>> sorry, i don't speak -- >> you are the son of mathis >> thank you for watching power lunch. welcome to power lunch ironically the lights have gone out. >> we're trying to get a sense of how big this problem is is it just affect the convention center or is it larger we're going to try to find out >> meantime, canada is saying it's more and more convinced the u.s. will pull out of nafta, we

have stocks moving on that that will bring you up to date >> and we aredebating whether big change in interest rates is about to affect the stock market we've seen rumblings of and we'll get to that important story coming up, but we begin with breaking news, a report that canada is increasingly convinced that president trump will pull out of the north american free trade agreement. don chu joins us now with more on how that could affect the market. >> that tracks some of the biggest companies in canada and in mexico. the biggest companies in canada. you can see that's pretty good

stock down about one and a quarter percent. on the chart just when those headlines came out with regard to whether or not canada thinks that the u.s. is going to withdraw from nafta. that move there exacerbated by those headlines. also the ishares mexico capped etf, this is another one that tracks the biggest mexican companies. same kind of situation that chart on the right hand side, right when the headlines came out, a sharp move lower we can call your attention to the other stocks we've been seeing with regard to moves. general motors on the auto manufacturing side we have a lot of business cross border between the u.s., canada, and mexico also kansas city southern, a railroad company that does a good amount of business with regards of the mexico side of the border as well also constellation brands. known for among other things, corona beers and modello beers, those moved as well. we're going to continue to watch this story as things develop some of the companies right now that we can at least see the market impact of the headlines twroord whether the u.s.

actually does contemplate leaving nafta, guys. >> try to figure out what may be priced in and how likely the outcomes are thank you for now. let's get more from kayla who is in washington, we'll see what they are saying about this report, kayla. >> hey kelly, earlier this week, the secretary of agriculture said a completion and improvement of nafta negotiations remain a top priority. u.s. trade officials have put forth so far is called poison pill and nonstarters by canada and mexico which are each determined to show they are willing to keep talking and it's the u.s. that's being difficult.

just this week, president trump said canada and mexico are making too much money from the current deal and that makes negotiations difficult the next round of talks starts january 23rd and a lot can happen between now and then. there are still several trade deadlines that will happen notably, commerce department recommendations are due on whether to raise tariffs on steel and alum numb produced by enterprises. that investigation was commissioned in april and has been a source of friction amid varying voou ining viewpoints i house. strong action from the president, but if too strong could be met with retaliation from china and russia. the report on the steel industry is due next monday the alum numb report is due the following week, kelly, and the president has 90 days from then to decide whether in fact he'll go through with the tariffs. there's a lot moving on the trade front this month >> hosting the prime minister

norway, there at the white house, and they're going to hold a joint news conference. i would imagine this this question will come up during that news conference in the meantime, breaking news on toyota. phil will have details, phil >> this is confirmation what have we first reported yesterday afternoon, toyota and mazda will be announcing they are building a joint final assembly plant in huntsville, alabama. we are an interview with tim lenz we'll talk to him about this and talk to him about the reports regarding nafta and canada and guys, why is that important regarding toyota the number one vehicle manufactur manufacturer, exporter from canada to the united states in 2016, toyota, more than a half million vehicles we'll be following this over the

next hour, guys, back to you >> i was thinking about impact on huntsville, alabama too >> this is reported, phil, they were going to win this, i imagine it will have a big impact on the community. >> very big impact, and remember, they are an engine plant down there, that's right in the heart of auto alley and so it's going to be a huge benefit for that economy down there and not a surprise that alabama gets it's fifth final assembly plan. >> wow >> or fourth, i should say >> thanks, phil. >> that's still a lot. now let's turn to this big surprise at the consumer electronics show in las vegas where moments ago, the power went out so apparently our camera guy is on battery power julia boraston has the latest. what do we know? anything at this point >> reporter: well bill, i'm here in the central hub of the las vegas convention center and it was more than a moment ago, it was about 45 minutes ago that the power went out here in the central hall, also in the south

hall of the convention center. we hear that the lights flickered in the north hall, but they stayed on we have a battery-powered light. we're going to turn it off and you're going to see just how dark it is in here there's a little bit of natural light from the windows to the parking lot, but otherwise, the power is entirely out. all of the big booths in here, this pan sonic booth, they all have booths in the central hall. and it's dark. so there are about 170,000 people that were expected to attend ces this year, the center of ces is of course here at the convention center. there are about 4,000 different companies presenting, and for 45 minutes, more than 45 minutes almost an hour, it's been dark so the consumer technology association says that they are looking into this, they're trying to figure out what the source is of this convention center outage. to say that this is a disruptive would be a massive understatement i've been coming to ces for

about ten years, never seen anything like this before. and when the lights first went out, there were a lot of people in the hall. this is sort of prime time for the convention center. they really started moving outside and it's much quieter right now, but we're just waiting to see when the lights are going to come back on. you can imagine meetings, disrupted and also just think about how much money is invested to put up these booths every year all that money for now is not being put to use so, certainly something we're going to keep on watching, but you can imagine that, the las vegas convention center, one of the biggest convention centers in the world is trying to figure out what to do and one other thing i note, yesterday, it was pouring rain here in las vegas when we came here yesterday morning, it was raining inside the convention center. there seemed to be big cracks in the ceiling as water streamed down it. it even shorted out some of the electronics, part of the google booth was partially shut down for a bit as they got those electronic devices up and running. not a good look for the consumer electronics show to be here in the convention center with no

electricity, guys. >> it's hard to overstate exactly how many people are there. it is by far the biggest convention they get all year in vegas. do you know is it isolated to the convention center? are other parts out as well, do you know >> reporter: it's really the fault of the convention center rarnt cea compromise runs the show it does sound like the lights are on in the north hall which is one of the three halls, the central hall is the biggest, with the biggest companies presenting here. like sony and qualcomm, et cetera, but it's also, you know, there are a lot of meetings that are going on over at the hotel at the strip nothing going on inside this hall that should be. so all of the big tvs, all the

big fancy devices that are being showcased here, they're dark right now. >> i wonder if that water you mentioned had anything to do with it. how much longer are your cameras going to be able to run, julia they've got to get this thing back on. >> reporter: i don't know, we have a great crew that's used to be operating out on the field. they can get the lights and camera up and running. our satellite truck isn't working right now. we are only reaching you because we have these live view ways of getting up, getting our signal up so we'll see what happens. i'm surprised they haven't been able to fix it yet and it's been almost an hour now. >> crazy keep us updated. thank you, julia president trump is walking out, i guess with the norwegian prime minister at the white house nor joint news conference in the east room let's listen in. >> it's been a pleasure to host you today. some very interesting discussions. as we strengthen the wonderful friendship between our two

countries. they are so much in common we're nations made up of strong pioneering and adventures people to say the least such as eric, brave, treacherous, courageous missions of exploration, century's later during the second world war, brave noor we januarys fought alongside of americans and the allies including on the beaches of normandy in 1944.

>> i want to thank the prime minister and the norwegian people and to meet 29% of gdp defense spending obligation so that together we can confront the full range of threats facing our nations and i believe norway will get there quite soon. norway is also a vital and

valued member of the campaign to defeat isis because of us, isis has now lost almost 100% of the territory of previously held not so long ago in iraq and syria. we're grateful for the assistant efforts and generous humanitarian aid to the region they've been out there and really doing an incredible job i'm also pleased to share that the economic ties between our two countries are robust and growing. the united states currently has a trade surplus, which is shocking, can you believe i'm saying we have a surplus there aren't too many, you're going to have to go back and check your people, but we're getting more and more surpluses all over the world i will say that. i told that to the prime minister but our two countries are robust and growing. the united states currently has

a large contingent of products that we sell and back and forth with norway and one of the big products, of course, is our military equipment i want to thank the people of norway for their commitment to fair and resip ri call trade a word you're going hear more and more coming from this administration and it should have come from other administrations before me. rerip ra kl trade which benefits us all in november we delivered the first fighter jets, we have a total of 52, and they've delivered a number of them already. a little ahead of schedule it's a $10 billion order

in american businesses supporting hundreds of thousands of american jobs they're very big investors in our stock market, and therefore the prime minister thanked me very much. their market is -- you have done very well with your investments in the united states mutually beneficial commerce is a model for other nations and it really is. it's an amazing country. i look forward to forging an even stronger economic relationship between the united states and norway growing this record of success with even more investment and more jobs and more job creation. we're also proud of our increasing cooperation on health and health security, and also on biodefense, very important to both countries. i commend the prime minister's efforts to promote vaccine development and disease prevention together we can save and improve many, many lives

we're working very hard and in some cases together on cures to many ailments. prime minister, i wanted to thank you again for joining us at the white house for decades, norwegians and americans have stood side by side against common threats to our freedom, our security, and to our values. together we have fought against fashionism, communism, and terrorism and we face threats, always together, we're partners. our partnership has advanced peace, cooperation, and respect for human dignity all around the world. today we remain united in our efforts to confront shared challenges to seize new opportunities and to build a bright and beautiful future for our countries, our people, our children, and i think we're doing very well working together and we have a newfound friendship so i want to thank you and god bless you.

thank you very much. >> thank you, mr. president, and thank you for your generous welcome. it's a great honor to be here at the white house. the relationship between our two countries is strong and it has very deep roots. there are millions of u.s. citizens who probably call themselves norwegian americans. how we can grow our economies, how we can further the cooperation in areas of mutual

interests. and i have assured president trump that norway remains an ally and a friend that you can count on in the future we are already number two in nato after the u.s. in terms of defense spending per capita, and we are making significant investments to further strengthen our defense and this includes as the president said, some big buys from american industry mary time control, aircraft from lockheed martin, largest single public investment ever in norway but also we are buying submarines and investments in intelligence capabilities and army assets and -- which is important also for our job in the northern part. the american economy is doing well and our economic relations are flourishing. and that's to the benefit of both countries as we discussed in our meeting for small country like norway, it's important for our ability to trade and to we have fair

trade and that we have multilateral trade systems also. and we think it's important to our future norwegian investments and companies support close to half a million jobs in the united states and through our government pension funds, substantial revenues from our oil sectors are being invested in u.s. assets the u.s. has an impressive business community and i have commanded a leading role that is playing also in the transformation to agree an economy. and norway's combatting climate change, it's an important issue for us and we are committed to the paris agreement, but at least businesses and at least to american businesses also selling costs in norway. at the same time, the green economy is in an area where we

see tremendous economic and business opportunities in the future and finally, i think it's important to say that we also are discussing some of the big difficult issues, for example, the development in afghanistan where i think and hope that we can find the future. it's important that we are all working together to find a solutions both in north korea, afghanistan, syria, and iraq and since september 11, 2001, norway has contributed to a range of mission and operations including the fight against isis and i have assured the president that we will remain unwavering in our commitment to the fight against terrorism all over the world. so mr. president, i am looking forward to future cooperation and thank you for meeting. thank you. >> okay. some questions, how about sarah westwood hello, sarah sarah. thank you.

washington examiner. >> yes, thank you, mr. president. yesterday in a meeting with lawmakers, you said that you would be open to signing just about any immigration deal that that bipartisan group of lawmakers sent to you. would you be willing to sign an immigration deal that ultimately does not include funding for the border wall or would that be a red line for you >> no. no no it's got to include the wall we need the wall for security. we need the wall for safety. we need the wall for stopping the drugs from pouring in. i would imagine that the people in the room both democrat and republican, i really believe they're going to come up with a solution to the daca problem and maybe beyond that immigration as a whole, but any solution has to include the wall because without the wall, it all doesn't work. you could look at other instances, look at what happened in israel. they put up the wall, it solved the very major problem we need the wall we have to have the wall for security purposes. security is number one

and so the answer is, have to have the wall. thank you. and, please. >> can i call on the norwegian broadcasting >> mr. president, prime minister, recently an american general, robert nuler told his marines based in norway there's a war coming the biggest fight. mr. president, how imminent is that big war and where will it take place >> when you say the big war, you're saying what say it -- >> it was an american general, robert nallor, he said there is a war coming a big ass fight. when will that war come? >> well maybe he knows something that i don't know, okay. >> there is no war coming? >> we have a very, very powerful

military we're getting more powerful by the month, by the day, we're ordering a lot of the equipment that you're ordering we're ordering it. but in larger amounts to put it mildly we are building up our military to a point that we've never been before we were also very much weakened over the last long period of time, but not with me. no, i don't expect that. i think we're going to have -- because of strength, peace through strength i think we're going to have a long period of peace i hope we do we have certainly problems with north korea, but a lot of good talks are going on right now a lot of good energy i see a lot of good energy i like it very much what i'm seeing i just spoke this morning with the, as you know, with the president, president moon of south korea, he had some really great meetings, his reptdi representatives had a great, great meeting and i had good feedback from it hopefully good things are going to work out. no, i think that we will have peace through strength

our military will be stronger than it ever was in a very short period of time and that's my opinion. that's not the general's opinion, but i think my opinion counts more right now. thank you. >> he said this morning that the quote, the world is laughing at our stupidity. so my question is to you are you laughing at the russia investigation? >> i think, i think that it's up to every political system in countries to scrutinize and discuss their own political agenda in their countries. and i respect that very much and that this is an issue for

american politics. i just like to say that it has impacted also in europe, i think all european countries who have had elections this year has been looking into will there be -- we concluded that we could not find any proof of any impact to put any emphasis on that from countries outside, outside norway i think it was very norwegian election with an norwegian participants >> i will say this, there is collusion, but it's really with the democrats and the russians far more than it is with the republicans and the russians so the witchhunt continues john, go ahead >> if i could address the president first. sarah brought up the russia investigation, your legal team, sources have told us, believes that in the next few weeks, the

special counsel robert mueller will ask for some sort of interview with you, your legal team believes is part of wrapping up his investigation. are you open to meeting with him? would you be willing to meet with him without condition or would you demand that a strict set of parameters be placed around any encounter between you and the mueller? >> there has been no collusion between the trump campaign and russians or trump and russians no collusion when i watch you interviewing all the people leaving their committees, i mean, the democrats are all running for office and they're trying to say this, but bottom line, they all say there's no collusion and there is no collusion. and when you talk about interviews, hillary clinton had an interview where she wasn't sworn in, she wasn't given the oath, they didn't take notes, they didn't record, and it was done on the fourth of july weekend. that's perhaps ridiculous, and a lot of people looked upon that

as being a very serious breach and it really was. but again, i'll speak to attorneys, i can only say this, there was absolutely no collusion, everybody knows it, every committee -- i've been in office now for 11 months for 11 months, they've had this phony cloud over this administration, over our government, and it has hurt our government, it does hurt our government it's a democrat hoax that was brought up as an excuse for losing an election that frankly the democrats should have won because they have such a tremendous advantage in the electoral college. so it was brought up for that reason but it has been determined that there is no collusion and by virtually everybody, so we'll see what happens >> would you be open -- >> we'll see what happens. certainly i'll see what happens. but when they have no collusion and nobody's found any collusion, at any level, it seems unlikely that you'd even have an interview. >> and madame prime minister, norway shares a small, but strategic border with russia,

president trump's position has been it's better to try to work with vladimir putin, if possible, than to work against him. where do you come down on that idea better to work with putin than to not work with putin. >> well i think russian is an important player in the international world. and i don't think you cannot not work with and talk to, on the other hand it's important to say we have a line with all the sanctionsed a the european union has done and as a member both connected in nato and interconnected and we have suffered some economic difficulties in some areas and based on those sanctions but, on the other hand, we have a very good relationship with russia over that border area where we do have very much free movement of people, especially people moving to and from.

>> it should have never been my problem. this should have been a problem softed many years ago when it was much less dangerous, but it was given to me along with a big mess of other things but i will say this, i am for massive oil and gas and everything else and a lot of energy putin can't love that. i am the strongest military that

the united states ever had, putin can't love that. but hillary was not for a strong military and hillary, my opponent, was for windmills.

>> norway supports the paris agreement and have expressed regret that you have decided to leave it what could persuade you to remain and what kind of common ground did you find in your talks today on this topic? >> well, it wasn't a major topic, i must tell you we talked about other things, including mostly trade, but i will say that the paris agreement as drawn and as we signed was very unfair to the united states. it put great penalties on us it made it very difficult for us to deal in terms of business, it took away a lot of our asset values, we are a country rich in gas and coal and oil and lots of other things and there was a tremendous penalty for using it it hurt our businesses, according to some estimates, we would have had closed businesses in order to qualify by 2025 whereas as an example, china, by 2030, they don't kick in until

2030 russia, some place in the mid1990s, that was their standard, and that was never a good standard because that was a dirty standard for the environment. it treated the united states very unfairly, and frankly, it's an agreement that i have no problem with, but i had a problem with the agreement that they signed because as usual, they made a bad deal so we could conceivably go back in, but i say this, we are very strong on the environment. i feel very strongly about the environment. our epa and our epa commissioners are very, very powerful in the sense that they want to have clean water, clean air, but we also want businesses that can compete, and the paris accord really would have taken away our competitive edge. and we're not going to let that happen i'm not going to let it happen

>> to reach our paris targets, that means that we have very strong policies for environmental friendly and climate friendly technologies and which is a small part of why the united states has a surplus in the economy with good environmental balance. >> great assets of norway is a thing called water and they have tremendous hydropower, tremendous, in fact, most of your energy or your electricity is produced by hydro. it's a great asset that you have thank you very much. great honor. thank you. >> talk trade issues, yes, but also, the understanding was that they were going to be discussing

climate change and the paris accord, but as you heard, maybe that was de-emphasized -- >> he said it was not a major topic. president trump just said the paris talks, he said, it was mostly trade, which i thought was very interesting and both of them emphasized right from the start some of the big defense deals intelligence deals even that norway has done with the u.s. questions about military deterrence came up a number of times with regard to russia or otherwise. there's the dow down along with other major averages again, that's one area defense and trade where they probably had a lot more common ground than if they had gotten into the paris agreements today >> eamon is at the white house he was in the east room there, in fact, you still are only two questions so they didn't get to nafta and the possibility that maybe the president will pull out of that as has been reported here and take an toll on the stock market, but the interest was more on the relationship with russia, eamon. >> that's right, bill, you heard the prime minister there at the end, also making a subtle point to the president of the united

states about the business opportunities in clean energy. you heard the president say he's for gas, he's for oil, he turned around a little bit there at the end and said he's also for hydro and admires what they have done on that, but the norwegian prime minister making the case for clean energy in business terms to this businessman president. you also heard the president there being asked about robert mueller and whether he would sit for an interview with the special counsel, the president really didn't answer that question at all. he said that he reverted back to some of his earlier talking points on the russia investigation saying it's a democratic hoax, saying that there was no collusion, saying that even the democrats haven't been able to make the case that there was collusion between trump, the trump campaign, and russia the president clearly didn't like that question, didn't want to tans, didn't want to pin himself down on whether or not he would have an interview with robert mueller and what the terms of that interview would be, but he also highlighted the fact that he's very much aware of the terms under which hillary clinton sat down for an interview with fbi agents during last year's, or during the 2016

campaigns interview between hillary clinton and the fbi. the president saying that happened over the fourth of july weekend. there were no notes taken, that it was not recorded. those might be some terms that the president might like for himself if he were to sit with the special counsel robert mueller. by all accounts would be unlikely that he could get those terms, but apparently those negotiations are going on behind the scenes right now and we'll see whether it leads to a showdown between robert mueller and president trump. he really did not want to be pinned down on whether that's likely to happen here today in the east room, bill. >> yeah. eamon, thank you >> and we should also mention by the way, the norwegian prime minister talked about tesla and how that's one of their biggest imports in norway, of course, with all the emphasis they put on electric vehicles it's true, i think tesla might be the second or third biggest market just even in sheer numbers >> alternative energy is big over there 24 minutes to go into the close. quick check of the markets, everybody still a little bit lower today. remember the s&p is coming off

of six in a row record closes to start off the year could break that with a four and a half point decline here. >> are we feuding or something >> i'm leaning to make up the difference up next, some of the nation's most successful investors have very different takes on whether the market rally can contue, inhow details when kelly and i come back wall street guy. ally a what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

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and we're calling it db. >> mount cashmore. i love that. >> let's start with bill gross on power lunch, just in the last couple of hours, about how u.s. bonds are entering a bear market listen >> it's not a strong columbian bear market. it's a decaffeinated bear market where yields on the tenure probably rise by 10, 20, 30 basis points for the year. but nonetheless, it means that yields are probably moving higher as opposed to lower which they have been for the bulk of the 25 year period that you cite >> that's bill gross on the end

of the bond bull market. now warren buffett, this morning on sidewalk box talking about market valuations. >> what has happened is sensible nobody thought we'd have these kinds of interest rates for a long time. additionally you have the tax act which is a huge factor in valuation. >> then there's -- that's the teddy roosevelt spot, isn't it jeff gunlock, in a webcast yesterday saying the s&p, quote, may go up 15% of the first part of the year, but i believe, of course according to gunlock, i believe when it falls, it will wipe out the entire game for the first part of the year with a negative sign in front of it >> yeah, i feel like he's sort of the odd one out here. but here is bill miller on the program yesterday, commenting on a potential market melt up, listen >> i think that's still to come. if we're going to get it and it'll be driven, if we get it by we mentioned i think earlier about ten year yields. those ten year yields go through

260 and head towards three i think we could have the kind of melt up we had in 2013, but the market was up, you know, 30%. >> all right well let's kick this around now with our closing bell exchange for this wednesday with us, jay jacobs from global x funds, new york stock exchange trader steve grasso who is sitting precariously close to me here at post nine, he's with stewart frankel and rick santelli. rick, i'm starting with you, you were saying yesterday how you felt a tremendous resistance would be at 263 for the ten year we had 260 today, and there are plenty of people who feel that's the pivoted point right now. where do you see us going here >> you know, you remember, bill, when we traded between like 230 and 245 for a long spell, i believe that 263 is form mittable resistance, but i think that zone is going to be played out with a lot of trading. many believe that we're going to see 3% or higher i don't necessarily disagree i think bill has it right, i

think it's the path. it's how we get there, it's not going to be nearly as intense. that doesn't mean we can't see a jump in rates. i just don't think it sticks so if somebody asks me what's the high yield i could see this year, i'd say 303, but i don't think it's going to close there. i think we're going to get a high yield to back away. i think the 250 to 263 area is going to be traded quite a lot, and i hugely agree with warren buffett, taxes are huge. you know, it's the calibration it's how we are evaluating the stock value and the future, and as far as mr. gundlach, i disagree there are going to be times where stocks aren't going to behave as well as they have, that's only logical. i don't think we're going to end with negative equity >> you know, steve, the one interesting difference between what warren buffett and bill miller were saying with, both see stocks potentially going higher, warren buffett was saying you can justify valuations because interest

rates are so low bill miller told us he thinks it'll happen in the market if interest rates move up i can lose money just like they realized in 2013 that's splitting hairs a little bit, but how do you think the market is taking this latest move higher in the ten year? >> the basis point rally in yields, that's not enough to take the focus off of equities rick just said it, he could see it at 301, that is still not enough to take it away from equities you have to look at from the historic point of view this is not nearly enough to kill this bull run that we've had, you have to look at tax reform as rick just mentioned. you have to look at infrastructure those are huge tail winds to this economy, judge tail winds to the equity market, the market, path of least resistance, still much higher. >> jay jacobs, you know, i guess a question that people are

asking around here is how high does the yield go to start crimping the stock market and affecting it do you have a number in mind at this point >> honestly if you look how low the treasury has been and how low it is. i don't see it going high enough for equity market returns. frankly, if bond yields started to rise, i think it would make them even that much more attractive as people try to load out of bonds for better returns. i don't think it would be until the floor hand that will you'd see people worried about bond yields in terms of reducing lending and starting to crimp the economic growth. >> but jay, i wonder, and again this is kind of a psychological point. is it so much about what the level of that interest rate is, simply the fact that people will lose money on their fixed income holdings if that happens >> no, i think that's exactly it people will look at their accounts, people historically have done so well at bonds over the last 30 years, and right now if they're holding fixed income,

they're getting very little yield. there's very little upside to hold on. if interest rates rise, i think people could bail and look at equities if you look at the side of the equation, volatility is low that stocks aren't behaving like stocks right now it's half way between where stocks normally are and bonds. i think people see them more and more as a replacement. >> all right gentlemen, thank you for your patience and your insights on today's market action. jay jacobs, steve grasso, and rick santelli. we have more information now on nafta kayla toush, still in washington, what can you tell campus. >> well bill, i just got off the phone with a canadian official who had this clarification for the reuters headlines that moved the market earlier this afternoon. this official said while canada believe there is an increasing chance that the u.s. will withdraw from nafta, there's no new information that the country has that convinces it that that withdrawal would happen soon or that it is anymore convinced than it was previously that

withdrawal is an outcome that president trump is weighing or has weighed in the past. now, this new round starts january 23rd, it's going to be held in montreal, and this official says that the potential for withdrawal still remains, but that there is no new information that canada has. it has not been notified that there is going to be a withdrawal, but it has always been prepared for and concerned about a potential withdrawal so a quick clarification on that major headline it moved the market earlier, bill >> which if what you're saying, kayla, gives us that context we shouldn't see as big market moves potentially. >> let's see if it comes back here >> yeah. right. >> i think some interpreted the headline to mean that canada had potentially been notified by the white house or the office of the u.s. trade representative that the white house intended to pull out of nafta and would do so before this next round there is no new information that convinces it that withdrawal is

anymore likely than they have previously believed. >> all right kayla, thank you very much >> thanks, kayla >> kayla toush with 12 minutes to go. and markets still sitting lower, of course we'll hone in on kansas city, gm, constellation brands >> went lower. >> that's true >> the u.s. dollar by the way still down about a quarter point today. coming up we'll get the outlook for defense stocks under president trump when we're joined by the chairman and ceo of l 3 technologies. stay with us let's get started. show of hands. who wants customizable options chains? ones that make it fast and easy to analyze and take action?

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welcome back financials leading the s&p again today. we saw this yesterday, as interest rates started to rise they continue to do so now and the big banks are gearing up to report quarterly results. so investors are looking for clarity on how much the tax bill will earn earnings and guidance among other issues

>> black rock, jpmorgan, wells fargo and pnc due to report earnings before the bell so those are up double digits in the past year with black rock leading the pack up 40%. and all four names have seen gains of around 3% or more just to start this year >> wow despite strong absolute performance, bank ceos has been on the post for many years could 2018 be a year of change at the top of the nation's biggest banks? we have a look at if changes are coming >> that's right. in fact the median tenure of the sixth major bank drrks ohs is higher than for the s&p 500. eight years versus four years. so double, but, jamie diamond and lloyd finds tenure really stands out, 12 in 11 and a half years. let's look into their possible successes if they were to go if they decided to leave today,

his most likely successor would be the current head of the retail bank gordon smith in that instance, daniel pinto, the head of the investment bank would keep control too and passed at 55, pinto's chances to take over improve, and others also come into play asset management head corporate head doug and cfo mary-ann lake. of this younger group, lake is the front runner large lit because of the breath of her current role. if any candidates did see their role change and gaining broader exposure in a different department, it would be a major bode of confidence if that transition happens soon, hard to see anyone else other than the ceos. cohead of securities with his trading background stands a good chance to become deputy to

either schwartz. and the head of investment management eric lainer, all reasonable long shots, but the bottom line for both diamond and black find they stand apart from the rest of the other ceos. here's total return of all five investment banks since black fine first took over which is the first date that both were in the positions because of this outstanding performance, they, and they alone will decide when it's time to go. goldman sachs, jpmorgan to clear out formers, guys. >> you know, it shows how much things have stabilized, a lot, even a guy like brian moynihan was under tremendous pressure going back five or eight years now is loded for what has happened the question becomes, what is the next catalyst for the big banks, period? i mean, is it going to be technology do they have to look towards that sort of -- >> fin tech. >> to lead them through the next phase of where we're headed. >> i think they're already

investing heavily in that. and it's an interesting area which hasn't in fact pushed into the banking space in a way that every other industry, whether it's retail or anything else that they've been hit by fin tech here the banks will bring it in themselves, maybe you'd say some payment systems has gone, but online lending hasn't really threatened the core banks. you mentioned, brian moynihan, let me just swrich and look at recent performance, for that as a gauge, i use performance since the trump election victory which we've got coming for you there's all six banks really highlighting that massive outperformance of bank of america, up 72%, jp second 53, down in the bottom in that recent spmpbs wells fargo. as we look ahead in the year, off little bit of pressure, tim sloan needs to of course show some performance, both share wise and earnings. as we said at the top, long-term tenure, stand alone. >> all right phil, thank you. very thorough. willford frost joining us from

hq we're coming back with the dow down 14 points, few minutes left in the trade. we have the closiing count down coming your way right after this let's begin.

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us there, the financials you look at the kbe, the bank etf, and you look at the trading there. >> as bond yields started moving up in the middle of the day, moved up and when bond yields moved down -- >> cue the ten year. >> we hit 260 today and now we're back at 255. >> at 1:00 was the ten year auction that was better than expected, rick santelli was quite exuberant about that and i was surprised. >> what sector would be hit hard, utilities and the dow utilities are down sharply today, but those transports continue higher. they were much higher earlier, they'd come off the highs. that's enough for a record close right there. >> the key is the two major airlines united american gave fairly decent guidance. they're now stronger, and remember, transports have been stronger early because the railroads are stronger >> ual was the best performing stock for much of the day in the s&p after that better guidance and jewelers on lower sales over

the holidays that's the big loser on the day. >> and remember, the interest rates all hit the bond yield started losing >> more on nafta maybe and what's going on with the bond market is the bull market over? that's coming up on the second hour of the closing bell with kelly evans and company. i'll see you tomorrow, kelly thank you, bill. welcome to the closing bell everybody, i'm kelly evans and the s&p 500 snapping it's six day win streak that started off the year today dropping about three points on the bell down to 2748 small declines for major averages no records today the nasdaq also breaking a six-day win streak there down to 7153, down about a tenth of 1%. look at the dow only down 15 on the bell well the russell has been underperforming continued that today, down just und under .1599. the bigger story, bigger mover was interest rates and we're

about to talk all about that joining me on the panel, we have senior markets commentator michael santulli here. alongside the global officer and bill snead checks in as well welcome one and all. the biggest winner in the dow today was general electric continuing it's streak once again. adding another 2% to just under 19 bucks a share the biggest loser was intel which has been plagued by the chip problems down 2.5%. over in the s&p, united, up over 6% today the biggest loser was cig in a jewelers, similar sized decline. michael, not huge move in the stock market today, much bigger question is what's been going on with interest rates, but just taking a step back, what do you think? >> apparently nick when it cams stocks, obviously the market was sort of twitchy because it was overboard going up seemed as if there was disturbance. bond market volatility that it was going to be the excuse for a pullback, clearly didn't really

materialize. we're going to have to wait for this trend to change for something to come along that really does sort of upend the basic view that it's risk on. >> were you getting worried at all mr. miner that we kept going up and that people were starting to get so focussed on this market >> i was, kelly. you know, i'm glad to see the market take a break. i'd like to see it take a breather here for a while because i think we have the potential to the upside of maybe another 20 or 30% this year, but it's going to make me uncomfortable if we just start moving in a pair bollic move straight up. >> yeah, it should make anyone uncomfortable. that's the big risk. we're going to come back to that bill, you always like to get specific, are you a buyer of g & e here speaking of value names it had a rip roaring start >> no, we're not primarily because there's so much interest in it. it's a little bit hard to analyze for us, it's not a

business that i would suggest that any of their individual industries that they're involved in are an expertise for us you know, historically, buying things at the bottom in the industrial sector is not the world's best way to finish up a bull market. >> okay. all right. fair point, let me ask you quickly about nafta, reuters report late in the session to push the nafta sensitive names lower like kansas city southern was down 3.5%. when you see selloffs like that, does make you want to buy or is there a real risk there that's a trade crackdown coming?

>> it has been quite a move. we to want check back in in vegas where the power went out a couple hours ago i don't know if it's been that long, julia, what's it like now? >> well, the lights just came on a couple minutes ago we slowly saw different lights across the hall here in the las vegas convention center turn on. there was a cheer among many of the people remaining kelly, it has really cleared out. this is the main hall in the convention center. 170 or 180,000 people expected here at ces. this should be packed right now. as you can see, it's really empty here behind me because everyone left, many people in the darker hallways

were evacuated when everything went dark. so, things are starting to move again. but a very weird, very weird day for ces and an incredibly, incredibly disrupted outage here at the convention center >> yeah, and it sounds like one that was limited to that convention center not more widespread do they know what caused it? >> yeah, we just heard that it was due to a transformer at the convention center that failed. the outage caused a power surge in the facility and isolated to the federal hall which is where i am as well as the south hall bridge meeting room.

everything was shut down for that 1:45. >> it was pretty traumatic good to see you again, julia thanks for the update. >> reporter: and one thing i would say, kelly >> yeah. >> reporter: kelly, intel did make light of it, they tweeted out, they said, introducing the blackout biggest thing to hit ces in 2018. definitely saw the big companies trying to make light of the issue, no pun intended >> hashtag there of course >> hashtag, yeah >> thank you out in las vegas for us turning back to the market discussion listen this morning a chairman and ceo warren buffett had to say he was on squawk box talking about why he thinks equities and not bonds are the best place for investors. listen >> except for a long time, but it was the place to be there's been no comparison to me it's just been absurd to see pension funds and those people and the early teens of

the century. saying we don't have 30 or 40% bonds. to make that as a voluntary choice in the last ten years against owning assets has struck me as absolutely foolish >> the thing he also said michael is you could look at bonds as they have a 2% yield or whatever as being valued at 50 x. >> 50 times earnings if you think that stocks were overvalued >> that's a little bit of apples and oranges thing there. that might be a little more comparable you don't get a lot of vol out of it on a return basis. >> to compare a price earnings

multiple to be equal between the multiple on a yield on a bond is a ludicrous concept. it was fantastic becky did a fantastic job, but the thing that i think did shine through was that equities still are chief. >> that was his point. i understand that people have different mandates and, you know, asset matchings, but, if that's been so true about equ y equiti equities if you're a pension fund or manager, have you been if anything, keeping that ratio constant or moving it lower while increasing or keeping steady returns about why does it make any sense to do that in this environment if what you're saying about stocks is true? >> to mike's point, bonds do provide a balanced in a portfolio, and there is to get kind of jargonish, there is a covariance here. bonds go up. pension funds have been trying

to hedge the volatility of their return >> i know, but they're supposed to be the long money they're not -- bill, go ahead. we have to move on. >> is makes profits valuable than before. strictly on that basis, that's where his opinions on stocks being much more attractive come second buffett will also -- >> quickly >> say something like that that sounds nice. and what he's trying to tell people, we could be starting a nasty bear market the next ten years in bonds and you don't to

want get in the way of it becau because. plans to build a assembly plant in huntsville, alabama, that plant is expected to employ roughly 4,000 workers and make 300,000 vehicles per year. phil joins us now with toyota north america's ceo jim lentz for more on this >> jim, thanks for joining us today from montgomery, alabama let me ask you why huntsville, why alabama, and did you and mazda look at any other locations in the deep south? >> yeah. actually phil, when we started this project, there were about 100 different sites in 22 states we did our evaluation, boiled it down, and huntsville was our overall first choice in our mind, it had the best site, it has the best work force, it's a great place to work and live and play and raise a family and it has a great environment from a business standpoint we feel very comfortable

partnering with mazda here as well as with state and local government >> jim, i'm not sure if it you've seen the reports today, but there are reports out of canada that it is increasingly looking to the canadians like the trump administration will eventually pull out of nafta i don't have to tell you that you guys import more than half million vehicles from your plants in canada into the united states, what kind of impact would of that if nafta is torn up in terms of the work you do in canada and the vehicles coming to the u.s. >> well, it's a problem not just for toyota, in north america, we are all global automakers. and for us to compete with the rest of the world in north america, i mean, there are three major sectors in had the world there's asia, there's europe, and there's north america, nafta is the glue that keeps that together that allows all of us here, not just toyota, but all of us to compete we hope that that doesn't happen, if it does, we'll have to figure out what we do, but we

hope that cooler heads prevail and that nafta remains and we continue to use north america as a strong base to manufacture not only here for our customers in north america, but also to export outside of north america. >> jim, what are your contingency plans if this ultimately happens six months, year, two years from now, and how much would it possiblily impact the price of your vehicles? this is a supply base that all of us have in north america is based on nafta and it's very, very difficult and it takes a long period of time so, my zbesz over the short run, price goes up to consumers and choice is reduced from consumers and there is also the risk that some makers may pull out of north america and move to other places to produce their cars like asia or europe. so, you know, we are firm

believers in free and fair trade, and nafta's a huge part of that for us >> jim, you've been to the white house, you've expressed these points of views to members of the trump administration, do they give you pushback what's the reaction when you've told them this and i know other executives have done the same thing. >> i think they know what we're saying and i understand their frustration level. they are looking at manufacturers that have moved businesses away from north america to take advantage of low cost labor we have not done that. you know, today, we are announcing our 11th manufacturing facility here in the u.s. so, over the years, we have not taken away, we have grown and grown and grown, and that is on the strength of nafta. >> kelly >> back in our new york studio thanks for letting me jump in. i just wanted to followup on something you said, toyota fundamentally a japanese company, is it possible toyota

would pull out if it adheres and feel's the trump administration is not doing that? >> well, we've invested $22 billion in north america we have a huge dealer body we support a lot of communities across america, we are part of the fabric of america. so, i doubt very much that we would pull out of the united states, but that said, you know, i export 135,000 vehicles a year outside of america that would be very, very difficult for us to do to compete if my cost moves up here and likely that would be picked up by a manufacturer out of asia or europe. >> jim, last question from us, you've been to d.c. as i mentioned and you've been to the white house, what's your gut say in terms of what happens with nafta? over the next two years, what does your gut say? >> it's difficult to say i don't know the personalities well enough to understand what

direction it's going to go i think everyone wants what's best for america you know, the reason that we're here in alabama adding manufacturing is it's the right thing to do to employ people, to build and sell cars here in america. and i think if they look at the global nature of north american manufacturing, and understand that nafta is a critical part to allow us to compete with the rest of asia and with europe, i believe nafta stays. i truly believe that >> jim lentz, ceo of toyota north america, joining us from montgomery, kelly, why they announce the plans to open a new final assembly plants along with mazda. they'll be doing that in huntsville over the next couple of years, kelly, back to you >> thank you both, phil and mr. lentz, big deal in alabama, especially after mike, i don't want to call that a vailed threat, but he didn't say it was impossible that it would make sense for an automaker to

produce elsewhere and not in this country >> right >> if something happened >> it would be a set of hard choices. i think he really underscored the idea that look, japanese automakers viewed the continent as a single market it created a whole supply chief for this purpose it would be pain to feel go elsewhere, but they would almost be forced to explore that opportunity. >> really fascinating stuff there. we have an earnings alert. >> kelly, kb home reporting better than expected earnings, 84 cents versus 77 cents, revenue at 1.4 billion, higher than the estimate of 1.36 billion, net orders, mieer than street consensus jeffrey, the ceo saying the housing driven by healthy employment, rising household incomes, strong consumer confidence, continued limited supply he also points out that the company ended 2017 with both return on equity and net debt to capital ratio within the ranges of 2019 that the company established more than a year

ago. stock is higher by more than 3%. it's up more than 100% over the past 12 months, kelly. >> yeah, although it's a different story from lenar this morning. thank you. hanging on to a 3% gain after hours. the second hour of closing bell is just getting started. >> canada now believes the u.s. will bail on nafta stocks north and south of the border are already moving. see what's likely to move in the states as well plus, a big defense play up 40% in a year we'll talk live with l 3's brand new ceo. plus, the home builders the way to go as we build into earnings season? lenar up big today even after quarterly guidance missed estimates a top analysts helps us get ahead of the game. the closing ll wbeith kelly evans is back in two minutes

canada spaerntly more concerned that the president will announce the u.s. is pulling out of nafta that's according to reports this afternoon. dom chu has a look at stocks that could be hit hardest. >> kelly as we talking about the gyrations of the market on those dualing headlines from reuters

saying that yes, we could see more of a likelihood of the u.s. pulling out and then maybe dampening some of that expectation. we did see the stocks move and these are the ones you'll want to focus on going forward as possibly the battlegrounds for if nafta becomes a bigger issue down the line. we took a look at some of the biggest companies with revenue exposure to canada and mexico. so according to facts set, using msci data. check the names out with regard to canada here florida gets around 11% of sales from canada. costco gets around 15% of it's revenues from there. marathon oil, about a fifth of their revenues and then kors, maybe no surprise there, 28% of total sales profile is related to canada. now on the mexico side of things, check these things out, they could be a big deal as well american tower, 6% of the overall sales. the auto parts side of things, 9%, then a couple of trngs stocks very much in focus today. union pacific, 11% of it's overall revenues from mexico and

then kansas city southern, we mentioned hem, half of revenue there from there as well whether or not we see the stocks move, they could be the ones we do see move in the future on those headlines anything involving nafta. so as we talk about places to watch, these are the stocks we're going to pay attention to guys, back over to you >> yeah dom, thank you and mike, these are the companies i would expect to be putting pressure on the administration if there is concern as we just heard toyota is >> no doubt about that, they also happen in general to be stocks that have been extremely strong because the fundamentals of their business are very good. especially the rails, energy stocks so i think it's a little bit of a raw nerve just to hear the talk of withdraw from nafta at a time when the stocks have had this big run we're not sure if the companies can plead their case successfully >> as jim luntz said, they have no idea what is going to happen. treasury rates are on the rise that's happening today at what point do rising rates threaten the stock rally pair of fast money traders weigh in shortly, first, we're talking about the outlook for the defense industry and we're

joined by both the chairman and new ceo of l 3 stay with us you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates

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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. welcome back red arrows across the board on wall street today. the s&p and nasdaq both snapped a six-day win streak that kicked off the year small declines though, s&p was down three, russell barely lower and the dow was down 16. time now for a cnbc news update, let's get over to sue herrara, sue. >> hello kelly

here's what's happening at this hour, everyone u.s. immigration agents descended on dozens of 7-eleven stores nationwide before dawn today to begin checking on employee's immigration status. officials described it as the largest operation against an employer under the trump presidency those audits could lead to criminal charges or large fines. in california, at least 15 people have died in the devastating floods and mud slides in southern california and that number could climb as search teams continue to look for the missing. arls of the devastation show just how widespread that damage really is. french police say five thieves, some of them armed, entered the ritz hotel in paris and made off with stolen goods, a lot of them. a french tv station says $5.6 million worth of jewels were taken. nobody was injured but three of the robbers were arrested, the other two got away and diet coke in response to slumping sales is changing it's iconic can the revamped can will feature a

new slimmed down look along with four new flavors, ginger lime, feisty cherry, twisted mango, and zesty blood orange they'll hit the stores later this month that's the news update this hour kelly, back to you >> i like regular, but that's boring >> exactly exactly. >> i figure if charlie drinks it and he's fine, i'll be fine, right? >> why not i couldn't agree more. >> thank you, sue, we'll see you later. our sue herrara. just out this afternoon, the defense department's controller told the house armed services committee a departmentwide audited is under way what could this mean for the pentagon's budgets as well as defense contractors? let's get insight from morgan brennan who's here with an exclusive interview with chris kavaisk. welcome everybody. morgan >> thanks. yes, welcome and i know you guys rung the closing bell, mike, we'll start with you i know there's been sort of a changing of the guard and you're

now solely the chairman of the company. budget, in focus here in the u.s. and certainly you look at shares of l3 trading near record highs and the broader defense sector in general, a lot has been tied to the anticipation that we're going to get defense spending growth. what is your anticipation given the fact that we haven't actually seen a budget put in place yet for 2018 >> well, given the needs of the military and the fact that they've been starved for almost the past decade, the terms of equipment and technology assertion is a widespread expectation that the budget will be up significantly to make up for this technology gap. where our adversaries have caught up, if not surpassed us now technology has been the leading edge that u.s. military has enjoyed almost forever so, that has to get rebuilt and as well as the navy, we have an air force that's flying less jets than it has probably in it's history, and there's a lot of work to be done

so we are very i think aous to see the budget put in place. >> there's a lot of work in place. you took the helm a week and a half ago >> right >> you said you want to make l 3 the sixth prime contractor, how are you going to do that and does that mean you're going compete for some of these franchise contract kps. >> okay, well thank you. first of all, it's a great honor to be the third ceo in our 21-year history. what i said is we're going to be a nontraditional sixth prime the focus is on the nontraditional aspect. obviously, we're looking to bid more programs and be a prime and compete against a conditional big five >> certainly there's been a lot of mna recently. picking up in the sector you have united tech, buying rock well, now you've got the potential tie-up between boeing and others i know you guys have done a lot of acquisitions as well. are you in the market to buy

more >> both in defense and airport security area and australia and the uk and we plan to aggressively grow the company. we're using most cash for mna and purchases is secondary use of our cash now. >> mike, i was just going to ask you. raise an interesting point about how we need to rebuild the navy. by the way, in the avid pages of the wall street journal, all the time that apparently we've really seen a diminishment of those forces but we have a sequester, the political tides have changed in washington how much money do you think the pentagon, the army, the defense department needs >> well, dealing with two things one, again, paying for this technology deficit and i think i would say looking at a budget immediately north of 650 billion, and the growth rate that i think needs to be over 5%, maybe 7, 8% so that industry

and the military can plan in a rational way what the future's going to look like with sequester and unknown budgets it's very hard -- >> even this administration could say that we have midterm elections coming you could have another changing of the guard, i'm sure it's almost impublic to plan things that take 20 year leave times knowing that >> no, it's -- it's a bet by any stretch of the imagination, but we do need that kind of long-term thinking to get to where we need to go these days and indeed we need to have confidence that those on the hill and the lawmakers and the appropriators will do the right thing and put national security first. >> chris, technology venders in the private sector meaning sell is often, you could buy our product over the long-term, it's going to perform better, it's going to save you money ultimately you're actually able to make that kind of a pitch to the defense department across the board with your products and do you think it's a matter of prioritization of what they're spending money on as opposed to the amount >> yeah, i think it's clearly a

prioritization and what we can do is get the capabilities in quicker. we made three acquisitions and the unmanned, undersea vehicle area we think that's a great growth market for l3 for the year's ahead, and our products we believe are more agile, more affordable, and more aligned with the belief of the secretary of defense we also have a pretty good business in the airport security we've invested heavily, well before i got here under mike's leadership to allow passengers to bring both laptops and liquids through the machines there shall expediting the whole process and having a better experience so i always like to say call your local congressman and ask him or her to lobby to get this equipment in your airport so you can travel quicker and safer >> i tell you, i was at la guardia last week, i was on the precheck line, still 45 minutes. i would like to see more of this technology -- >> i'm in the same line with you. >> real quickly. tax reform, do you expect this to boost your bottom line and if so, where do you plan to put that money to work

mna? >> it's clearly going to boost our bottom line. we're going to have a one time gain when we do the adoption here at the end of the year and then ongoing, we're going to have a lower tax provision we look at all of that money in one bucket, we're going to have 900 million of precash flow. this will add another 50 million. we'll start with mna we've increased our rnd five straight years, $300 million and trying to grow organically and that's a priority. >> all right good stuff thank you all, michael, newly minted ceo, chris, i'm sorry, michael's chairman, morgan brennan as always, very much appreciated. thank you all for joining us >> thank you >> thank you treasury yields have been lacking for years. interest rates are spiking so far this year. we're going to have two fast money traders tell us if that could derail the stock rally after this find out why the new tax law is a rotten tomato for a famous food maker that's also a non-profit charitable foundation that's still ahead

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the s&p 500 is off to the best start since '87 buffet says the markets are not

richly to value rates right now. >> nobody thought we would have that kind of interest rates right now. traditionally you have the tax act which is a huge factor in evaluations. >> billionaire investor jeff gundlach betting the s&p 500 may go up 15% the first part of the year but i believe when it falls, it will wipe out the entire gain of the first part of the year with another negative sign in front of it. >> a new report about a minute ago have learned some high officials believe that donald trump will pull out of nafta >> let us hope that we do not pull out of nafta. that would be a stupid decision on the administration part >> i am here at the las vegas convention center, about 12 minutes ago, all of the power went out this is horrendous really for what is the largest consumer electronic show in the world >> there is collusion, but it is

really with the democrats and the russians far more than with the republicans and the russians the witch hunt continues >> s&p 500 snapping at six days win streak dropping of three points on the bell "fast money" begins in just a couple of minutes. thank you guys both for coming here a little bit early. listen, we woke up this morning, china is going to sell, the sky is falling guys, what do you think? so many of these wise people weighed in, what do you think? >> for every time i heard the china story about $100 this is what i think the ten years, i think we hit a $20 billion, the participation rate was 20% if that's the case, this treasury auction would be a lot

worst. >> so, guy, do you think people are going to buy it up so the yield is not going to move that much then? >> if rates are going higher because we have this robust economy that's doing better, that's a good thing. you can make an argument that a low interest rates argument is good for the market. if rates are going for a higher lack of demand, that's an entire different story. i think that's what mr. gundlach is speaking to >> carol, what about you does it depend on the reason why? >> i think it does depend on the reason why i completely agreed with guy we are seeing economic strengths and i think the market sort of does not like a surprise rate hike that's what's been scary in the past so we are in a different situation because this fed has telegraphed exactly what they're going to do and started three/four years ago with a temper tantrum and we came back

from that. other rate hikes have been absorbed assuming they don't go too hard in the early '80s. the economy has come back and the market has come back it is not a bad thing. if it does create a downdraft, that's an opportunity to buy things >> karen, do you think there is people sitting in bonds and fixed income, this sort of thing if they start to lose money, they're going to come in the stock market do you agree >> there is always money coming into the bond market and the stock market, savings everyday month. i am not counting so much on a big reallocation in early in the rate rise. maybe a little later down the road >> guy, by the way, your financials would love higher rates if for the right reasons >> the financial, i think the story comes down to this

evaluations, in terms of price to book. i still think the right metric in this environment is some where in eight times the book. plus, the book values is going to be higher this quarter. >> all right, thank you both >> appreciate it >> bye bye >> i will let you get ready. >> be sure to catch "fast money" begins at 5:00 p.m. eastern. >> charlie munger is issuing a at uing adventure capital. th'sp next on our take away right after this

welcome back, it is time for our take away. today we start by asking whether there is a bubble adventure capital. here is charlie munger talking about it this morning. >> as measured how >> bubbles >> and is this something that you think the arena itself has gotten too big >> well, there are always these excess in bubbles. >> they're bubbles of different times. think back in the 2000s.

$50 billion burning -- getting the same results >> that comment this morning came after arena venture. citing too much capital chasing over valued company. >> munger is in the west coast and is also an la guy, is he right? >> i am not sure if he had his finger in the angels investing right now. >> it is not something that somebody says there is values there. it is about keeping the treadmill going and hoping and getting the idea >> the interesting is 2014 freefreeeels like the bubble year for a lot of unicorns. the amount of money put in was higher last year than any year since the dot-com. can it be a bubble or not as high profile since in 2014 >> in the end it can be

determined to be a bubble but it is not the public market where you see this dramatic sharp moves. it has to happen privately the financial pie grows and allocators don't have anything to put i t in there >> it is not just intel anymore. nvidia is dragged into the chip committee. its graphic processers is vulnerable to in spespectors they're failing to restart will this take the heat off of intel. >> the market today did not take this message to heart, letting intel off the hook intel is down again and the other two stock is up a little bit. it is going to keep focus on the overall problem. the stock seller is what it is,

i don't know if there is anything else you will ask whether it is suspicious or not in terms of its timing >> to their credit everyone was on this one before, it became widely known but it still sounds like they're trying to fix it. >> exactly it is an ongoing thing where they have to play cat and mouse with it. >> intel is the worst performer today. one of the most successful ceo of our time, why domino's ceo patrick doyle. that's 25 x gains in under a decade is he going to be seen one of the greatest ceos of all time? >> you can make the case, still of all the increase, it is an $8.5 billi $8.5 billion cap company yeah, i think he's in the running.

granted he wrote one of the most market rebound of all time >> over one cycle. >> there are plenty of companies, look at ge, for example, not apples to apples, you cannot just say oh, the market was up. >> no, it was not just the market it seems like left it in good shape. the stock was down and he's the youngest guy it is not so much intuitive. >> i am curious of the next chapter will be especially after the first one. kb home is trading higher. we'll talk to top analysts on what to expect on names and housing. this earning season is a couple different stories on that front today. ahead on "fast meyon." he will tell us how much he thinks bitcoin is really worth stay with us ♪

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another company handing out bonuses after the tax law passage. seema mody has details >> reporter: this time it's waste management it says, i didn't lie to the u.s. corporate tax plan, the company will distribute $2,000 in 2018 to every north american employee not on a bonus or sales incentive plan that includes hourly and other employees. the company says approximately 34,000 qualified waste management employees could receive the special bonus. kelly? >> 2,000 they're upping the ante. seema, thank you very much kb homes is trading higher after reporting earnings lennar finished the day higher, more of a mixed bag on its earnings report. jack, it was a tough day overall for the builders what exactly is going on with the market here?

>> you've got the push and pull of a couple of things. overall, the yield serve is steepening mortgage rates are tied to the ten-year treasury. there's a little bit of concern on the move there, higher in the last couple of days. offsetting that, better than expected orders from both lennar and kb today margins were in line to slightly better the operating trends for builders are still very strong >> but you're also positive on dr horton, one of the worst purchasers, 3.5% decline, nothing catastrophic why do you think some of these names are still well positioned after the rallies last year? >> we're still i think in the early stages of what will be a first time home buyer recovery we'll look back at 2017 and say that was the first year the first timers came back to the market they typically propel the housing market you combine that with tight inventory. excess demand, tight inventory, and it creates a scenario where

the builders are able to get some pricing power and grow at a double digit rate and grow profitably at that >> jack, the supply/demand picture as you lay it out there certainly is not in question at this point but some of the other folks are focusing on just what's happened to labor costs lennar's number pretty eye popping, in terms of the year on year increase in what they've had to pay, and also availability can they deliver in a way that will let them meet their numbers? >> the difference in this recovery from the prior cycle is the builders are moderating their growth they're metering the growth. and letting the market conditions really dictate growth, rather than grow 20, 30%, they're happy to grow, you know, 10 to 12, and manage the labor costs, manage the lumber costs. lennar's construction costs were up 8% year over year but they've also raised their average sales price up 8% too.

they're managing the cost inflation with the demand side by metering growth they're focusing on return, return on equity we think over time that will become a capital return story as well, share buybacks, something we haven't seen with builders in a number of years. >> and kb up in after hours as well jack, thanks for joining us. >> thank you if you're a fan of newman's own products, and i like the fig newman's by the way, stock up now. the whole line could be affected, we'll tell i couldn't, next (daniel jacob) for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week. (malo hutson) growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener. the solution was right under our feet. asphalt.

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tax reform is putting one sauce maker in peril >> reporter: newman's own will have to sell itself or pay a crushing fine all because of one rotten tomato in the tax code. the company was founded by hollywood legend paul newman it's technically a for-profit corporation even though the earnings are turned over to newman's private foundation. that worked great while paul newman was alive but after he died in 2008,an obscure tax provision kicked in that prohibits his foundation from owning more than 20% of his company. now newman's is facing a 200%

fine this year on the value of its company's holdings and that could force it out of business >> it's not the possibility. it's the absolute certainty that we would have to divest down to no more than 20% of our ownership of the food company. now, how we do that is very complicated. >> reporter: this was supposed to get fixed in the republican tax plan but it dropped out at the last minute for procedural reasons. company executives were in washington today lobbying to get a solution attached to another bill but kelly, they need to get this figured out by the end of the first quarter, otherwise the credits could be rolling on this iconic brand >> ylan, i like the ginger o's, it's like a ginger snap and oreo all in one >> reporter: you said you liked the fig newman's >> i like to put peanut butter on them. >> reporter: you lost me on the

peanut butter. >> i can put peanut butter on anything you mentioned this was supposed to get fixed and it didn't there's a lot of attention obviously being brought to it now. will they fix it >> reporter: it's not clear, this is not something that would pass as its own piece of legislation. that would have to wrap it into a larger bill, such as potentially any precision to keep the government running past january 19th clearly washington's attention is taken by other, more pressing matters right now. so they are trying to get something in there but it's really uncertain >> i think this is pretty pressing ylan, thank you, ylan mui. mike, you feel like when something like this happens almost by accident, they shouldn't be punished for it what do you think? >> i don't know either >> was it intended to

circumvent >> he's no longer with us. if he were no, i don't think so you would think this is the kind of thing you would get people saying, look, just close the little gap in this bill. >> this is a social media campaign waiting to happen anyway, michael, thank you i'm going to get some fig newman's that does it for "closing bel"." "fast money" is starting now live from the nasdaq market site overlooking new york city's times square i'm melissa lee. tonight on "fast," billionaire investor warren buffett sounding off on the bitcoin boom. >> in terms of cryptocurrencies generally, i can say almost with certainty that they will come to a bad ending >> so does the dean of valuation agree with the oracle of omaha he'll be here to tell us what bitcoin is really worth. plus