company which is a relatively low rating the's challenges there. >> bruce, great to see you thank you. >> great to be here. >> we took bruce to the end, didn't we? >> right up to the end. >> right to the end! >> he did it - >> you did right to the throw. exactly where to end it. thank you for watching >> "closing bell"! ♪ good afternoon welcome to "closing bell." i'm wilfred frost. >> i'm contessa brewer boeing is under some pressure as airlines and countries suspend operations of the 737 max 8. the international transportation union calls for the faa to ground flights we'll talk to its president coming up. plus crude oil up more than 25% year to date and bp's ceo will join us in a first on cnbc interview. you don't want to miss that. british prime minister may

facing a crucial vote on her brexit proposal. the outcome could come any minute we will have the latest live from london. first, a check on the markets with a little over 59 minutes left of trade and we are nicely higher for the most part. the dow is weighed down by boeing as it was yesterday s&p's up 0.4% and the high of the session 0.6. the nasdaq leads the charge up 0.6 and communication services and tech within the s&p that lead that index higher. we want do get right to london where cnbc's villa marks has the latest on brex it. where do we stand on this vote >> reporter: i'm watching right here looks like they're calling division, the moment where lawmakers will leave the chamber and go off to vote against or for theresa may's deal eight weeks ago she suffered a historic defeat and trying and the government is efforting changes to this deal going back

and forth to brussels. they have assurances it doesn't seem like there are enough i don't want to predict the future but based on the numbers we have seen, the lawmakers, it doesn't seem like she has enough to get the deal passed here's part of the pitch earlier today. >> i believe that tonight members of this house are faced with a very clear choice vote and support this deal in which case we leave the european union with a deal an i'll go on to explain why i think it's a good deal. or, risk no deal or no brexit. >> reporter: we have already heard from the democratic unionist party that props up the government saying they will vote against it quote, we recognize the prime minister's made limited progress in the discussions with the eu n. our view sufficient progress has not been achieved at this time there are a number of conservative lawmakers, members of her own party said they'll

vote for this and doesn't seem like nearly enough we may have a much smaller defeat than last time eight weeks ago and doesn't leave any room for prime minister may and the proposals on brexit to continue and could lead to a vote tomorrow to rule out a very, very economically challenging no deal scenario but it also raises questions about her continued position as prime minister >> willem, on that note, very hard to guess how this vote will shake out and clearly in absolute terms lost by a single vote equates a loss for her deal but what about relative terms? is there a margin of defeat with which she can still spin it as not as bad a defeat as people expected >> reporter: i mean, anything less than maybe 30 or 40 votes would make life a little more bearable for her it might allow her to try and come back in a week or so's time to have yet another vote but as of right now it seems anything

more than that will really leave her struggling to get the concept through parliament in the future and will perhaps leave the parliament itself to take control of the process and that could lead to customs union membership, a softer brexit or a second referendum on eu membership itself. >> always looking at the british pound. 1.307. down today what are the possibilities of a wild card to today or tonight or tomorrow like a vote of confidence once again? and possible pressure to move towards a general election >> reporter: i think you have to look at the two possibilities. one is that she decides herself to step aside at some point in the future her party lost the opportunity for ten months to do that with the rules of the conservative party. the idea that the labor opposition to table a vote of no confidence is not beyond

imagination but based on the circumstances they find themselves in, all of that entails in an election it seems unlikely at this stage that any of them willing to vote down their own government and trigger an election. >> willem, thank you for that. we'll be back with you when we get the results of the vote. what does it mean for global markets? let's bring in jason trelup. is this a threat to u.s. equities >> i don't think so, wilfred the worst jououtcome of the thre possibilities, i think the biggest risk is no brexit or referendum because i think given the political winds surrounding when's happening globally there's a lot of questions about the elite, how they're moving and i think that would really cause a lot of uncertainty i think for u.s. equities, the

u.s. -- they say no man is an island and the u.s. given the structure of the gdp equation is probably pretty well insulated of what's happening in the uk for the moment at least. >> given what we are seeing in the markets today is it pretty clear that the traders, the investors just really aren't paying attention to what's happening in brexit? >> i think that's right. i think, you know, the risks are more -- i think what the market is largely discounted at this point is there's some sort of trade deal of the u.s. and china. that brexit if it does happen will not have a meanfulingfullyg impact on an economy that's already weak going the other way, obviously, it could change. but again, the u.s. runs a trade deficit so we're so much more driven by consumer spending. in my opinion we have a lot to go in terms of government spending as a tail wind for gdp

growth in the states and then hopefully things calm down enough for capital spending but just given the structure of our economy it is hard to get exercised of when's happening abroad it seems to me for u.s. equities. >> what about the impact on the u.s. dollar? is $strength a concern >> i think and that's the thing that the fed learned i think twice the hard way the idea was largely that the fed did interest rates and the treasury did dollars and never the twain shall meet and changed because you had synchronized monetary policy. if the fed tightened too much, it learned that the dollar gets too strong and causes risk assets to weaken and that causes other problems for the fed so in my opinion for the time being the fed very much appears to be patient and doesn't expect to be tightening but in the end in the second half of the year and if that's

the case it seems to me the dollar strength story should be relatively weak or should be weaker >> the dow's off 58 points on the day and here we are ten years into this bull market and you think, jason, this is somewhat like jake from state farm and for those that don't know what i'm talking about, let me play it. >> jake? >> from state farm at 3:00 in the morning? >> who is this >> jake from state farm. >> what are you wearing, jake from state farm? >> khakis. >> she sounds hideous. >> well she's a guy so - >> how do you make that comparison >> well, it's just -- you know, i think overwhelming evidence to the contrary people still don't believe that this is a bull market and we have looked at flows, etfs and mutual funds and found that the average investor, the individual investor is a net seller of equities $1 trillion gone into domestic equity etfs is offset coming out

of the domestic equity mutual funds and people get burned twice in the first part of the century in 2000, 2008 and 2009 but people -- my opinion are probably too gun shy there's no reason why the recovery and the expansion and the bull market can't last longer and so what normally in my opinion would normally signal the end of a big bull market is euphoria and i think there are some pockets of that i don't think they happen to be in the public equity markets. >> jason, thank you for bringing us that. she sounds hideous. >> she sounds hideous. let's get to the action not bond market now. rick santelli at the cme today what are you watching? >> hi, contessa. there's so much going on and even though they're not big basis points they're important look at the curve we are down in the front end three basis

points, 2s, 3s, 5s, 10-year down 4 sitting at 2.60. why is this so important this is going to be should we close here the second lowest close in almost 14 months. look at the chart going back to january of 2018. between then and today is one spike on the right side that was early january of this year 255 close. we want to watch that carefully. look at one week of the guilt versus 10s everybody's going well of course they're on top of each other but look at the unique issues that are going on in europe and specifically in the uk i underscore that all sovereign debt is tethered together. no matter how dramatic the underpinnings in the stories are. finally one week of the pound versus dollar also suffering and had a conversation regarding the vote to begin shortly and all markets are not only tuned in on brexit and the ever-growing

notion of the slowness that's around the rest of the globe and how many of those waves are slapping on u.s. shores. wilf >> rick, was cpi data an impact today or those international factors you talk of? >> well, you know, it had an impact by not having an impact. those numbers were as expected arguably a few degrees cooler. so once treasury and sovereign investors globally saw the data, then they refocused on what was ever important if that data would have been a little hotter it definitely would have changed the tone of the day and tomorrow even though we have ppi, many inforvestor thinking it's more telling and ppi would have to be really cold or hard to garner the market's attention. >> thank you very much rick santelli for us there. boeing sates it has full confidence in the safety of the max jets just days after the second fatal crash in less than six months

we'll discuss whether the faa should join other countries in grounding the plane and what it means for boeing. shares of bp up double digit this is year we'll talk to bob dudley about the state of the sector and his outlook for oil prices that's next. alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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welcome back to "closing bell." we are awaiting the result of the brexit vote due any minute now. of course, this on theresa may's brexit deal. she is expected to face defeat the question if that is the case, of course, is by how much. last time around over 200 votes. willem marks saying only under 30 to really keep her deal alive in some form or fashion. we await to hear the result of that vote any minute the british pound down 0.7%. 1.306 somewhere in the mid range of the year to date performance. >> new iae report out this week

says the united states is set to become the world's biggest oil exporter in the next five years. ryan sullivan is in houston and joining us live with bp ceo bob dudley hi, brian. >> hey, contessa, thank you. good timing to have the ceo of one of the biggest companies in england while the brexit vote is happening here before we get into why you're here, what is bp doing to plan for brexit how do you as a ceo based in the uk deal with this? >> we deal with uncertainty all the time all around the globe. >> not this kind. >> well, it is another big day, another big vote but every negotiation i've ever been always goes down to the deadline i'm not sure this is it. we'll see you you are going to stay in england? >> yes we will stay in england. >> it used to be british bp.

>> that's where we're headquartered and staying there. >> keen focus. brexit big deal. >> we'll see what happens. for bp, revenues are in dollars. we pay dividends in dollars. less of an impact for bp. >> let's talk about dollars because you guys come through a tough time but, man, excuse me, you got me all choked up thinking about your earnings cash flow's been off the charts and reinvested and $2.5 billion. a lot going to the permian basin. is there any feeling it's overdone in any way? >> it's a really unusual, big oil field. there's good parts, other parts less good but it's very, very thick. you have to run very fast to keep production up but it's a great place to produce oil and gas. so we're very happy. we have made $10 billion acquisition with bp the end of the last year and took over the operations on the first of march. very pleased with it

shows confidence in it. >> yeah. also, offshore we were on an oil rig a couple of months ago, a competitor, sorry about that, andthunder horse, one of your rigs, a billion dlarl equivalent expected there how much more does bp going to put in offshore? >> we have massive investments in the gulf of mexico. probably over 300,000 barrels a day. offshore in africa we do offshore in the uk these are -- we had our accident we focus on safety and reliability of the operations and not walked away from - >> paid tens of billions of dollars in restitution is that over with or almost? >> i think we have it provisioned. up to the total cost of the build, $67 billion now we can plan our obligations, they're railroad clear to us and a lower level now and i think that's behind us it will never be out of our

memory, though, in terms of how we operate things. >> the technology changed since then there is going to be increased cash flow once the payments are provisioned. >> that's right. >> where does the money go what's the best use for the bp share holder dollar right now? >> first thing, the dollars remain disciplined i think this is what the shareholders keep saying even if the price of oil drifts up, will you spend it on lots of capital? $15 billion to $17 billion of capital through 2021 we'll stick with that. we are going to probably take -- notch down our debt. bring it back down and then we have options we have options of dividend increases. we will offset the deskripcript dividend in the uk it's not precise and depends on the cash flows that come in. optimistic about that. >> bob, thanks so much for joining us itch a question here from the stock exchange

i wanted to ask what you felt about president trump's attitude towards the broader oil industry is he a friend of the industry as of late he's mentioning quite often about how much to see a lower oil price. >> well, i can tell you being in the industry, not just the oil and gas industry, infrastructure companies, there's been a notch back in regulations and decisions are made that's allowing more investment to come the reduction of the tax rates led to more investment so i think he understands the value of it as does secretary perry. >> on that front, we look at news from the financial times with documents of green peace showing despite bp's stance on climate change and calling for more action on the point of the oil industry on climate change and instead you're fighting

methane regulation, lobbying the administration to roll back some of the obama era environmental regulations. how do you coincide the public stance with what the company is doing? >> well, that's a good question because i read that article this morning and i thought where did that come from, really we are trying to be leaders, set targets of methane reduction levels, not reductions, levels for the company, reducing the greenhouse gas emissions i don't know where that came from we have been working with the administration we support direct regulation of methane. we've been making investments through the gas fields to reduce methane leakage. i think what we have been doing is working with the trump administration making sure that regulations allow for new technologies to come in, not being too prescriptive and support regulation on methane. >> you think the article is inaccurate in some ways? >> i think it -- yes seemed to me inaccurate and

overstated we made a direct response to that article but that's not what's, of course, been repeated over and over. >> on the brexit issue, i want to go back to what we started with wilfred might have another question and knows more about brexit, forgotten more about it than i know, but if we get a deal, if there is a deal, no hard brexit, do you think it's going to benefit companies like bp not on the business side will it directly benefit your stock? >> i don't know. >> a brexit put? >> i wonder sometimes looking at the ftse 100 companies and we have as much traded on the new york exchange as here and can't help to be a lift with uncertainty removed. i don't know if i see that and again, we are regarded as like a resource company's revenues in dollars, less affected by it

>> okay. we are just going to go to the result of this vote, mr. dudley. thank you very much for joining us hopefully we can come back to you in a moment. willem, what's the result? >> reporter: we're just getting it wilf, take a listen at the live shot to get a good sense of it from them directly it looks like a significant defeat, though, for the government based on the cheers i'm hearing behind me in feterm of the absolute number, that's in a moment's time a defeat very significant it will mean some real adjustment to what had been her plan to get this deal through the parliament it will mean in theory that there will be a vote tomorrow whereby they have the chance, parliament behind me, the rule out no deal. i want to bring you the absolute numbers on the vote. i'm not getting the live pictures right now it does seem that there will be a very significant moment for the part

to assert the sovereignty. >> thank you very much we'll ko we'll come back to you 242 in favor of the government motion, 391 against. defeat of 149. significant defeat bob dudley is still with us. bob, if i may, i wanted to come back out to you for the reaction you said at the top of the interview to brian you deal with difficult political situations alm around the world in a lot of the countries you operate in where's the uk in your mind now in terms of business certainty on that scale? is it right down there towards the bottom with some of the toughest emerging hot spots you operate in has it lost its star over the last couple of years >> uncertainty is clearly there and you read about it every day. i think it's an unfortunate negotiation and i have sympathy for the prime minister to negotiate every day, everything

in the press publicly and members of her own party that don't agree. but i think again this isn't over yet i think we are not fully sure what the eu will do. the negotiations will go on for a number of days here at least and doesn't surprise me there's no certain outcome. >> and to go on what you mentioned -- >> sorry, brian. keeping your headquarters and listing in the uk regardless >> absolutely. absolutely doesn't have anything to do with brexit it will remain in the uk. >> keep the british in british petroleum. >> it's bp not brexit petroleum >> bob dudley, with a sense of humor in a tough time, we do like that, thank you very much. >> thank you. >> who knew that oil ceos would have a sense of a humor? probably needed in these times back to you. >> certainly is. our thanks to brexit dudley --

sorry, bob dudley and brian sullivan the pound recovered a little bit of ground. equity markets have seen a little bit of a slip in the last 20 minutes or so but still looking at decent returns. s&p 500 up 0.3% with 34 minutes left of trade. still to come here on "closing bell," elon mus westbrook a fiery defense of the tweets accusing the s.e.c. of an unconstitutional power grab. plus, a mixed bag for retail today. stitch fix soars dick's sporting goods sinks. bendl tell you what's hi those moves ahead. what do advisors look for in an etf?

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♪ welcome back to the "closing bell." we have little over half an hour to trade the dow once again the laggard elsewhere higher nasdaq leads up 0.4. health care, energy, communication services are top of the list. only really industrials meaningfully in the red. shares of boeing under pressure today as more airlines and countries of the european union safety regulator operate the 737 max 8 operations we asked passengers in new jersey if they would feel safe flying on that plane and whether the faa should step in

>> honestly, probably if i did find out i was on that plane i would see if they would switch my flight. >> i think the safety standards are pretty thorough and the two events that happened in the past year while they're like definitely concerning i think overall it's not something to be terribly concerned. >> they should get them checked before anyone else flies on the planes and make sure they're safe for the people. >> cnbc's phil lebeau with the latest there the reaction is creating a branding problem for boeing. >> right i'm not surprised we are seeing that or hearing that from people flying on 737 max 8 models around the united states but, guys, i get no sense that changes any time soon. when you look at what happened today, there's a drumbeat of countries or airlines around the world saying, shut it down we don't want to see it taking off in our country or not flying

it anymore among those who have said they're going to be grounding the plane, european union said it will not fly in countries within the union, within the last hour india has said it will ground the 737 max planes. 60% of the global fleet has now been grounded. where are still flying united states. american airlines which has the second largest number of 37 maxes in its fleet, second only to southwest, said that it is confident in the safety of the aircraft and it sent out a statement not long ago basically reiterating that same thing from southwest airlines we heard from the pilots of southwest airlines today saying we did 41,000 planes this plane is performing as it should be and not the way for the flight attendant union they're calling on the ceo to basically ground the fleet the head of the union said i implore you sending this to the

ceo of southwest, i implore you to ground all the boeing 737 max 8 planes in your fleet until the results of the investigation into the voice and data recorders is completed and the cause of the catastrophe is determined and talking about the most recent crash in ethiopia where a 737 max 8 crashed on sunday guys, taking a look at shares of boeing, the ceo today had a conversation with president trump basically talking about the safety of boeing airplanes and expressing his confidence in the safety of the max line of airplanes. i get no sense, guys, we are going to see the faa mandate a grounding of the planes any time soon. >> phil, early yesterday morning when we knew that china and indonesia had grounded this particular plane but nobody else had, there were questions posed whether the countries, aviation authorities, were being anti-american in what they were doing. is the faa being pro american

not following what other authoritys have done >> i don't think they're being pro american i think the faa is taking the approach they usually take which is show me the data. you show me something that indicates that this plane has a defect or is not functioning properly, then the faa will take steps. they have shown that historically and the case again here i think what we might be seeing, wilf, is a repudiation of sorts by foreign aviation authorities to the faa essentially saying, okay, you say it's safe. we take a different viewpoint and that's a big change. we have not seen that in the past historically the rest of the world you believely follows along. >> when the flight attendants are petitioning the ceo to ground the planes, do they have other models singing in the

hangar ready to plugged in >> no. no, no that's not capital efficient could they over time talk with aircraft leasing companies and see if there's a way to modify the skechedules with other 737s that's a possibility but immediately these airlines are going to have to rejigger their schedules. they will have to move people around and in some cases you look at somebody like norwegian with a large flight of 737 max 8s, it is unclear what they have to do. might be a case where they have to potentially maybe cancel some flights or tell customers we are not sure when we can get you to your destination. >> all right phil, trickle down effect there, thanks jix time now for a cnbc news update with sue herera. >> hello, guys. u.s. federal prosecutors charging parents, administrators and college officials in a $25

million scheme to help wealthy americans buy their children's ways into elite schools including yale, georgetown among those charges with felicity huffman and lori loughlin. >> beyond enriching himself, singer used that money to bribe college officials, coaches, exam administrators for admission to the children of the clients not on the merits but through fraud. "empire" actor jussie smollett is back in court showing support for a request to let cameras in the courtroom for his upcoming hearing he is expected to enter the formal plea on 16 felony counts on thursday. the judge approved his request. firefighters in philadelphia still investigating the cause of a gas explosion. the fire was quickly brought under control but the blast left a large crater outside of a 7-eleven luckily the store was not open at the time that the gas station exploded and no injuries were

reported that is a lucky break. that's the news update this hour back to you. >> sue, thank you very much. we'll see you next hour. still to come, wells fargo ceo tim sloan facing lawmakers and cnbc caught up with him on the way in to the testimony. >> hi, mr. sloan can customers trust wells fargo? >> sure. we serve them well every day. >> how long do you expect to be chief executive? >> i'm sorry >> how long do you expect to be chief executive? >> as long as i have the job i think i'm doing a great job. the board thinks that and the team members think that. >> we'll bring you the highlights from today's hearing that and much remo still to come here on "closing bell. don't go anywhere. see that's funny, i thought you traded options.

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wells fargo ceo tim sloan on capitol hill today we'll have highlights of his testimony next. lawyers of elon musk saying the s.e.c. is infringing on his first amendment rights we'll look at wh icoatt uld mean for the stock coming up on "closing bell.

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what adding futures can do for you. wells fargo ceo on capitol hill today appearing in front of the house financial services committee. you were monitoring that rather long hearing. anything newcombing out of this? anything we didn't know about the wells fargo practices? >> not specifically new. of course this comes some two

and a half years after the scandal first became public and facing today the house financial services ommittee, the title o the hearing is holding mega banks accountable. it relates, of course, to that scandal of two and a half years ago. tim sloan faced at times heated questioning and without a huge amount in new angles since the appearance appearan appearance in front of the senate finance committee. >> is this the end of scandal at wells? will we see more headlines coming up and another hearing about this >> i can't control the media there's nothing else i'm aware of we haven't disclosed and we have changed the standard of disclosure at wells fargo after i became ceo it is not a materiality level of disclosure anymore it's one of reputation. >> one theme that also came up was whether or not he was the right man to continue to lead

the company. >> to the consumers wronged by wells fargo during this long pattern of misconduct, how do we assure them that you're the best person to change the culture when you have been a part of the couple ch culture for the last three decades? >> having knowledge of the bank allow this is allows me to know to make the decisions. i take responsibility whether they work or they don't. >> the stock price not really reacting today in large part because most of the bad news priced in. for example the fed asset cap put in place 13 months ago it's performed in line since tim sloan took over, the stock has significantly underperformed the other banks and returning to the committee

early next month with the other bank ceos for a broader thing. i would say overall, contessa, these lines of questioning i think they would have come across as expected 18 months ago, 2 years ago there was nothing new behind them and so it was therefore repeated and gave the same answers of before really. >> this may be that the democrats newly in charge of the house again putting on a political show taking over the big banks. for more on wells fargo, let's bring in two guests. why do you think it's a sell >> so we have a $42 target, the stock's at 49. the street is looking for 57 all eyes should be on the federal reserve, asset cap means it's hard to maneuver to grow the business since they reported late

january, we are in a low rate environment where maybe the fed increases rates one time and puts all the pressure on wells fargo to grow the business from noninterest income tough for them to do given that they have the distraction that hurts brand and the consumer bank and the mid markets area for commercial lending. >> thank you thank you for the clarification. i had the numbers reversed here. >> sure. >> can you give may sense of how much this company is in the position of having to prove it has innovated, cleaned house it reminds me of sitting through a gaming commission hearing a couple of weeks ago in nevada where wynn resorts trying to have to prove it's turned over a new leaf with the ceo having been with the company since its inception. >> thank you, contessa it's a no-win situation. how can you prove that you know they were disputing the customer approval ratings with ceo sloan.

at the end of the day, there were some things that were ferreted out by third party that is resulted in major changes at wells fargo. sloan implemented those changes and since then all of the findings have come from wells fargo itself they have identified it. if that doesn't prove a cultural change, i'm not sure what will >> and the fed's asset cap on wells fargo, is that having a lasting damaging impact on the company in the stock or only temporary? >> well, wall street terms, it is lasting my view is it's temporary. i do think they're facing some hurdles with the fed they have presented plans and rejected that's good from the fed side of things bad from the wells fargo side of things but they'll go back and refix it and they will then meet the terms of what the fed is requiring and when those terms are met it's lifted.

now, you know is it the first half of next year? towards the back half and maybe 2021 before it's lifted. >> ken, do you think it's to be expected that wells fargo stays in the spotlight, the political crosshairs, if you will, for 18 months given that we have an election coming up and if so does that affect the outlook for the share price or not >> well, it affects the share price is performance and the asset cap limits them in terms of loan growth which was down last year. when you look ahead to the bull case for 2020, you would need to have a very friendly environment for banking which includes rising rates i think in time the issue related to what congress was interested in probably goes away but when we look at wells fargo's competitors, they have an open field to gain market share. >> guys, we'll leave it there.

thank you very much. ed and ken j. up next, dick's sporting goods taking a hit gtil break down why the stock isetng slammed when "closing bell" return s ♪ don't get mad, put your money to work with e*trade's easy-to-use investing tools.

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♪ welcome back to the "closing bell." we are down a third of 1% on the dow but that is the outlier and weighed down by boeing nasdaq up .5%. check in on the individual market movers. stitch fix my pick today soaring after reporting the second quarter earnings yesterday the company beat revenue and earnings shares trading higher by a healthy 25%. an the numbers great, pretty much across the board, contessa. as we discussed last night, a third of the stock borrowed for short sellers so a squeeze happening over the course of the today. >> it was interesting. we had the ceo talking about the importance of the algorithms and highlighting the growth that they have had in profit per user as far as coming up with these great earn >> shares of dick's sporting

goods were falling they beat on the top an bottom line but a weaker than expected earnings outlook for the year. the stock is trading down 11% on the day. two items of note here they thank you some slumping sales after the ceo had announced that it would restrict gun sales in about ten stores and they've doubled down and restrict them in about 125 stores the other thing is there was a lot of blame here for under armour, lagging same store sales. now dick's own private label is going to compete with under armour on floor space. >> down 11% today. >> right. >> after that guidance change. up next, the closing countdown. we have six minutes left of trade. we are down a third of a percent on the dow and up a third of a percent on the s&p with all that usaa offers

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bell." new york stock exchange. let's take a look at today's winners and losers united health up 1.25% apple a big winner home depot, american express and visa all driving some of the growth today. on the dow on the other hand, the laggards as you might expect, boeing is the leader on this front or the loser as the case may be, down 6.45% united tech, 3m, jp more began chase and caterpillar with the laggards for the day wilf >> thank you very much and the fact that boeing is weighing down the performance of the dow clear to see here. of the four, the s&p up .2%. the dow down about 0.4%. all the indices with selling in the last half an hour or so. the high on the day of the s&p just higher than half a percentage of gains. now the nasdaq leads the challenge and plays out looking

at the sectors and the boeing impact industrials are worst performing sector consumer staples also in the red but only just. communication services and technology up. hence the outperformance of the nasdaq health care leads the pack up 0.6% just going to show you the british pound intraday, as well. lower and recovered off the lows the main reason for that not so much the result of the vote itself which is a big defeat of prime minister may but confirmed that there will be a vote tomorrow on whether or not mps want no deal following day on whether or not they want to extend article 50 and expected that mps will vote to extend article 50 instead of no deal and giving the british pound a bit of a boost in the last hour or so and still down the dollar, though, not, in fact, stronger despite the pound's weakness it is weak itself.

show you the 10-year treasury note and rick was explaining slipped a not today. partly cpi and moves around the world. down 2.60. seema on the floor for her main take aways on the day. >> consumer confidence rising. global yields tick lower reinforces the idea of the fed to continue the flexible wait and see approach brexit vote, see what the international reaction will be a strong session overseas. china, hang seng, japan with an increase of 2% and india with a 6-month high ahead of the election a month. >> way and not sure if prime minister modi will win and the dow underperforming, stocks hitting new highs today. procter & gamble, yum brands. >> some of the tech names like apple and facebook

continued buying of those today after a good session yesterday it's been so important for the bull market. there goes the bell. down 0.4% or 100 points on the dow. boeing a big factor. s&p up 0.3%. nasdaq a little further ahead of that that does it for the first hour of the "closing bell." contessa, back to you. >> thank you, wilfred. and welcome to "closing bell." i'm contessa brewer. wilfred frost rejoins me with mike santoli here's how we finish the day on wall street. right now the dow jones industrials off by .3% s&p up a .3% the nasdaq up nearly half a percentage point and the russell 2000 just barely in the green hanging in there here are the stories on the radar. boeing under great pressure as airlines and countries suspend

operations of the 737 max 8. the nasdaq outperforming second straight day global debt up 50% over the past decade and the results of a key brexit vote last hour. we'll get to all of those stories but first joining us is barbara durand but first, let's start with you, mike how do you read sort of what's happening today? rather smooth ride on wall street. >> little bit indifferent. follow through to yesterday's strong rally most notably i think apple and alphabet up. probably accounted for a big chunk of what the s&p was able to do but the index again got bashful, up to the 2800 level or a point and a half away and backed away. i think we are in the between neutral and holding pattern. within sights of the high and the bond yield's being

compressed and getting a lot of attention. down one year lows really for the two and the 10-year yield. >> low slow mold >> momentum and growth stocks and a pattern of previous years and the cycle where in the absence of really fast underlying growth the market is sort of comfortable with the low rates, high liquidity situation and buys the big growth stocks i think you can argue we have got as much as we can. and all that but for the moment, it seems to be keeping the market supported. >> barbara, what is your take on the little bounce at the start of the week? is that the easy part and then back to the 2800 level on the s&p? >> the market is acting very constructively here. i think it could go a little bit higher in the short run. i think i'm with mike. the market is discounting the fed easing

fed on hold. maybe easing you have the china trade expecting good things there. full employment all this sort of thing. but i don't see -- i think this risks are skewed to the downside. >> you are paying attention to payroll at a time when people are factoring payroll into the fed to do and going to tighten up on its balance sheet and interest rates what does that do to the markets? is there too much -- have we gotten too used to easy money? >> well, we may have but what i think what's interesting about the payroll numbers is may say about corporate america and you had two things reported last week. the payroll numbers are the lowest since the beginning of the recovery in '09 and a survey with job cuts, the most we have seen since mid-'15 corporate america, always very quick to cut costs and staff because labor is a biggest cost center and may be what's

happening. despite full e7mployment and jos out there. may mean the profit margins are under problem aessure i think the market is telling us that's what's assumed. >> mike, to come back to the point you mentioned about rates, when you start to see the move it can have some bearish implications if that's why people are buying but settling at the levels, it takes away a main cause in the first place for why markets pull back late last year. >> it's true early and late last year that is true i guess you can have -- go too far in either direction right now. i think that's what the market is comfortable with the idea for the moment if the yield curve does not completely invert or go flat that we can be okay with that for a while to barbara's point, i think right now the market is giving the economic data in the first quarter a pass in part of the first quarter and always weak and also does basically think that earnings will maybe skirt the zero line this quarter and

maybe next and then pick up from here the question is whether the market has that pegged or it's overanticipating the ultimate rebound in profits. >> let's dive in on boeing and weighing on the markets. the biggest decliner on the dow closed near session lows, down some 6% as more countries and airlines ground them the plane involved in sunday's deadly ethiopian airlines crash. of course, the tragedy tops the list here by some country mile as to the main talking point on everyone's minds but, mike, as to the stock price, it's crucial to their forward looking profits but the moment the party line maintains that this is a safe plane and shouldn't change -- lead to change in orders. >> in the u.s. that's the line and with the company for a couple of reasons the market is a little bit uneasy with that. obviously the drumbeat of countries and airlines grounding this flight and this sense that

this is not going to go away as an issue even with no more incidents for a while. that's one two is exactly how the stock is valued and how people positioned in it beforehand it was the best performer in the dow. it was very expensive based on the history. and 85% of all analysts telling you to buy it three days ago and all that together causing this unwind of optimism or confidence in the story whether it's justified or not. >> is there likely to be a trickle down effect? we have seen it with southwest and american barbara, could it keep going >> i think it depends on the amount of these airlines, the 737 max 8 that the airlines own because it looks like they're grounded and when do you bring them back on we still don't have the answers for the last crash five months into it and hurts the airlines so there's lots of analysis the next few days of that. i have a feeling we are grounding our planes, too.

we can't not. >> do you think boeing is doing more in terms of crisis communication to change the narrative? >> they could -- yeah. >> i can understand why they're cautious right? one hand to make sure people realize you still have to figure out what happened and automatically jump to that point but no i think that there's almost no good answer at in point except for saying we'll figure out what's going on and make sure that people have the training and whatever software fix. >> stating the obvious only reason why the dow didn't perform like the others. >> brought attention on the lopsided of the dow as a benchmark. >> to your question, though, the question is whether boeing should be doing what tylenol management did years ago and recommend every airline ground until they make sure they're safe even though there's no reason for them to think that it isn't. so what will you do? if something happened, another plane went down? >> oh. rock and a hard place. >> right. >> on the flip side, the nasdaq

outperforming. up 15% so far this year. will we continue to see more strength ahead i'm looking right here at apple's performance today. there was some news driving that at least with coming out with their streaming service. that the point but what's driving tech overall >> i think in general the fact that people are gravitating toward the reliable growth stocks that have room back do last year's highs so there's a psychological element of saying i can buy apple at 180 when the chart looks like it's better shape than a month ago and over 200 several months ago and part of it and i think that this low yield kind of favors big steady growth stocks right now. if that continues, hard to see >> i was about to say that, mike that was a big factor yesterday. high profile upgrades and continued momentum today clearly better than downgrades and not the same as a long-term secular bull market for the stocks for most of the last

three or four years and we are now getting into the nitty-gritty see an upturn and valuation's attra attractive >> seems more tactical an when's interesting, though, is the long-term fundamental outlook for these companies for a facebook even or an alphabet didn't really change that much from one year ago, two years ago to now it is still kind of double digit growth and then maybe deliver and all about the market's willingness or unwillingness to pay a huge price for those earnings. >> how much are you paying to their corporate debt >> i'm not you know not in the high quality names like the amazons of the world, no not paying attention to them in general, companies right now you don't have to worry about that some point we will for the lower quality companys that are doing junk bonds, equivalent, at this point. not for the big tech. >> who do you like in the space?

>> tech companies? usual. usual suspects facebook is continuing to be cheap despite the issues and not exactly helping themselves but amazon netflix continues to be strong and there's a host of competition coming on and a huge runway for all of them and they have to lead even nvidia with the acquisition is quite interesting because they were crushed this last year and they have a great long-term franchise. >> marketed that yesterday stock up about 7%. moving on s&p global ratings out with data saying the global debt up 50% over the past decade with corporate, government and household debt totalling $178 trillion as of june 2018 while s&p says another credit downturn is inev it itable the firm does

believe it will be as bad. the key point, though, i would say is headline grabbing statistics of the increase and debt to gdp it's 208% to 231% and continued to tick up and the decade started with everyone saying we must reduce debt >> also, looking at the cost of that debt, to service that debt, relative to what it was back then, of course, with rates so low, it is lower, less of a burden seeing the global aggregate debt numbers, to what planet do we owe this money somebody's debt is somebody else's asset and the only way that debt in aggregate in modern economy is going down because it's written off. >> i hear experts in corporate debt and bonds ringing a warning bell of how much easy access to credit, the credit worthiness of the companies to go to the fed, to take out money that the big banks were making it available

and how it sets things up in a way to see with people borrowing mortgages on the houses in 2007, 2008 >> it's been a concern that lower quality companies have not had that market discipline to say you're cut off and basically it's been floated for years. and i do think it's a risk that hangs out there in a reckoning and forestalled it for a lon time and the market, the credit market trades like not too concerned of a spike in defaults i don't know whether that's right or wrong. >> the question is in the end when things -- interest rates shot up, is it a systemic risk i don't think so i think we have put enough in place and it was the baches who had 25 times leverage and hopefully not changed until this last generation that remembers what happened in 2008 dies off i think it is not an issue the percentage of sovereign debt, no problem the corporate debt in china, no problem. backstopped by the government. if individual companies start to go belly up, that's an

individual company and if you are a shareholder, you have a problem. >> the only country to say, again, to your point backed up of the fact it's a sovereign issue and print the money if they need to but a debt increase is china talking 300% and still increasing and the one to watch but for the last decade we said that and not proven to be a problem. >> that's right. for the decade before that, we said it about japan. >> right. >> it seemed for a long time unsustainable and then sustained. >> on capitol hill of traditional deficit hawks you have a record budget, coming through. the deficit skyrocketing and everybody's shrugging going, oh well. >> yeah. let's talk brexit. prime minister may's brexit deal defeated last hour in

parliament defeat by 149. here's what theresa may and the leader out opposition party said after the vote. >> i continue to believe that by far the best outcome is the united kingdom leave it is european union in orderly fashion with a deal. and that the deal we have negotiated is the best and indeed the only deal available therefore, tonight, we'll table a motion for debate tomorrow to test whether the house supports leaving the european union without a deal on the 29th of march. >> the dangers, the dangers of what the prime minister proposing are basically that we carry on threatening us all with a danger of no deal, the danger of that knowing full well the damage that will do to the british economy. >> i think the key point here, guys, after the news of the defeat which was expected and confirmed by a large margin is

she did confirm the two votes in the next two days. to confirm no deal, hard brexit. assuming that fails then a vote on thursday as to whether to extend article 50. again, the take is that parliament will opt for the delay which clearly puts off at least the prospect of no deal. just on the flip side to offset that a little bit, everyone commenting that jeremy corbyn didn't bring forward proposal for second referendum. without that it does highlight even though we get a delay if that's what they vote for on thursday, there's a long way for a referendum and overturn the vote and still in the purgatory and it may well be extended. >> that delay, the vote to delay, that is something that uk can do on its own and doesn't require another measure from the eu >> it would require unanimous approval from the eu 27 to delay it they have indicated in the past that they would be willing to do

that. >> yeah. >> in recent days and weeks the comments but not solid comments have been less warm towards that in fact, the chief brexit negotiator tweeted out this result says we have to focus preparations for no deal and suggesting they might not go for the extension. either way, the thing to get certainly we needed to see her deal pass. that didn't happen we are in purgatory. it doesn't look like that purgatory will lead towards no deal any time soon more votes to come soon and the british pound down 0.7% or so. barbara, on this topic, is this a fear factor for u.s. equities or not >> not short term. it is interesting to watch from abroad and if i was an investor in england, i would be interested but i think ultimately it is really about long term and impact on europe and how it unfolds. >> okay.

we'll leave it there thank you for joining us. >> great. still to come here on "closing bell," lawyers for elon musk taking on the s.e.c why they're saying regulators are infringing on musk's first amendment rights we'll discuss and debate next. plus, amazon reportedly lifting restrictions on third li cpetillers, what it means for onneomtion coming up on "closing bell. every day. i think there are some ways to help keep you on track. and closer to home. edward jones grew to a trillion dollars in assets under care, by thinking about your goals as much as you do. a cfp professional is trained, knowledgeable, and committed to financial planning in your best interest. find your certified financial planner™ professional at letsmakeaplan.org.

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shares of tesla lower today after the ceo elon musk's lawyers fire back at the s.e.c. saying the february 19th tweets of the production rate did not violate an earlier statement agreement. settlement agreement, excuse me. the lawyers say regulators are broadly overreaching and inflinging on the first amendment rights seeking to hold him in contempt of court let's bring in ron gefner and steve shore. good afternoon, gentlemen. thank you very much for joining us. >> good afternoon. >> ron, if i start with you, is the issue here about the one tweet of sales in 2019 or about the deal elon musk had struck with the s.e.c. already

what's the key factor? >> the reality is it's about all of those things and so fundamentally the s.e.c. is tasked with enforcing a level playing field in the united states regulation fair disclosure. so in october of 2018, when they settled with the s.e.c. and court entered an order against tesla and musk, they adopt policies for communications by executives they required a review in advance of communications with the public that could or reasonably could contain material information of the company. in december of 2018, tesla adopted the policies for communications in which the policies exactly state what i just said with some caveats. highlight certain subjects they be deemed to be material depending on the significance of the information and that was specific to the production progress or delays, sales or

delivery of numbers or other major business developments so they have a policy in place that highlights that the subject matter may be deemed to be material subject so that's that tweet then beyond that, they're going to look at all the communications he's had tweeting whether they're looked at for preclearance to determine a pattern of which he hadn't done and this is the most egregious communication. three, violated potentially a court order. four, antagonizing the government with the communications with regard to "60 minutes" and other follow-on tweets we the policy of which they have chosen to adopt and then the policy they themselves created and adopted. >> well, antagonizing the government may not be wise but it is not a crime. >> i'm not suggesting it was a crime. >> right tesla has been in the news -- i got that

tesla been in the news almost every day. when we look at, steven, what the possible jupside of this behavior from the ceo and founder of this company, i mean, is it keeping the tesla name in the spotlight? >> to the contrary i think that this is something that is contrary to the interest of the company i think the company would best be served by going forward with its business, not dealing with derivative lawsuits, fighting the s.e.c. i think that his actions - >> then why isn't the board taking action? >> the answer is we don't know everything that's going on i suspect although -- if i were one of tesla's lawyers i would be telling him, please watch the tweets you know hold your fingers. let's be cautious. double check before you send out things on the other hand, i think he is a hard person to control. >> steven, bottom line -- sorry.

hold on a second do you expect to see significant punishment from the s.e.c. on musk >> the answer is, i think that he violated the court order. they'll have to be a hearing to determine intent you know was this material? or would a reasonable investor view it as material? at the end of the day this is did first step in a series of actions by the s.e.c. to rein him in i would venture a guess that if the court finds that he knowingly violated the order and that this was material as i believe it was that there will be a slap on the wrist and then be, you know, further e-mails and watching him and i think looking at a long-term game plan. >> ron, your take on - >> two points -- >> punishment? >> i expect it will end up in

punishment and two more facts relevant to why it's negative or potentially a greater preponderance is as a general counsel resigned the day after the tweets and two, the second tweet that was designed or sent out to correct the initial tweet was vetted by securities counsel and why the initial one was not. the judge broad discretion and the judge to balance out either sending a mess and or exacting the penalty. versus harming the company and where the middle is we don't know could be -- i expect it's a monetary fine. i don't expect it will be more but there's still not enough information that we have that's publicly available the s.e.c. has provided requests to both tesla and to musk for information gathering purposes so we don't know how deep this might go. >> okay, gents thanks very much. airlines around the world

grounding the boeing 737 max 8 today following the weekend's tragic crash but the u.s. has the controversial jets in the air. ahead, a top transportation union leader and former faa official will weigh? some passive index funds very active as of late mi stokeanli shows us what it means for the greater market, next

s&p 500 shares by passive

funds have been rising what does it mean? mike santoli at the telestrator with more. hi, mike. >> hi. this trend, you don't get a more regular up trend that this making the rounds and chose the percentage of all publicly available s&p 500 shares that are owned by passive index funds, it is up here at about 15% at last quarter's count. and up from just about let's say 6% in 2008 about doubled in the last ten years. this is a trend on the march for a very long time and investors opting for low-cost index funds. this is the direct result in terms of ownership what it means for the rhythm of markets trade. does it mean that all stocks tend to trade moretogether or does it mean, in fact, that more investors just get cheap exposure to the market so there's always been a question as to how much is too

much in this sense of indexing. >> i have to say given all the talk we have about how much money's moved into passive versus active in the last few years 15% seems quite low to me, particularly talking about the floating market caps of total market capitalization and the lower is lower >> the float of like warren buffett with berkshire hathawi and the shares are part of the float and the reason we have the attention is because more than 100% of the net inflows into fnds into utfs and seems like the only growth is happening in terms of retail ownership. arguably more room to go before it's an issue. we'll see. >> certainly as we discussed earlier, puts pressure as it rises regardless of the level, pressure on pricing. inflows coming into the active sectors. >> the way to know when it's

gone too far is when it becomes easy to beat the market an show you there's all of a sudden not enough active investors trying to do the work. >> very interesting as always. thank you. >> thank you. now sue herera with a news update. house speaker nancy pelosi introducing the dream & promise act to allow more than 2 million immigrants including dreamers and people with temporary protective status to apply for u.s. citizenship and first introduced in 2001 by dick durbin israeli police close the entrance to one of jerusalem's most sensitive holy sites after suspects threw a fire bomb at a police station no injuries reported but police scuffled with protesters during a search for the attackers three people were detained. hometown food company recalling some pillsbury

unbleached flour products after a possible contamination the products sold at publix and winn dixie. officials are investigating the cause of a small plane crash after a cessna l-19 slammed into a home in kansas while attempting to land the flight student piloting the plane escaped without damage the instructor had minor injuries. >> he failed the driver's test. >> yes, he did. >> thank you. >> in rare form. >> many ways. >> thank you very much for that one, sue either way, great to see, no major injuries in that which sadly, of course, not the case with the 737 max 8 issue and we are going to discuss more about that and what it means for boeing coming up

here's a live look right now at boeing 737 max 8 planes currently in flight.

that's a live flight tracker for you. so far, more than 20 countries including all countries in the european union have suspended flights of this particular aircraft model into or out of the air space following the deadly crash of an ethiopian airlines plane second and the second of a boeing 737 max 8 in 5 months despite calls from lawmakers like warren and romney, the federal aviation administration declined to ground the 737 max 8 deeming it safe to fly joining us now to discuss this is john samuelson, the international president of the transport workers union and barry valentine, a former acting administrator at the faa barry, let me begin with you what do you make of the faa's decision not to intervene and ground the flights here in the united states? >> you know, any time that you have an accident involving two very similar aircraft in a short

period of time that obviously getting everyone's attention as it should and it has and the faa has looked at the two events we believe we know the cause of the lion air accident. we donot know the cause of the ethiopian airlines accident. and a single event does not a trend make now, should the data that will be looked at on the ethiopian accident show that there may be an issue then a different approach will be taken i'd like to point out there's a system within the airline industry and with the faa. it's got an odd acronym but when you're a passenger on an airliner flying, this airplane is constantly broadcasting data about its performance, about the flight characteristics, the systems in realtime. and that data comes from all the airplanes, aggregated and looked at to see if there's trends that

show anomalies in the systems or operations thus far for this particular airplane, there's been no evidence that there have been any oddities or anomalies that would suggest that the airplane is not air worthy. >> barry, finish your thought. my apologies. >> oh. that's all right on that basis and the three airlines in the u.s., for example, that are operating that aircraft continuing to do so, they appear to be comfortable doing so i have a nephew who's a captain for one of the airlines that operate that is airplane and flies that airplane. and we also have confidence. the system as a whole that the pilots flying those airplanes like my nephew are knowledgeable about what to do if an emergency

did happen and i think the fact that the airlines have confidence in the airplane and in the pilots would suggest that it would be premature to be grounding the airplanes here in the u.s. i can't speak to - >> john -- >> the quality of the operations and other airlines around the world but certainly here in the u.s. >> okay. john, you represent a lot of transport workers. quhald y what would you like to see >> we represent over 17,000 flight attendants on the southwest planes the world disagrees with the faa. aviation professionals across the globe disagree with your guest. there is evidence that there's a problem. two catastrophic crashes that have killed around350 people boeing itself acknowledge that is there's a problem in fact, they're talking about coming out with a software patch to correct the problem and i think it is absolutely absurd that the faa won't ground the flights until at least they get the voice and data

recordings back from the latest incident. >> i'm fascinated about the point of a software patch or updating the manual so that pilots are aware how to disengage from a various autopilot aspect that could possibly have caused that. surely that's grounds to ground everything so you don't need a software patch this shouldn't be an issue, should it? >> absolutely. >> it's -- >> a burden on american and southwest pilots, the most professional in the world and don't deserve to be -- >> but the pilots have said they support boeing, they support the faa's decision not to ground the planes to your point, it is the flight attendants who are demanding that their boss ground these planes. >> the american airline pilots to my knowledge have not come out and proactively said they're comfortable flying the planes. in fact, the pilots have self reported prior to this incident and possibly possibly to the lion air crash of problems with

with the exact problem that is we are talking about that have been identified by boeing. so it's -- the idea that the pie lots are all kosher with this is not true. >> do you expect to see a reversal from the faa or some action within the next couple of days >> i think the faa has to make a decision of whether to kowtowing to the industry. i think it's about profits the faa needs to realize they work for the american people and look after the safety of the american people and not the industry and until they come to that reckoning they continue forward with this plan and will continue kowtowing to companies like american and southwest. >> we should make clear that the faa and boeing and other airlines have said that their primary concern is always customer safety as opposed to profits but we'll leave the conversation there thank you both very much john and barry. >> thank you for having me. still ahead, the real estate industry is pushing back of a tax on luxury new york city

apartments details on the controversial plan coming up. plus, is the content streaming wars speeding up, spotify painexndg? the new deal for tv and movie fans coming up you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org

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support as no extra cost the two companies offered a similar plan last year the current subscribers enrolled into the new less expensive plan very interesting timing as we await the apple announcement that people expect to be their announcement for tv and movie content. they're the obvious competitor to bundle a streaming muse wick a streaming tv service as of when they launch that. >> sure. >> a bit front-runner. >> at&t is launching two new video packages to include premium access to hbo. seems to be the wave of the future how do you bundle this together? really, do we get to the point spending as much on bundles as cable? >> it could get close with broadband and maybe they come in below what netflix is charging. >> hulu with advertisements.

starbucks with a dairy alternative rolling out oat milk at five of its starbucks reserve locations in seattle, san francisco and new york starbucks offered alternative at the european locations in 2018 so now you can go in and request almond, request soy. >> soy. >> right i'm a big fab of coconut milk myself that is nail in the coffin for farmers -- >> milk in the coffee? >> i love it especially flavored. it is delicious. apparently oat mill westbrook a texture like real milk and look at u.s. milk consumption of ten years or so. the last year of data is 2018. it's plummeting and in 2018 we also saw dairy alternatives growing 8% as milk dropped 4% year over year. >> there we go a new rival. >> right. also looking at amazon rolling back restrictions for some sellers on the website.

the company says it will not tell third party sellers not allowed to offer prices at lower prices on competing websites this is under pressure from senator richard blumenthal of connecticut an a complaint because of amazon selling up either own stuff or puts the arm on the third party sellers using the power to do that always tussles with suppliers and vendors. >> it is interesting of pressure of one lawmaker that this is starting to get -- cave. tech companies in general think about that pressure now and i think, you know, being more proactive than waiting for it to develop. >> a bit of a sensitivity to it, absolutely. still to come here on "closing bell," luxury apartment buyers in new york city could face a new tax they're pushing back. massive college cheating scandal busted two hollywood actresses are caught up in the plot and that's not all.

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a new proposal to tax some high-end apartments in new york city is facing backlash from the real estate industry robert frank joins us with the details. >> new york governor andrew cuomo yesterday announcing his support for that tax in new york city cuomo saying that the tax on secondary homes in new york city would raise $9 billion over time for the mta transit system now, it's already got support from the assembly, the senate and the city council so this makes it pretty much a sure thing. you could call it the ken griffin tax. that's because this was an idea

that first came around in 2014, but it sat around the legislature, didn't go anywhere until ken griffin bought that $238 million condo in january. that sparked new calls for the tax. the bill's sponsor told us the rich who own multimillion dollar second homes in new york can easily afford it >> we're leaving a lot of money on the table in new york city. these are individuals who don't make new york city their primary residence and don't pay income taxes. that's money left on the table for things like our subway system, affordable housing and the infrastructure of our city. >> so here's how it would work it would apply to properties valued at $5 million or more that are not primary residences or primary residences of the

them, or their children. ken griffin, for instance, he would owe about $9 million a year on that property. analysts say the tax would raise about $650 million a year in total. the owner of a near $10 million one would pay $50,000 a year an additional tax would suppress sales activity and lead to lower tax revenue for the city wilf, you know more about this than we do because london had something similar. so what should we look forward to in terms of the impact on the market >> well, the debate there is slightly different because there's not an annual property tax. the difference is in the uk you don't pay capital gains tax when you sell your primary residence, but you do on a secondary one. however the structure of the overall property tax works, i actually think that in general people get that.

a primary residence gets whatever tax breaks and whatever the country can apply. but the secondary implies the person is much more wealthy, it's not just their home so they can make ends meet and live somewhere, it's clearly something they have enough excess cash to pay for that meant the people understood it when the changes were made. >> in practice this ends up being more like a hotel tax. the reason why you see destination cities taxing on exorbitant taxes on hotel rooms because visitors will pay it when these people come here and buy a new york city apartment from russia or the uk or wherever, that's just the price. the cost of having an apartment in new york. >> it's not just a stamp duty or a sales tax, this is an annual fee. and so i think that changes the whole cost structure of owning a second home in new york. by the way, these are new york who pay the property taxes but really aren't here that much to use the services so from a taxpayer perspective,

they're very efficient the idea that they should pay more i think is going to get a lot more pushback. >> that's true for property taxes on any second home, that you're paying property taxes for services, school taxes and the like that you're not using. >> that's right. >> all i would say, robert, yes, i can understand real estate interests kind of crying about this. >> yeah. >> but i do believe that they have a very loud say within the new york city and new york state taxation in general. it's not as if these are underserved constituencies based on the law. >> no, absolutely. and it is such a small group, there are only 5,000 people or so that will be affected by that tax so i think politically it's going to be very popular. >> robert, you called it the ken griffin tax. of those 5,000, i imagine over half of outsiders, i would presume. >> yeah. we really don't know but i would guess whether an outsider is someone like ken griffin who owns multiple homes within the u.s. or even a

foreigner. >> yeah, foreigners is what i meant. >> foreigner, i would guess half or -- they say that around 30% of new condo development sales are to foreign buyers. so i think of that total pool half is a pretty good guess. >> so, robert, stay with us. after the break we'll discuss the busted college admission scandal. this is all over social media today. and tomorrow "mad money" don't miss the interview with llll's founder and ceo, michael deyou don't want to miss "mad money" tomorrow at 6:00 p.m. we're back in a couple you're searching for something more... ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place. the road is yours, dig in.

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prevagen. healthier brain. better life. the u.s. attorney's office has charged 33 parents who paid millions for bribes to get their kids into elite american universities robert frank rejoins us now with more of these really jaw-dropping details robert. >> it's such an interesting story. hollywood stars felicity huffman and lori loughlin may be the most famous names in this college cheating scandal, but 30 ceos, entrepreneur and a top lawyer were charged with wire fraud and mail fraud today as part of that scheme to get their kids into college.

some of those folks include doug hodge, william mcglashan, manuel h henriquez, founder of hercules capital. you also have gordon kaplan. he is the co-chairman of the global law firm wilke farr none of those charged or their lawyers could be immediately reached for comment. guys, back to you. >> some of the numbers, robert, are enormous a place in these colleges was costing a million dollars. >> yeah. and that was, again, to pay for false test scores and to get people into sort of the athletic recruiting end of things but it's a lot more expensive if you want to go the other route, which is to give money to the university as a donation as a

philanthropic donation to try to get your kid in that way that's now tens or hundreds of millions of dollars. so this is a bargain for wealthy families trying to get in. what the guy in this story called a side door to get into college. relative to the alternative, it's a lot cheaper. >> robert, thank you very much for that thank you also, contessa, for joining us today that does it for "closing bell." "fast money" starts now. "fast money" starts right now. live from the nasdaq market site overlooking times square, i'm melissa lee. tonight on the show it is make-or-break moment for the semi stocks and maybe the entire market we'll tell you what wall street is waiting for. plus tesla hits the skids. the stock falling again, now down 15% this year one top analyst says it is about to get a lot worse for shareholders we start off with the big story of the day, the boeing fallout the stock down another 5% today after a number of countries and airlines ground one of its