reminder that tomorrow, tilman fertitta will be here for two hours. we'll talk taxes, sports, the consumer, and much, much more. brian, you're off for a couple days >> have a great new year >> happy new year to everybody thank you. >> closing bell is up next happy new year by the way. >> hi everybody, welcome to the closing bell, i'm kelly evans here at the new york stock exchanges. >> you're here to say it all week if you want to. retail reversal, consumer discretionary games we're going to look what's behind a move and how gift cards can play into their bottom lines in the coming weeks here >> and companies going public this year have raised double the amount of moneys last year some high profile buffs could spell problems for 2018, the ipo playbook is coming up. >> and some homeowners are

literally lining up to pay their 2018 property taxes. are we in there somewhere? >> do you hear christie made moves today. >> did he? >> he did. >> in his last couple of days in office >> yes, apparently >> we'll tell you what's going on with that and whether it's worth it to pay your property taxes ahead of time because of the tax bill that'll be very interesting. but let's start with how companies are going to be impacted by this tax law, number of corporations have released the impact that they will see, morgan brennan has going through those filings, she joins us now with the latest details, morgan. >> yeah, that's right, bill, finally getting some hard numbers regarding tax reform or at least i should say the immediate impact of tax reforms. companies readjust their balance sheets among the immediate or near term winners which expects the bottom line boost of at least $250 million in the forth quarter, german auto makers expect to see net profit wind falls for 2017, they did add it couldn't

quantify the tax effect for 2018 yet. and this after led the charge last week saying tax reform would add about a billion and a half to earnings in fiscal 2018, but there are initial losers, at least for balance sheet perspective as well, especially the big banks which are taking one-time charges barkleys, bank of america and citi which warren, that could tyke $20 billion write down. also capital one, royal debt shell just earlier today saying it would take a noncash charge it's all one-time hits this is tied to the valuation of deferred tax assets with deferred assets companies did use losses from one tax year to offset future taxes. those aren't worth as much on paper when the corporate tax rate falls to 21% from 35% now for deferred liabilities which is what most big corporations have, the opposite is true. so all of that said, companies, including those big banks, are mostly upbeat, longer term, they're saying reform will

positively impact future earnings in the u.s. and if we see a boostto the economy, that's going to be a benefit as well bottom line, expect some big and unusual numbers when earnings season gets under way next month, guys. >> as i understand it, morgan, that's when they have to come out and quantify the impact, you know, of these tax rate moves, also the impact of that overseas cash and that repatriation, saying we know you're having a hard time figuring outs exactly what the impact will be, but we need you to give us your best guess estimate when the earnings come around. >> absolutely. and i think as we've seen in so many conversations we have had on this air in the months leading up to this, there are many folks on wall street, analysts and strategists who haven't factored in the impact from tax reform either so getting some much these early estimates is probably very helpful as we go into the earnings season. >> should make for a more interesting one than usual >> yes, it's going to be busy, i think. >> morgan, thank you, morgan

brennan. sticking with taxes, they are going to help them today we are back with a look at the groups losing out, hi. >> kelly, need not look further than right here in washington, members of congress got rid of some of their own loopholes starting january 1, lawmakers won't be able to deduct payments for sexual harassment settlements. i didn't even realize this was a benefit, but it is part of their response to the me too movement that's been sweeping the country. also no longer be able to use their living expenses as a tax deduction, that was a proposal from iowa senator joni ernst, stop questionable, unnecessary, and excessive allowances for legislative senators squeal act they're getting hit. the law eliminates taxes for employers that encourage biking to work. right now companies can reimburse employees up to $20 a month tax-free for biking, and that translates into an annual

savings for workers of $89, and starting january 1, that's going away too and then there's tiny bareia school in kentucky none pay tuition it is a free college degree. it was supposed to be exempted from a new tax on colleges and universities that have big endowments, they had to scrap that carveout because it didn't comply with senate rules guys, the school estimating this could cost them $1 million next year alone back over to you >> bicycle tax, what is that >> it's not just bicyclists, it's all commuting benefits. right, the companies can't deduct them anymore, but we can. >> well, the incentive was for companies to provide them to workers. if the companies no longer have the incentive, then the workers can no longer get it companies were giving this to workers on a pre-tax basis so they no longer have that, have that incentive to do that anymore. >> i understand eliminating some of the tax breaks if it's going

to mean it's a good pay forward, right? >> the biking was like 20. >> how much did they make off a bicycle tax? >> bicyclist claim they're being targeted, right? >> that's exactly right. so this is one of those areas where it really becomes more of a political game rather than a game of actual fiscal policy, right? >> and only -- >> encouraging biking lanes is something that democrats had been -- >> only democrats ride to work on bicycles? what is that about >> well, it's sort of like the commuter tax benefits, they've used to to stick at chuck schumer for a while as well. so these things are used to sometimes not entirely for purely fiscal reasons, guys. i know you can't imagine that happening in washington. >> yeah. >> well, yeah. exactly. yes. thanks, see you later. crazy, crazy let's get to our closing bell exchange today, a lot like yesterday, kind of a tepid day, the major averages have not

strayed far from the unchanged level. we are tiptoeing towards the close at the end of this year. rob morgan is with us today from citi final group, and welcome back, jack from ucx, he is at the cme in chicago jonath jonathan, the mindset here is we've had good games this year, let them ride for the end of the year here. why aren't we seeing more profiting, do you think? >> well, because the uncertainty is definitely still there about tax reform and that uncertainty has been here throughout the year, we knew that something was going to come at home point, what the blueprint, what the details were going to be was uncertain. now that we do know, the next uncertain matter is how is this going to affect investors? how's it going to affect corporations we should get information in the first quarter, second quarter next year. investors are forced to doing nothing. you're either enjoying this ride or you've completely missed it and both of those parties are

forced to doing nothing at this point. yesterday was the lowest volume day of the year. that was followed by friday's section which was the other lowers volume day of the year. and we're going to continue to see that trend from now. >> you're betting on the less popular names of the market. why? >> yeah, kelly, i think that as rates continue to rise as we go into 2018, the dividend payers on the equity side, particularly those that grow their dividends and should do fairly well given that backdrop. as you said, those are some names that aren't quite as popular, but i think we'll see them do well as we head into 2018 >> are you -- >> what are you telling your clients? do nothing as well as jonathan suggesting since we don't know the full impact of the tax bill yet? when it comes to strategizing for your investments >> i think, bill, i think, you know, most institutional clients are fully invested in stocks according to to the asset allocation individual investors aren't in

my opinion. >> the bit we're seeing in fixed income, not like what we're seeing over in the stock world right now. there's a lot of action and there's a hunger for yield so you see it coming out now another reason for that might be the fact that there is this question of what's going to happen with repatriation remember, last time we saw repatriation tax holiday in '04, $300 billion came back to the

states and upward pressure in dollar and we have a trillion and a half coming back over the course of the next year, what's going to happen to the dollar? are we going to see that strength and is it going to make the fedless aggressive all of that is factored into the bond market right now. quite frankly it's got everybody a little bit confused. >> jonathan, you know, at various times this year, we would have different catalysts for the market, not at all once though, whether it's fed policy which i guess will be a catalyst next year as they start to raise interest rates, oil whether it was going up or down >> i think the unknown catalyst that's out there, that's quiet for now, but keeps popping it's head back up is north korea. that headline certainly will have an effect on our market, and as we've seen, as those headlines continue to come and it seems a little dicier, we see the vix start to move, investors start to feel a little bit leery about where this is going to go, as the rhetoric continues,

investors will be forced to making a significant move in their portfolio, but i think that's going to be the headline that will really move this market to the downside >> and that of course would also boost the dollar rob, i know you're focussed on this for next year how are you positioning? >> yeah, well i think the dollar's going to continue to trend up just as jack and jonathan said and that's from a macro standpoint, that's going to hurt the big cap multinationals, i would overweight the small cap growth stocks here also it's going to hurt international investing in general for u.s. investors i would underweight that space as well. >> are you -- so we've talked about all of the reason why is the dollar should be going up, but quite the opposite has been happening. we've talked to rick santelli a lot about this, rob, so how do you have confidence in that call given that despite all of the reasons we could all outline the dollar is still weak >> well, i mean, jack kind of laid out a good case with the repatriation the last time it happened, 300

trillion, you know, we saw a dollar increase and now we can get five times that. so, plus the fed, the fed, just the fed raising rates should begin to nudge the dollar up, as jack said, if repatriation causes the dollar to rise, then maybe they're less aggressive. we have a lot of forces i think that are going to be pushing the dollar up, and just because it hasn't happened yet doesn't mean it won't happen as we go into 2018 >> and before we go, jack, short term rates have been going up as well, part of this flattening of the yield curve, we hit 190 in the two year and kind of stuck there. are you guys talking about much higher yields in the near term yet?

stock market could be in trouble. >> all right very good. thank you, guys. >> thank you >> thanks, bill. >> see you later dare i say it? happy new year >> merry christmas >> she wants to wait until it's new year's eve >> we have the debate about keeping the tree >> you keep it as long as it's safe. >> and the mystery hanging on. >> if it's dry -- >> it's very >> needles are coming off. >> get it out there have get it out there have. >> i can't bear. where are we we've got 47 minutes left in the trading session here mixed day, the dow and the s&p positive right now as we head towards the close. still ahead, here's something you don't see every day, people standing in line to pay their taxes. they're anxious to do this what's causing americans from new york to sacramento to cue up those details still ahead. and later from snapchat to stitchfix and blue apron to

roku number of high profile ipo with varyi varying degrees of success east side will talk about which bets have paid off we want to hear from you reach out to the show on twitter, facebook, send us an e-mail you're watching cnbc first in business worldwide

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joining us, we yanked two professionals away from their phones, which i'm sure have been ringing off the hook from their clients there. there they are, ed, and founder of irahelp.com and carrie coghill. both joining us here, thank you for joining us -- >> hey, great to be here >> you've never seen this before. >> i've never seen people lining up, pushing people out of the way, i was here first, i want to pay my taxes >> they are very anxious to do that, right? >> yeah, but first thing i would say, ask your tax advisors you just said, most of these people are subject to amt, alternative minimum tax which means they don't get the deduction anyway, but they run down there, it's like black friday of taxes. >> so let's be clear if this happens, they tweaked the rules so you might not know if you are going to get hit with the amt right now, but you might think, worse case i should prepay the taxes, what happens if you lose you can't deduct it?

then you still prepaid, but you can't take the deduction >> right, we don't know, even if you do prepay your taxes as you said, irs hasn't weighed in on it, even though governor cuomo issued a proclamation on friday saying you can, he's not the judge. >> carrie, i'm curious, montgomery county down in yanld, they wouldn't allow people to prepay their property taxes until yesterday, they convened a special counsel meeting where they voted to allow people to prepay, but they did say, it's ultimately up to the irs whether to allow those prepayments to be tax deductible what is this they have to decide specifically >> well, i think the big question when it comes to how the irs is going to rule on this has to do with whether or not you can prepay a tax that hasn't accrued. it would suggest that you can't

prepay this tax that when you haven't incured it yet so, i think from our perspective as we have been fielding calls from clients, you know, there are some baselines here. if you itemize your deductions now, and you know you're not going to itemize next year, you're going to take the standard deduction and you don't fall into amt, we -- we are seeing people go out and prepay because you're just creating some flexibility in what you can do with your taxes but, every county, every state is different, some, some municipalities aren't even allowing you tow prepay. >> and if you pay the escrow, then it becomes even more conflicted or hard. >> that's a whole other thing, remember, coming down last couple days of the year, you're going to call your bank, they're going to call the local tax, the money will be in escrow, this is all going to happen in a few hours. >> right >> highly unlikely, and some of the people down there got told, well, you don't even pay your taxes here, the bank pays them

through your escrow. >> exactly >> we'll have donuts anyway. >> and -- >> what are we -- >> i do think that as ed was saying, you know, this is something that you need to really take a look everyone's situation is very different, everyone's locality is different in terms of how to prepay i personally am going to pre-pay because i'm in a gap and i've been advised that, you know, i'm not going to be able to use it next year, why wouldn't i pre-pay now, it's going to take some time and i have two days to get this executed, and it's 15 degrees outside. so, it's not a lot of fun, but at the same time, i think that for some people, having that flexibility will make sense for other people it doesn't make sense. >> well, i just wonder, you know, is this all going to push the irs to have to issue a ruling saying -- >> i have a feeling they may come around. remember, this is not a big -- it's a big event, it's a one-time event they only have to give some flexibility and be nice for one

time and this issue will never come up. >> they may say, well, wait a minute we're losing the revenue >> in the spirit of the tax bill where they're trying to pay down the debt, why would they allow for the deductions when they pay tax? >> they've been known to be nice people >> really? by taking names. >> i'll make a prediction, i'll bet they come across and say, you know, for this one time we can kind of stretch, remember, they're stuck in the confides of the law. but they still can write regulations and kind of stretch it like a rubber band sometimes. >> i will say these reports i mentioned about chris christie are that the new jersey governor tomorrow will issue a proclamation just like new york's governor has ordering them to september taxes early, if the irs was going to push against this, i would hope that by now, they would have tried to make that clear instead of coming out -- but you know what, it's caveat, how do you say payer. >> no harm, no foul. >> no one's going to cry for you if you don't get to take that deduction. >> the only thing you lose is the tremendous interest on that

money if you pay it early. >> yeah, yeah. >> and you know, the other thing that i think is important to realize is that for people that will itemize next year, you have to be very careful that you might not want to be pre-paying because that can really cause you to be in a bad situation next year. so it really is a very -- >> meaning you won't be -- >> so if -- >> because if won't be high enough >> right, well because if you're itemizing your deductions and you know, you're right at that cusp of taking the standard deduction versus not and you've prepaid your property taxes that would put you over that standard deduction amount, you might find lost value next year >> there are people taking out home equity loans to come up with the cash to pay for that -- >> which under the two tax bill are no longer deductible the interest is no longer deductible >> we can't get into that right now. >> areas like here in new york, that 10,000, everybody's going

to be over the 10,000. >> yes, they will. thanks, folks. we'll let you get back to work happy new year >> thank you >> carrie coghill joining us today. when we come back, there was a nearly 50% increase in companies going nbl year versus 2016 and as stocks continue to rise, next year could be another better one for ipos. we are going to look at how the listings perform this year and what it means for 2018 then later, shoppers spent a whooping $27 billion on gift cards this holiday season. and while that sounds like a good thing for retailers, it could lead them in a find if consumers don't cash them in we'll explain, just ahead.

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this year actually saw strong ipo activity compared with 2016. there are also high profile blow-ups that we keep talking about. blue apron and snap and maybe those are warning from 2018. he's ceo and founder of equities end, welcome to you. >> thank you >> there's sort two of different things, if you only heard about blue apron and snap you'd think jeez, i don't to want go public right now. then we had strong performers. what stands out to you >> what was the rhyme or reason here >> 2017 has been a subdued year for ipos and people are expecting a roaring ipo out of the gates. what we've seen is a lot of attention being placed on bit consumer ipos, you have snap, blue apron and stitchfix if you look at the returns that the investors have made from the

last round before the ipo, until right now, we actually see 180% return so, the private investors that were allowed to invest in the companies right before the ipo on an average, not just focussing on the consumer names, have actually done phenomenally well. >> good for them so was it a bad idea for them to go public? when you consider the performance and the aftermarket? >> not at all, you know one of the things it's done is what it takes now to go public if you venture back or digital health company, what it takes to go public now is very different from what it used to be 10, 20 years ago. your companies are almost twice as old at 11 years old, and you need to show at least $100 million in revenue and these companies actually have to have staying power if you take a look at what happened in 2015, q, fourth quarter, we saw actually a pretty big -- >> alibaba >> that was, that was right after alibaba, and we saw a

tremendous amount of bullishness. we see a company go public and tremendous amount of private investors flock in, and then we see the nasdaq come down 16% in the first six weeks of the year, all of the sudden there's a big freeze in the private market since then, what we're seeing is a market sentiment on the private side, the equities index showing we're now seeing bullishness almost twice as good as what we used to have two years ago. >> what will matters most? if i'm a company, let's take airbnb, if i have a company that's thinking about this process, am i kind of forced to do it because of early options because of stock options that have been granted? do i kind of have to do it or do they want to do it how much do market conditions matter is it just them looking for the right window to pull this thing off so they can -- >> let's look at spotify, it's a perfect example. it's a company that is quite old, it's approaching a deck daddy. equity investors, but what you see is that it doesn't need anymore money in it, that's

quite a statement they're making we're not going to pursue an ipo by offering shares, we're going to pursue a public listing what they're saying is, you know, unlike two years ago where a lot of companies were chasing growth at any costs, we are chasing growth with positive economics. >> they're not raising additional capital, it's just a turnover of the existing shareholder base >> private shares are going to get registered >> is that the idea? private investors? >> car and shareholders are. whether they're employees and what you're seeing is a company saying, we don't need the money. so you know, to your point, a lot of companies going public, they know they're going to get decimated if they're not ready for it. >> but they don't need the headaches either so you do have, i mean, you have a business relationship with spotify and that's candidate for next year. what part docusign as well >> yeah, docusign, the only e signature provider for the entire u.s. government, the suite is mature, it's one of the factors we take a look at whenever we host a marketplace

or a credit investors and sellers can get together and docusign was one of the companies that we looked at and said there's maturity in numbers and maturity in the people and it's a great candidate for 2018. >> i love docusign it's like -- just being able to hit a button and all of these documents are signed >> do your taxes that way? >> i wish. >> i was just going to say going back to spotify, if they don't need the money, why go public? again, is it because a lot of these start-up companies, no matter how much they might raise and how successful they might be through the private fundraising rounds, ultimately need to compensate those investors by listing the shares to the general public, is that the fundamental motivation for going public >> well, there's actually a lot of liquidity alternatives that are appearing now that never existed before you look at soft banks vision fund look at what equity is doing our marketplace is built explicitly to deliver, to separate liquidity from exit and these two used to be considered one in the same, and i think by bringing solutions like this to market working with the companies, with the

qualified investors, with the shareholder -- >> spotify had other options is what you're saying >> chosen not to go list -- >> why don't you think they would do it then why do it at all >> they want to make a statement and say, you know, hey look, we're ready. we're ready for prime time and we're ready to have our shares on the open market >> it's still a signal that way. >> i think so. >> see a change in how companies are funded, that's for sure. >> not just ipo. good stuff, thank you. >> thank you very much time now for a cnbc news update, hey kids, it's contessa brewer, hi contessa. >> hi bill, thank you for the introduction here's what's happening. explosion at a market in st. petersburg, russia, hurt at least ten people no fatalities reported the sploeg was caused by a homemade bomb which was left in a locker the hard work is not over for ups drivers, the skpaen on track to return a record number of packages to retailers about a million packages per

day, and it's expecting to peak at about 1.5 million next wednesday. looking to upgrade your ride now may be the time, the average dealer incentive for a new car purchase is at $4300 all-time high. you can expect to get the biggest discounts on 2017 models and buyers with good credit should be able to get zero interest financing and a barber arrested after giving a bad haircut look at that according to police, the barber told the customer to stop fidgeting and then to snipped his ear with the scissor as if that wasn't enough, then the barber just shaved a line right down the middle of his head kind of like a reverse mohawk, right? how bad does it have to be to fidgeting that you snip somebody's ear and then give him a reverse mohawk it's not a crime to give someone a bad haircut. clearly, i see them everywhere, but the ear snipping got the barber in trouble, bill. >> who took the photograph >> you know, it could have been like -- >> who takes that -- i mean, the

barber's going take that picture to prove that he did that? >> look at this, selfie. see how that goes. just like this you could do it. >> professional at work there, folks. >> a lot of practice >> thank you, contessa >> see you next hour see you. kelly. >> thank you both. >> less han half hour to go in the session today. >> only six times in 24 years has the period rally produced a down tick. >> which is from after christmas day until new year's roughly >> basically christmas eve until two days after new years and in those six times, three times the year that followed was

basically flat, two times it produced a -- it was followed by a bear market, and the last time it was followed by a full bear market >> everyone wants repatriation of capital and maybe bitcoin what about the more tax bill related moves, are those affecting the market do you think? >> i'm sure they are i think for example, caused by waiting on the tax bill has prevented a lot of normal tax selling. ordinarily you would be getting a rebound from that period we haven't had that period so you didn't get the early weakness to be followed up by some of the strength so, yeah, there are mitigating facto factors, i just go by history, i've been around here a long time you see the patterns, there's been a bad year for seasonal patterns weak september, weak october,

none of those things came about. santa may have take an hike on us, we'll see. >> next couple of days he doesn't show up, is that enough for you to be cautious for 2018 or do you have to wait for a few more things in january >> well, it would kick into service the first week in january and the overall january in decatur i would go on alert if they were me >> all right getting those milk cartons ready, arthur, thank you so much bill . >> thank you, folks, see you later, arthur. up next a lawsuit involving slow apple iphones is gaining speed now. we're going to tell you about the growing list of class action lawsuits against the tech giant. and how many apple users could be involved. plus, small cap stocks are up double digits this year for the most part, but they are lagging their large by hefty margin coming up, a debate whether it's better to go big ithe n new year or to bet on little guys stay tuned ♪

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the lawsuits are piling up for apple, now according to reuters, eight suits have been filed in the week since the company admitted to slowing down purposefully slowing down older iphones to make up for poor battery performance. the suits were filed in california, new york, and

illinois they are all seeking class action status representing potentially millions of iphone users. now apple acknowledged that operating system updates released since last year for the iphone 6, 6s, se, and the 7, those updates included a feature to smooth out the power supply from batteries that are either cold or old or low on charge and apple shares have been suffering since that announcement today, it is down another 39 cents -- >> this is a tricky one. >> what? >> it's a tricky one i mean, i understand why people are upset, but what apple admitted to is saying they're slowing down the phones in cases of extreme cold, if they're old, or if they're not responding well to the operating systems. what is not been proven is that they're simply slowing down old phones, which have been claimed over the years, to push people into the launch of a new phone >> that was the urban legend and we were talking earlier today about this, you know,

what's the damage? what damage was done and i think that it did push people to buy a newer, faster phone. >> because it tern turns out if it's a battery problem, they could have replaced the battery. john was saying earlier, they would have covered the cost of replacing that battery anyway. >> it occurred a while ago, after i company issued 6s, okay. >> lucky you. >> as i said, i have never updated. i get all these notifications all the time, hey, there's a new operating system update -- >> do this right now >> you know what, i think i'm going to update it and see what happens. >> is the battery badden to? >> no, it works fine so i'm thinking -- >> if you update you think it'd be worse >> it might slow down. i'll report back and let you know thousand works out. and again, i remind everybody, this never happens with a battery -- with a blackberry they just don't. they don't mess around with the perfection there are we done?

>> yes, no further comment from me kim kardashian received give the cards for netflix and for amazon for christmas just more than $27 billion spent on gift cards this holiday season, all of those retailers, restaurants, and entertainment companies need to use them we'll explain why, coming up and here is what the planned tesla pickup truck could look like when it rolls off the production line, but, electric car companies protection capacity has some experts concerned about the truck hitting the road when analysts is cutting his delivery 'rtaintea,om that model 3. wee lkg sl cing up ♪ (nadia white) the moment a fish is pulled out from the water, it's a race against time. and keeping it in the right conditions is the best way to get that fish to your plate safely. (dane chauvel) sometimes the product arrives, and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred.

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welcome back retail stocks are taking a hit today as holiday returns are expected to hit record highs remember yesterday, a lot of names are doing the exact opposite having a strong day now macy's is down 4.5%. while retailers are counting on gift cards to boost their sales, that money, get this, cannot be counted as revenue until the gift cards has been redeemed in stores kate rogers has more, kate >> reporter: this is a big week for returns. the national retail federation says consumers were set to spend

$27.6 billion alone on gift cards alone rather this year that's up from 27.5 billion last year in terms of gift cards, consumers were supposed to buy on average around four, toemting about $45 each, the most popular place to buy them for, restaurants, followed up by retailers, department stores, then visa, mastercard, discover card, ammex and gift cards for coffee shops this year we also know it was a strong retail season. we got data about sales being up 5% from november 1st through christmas eve, we caught up with some shoppers who told us they were feeling good about the economy and maybe even spent a little bit more this year. >> i have good feels about the economy this year. i think he's doing a good job. and i think for the financial stabl of the country, i think it's going well. >> i would guess like 8 or $900. i spent money on toys and things like that for my grandchildren i think that, since president

trump's been elected, i think he's done a lot of help with the economy in certain things. >> reporter: so you heard it there, people feeling good about president trump so far and just because the holidays are over, consumers are still out spending, in fact they're set to spend some $69 billion through new year's, that's about 10% over the nrf projected nor holiday season, back over to you guys >> spend the gift cards, or else your loved ones are wasting their money. >> well, i don't understand, why they don't have better incentives to get people to spend the money. >> that it's free? >> no, i'm saying, clearly people either forget them or they get a card that means nothing to them -- >> you're right, totally right i've been guilty of this this is mostly self-criticism. >> are there incentives -- >> reporter: yeah, they never expire >> well, you know what, i think that's a problem i think that's a problem if you

know it's going to expire, you're more likely to to want spend the money. who am i i don't know. >> like six weeks for people to get in the store can you imagine the end of year boom would be even stronger. anyway kate, thanks >> thanks, kate. 12 minutes to go i think that's a good idea i don't know if legally they can't, if it's equivalent to money, make them expire. >> i think they used to have expiration dates >> i'm looking into this everybody else is in the red >> the last time small cap stocks outperformed the s&p 500 index, that was in 2016. but with the trump tax cuts, small caps may be poised for a surge. all rse come back, we'll look at smveus big for 2018. sir! how many of 'em? we don't know. dozens. all right! let's teach these freaks some manners! good luck out there, captain! thanks! but i don't need luck, i have skills... i don't have my keys. (on intercom) all hands. we are looking for the captain's keys again. they are on a silver carabiner. oh, this is bad.

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welcome back on this wednesday. the markets are on pace -- see what i did there >> christie did issue it today, not tomorrow. >> you're looking at a chart of the major averages here which are on pace to end on a high note here. they're up roughly 20% or more from the year and the russell's up nearly 14% year to date >> should investors put their money into large or into small cap stocks for the new year? joining us to discuss are these two.

>> you like the small caps why? >> we just think, you know, as you pointed out they have not moved at much this year. we think a lot of that is the fact that investors are paying close attention to the tax cuts and what those are going to mean across the board, but the smaller growing companies, a lot of their tax bills are coming in the future and people aren't paying attention to that we think there's actually some benefit that has not been realized there >> yeah, i mean, that seemed to be the conventional wisdom here, mark, the small caps will benefit more because of the pass through divisions of the tax bill, what about the big caps? i mean, we're hearing from a few, handful in various industries it matters which industry you're in among the big caps whether you benefit from taxes or not, right? >> well, i disagree with that, bill, and in the sense that it is it isn't all just about corporate tax reform that's going to be a wind fall, the small versus large, we, like the other guests favor small caps,

the disproportionate benefit they're likely to get from corporate tax reform themes like higher oil prices which we believe we'll see in 2018 is good for the energy sector which also happens to be a tax-laden sector among the 11 in the s&p 500, strals are benefitting from a cap x psych that will has little to do with corporate tax reform, there are other areas in which we can invest that large cap names proliferate that will stand to benefit beyond just the tax ramifications. >> you both have specific picks here as well in the small cap space, lamar, you have three of them, including pool who else are they? >> sure, in addition to pool, we like taser, axon, a company called 2u. >> 2u, just explain for a second what they do >> sure, 2u partners with top flight universities in the u.s. to offer online versions of their graduate programs. so, you know, if you want to get an nba, rather than quitting

your job and moving to somewhere random, the school happens to be, you can keep your job, get the same degree through 2u version of that university >> all right, and mark, the three you picked are the big cap areas, jpmorgan chase, interestingly, some of the banks have been saying they're going to have to take charges depending on how much money they have overseas and honeywell. why these three necessarily? >> well, bill, to my point made early by higher oil prices and i think the energy sector stocks are due for a catch-up phase jpmorgan benefits from higher interest rates on the short end and stronger economic growth domestically which helped lending practices. and thirdly, honeywell is benefitting from a sector at large which is getting the end fall up psych that will we think has a long way to go >> all right i don't know, i get this feeling, it's going to be another interesting year, 2018 it's going to be very interesting to see thanks, guys

lamar, mark, happy new year. thanks for joining us today. >> thanks, bill. >> thanks. we will take a quick break come back with the closing countdown for a wednesday. after this s not a cloud. this is a car protected from storms by an insurance company that knows the weather down to the square block. this is a diamond tracked on a blockchain - protected against fraud, theft and trafficking. this is a financial transaction secure from hacks and threats others can't see. this is a patient's medical history made secure - while still available to their doctor at their fingertips. this is an asteroid live-streamed to millions of viewers from 220 miles above earth. this is ai trained by experts in 20 industries. your industry. hello. this is not the cloud you know. this is the ibm cloud. designed for your data. ai ready. secure to the core. ♪ ♪ the ibm cloud is the cloud for business.

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swear to you disneyland just announced that there is a power -- they've experienced a power outage between toon town and fantasy land you can't make that kind of stuff up only out of myhometown in southern california. i asked far two-day chart of the dow just to show you how smooth things have been this week so far. i don't know, doesn't look like we're going to make it to 25,000 by the end of the year on the dow, but hey, it's been great anyway and they can save that millennial mark for next year. the ten year yield, 244 is the number we're watching right here rick santelli points this out, after all volatilitvolatility, downs, we may end right where we started around 244 we'll watch that wti and crude oil continues to move higher. today pullback here, but $60 is the number that we hit yesterday first time in two and a half years and end occasions we're going to see higher numbers for crude oil in the new year, especially with opec holding here and the usa dismost

especially needing that higher price to help. bob, we talked about how great things were for the retailers, we saw that rally, we've had a pullback today, but today we're looking at this, the shippers because they're saying that $90 billion worth of packages are going to be set back now, returns after the holidays >> and here's the problem with shopping online, the return rate is much, much higher our numbers, we've been running as high as 20%, i've seen 30% numbers who shop -- stop returning everything i think that's a good idea power outage in -- >> toontown and fantasyland. i kid you not. that was the headline it there. >> we can do a lo lot with that line >> i'm going go there, but i'm not going to here's the key, we're waiting for the consensus to emerge on 2018 i think the growth stocks are going to do very well in 2018. the technology names sold off dramatically because they're not as friendly on the tax cuts, but the numbers overall if you

believe in the global economy growth and believe that earnings are going to be remain at new highs, it seems to be the place. >> puppies we're all just fawning all over them stay tuned for the second hour of the closing bell with kelly evans and company. i'll see you tomorrow, kell. all those puppies are available for adoption by the way, welcome to the closing bell, everybody, i'm kelly evans, here's how we finishing up to date on wall street. looking for the santa claus rally, eking it out just at the bell of a dow up 26 points, 24,772 is the number there s&p 500 up about 2 points to 2682 nasdaq up 6939, and the russell 2000 which was the only in the green yesterday, today the only name in the red. the russell dropped a quarter

point, 1543, no records on the close here today but markets did avoid that three-day losing streak, and financials are up 20% in 2017 making them one of the year's better performing sectors. what to expect from the banks in 2018 and how the new tax bill will impact that sec store coming up. and joining me today, commentator michael santulli, welcome back sarah hunt, welcome back to you. and john augustine, welcome to everybody. and let's get to those big winners in the dow today was visa, the biggest loser was nike, a lot of retail names gave back the gains today. over in the s&p, 2.5%. and the biggest loser as we said was macy's down 4.5% what's the deal? today is gives it back >> it was a good excuse to say it's ban good month. if you looked at macy's gap, home depot, alabama com by, all up 4, 5, 7, 8% in december, and

they're not good stocks in the last month of the year it seems it was just a real kind of timely excuse to say what incremental good news are we going to get in the next week or so >> some of the retail names have been north of 30, almost 40% in the last two months because they came off that sell off are you in that space at all >> we have a little bit of participation in the space, more something like a home depot and fedex, the macy's you were just mentioning it's being participated in that part of it, you have seen the conservatives spending money this year. >> speaking of which, we had all-time highs in retail today they were in names like home depot, lowe's, this was in the session. bad, bath -- i'm sorry, best buy, tiffany was at two-year high caterpillar doing well today john, what would you do with retailer what you would you avoid it? so we use the retailers as well.

we think the consumer is going to be okay moving into next year retarial should probably move with it. >> if the consumer is doing okay, the question is how much is priced in and how much, john, does it benefit retail does it just flow to the rest of the enormous part of the market where people can spend outside of the mall? looks like it. obviously it looks like people were spending on their houses. perhaps people were spending on appliances, perhaps people were spending on special gifts, the little blue boxes let's say for themselves it looks like it may be broadening out how the stocks react, maybe they pause into earnings and reset from there, but it doesn't look like to us a q1 cold snap is coming right outside of the weather right now. >> the consumer confidence data dipped a little bit. we're talking about high levels and it's been ramping basically

since the election >> the question is how many more are you going expect out of the surprise factor for consumers? in other words, we all now agree that consumer's in great shape the stocks have accounted for a lot of that. and if you believe the macro story an economy running hot with an upward bias and the interest rates, that's not the environment that consumer discretionary stocks tend to do that well in, even if the consumer is doing fine at the household level. >> who would it favor more >> it's going to favor something like a financials or even i think industrials over something like consumer discretion >> pending home sells were flat for november and barely higher from a year ago, these are sales of existing and newly built homes. they had slowed during the summer, but did turn higher in october in november. that was a surprise because.

the supply of homes have fallen to 3.4 months worth the performance of the home builders which are showing 30 plus % this year continues a pace. >> that's a pure supply demand issue right there. therefore pricing is good for them i don't think it's a surprise right there, but it does tell you that the sector as a whole, you know, the activity levels restrained in terms of sales just because of the supply factor i think it's in recovery mode. you wonder if you're getting a building to take up the gap here >> that's the problem with the cycles you had too much of it, the last cycle now, apparently you don't have enough. >> then you also wonder because the fed is raising rates and they've been talking about that. if some people went into the market this year because they thought hey, if they raise rates i'd rather lock in a lower

mortgage rate. not overall for the entire u.s there are markets affected by that all of those things are going to come into play and what that picture looks like next year >> and john, knowing you're positive on retailers, what about home builders into next year >> well home builders, look, there's a trifecta going on, not only you talked about pending home sales, they're near a ten-year high, existing home sales are near a ten-year high building permits and housing starts are near an 11 year high. there's definitely something going on there in housing that takes the momentum into next year, just as we would say retail, and as mentioned, how the fed reacts to hat, how the bond market reacts to that we'll be seeing probably as we would have in spring and summer. to answer your question though, there's a lot of positive economic momentum to us, moving into the new year, that's good news >> yeah, we had commodities on the move as well today copper hit a three and a half year high. boost in a bump in the imports

of the metal last month. yesterday it was oil that hit $60, that was a level since 2015 interestingly, the flip side is that the dollar was weaker again today. >> yeah, it's the everything is up in dollar terms trade that has worked this year although it's interesting that, you know, copper got the headlines, other commodities too coming along, sort of proves the wisdom of that old, you know, bitcoin hedge using copper, i mean, you know, one or the other, unglamorous, useful metal, the other is the opposite >> they should hand out bitcoin medals at the olympics >> yeah. no, no -- bold money, come on, these are young athlete spps it that we can read industrial strength, strong economy into the fact that oil and copper is high or do we read into it that the dollar is weaker >> copper, with the chinese headlines, if they're cutting back production. it seemed like there was headline action there that was friendly to the market, but no, i think it's all of it it's look, demand is pretty

good it's one of the elements of global growth that we keep talking about. it's using up more stuff. >> and sarah, how do you feel -- would you be in the industrials in materials i mean what does all of this say to you >> again, for the industrials, we need the promise of infrastructure building. you have seen the industrial economy pick up. that's been positive i think on the metals, oil and copper, you've had supply constraints. i think the people are not trusting that the oil price is going to stay up here. they've lagged the price of oil if you look at them relative to one another. there's some opportunity into that, if we continue the strength. >> john, what about you guys >> well, the copper is one component of the metals, they're all up palladium is up, zinc is up. they all started at the same time, right in the middle of the

summer when we got those better global economic numbers. then the energy, one of the things we notice about energy right now and oil specifically, the future's market has a price of oil at $57 a barrel next december and 54 the year after so they're expecting a decline in the price of oil over the long-term. maybe that's what the stocks are playing too right now. you have to be choosey there >> good point. let's talk about tax reform. something of a mixed bag for corporate america. saying today they anticipate a profit boost while oil giant shell and barkicallies expect a hit to their bottom lines. companies wrestle with the ramifications of tax reform, indications are that president trump and congress could be looking at that infrastructure bill next we were just mentioning, so we know mike the deferred tax assets versus the liability which is kind of a dollar change. it's not having a big impact on the stocks and some of the infrastructure be a bigger deal. >> exactly right now you're getting the

initial wave of the accounting based judgments that would have to be made don't think the smarkt going to price that too aggressively. infrastructure it would be a big market mover but i don't think that the market itself is going to overanticipate that. we did in the first quarter of this year, remember the engineering stocks, all of that stuff was flying and i don't think that people are really going to handicap the odds of that being very high in the first half of next year. >> do you think it's already getting to the stocks at all or no >> i was looking at some of the materials stocks like mark, and actually they've come down since that, they pretty much are back where they were before the election, they had a big run-up afterwards and come down a little i think people are not discounting that to actually happen, especially in a timely manner even if you get infrastructure legislation, the spending that comes along with that lags to a great degree in a different way that maybe the tax and some of the other recent legislation is. it takes longer for them to get off the ground. >> they could sign it in 2018 and build a bridge in 2025 it feels like in parts of the

country. so you mean that benefit continues to flow over that period of time >> it's not going to be as big of a shot as quickly anticipating too much into those stocks immediately is probably a little early for that, i think that that's -- they could lag whether or not that happens. >> john, what about you guys what are your tax plays? >> well now mostly the domestics, that will affect the retailers potentially, that will affect the banks, a lot of companies with a lot of domestic income to them and as mike said, there's going to be a lot of balance sheets adjustment going on around that anti-basing measure of the new tax provision. so, maybe that helps small and midcaps a little bit on relative basis, we could see some of that as well next year, what we're really interested in is how companies and if companies adjust their 2018 earnings estimates when they document out with first quarter earnings. we think those are going to be some very interesting statements around the reports >> yeah, as we were saying, sounds like they'll have to do everything from trying to figure out on a top level basis how the

corporate tax rate will affect them, also maybe how the repatriation taxes will hit them too and what they've going to do with the money they're going to estimate all of this in the earnings season, right? does that mean you try to do guess work into that or wait for it to come through >> what we did so far was mentioned, we moved into the retail space we also did move into the some of the stral space we kind of consider those earnings battleships, and they're turned in the right direction right now. and we think they pick up some momentum so we're not laying back you know, we do suggest we probably get some rotation next week and the week after, start of the new year. if anything, we're probably getting more sickly kl in our stock portfolios here at huntington right now >> same question for you guys, what do you anticipate going into earnings season sounds like it could be -- there's a lot of headlines >> it's going to depend a lot on how we set up into earnings season we're going to have about a month before now and then. and i do think you're going to have a situation where if we do

see this reversion to the mean trade in january, that's going to be one kind of set up i think expectations in general are high though. i don't mean for the actual numbers -- >> for the year. >> a lot of exposure to stocks, people think the outlook remains clear. that's where you have to brace for some kind of, you know, unwelcomed surprise. >> i would be surprised to hear any bad news coming out. i think people will be optimistic on the year they're going to look at the tax bill and they're going to be speaking about the year in a positive way companies don't like to give you too much information early on because they want to see how it's setting up for themselves before they put themselves in the position where they are being too optimistic in the beginning, i don't think you're going to see -- we've seen where it's on the pessimistic side you're going see optimism. >> all right difference of opinion. we'll see, guys, thank you very much sarah hunt and john augustine joining us here to kick things off. appreciate it. key bank coded estimates for tesla's model 3 today. we'll discuss whether it could be trouble for des la's future

and the stock that's up 50% still this year. plus, it's been a strong year for financials, we're going to hear from one analyst who says 2018 will be even better for the banks once the president's policies really start kicking in and we to want hear from you. ma, u'atinitter, facebook, or e-ilyore wchg cnbc first in business worldwide.

shares of tesla closed down near 24ri % today after key bank lowered outlook for model 3 production from 15,000 to just 5,000 deliveries key bank's note came a day after tesla's ceo planned to make a pickup truck after the model y is completed brad ericson, the analyst behind the note appeared on power lunch earlier today giving his thoughts on whether supply or demand is the cause for the slowed production. >> it's definitely a supply issue at this point. elon's obviously been very candid through the quarter of being in production hell and, you know, having difficulties in getting all of the, you know, the stopgaps and the supply chain opened up. and so, you know, i think this is just a reflection of we check

with the end market and see how deliveries are coming and that is just a direct function of the production capacity at this point. >> joining us now is trip from global equities research along with matt from kelly blue book to discuss this. welcome to you both. trip, are you concerned about their bottlenecks? their ability to hit the production numbers >> actually, that is totally non-issue. tesla is creating an industry. the energy production, energy storage, vision-first devices which is mortal x, model 3, and tesla semimy which is all based on the networks. and, of course, you've got factory. so when you think in terms of industrial creation, delivery numbers means nothing. this is once in a lifetime opportunity. >> trip -- it means something for the stock. this is not just a lotto ticket, the stock is supposed to trade

at a number that reflects some of it's future earnings power and if they're not turning out enough of these vehicles, that takes a big hit, right >> not really because rather than make 5,000 units this quarter or 15,000 units next quarter or a million units two, three years down the road, it is totally irrelevant the question is, how many factories can tesla create and build. the stock is not going to trade at the delivery numbers, it's really little. when you're thinking in terms of industry creation, then the tesla stock will trade at how many gigafactories can tesla create think about it, it is like an oil refinery, superchargers is like a network of gas stations it has components of chevron if you think about vision first devices, and give the networks which is powering that, they have some inclinations of

invidia. if you talk about model 3, it's ready for tesla is doing right now is they are creating delivery at scale. it is still built down, like who can you deliver, 500, 600 vehicles in one day. that is almost like amazon.com, so if you think about industry creation, you have to think hoe listically not in terms of products because tesla is not a product company at this stage. >> matt, we have this kind of big picture vision that's out there, certainly some investors in tesla buy into it on the other hand, it's the company itself that putting these production targets throughout by a certain date and they're not managing to meet them on a consistent basis, is that a concern for investors >> it's a huge concern well, they need to move the product and get some cash flow they can to the sustain the cash burn that they're doing and remain a viable business now, you say that they're creating a new industry.

tell me, how is a battery factory a new industry or semitrucks or autonomous driving. the auto industry is working on all of those technologies right now, the question is time. the other, the competition that tesla faces, they're not going to wait around for tesla to get it's act together on production. they're going to eat their lunch. >> trip? >> i think my -- the other salesperson completely clueless, let me tell you why, the way gigafactory has been created, it is something which is completely revolutionary. it uses gravity as the most important component of production capacity. it's not assembled product, it is a especially designed product, it is just like a coca-cola bottling plant, they use gravity to makes the components of the factory and that is the reason they're

creating 30 to 40% efficiencies, just by designing gigafactory in a space orientation. it is the biggest innovation that has ever happened it is like my friend is telling, why haven't we seen anymore gigafactories, no, because it has been designed by physics, and only exponential thinkers, the only two right now jeff besos and elon musk >> let me give matt a chance to defend himself go ahead >> we have to look at the marketplace realities, and the ev market is a very small segment of the overall industry right now. and it's become a very highly competitive segment. the tesla model 3 is positioned against, above it's competitors, he's talking about volumes that reach honda accord and toyota camry levels of volume which are

more mass market oriented vehicles i think they're kind of unrealistic expectations, and the fact that he's doubling and tripling down by saying, well we're going to do the crossover model y and follow it up with a pickup truck, i just don't see that happening within the time frame of 2019, 2020, 2021 even it takes a long time to get a vehicle on the road as model 3 has demonstrated >> all right gentlemen, thank you both, matt, trip, thank you for joining us trip's price target still 485 on the stock. coming up, nissan trying to gain market share in the u.s. and on it's traditionally thin margins. our takeaway is next plus the dow rallying 25% this year. pushing the index to record highs. but several other global markets performed even better. those details later on the closing bell ♪

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welcome back santa snuck through at the bell and pushed the dow up 28 points. the nasdaq was up three. the russell stayed in the red this afternoon time now for a cnbc news update, let's get over to contessa brewer >> here's what's happening right now. things are getting back to normal at disneyland after power outage some were stuck on rides disneyland spokesperson says it's been restored to most of the areas of the park. protests in virginia as the

race for a state house seat continues to get weirder it's tied at 11,608 votes each the democratic candidate is challenging the results of the last recount so the board of elections is delaying the next step, which is literally drawing a name from a bowl wow. the world's tallest lego tower built in israel to honor an eight-year-old boy who lost his battle with cancer it stands 118 feet tall, it's constructed of half a million legos. a zoo is showing off a brand new baby elephant. it was born on christmas day at a wait of about, 200 -- weight of about 200 pounds. two more elephants are pregnant, so look forward to, you know, more cute baby elephant videos in the very near future. kelly. send it back to you. >> that lego tower was awesome >> sure was. >> contessa, thank you contessa brewer. let's get to the other big stories today. here's the rapid recap

>> this has been a dreadful year for seasonal patterns, almost none of them have worked and so far the santa claus rally is not up and running. >> we're finally getting the hard numbers regarding the impact of tax reform, among the winners, insurer chub which expects a boost of $250 million. bmw expect to see net profit wind falls for 2017. >> the stock is insanely valued. one day people will look at it and say, wait a second, it's a car company. and it's going to trade at a car company p and a car company margin, and like if a bird flew too close to the sun, it would melt apple is facing lawsuits over the mission that it adjusts power to prevent possible shutdowns. >> ripple is very much focussed on solving a payment's problem up 20,000% this year it's the number one performing digital asset for the year, and i think a lot of that is because

we have real customers, it's a asset that works very efficiently at scale, we can do massive number of transactions per second, very, very quickly compared to bitcoin, which is much slower. and now it's time for our takeaway we begin today with all of those nissans clogging the car rental lot. at the same time they've pulled back sharply own the sales, nissan upped the percentage of cars it's sending to 18% of it's total sales. by comparison, honda and subarus, 5%, now nissan says it doesn't require as much advertising, can they be right about this, mike >> i think it depends how the company views it as you kind of consider this to be an arm of marketing in part, it's not just about how much you make in part sold to a fleet it's about creating recognition for your new models and make impressing people. i guess makes sense. especially for a company like nissan >> that's the interesting thing

to me. reminds me of gm and ford has extremely aggressive sales targets and that's how they wind up with the fleet cars in the first place and now they're enjoying discipline. >> we're not just dumping the least attractive models there and cognizant of the fact that you want to maintain resale value when they're done from the fleets it's certainly not without risk. >> i do see that i have rented cars though, where i'll say gee, driving a jeep, this is nice or whatever the case may be. if they're not just dumping them but still a big turn around from what we thought was happening with the car companies next, a hiccup in the deal for health care. brigade management says the price being offered is too low in fact, it says the offer is grossly inadequate and did trade up to nearly 10 bruks a share. will they have to raise it's bid? >> this is interesting, if you read the letter, and it's of a type that often comes when you have a private equity takeover that's proposed, which is look, you're kind of cutting

management on the deal here, this is an inside job, you're not thinking about other shareholders, not only was the stock 12 this year, i think it was in the 20s in the last couple of years. so i think they're building a case that this is a little bit of a take under. >> dell all over again >> perhaps interestingly, dell traded at cheap levels far long time >> totally >> we'll see it is the kind of thing that you can make the case, you have the leverage with management, i don't know >> with all the deals that have happened in this space this year, it's hot it's heating up, you think they'd have a case to be made for a higher price we'll see if the buyers pay up finally a regulatory red flag for the big tech giants. senator mark warner's office organized a briefing by two critics last month meanwhile, the republican attorney general of missouri is investigating google as he runs for that state senate seat is it time to ramp up the lobbying >> i think that's an inevitable piece of it, i don't know if it's enough. what's interesting, if you look

at the mark warner kind of briefings he's creating and some of the theories he's proposing is that they're creating intentionally vindictive products maybe it's a stretch to call it that everybody company tries to create a product >> it's sort of a definition of success. look at the video game company. >> they are saying look, you used the tricks that everyone knows about human behavior to get us hooked. that may not carry much weight, but what's interesting is the actual bowl case for a facebook or a google from investors is exactly this which basically -- >> that it is a basically -- >> yeah. >> and then they create their own content, it's just magical system of creating value -- >> what changes that >> very good question, i think it ends up coming back to an awareness thing and a balance thing and making sure that these platforms are open to other views. it's not easily engineered >> i agree, we'll see how much more of achallenge for those companies companies in 2018. news alert on the president, what's happen kpg. >> president trump remains in

florida until after the new year, but he just made a visit to a west palm beach fire department while he was there, he took credit for a more prolific legislative record than has been advertised so far and also took credit for the record performance of the stock market take a listen. >> we have the all-time record for stopping ridiculous regulations and we're proud of that that's one of the reasons the stock market is up, you know, at a record level it's a record level. we broke 84 times this year. the stock market hit a new high, 84 times since we won the election on november 8th of last year so that's something we can all be proud of. >> now the president went on to say that record stock market levels are something that not just the wealthy, but also average people because they're 401k and other retirement programs are invested in that they can take a lot of credit for that hasn't helped poll rate sogs far, republicans are hoping the combination of factors like the

stock market as well as the tax cut just passed in the change of the withholding tables may improve some of those difficult poll numbers as we get toward november 2018, guys. >> john, thank you mike, it's true as we said, you live by the sword, you die by the sword. markets become something you can point to when they're doing well by the way, i also wonder what proportion of those firefighters are invested, even indirectly. >> that's the issue, yeah. there is that case, gary kohn made that case, firefighters have a pension and they're participating, but the thing about is pension is they owe it to you off defined benefit. if the stock market triples, your pension benefits don't go up if you're in a pension plan traditionally, it doesn't matter all presidents take credit for things that were lucky and i do think that makes sense. it is telling that he feels the need to keep repeating it because it's one of the very few kind of third party objective signals that things are going well. >> that's true financials meanwhile have been one of the better

performing sectors this year our next guest thinking that strength will continue into 2018 thanks to washington's policies. he's going to lay out his case in just a moment plus people are learning thousand code everywhere, including in prison. we're going to look at how inmates from one california prison are learning to code and landing jobs after they're released, coming up. ♪ with expedia, you can book a flight, then add a hotel, and save. ♪ everything you need to go. expedia

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how about financials up 20% in 2017? willford frost has a look at what he thinks 2018 could hold for the banks. >> reporter: big tail winds for banks in 2018 and a few risks to watch out for too. first, deregulation. investors are excited about deregulation actually arriving now that key positions are filled, including jerome powell as fed chair, randy kwaurls of position and occ controller. the key things to watch for are changes to bigger capital returns. changes to volka health and training revenues and overall reductions in regulatory expenses second, rates. expect interest rates hikes to continue to help much of the recent focus has been on the flattening of the shape of the yield though which isn't ideal for banks long term.

there remains a positive earning impact for every rate hike that we see terms of risks, keep an eye on deposit meters, ie the rate at which banks committee more as rate goes up and also, credit quality while still low by historical standards, it has shown signs of rising recently. especially in the subprime consumer spice final thought, tax reform. bank share prices may have risen sharply on tax reform given that they pay a high disproportionate rate of tax. >> nicely done we are joined here at post nine for follow-up. i think the credit quality issue is an interesting one. it's the one thing that as all the fundamentals look great, it's like, then why, why are the charge off numbers rising? why is this personal savings rate down to 2.9%. >> exactly right that's why i brought it up in

there, it's the one red flag we're looking for. that said all of the bank ceos would say, we are record, record lows it's something to watch. i think the corner's been turned on it, we're still right down at the bottom of that level i think we'll see banks taking more risks on their lending. >> i wonder if there's any room for investors to be pleasantly surprised on the front whether it's return of capital and shareholder. other fronts where everyone has baked it in at least psychologically. >> i think bank of america, the start of the month increased significantly. that was sort of based on the sale of one of their smaller assets, but absolutely as we look forward to that in terms if stress tests rules get relaxed further, can more capital be released the other thing on that, particularly for the likes of bank of america who are returning capital, could they start to pate dividends instead of shared buybacks as prices rise, they become less attractive this could become a yielding sector again, then it becomes more attractive. rather than just being

attractive at the moment, it's been a racy reason to buy. >> how important and so forth. firstly the rate hikes, we shouldn't overlook that. rates are going up that you believely puts pressure on valuations this is a sector that's still got an average below the s&p median and will benefit as rates go up, which would otherwise per other sectors. that's very important. and yes, the yield curve isn't as steep, but shorter term hikes help i think moreover the hump in terms what have matters to banks. mostly the chair and fed vice chair and the initial turns we've heard from them are encouraging in terms of deregulation, and add that to the fact that europe comes into play on the third of january next week and u.s. banks again looking like they're very well placed for 2018. versus regulation still coming into effect in europe, in the opposite direction >> thank you very much let's see if the next guest agrees ed mills joins us, it's managing

director and washington policy analyst at raymond james ed, what would your main concerns be since we have talked about a lot of positives >> well, no, i think will is absolutely right there are a lot of positives, one of the notes i wrote recently is how the policy stars are finally aligning here for financials we get tax reform done here, we get obama era regulators being finally replaced by trump regulators, and, you know, the one bill that is coming out of the senate in a bipartisan fashion in january is probably a bill to roll back dodd frank, and so, it's, you know, i'm a policy analyst, i've gone around depressing people the last eight years. there is regime change at these federal regulators in the benefit to the financials is kind of hardle to understate, plenty of concerns about tax rates getting competed away or the yield curve or credit quality, but i think that note can be written later what i'm focussed on now is kind

of a lot of these policy stars coming together to the benefit of the banks >> and that i guess the bill won't come due on anything in terms of unintended consequences probably in 20d 18, i'm wondering if things like cfpb becoming lenient about new products and essentially encouraging the old rules of banking which is craziest guys makes the rules. >> yeah, i think we have a lot of guardrails put into place based upon dodd frank. there are going to be changes to rules at the cfpb. i think one of the things for cfpb where things don't get completely out of control is what we saw with the director is that he didn't really care about statutes of limitation, and so, ultimately, there will be a new director by a future democratic president that could come back and look at some of the behavior and so, we'll get a huge loosening of some of the consumer credit rules by the new leadership of the cfpb, it kind of doesn't get kind of to an

irrational level because people will be concerned that there was a piper to be paid later on. >> speaking of tax reform, that will be a lot of the smaller banks as well, the benefit, simply because of the higher tax rate is there any other reason why you would benefit one size versus the other >> yeah, so in our research, at raymond james, we see that kind of because of tax reform on average, the banks we have under coverage go up 18% in earnings due to this tax bill alone, but as i talked about that senate bill, and some of these regulatory efforts, what we see is the regional and community banks are at the focus of one of these kind of legislative efforts, $250 billion and below get the greatest amount of relief there is relief at $10 billion asset level. so community banks, they pay the highest access now and they're going to get the most relief out of legislative and regulatory changes in the near term >> all right ed, good stuff as always thank you for joining us >> thank you ed mills of raymond james. breaking news on the story

we were talking about earlier on pre-paying your property taxes what is happening? >> kelly, the irs just issued new guidance for all of those people who've been lining up to try to pre-pay those property taxes. the irs saying that you can deduct your property taxes if they have been assessed and paid in 2017. that word assessed is critical here's what the irs is saying, a prepayment of anticipated real property taxes that have not been assessed prior to 2018 are not deductible in 2017 so if you haven't actually got than property tax bill, you can't prepay it and have it be deducted in 2017 how do you know? state or local law determines whether and when a property is assessed, and that's when the tax payer becomes liable for that bill, kelly the irs now issuing some guidance for those people trying to pay their property taxes up front. back over to you >> all right this is good, at least it's some guidance we were saying earlier today, it wasn't clear if you went ahead

and made the payments that you'd be -- the irs could say no, no, no, we're not going to allow this at all. now you have a conundrum, westchester for example has some of the highest property tax rates in the country, said sorry, we just can't get this done in time there's two or three days or a year >> just a couple years they had to nut together and they're not equipped it could be to somebody's advantage even if you can't deduct it for 2017 purposes, i suppose. >> to prepay it. >> yeah. i'm trying to think of how that might be my understanding is you didn't have to say it was going to be deductible immediately this year in order to do that. >> huh i'm wondering about the assessment piece of it as well you've had new york come out and issue, i think an emergency order to states and local government saying, try, i think the cuomo order was to try to do this, i don't know if it was or not, but if it wasn't, now he these to do this and christie was issuing the executive order about this as well, this is a very short turn around time to get these assessments out. >> and just from an economic perspective, you really do hope

that a fair number of people can deduct it for 2017 purposes, otherwise, you can anticipate in the first quarter of next year retailers coming out and saying well, we have a lot of people in the local areas who wrote a check for property taxes i guess arguably it's not affecting that many people in the grand scheme of things in terms of nationwide affect >> elon, any other detail that the irs is giving that the point? >> not very much they do have some e lust rative examples of what happens in different counties, but they're fairly complex and, you know, as you mentioned a lot of issue s that local governments are saying is processing the payments, much less assessing the properties if they haven't already 234 just the next few days unclear even though you have guidance how many people can take advantage of it >> yeah, boy, gets more and more interesting. elon, thank you very much. there is a tech incubator in one of the last places you'd expect it's a maximum security prison up next, we'll follow an inmate

from convict to coder and see what's happened to him since his release. coming up on fast money, massachusetts secretary of state issued a warning on bitcoin, why he feels crypto currency is a danger to investors. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments

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success he's found on the outside. >> reporter: can i ask what your number is? >> t-31014 >> reporter: he's a convicted murderer who spent years in prison >> gentlemen, grab your stuff. >> reporter: a few weeks later, chris should yumacker left san n prison >> the code i wrote will work on any device >> reporter: even he can hardly believe it >> i mean, like this, right? my mind is blown >> reporter: the story of how a felon learned to code inside a state prison where there is no internet and then got hired by the website fandom once he was freed is nothing short of a miracle, the sort of miracle regularly coming out of a program called the last mile the founders teach willing, qualified inmates coding skills on a fake server so that when

they leave prison, they can be productive members of society. where do you see yourself in two years, five years, ten years >> oh, my gosh that's a really hard question. you know, i see myself on the this side of the wall, being a family man being somebody that cares, really, about life and people and somebody that's has a strong mind and a strong character. >> reporter: he hopes to live by a new code jane wells, cnbc business news, san francisco. >> chris was initially hired as an intern at fandom and the company says he's accepted a full-time position as a software engineer which he'll begin next week

do you think his co-workers will have any qualms about this >> i would doubt it, in a situation where you're talking about a job that you have to demonstrate your aptitude for, you have to demonstrate your suitability for it in this kind of an economy where you actually have shortages of people who can do the job, and also of course you want to try new things, educating people who are incarcerated >> when you're stuck in prison, you have hours to fill, and this is one of those repetitive learning kind of things. >> there's tremendous frustration among many people that rehabilitative training has not been at the forefront of the prisons. >> we wish him all the best. a great report by jane wells meso emerging markets across the globe are doing well, is it too late to put your money in? that's next. [lance] monica, it is absolute chaos out here!

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it has been a record breaking year for stocks the dow has posted 70 record closes, 62 for the s&p the s&p is up 20% for the year there's other markets which have done even better argentina's index, up 73%. nigeria and turkey have posted gains of 43% the u.s. stock market has grown by $4.4 trillion the value of global companies on stock markets have grown by $12.4 trillion this year i am not a big fan of this whole, oh, yeah, if you had only picked argentina >> that's not the way to think about it >> no. >> there's always going to be countries on kind of the whip end. most of them have been very depressed before they have one of these slingshot moves or the national currency took a huge hit. >> yes half the time it negates the entire -- that's always a fun part of the last page of "the economist. when you compare it with u.s. dollars, it's a wash >> exactly

the all country world index, if you bought that as a dollar-based investor, it's been a pretty consistent run. but you don't want to look at the best performers as a guide >> it's not consistent over time michael, we have to go that does it for "closing bell." "fast monefas"fast money" start. now. live from the nasdaq market site overlooking new york city's times square i'm melissa lee. tonight on "fast," the state of massachusetts issuing a major warning for bitcoin, telling investors the rally could end in disaster secretary of the commonwealth william galvin, the man behind the bitcoin warning, will be here plus it's been a record breaking year for the markets. if you're worried things could slow down come 2018, don't worry. one of the biggest bulls on wall street has his eye on one sector in