tv The Claman Countdown FOX Business October 21, 2022 3:00pm-4:00pm EDT
it was cheap simply because of the share price. it's a classic mistake. but remember, price alone has nothing to do with whether a stock is cheap or not. point number two, last year wall street pell in love with this sock after a single good quarter. last february morgan stanley said it could go to $105 a share. since then it's been straight down, and here's the thing, morgan stanley placed an underweight rating on it today. there's no monopoly on smart ideas, on smart portfolio management, and sometimes your ego can get in the way because that's what happens on wall street all the time. whatever you do, don't be wall street. let the work justify itself. right, cheryl? cheryl: yeah. my work is about to justify itself with a market rally over the next hour. [laughter] charles: sounds good. cheryl: market alert right now, take a look at this. the fed whisperer giving stocks
a boost as we enter the final hour of trade. dow is higher by 637 points. s&p up higher by 73, nasdaq up by 194 points. all of the major averages trying to snap a two-day losing streak as the dow remains on track for its third consecutive weekly gain. stock toes reversing earlier losses after fed whisperer nick timiraos of the "wall street journal" reported some fed official officials have begun signaling their desire to slow down the pace of rate hikes after the november meeting. we are expecting at least for the november meeting a 75 basis point increase. markets cheering the possibility that the fed, led by chairman jay powell, will reconsider its aggressive policy stance as treasury yields fall if their highs. but other factors driving the market as well. investors considering a slew of corporate earnings. american expression and --
express and verizon both falling to the bomb of the dow during today's session after posting quarter arely results. amex, as you can see, down more than 3%, on pace for its lowest close since february of 2021. they reported that they're building up bigger provisions to prepare for potential defaults. company cpos saying that delinquency rates for loans have modestly picked up but do remain below pre-pandemic levels. as for verizon, stock dropping to an 111-year low after missing estimates for wireless subscriber editions and losing 189,000 monthly bill-paying phone subscribers. the telecom also unveiling a new cost-cutting plan after profits fell 23% in the last quarter. shares of verizon could be over 4.5%. now the major earnings mover of the day, whoo, charles just hit it. let's hit it again, snap. stock is down 30% right now.
the company missed revenue estimates, and it forecast no revenue growth for the current quarter. they are getting punished right now by investors. concerns over deteriorating ad demand spurring a selloff many all social media stocks as you can see, taking a look at snap, that's lower, but meta, down almost 2 the %. twitter is down. the met the that -- meta, of course, facebook itself, that is a major space and a major holding for many of you out there. now another big week ahead. we've got earnings keeping, rolling in next week. investors going to be watching very carefully for results from you've got chipotle, ups, visa, jetblue, apple, amazon and exxon just to name a few. we're also going to get a first read on gdp for the third quarter. how should investors proceed? let's get right to our floor show. joining me now are john mayer,
and fitzgerald group principal fitzgerald. guys, great to have you here. keith, i want to start with you. pick up on that snap story, because the stock itself, i don't think that's really the issue here. it's the story behind the story and what that means for a meta. what does that mean for a twitter, etc. >> absolutely. and happy too. this is a case where the ceo is telling you the financial equivalent of the dog ate my homework. the ad model is broken, they have no plan to fix it, and they've never been able to monetize it. so i am not surprised in the least to get this thing being carried out. meta has got the same problem. zuckerberg is struggling and flailing, and he has no idea where to go. wall street's trying to defend stock, but that ultimately isn't going to work, cheryl. cheryl: and also, josh, sometimes volatility -- even though the vix has backed off a little bit, the fear gauge, not really a storied today, but
since we've backed off of that volatility a little bit just for the session, doesn't that mean there's the opportunities getting creative for ways for us to kind of navigate the next couple of months as we do face a fear and look at a recession and look at an economy that's changing? >> yeah. i think the market is contextualizing what's going on with the fed. we always say follow fed. we follow fed up, we certainly have is followed the fed down, and now with some potential pause, at least a deceleration are of the magnitude of increases, the market's saying which stocks are going to prosper in this environment. and in this earnings season, the banking sector so far has indicated kind of mixed results in terms of indications for the future whether it be the consumer is strong or provisioning for losses going forward. so i really think it's a bit more of a stock-picking market right now. but there are certain periods of time like in social media today where the baby's being thrown
out with the bath water. individual companies need to be looked at. and and. cheryl: and that's where you look for those pieces of momentum. next week we're going to get september pending home sales. obviously, we're pushing 7% right now. mortgage applications really falling, keith. that whole picture speaks to the economy. how does that speak the to you though? >> well, you know, that's a very interesting one because we begin walking away from home builders and home repair shops a long time ago this year. the question i want to know with the mortgage applications and the rates is does this say that people have already repaired everything they're going to repair in their home in do they not have money? where does this go? that's a sector that i'm keen to avoid for the next few months. cheryl: so you're going to avoid the lowe's and home depots of the world? is that what you're saying. >> correct. i don't trust that data, ask i don't trust the fed's plans. cheryl: okay, if they do slow
down their role at least in december, that would help the housing market. john, let's pick up on this. because if you look at the labor situation right now, the reason we have had this semantic debate, i personally say we're in a recession. those were negative quarters, i say recession, i'm an old school type of gal. but at the same time, with the labor market as tight as it is and and wages having to go up, it seems to me some companies might start to turn to a.i., to robotics. that means job losses down the line, but that also means better margins for them. >> yeah. i mean, i think you really are have to look to the demographic story. demographic, aging population, tight labor market now that's certainly not going to get better in the future over a long period of time. so you have to look for efficiencies, and robotics and artificial intelligence is certainly an area where, over time, companies can improve their efficiency. so they're going to be investing a lot into those areas, especially manufacturing
companies, because we know what it's going to look like down the line. we're going to have less people, and we're till going to have a great amount of demand. particularly the consumer is strong now, and they may weakennen in the short run, but over a long period of time you immediate to increase these efficiencies. robotics is certainly an area that makes sense going forward. cheryl yeah. and you mentioned look at renewable energies. we're having this big fight about climate change and, obviously, the it's not turning in favor of the big oil companies right now and energy producers, so maybe there's some opportunities. okay, keith, last word to you. >> i tell you what, i'm very excited to see what happens next week, because to your point, 90% of all the data created in the history of humanity the has been created in the last few year withs. if there's any kind of pause from the fed whatsoever. cheryl: all right, keith, john, appreciate i. that is your floor show for this friday. now we've got some breaking news on the elon musk-twitter acquisition. this is actually just hitting
the tape right now. "the wall street journal" is reporting that the banks committed to help finance elon musk's takeover plan are going to likely hold all $13 billion of debt that is backing that deal rather than syndicate it out. that's according to people that are familiar with the deal. this is on the banking side. now, the banks involved are keeping the debt on their a balance sheets, basically to avoid selling it at a loss to bond and loan fund managers. does threaten though to bring the buyout pipeline to a standstill because it ties up capital that really these banks could use to do the other deals, the back other deals. $13 billion, not a small chunk of change for these banks that have been backing this musk deal. so this is a very important headline just crossing. now, the $44 billion deal is backed by, it's got morgan stanley attached to it, bank of america and barclays.
i want to bring in kelly o'grady now. she's got specifics on also what we've been learning here, that elon, it looks like, kelly, is probably going to do some job slashing, maybe 75%, we're hearing. [laughter] >> reporter: yeah. i mean, that is such a big number: but it's also because twitter's going to look a lot different, right? he's going to be less focused on advertising revenue. twitter's currently 90% of their revenue from that. ing instead he's going to explore a sub subscription model where creators could monetize their followers with, collusive content. the biggest change is going to be eradicating those spam bots, less content moderation. so we're likely looking at some mix of a messaging, payment and content app. this 75% cut, let's remember, twitter does not have the profit margins in line with a competitor like facebook, and many text i lease during the title runup, he agreed that the
structure is not aligned with other company companies. he shared that twitter's revenue per employee, if it had a taffe of 3,000 instead of 8,000, would be more like $1.6 million. that's capable to industry standard. and musk you can see there responded with, there is insane potential for improvement. so folks on inside el me, of course, people are very concerned, and those who staunch. ly support twitter's content moderation approach believe this could destroy the platform. less moderators would expose users to eau fencive -- offensive material the. he's going to be taking on at least $13 billion in department to finance deal. slashing head count on his side would help with that leverage. he's already shared his intent with investors to bring on more effective workers that fit with his few strategy. so that 75% is probably going to be initial, but would ramp up hater on. now, i do want -- later on.
i do want to highlight -- so many headlines with elon musk today, cheryl. [laughter] he is potentially facing more headaches because the biden administration is reportedly considering investigating the deal for national security issues because of is some of the porn investors he has. he -- foreign investors he has. certainly precedent for that with what president trump did with tiktok. but we've spoken to experts and they don't think it's going to prevent the deal. cheryl: if you're to going to spend $44 billion on a company, he wanted to get a better deal, he's being forced to buy it at the end of the day, so you want to monetize that purchase. i remember when this all began months ago, he got on twitter, and remember all the twitter employees started getting on the message boards and flipping out because they knew this could be with bad news for them? well, looks like it might be. yeah, it's it's going to be interesting. kelly o'grady, thank you. you've been on this story from the beginning. thank you very much for that live report. >> reporter: thanks. cheryl: we've got a lot more
coming up. a football star turned finance professor, brandon copeland, he is here to tell us how he's trying to help his fellow nfl stars hold on to the millions if they are making on the field well after their careers are over. as for stocks right now, we are pushing session highs. again, as you can see, the dow is up by 680 points right now, and it has been a really strong session. session highs right now i for the dow. i am doing my job. i guess i can come back monday. s&p is up, was up 77. strong ther now, nasdaq as well having a good day. we'll be right back. ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪
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cheryl: week seven of the nfl season is officially underway as the arizona cardinals defeated the new orleans saints 42-34 last night. thursday night football games are aired on amazon prime, and when there's big games being plaid, there's players being paid. but after making millions in the nfl, players often find themselves broke after the cheats and the pads come off. so what needs to be done in order to have a stable lifestyle after retirement? let's tackle this head on. joining us now is nfl linebacker, university of pennsylvania professor brandon copeland. brandon, it's great to have you here. obviously, our viewers know, as his', we're big nfl fans overall. these players, look, there's only so many tom brady out -- well, there's only one tom brady. [laughter] these lower level players, they make it a year or two, you know, what do you say to them if they
get injured and that a career is over? what do they do? >> yeah, yeah. i mean, obviously, we we come into a lot of money fast, and, you know, for most people you have a different type of earning curve over your entire life. for us, we start making a lot of money early on many our lives, and we have no experience with it or little to no experience, i should say, and no financial education around us. so, you know, the biggest thing that a lot of guys are doing nowadays is they are trying to flex their brains and muscles off the field. a lot of guys, you see them starting to dive into different types of investing, alternative investment, venture capital, real estate. but first and foremost, the first thing you need to do is focus on being in the nfl and being a player in the nfl. because like you said, the average nfl career, i think, is less than 3 years now. i think it's 2.78 now.
so you need to focus on being there long enough to start to stack the checks so that you can put it to work for you throughout the rest are of your life. cheryl: i see a lot of these guys that has this crew that hangs on, and sometimes that can be bad news financially for them even while they're still actively playing. isn't the nfl trying to also get this message out that these guys need to really focus on the financial side of their lives as well? >> i think it's, ultimately, i think it's a lot of players, honestly. i mean, you have these espn 30 for 30 brokes, and no player wants to end up on the next episode or the next, you know, series within that whole, you know, ecosystem of being the broke player. so, you know, guys are following the lebron james of the world, they're following some of the other folks who have made it cool to do things off of the field, and the nfl, they have a
great rookie program that tries to develop you. but ultimately, you know, when you make it to the f nfl, you are bringing the dreams, hopes and and aspirations of a lot of people with you. the first lesson you've got to learn is how to say no and, two, you also have to, you know, strip away your ego as well too and realize that none of us are actually superhuman. we feel like superhumans on sunday, but it doesn't necessarily mean that we're all going to have a 10-year nfl career. so when you start to think of every single check as what could be your last one, you start to spend it differently, and you start to say no to things that a you otherwise would say yes to. cheryl: and you come from a legacy, you are an nfl -- your grandfather plaid for the nfl, so, you know, this is in your blood -- played. we're looking at video of you talking to these kids and young players. i think that's really inspirational. and also, too, you yourself are inspirational.
i mean, you, you interned at ubs. you got into finance early in addition to your football career. what did you learn from that? >> yeah, i learned a lot. i learned so many different things. you know, the biggest thing that i was taking from those internships and especially the ones i did once i got into the nfl was, one, how to preserve wealth and how to use leverage properly, you know? i think that, you know, you -- i came into the nfl my first season, i was day trading while playing in the league, and i had no understanding of leverage and trying to, you know, offset gains with different strategies and different things of that nature. and so for me taking those internships was to learn how the pros do it, you know? as a player, my job is to play football. and so, you know, i spend a lot of hours of my day and most of my week thinking about how to beat my opponent.
there's other people whose jobs, they spend that same amount of time to focus on how to gain money and create wealth over time -- cheryl: right. >> and for me, it was how do i study the pros and take what i can to help increase the net worth for myself and my family, but also for me more importantly, who can i help with it. cheryl: well, i've got to get this out to our view prokers before i let you go. we're about out to have time, but you've got a netflix real estate show. how did that happen? [laughter] that's cool. >> yeah. yeah, we hit top ten for a while there too. maybe we can get back up there. but, no, it's called "buy my house." i'm fortunate to be sitting next to some amazing investors. you've got the ceo of redfin, the ceo of corcoran group, and you've got an amazing investor out of chicago, and we're all literally competing to buy people's homes throughout the country. it was an amazing experience. i'm a real estate investor myself but, honestly, i've never
heard sellers, you know, tell me all the emotions going into the background of their homes. so it was definitely a different experience because as an investor, you don't want to have e moasmghts but, you know, your heartstrings get a little buller standing right in front of you. cheryl: well, it's great to have you here, brandon copeland. and congratulations on your success. >> thank you so much, cheryl. i appreciate you. have a great weekend. cheryl: you too. all right. well, we want to change gears here, show you some live pictures. you're looking at dover, delaware, right now. we are waiting to see and hear from pride president joe biden. he's going to speak about the student loan forgiveness plans. there's been lawsuits, there's been appeals, probably going to be more over that forgiveness planning but we're going to get the scoop from the white house many moments about where we sit with all of that. take a look at your markets right now. obviously, it's a good day at the office. the dow hitting new session highs. i guess brandon was good luck
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june 24 at least of this year. dow right now, as you can see, up 773. s&p higher by 89. nasdaq higher, stronger as well. cathie wood's ark innovation fund scooping up more tesla shocks -- shares. that is according to data from bloomberg. it's the firm's second purchase of elon miss musk's company shares this month. the ark funds also did some el selling. they did a little selling of nvidia and some other gene-editing bets. svb financial group sinking after the bank report third quarter earnings that missed analysts' estimates. the financial institution facing down its lowest close since october 2nd, 2020, when it finished at $265-- 2 the 45.65. it's on pace for its worst ever
performance. venture capital firms have suffered due to the volatility we've been experiencing. now let's take a look at under armour. stock, as you can see, is higher almost 3% despite the raying being can cut -- rating being cut from outperform to market perform. brokerage firm says a slowdown in demand highlighted by nike and adidas is a bad sign for under armour. also afraid that under armour is discounting more than expected to get rid of excess inventory. a lot of retailers have had excess inventory to deal with. urn armour, as you can see, up 2.8%. adidas, that's down about 4.25%. adidas is still waiting to make a decision on its relationship with kanye west. but luxury fashion house balenciaga is now the first company to sever ties with ye
over recent controversial comments. publish balenciaga's parent company said in a statement, quote: it no longer has any relationship nor any plans for future projects related to artist. this comes after the billionaire rapper made a series of anti-semitic remarks over last few weeks. west is and balenciaga had commented on his short-lived eyes saw -- yeezy project with gap. all right. now back to the breaking news that we have been following for you. once again, we are looking at a live picture right now, waiting to see president biden. he is going to be giving some remarks. he's in dover, delaware, expected to speak about his student loan relief plan. this is delaware state university. now, this is a historically black college and university. 75% of students here received a pell grant.
biden's forgiveness plan is to cancel up to 20,000 in student loan debt for pell grant recipients and 10,000 for eligible federal, non-pell grant borrowers. they base that on income. the plan's got an expected price tag, $400 billion. the dos to tax taxpayerings -- the cost to taxpayers a major cause of concern. consumers are facing high inflation, a slower economy, a a lot of that tied to stimulus spending, and this is after multiple courts rejected republicans' efforts to block the plan. the president also spoke earlier about economy, u.s. budget deficit. ed lawrence joins us now back at the white house. i think too what's interesting here is, obviously, that these state a.g.s led by eric schmidt many missouri are, like, this is not good for our states, for americans. >> reporter: and they're talking about all the people who maybe paid for college and paid back some of their loans, didn't have federally-backed loans or didn't go to college because
they couldn't afford it. you know, it's not fair to those folks. now, the president obviously making student loan leaf a big deal before the midterm elections, 18 days before the elections. he's also talking about his stance on abortion. the president yesterday bringing the bipartisan infrastructure deal into the debate saying look how much money he's spending through his administration. and earlier today he touted the pact that he says he's got 1-- cut $1.4 trillion from the federal deficit. >> we're going from historically strong economic recovery to a steady and stable growth while reducing the deficit. building an economy where everyone does well, where the poor have a ladder up, the middle class does well, and the wealthy do very well. they're not hurt by it. >> reporter: but the committee for responsible federal budget says, quote, the entirety of the decline in the deficit between 2021-2022 can be attributed to the expiration of temporary covid relief, not due to a renewed era of fiscal
responsibility. so this is how it really breaks down with the massive spending under the cares act that was passed urn the previous administration, that's now run off. the president signed four more major spending bills, each one a smaller size than the first one. so it looks like he cut the deficit when he actually reduced the amount of spending the government is doing. all does is not bringing down inflation as of right now. the minneapolis federal reserve president says that we are not in a good place. >> it's possible that headline inflation has peaked, but i have not seen evidence to give me comfort that the core inflation and the services inflation, the stickier participants of inflation that are less volatile, i've not yet seen much evidence that that has yet peaked. and if that's what i'm quite concerned about. >> reporter: very concerned. president joe biden just walking out, coming to speak about student loan relief. he's less concerned about and has yet to give a timeline for when his transition will happen
and when his policies will actually bring down inflation. back to you. cheryl: yeah, yeah. well, obviously, you know, as we wait to hear from the president right now -- and we are looking at these live pictures from dover, delaware, he's being introduced, as you can see here -- the question is with all this stimulus spending. and i'm glad neel kashkari, actually, alluded to fact that this is why you have these high inflation numbers. and if you get more cpi numbers like we've had, this does not bode well for the economy, and there's going to be more talk about this recession. we are going to monitor these live pictures. he's going to be touting the student relief plan. those are the expectations. if he says anything different, we'll let you know on "the claman countdown." strong market, very much right now. as you can see, we're higher by 745 points. high rates though, high mortgage rates hanks to the fed, hit -- thanks to the fed, hitting
markets. applications really beginning to disappear. let's bring in huntington big share ceo, he's going to join me in just a couple of moments here to tell us what he's seeing on the loan front as the fed shows no signs of stopping, at least november's meeting anyway. and back to our markets, 752 the on the dow. the laggards, amex, verizon. that's an earnings story for both of those companies, and the earnings to guidance not good when they released their numbers. we'll be right back. ♪ ♪ if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity. vo: it's a new day. because covid vaccines just got a big update. just in time for everyone who works. with other people. just in time for... ...more togetherness.
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with my hectic life you'd think retirement would be the last thing on my mind. thankfully, voya provides comprehensive solutions and shows me how to get the most out of my workplace benefits. voya helps me feel like i've got it all under control. voya. well planned. well invested. well protected. cheryl: mortgage rates rose once again this week, stopping just short of 7. that's according to freddie mac. 30-year fixed averaging 6.94% for the week epping october 20th -- ending october 20th, and that is also higher from the week prior. pretty much 7% here. these higher rates have caused mortgage applications to plummet, dropping to the lowest
level in 25 or years. huntingon bank shares which operates more than 1,000 branches in 11 states offers a variety of financial services including mortgage financing. company just reported record earnings morning beating estimates on the top and bottom line and upping their fourth quarter guidance. their stock is doing well. how's everybody else doing? president and ceo, steve stein our joins me now. it's great to have you here, and we'll talk about the quarter in just a second, but i first want to get your take on what you're seeing out there the when it comes to lending and where the consumer is in particular with mortgage loans. what is the forecast and what's behind the numbers right now? >> well, cheryl, we've clearly seen a slowdown, right? 7% mortgage starting the year at 3.5, so a 2x times, and there's a bit of sticker shock and an affordable quotient that comes with that. the industry is seeing that as well. we happen to have a very strong
third quarter, did about a billion dollars of mortgage production, so we're quite pleased with what we've generated so far. pipelines look good going into the fourth quarter, but clearly things are slowing. we happen to be a very large home equity lender, number four nationally. we only lend in 11 states, so there's a partial offset for us. mortgage loans to home equity that's underway, and i think it will car carries through much of next year. cheryl: the market's expecting another 75 basis point hike in november, but there's a hiking now that maybe -- a thinking now that maybe fed may slow a little bit down for the december meeting. but what does that mean for you? >> well, the fed's operating on the short end of the curve. it's currently inverted in the short term. obviously, the long term is not, but -- so the curve's moving around a bit. it doesn't, their actions don't necessarily mean the long side of the curve moves. i do think there's a, however,
there's going to be a slowdown year-over-year as we look at '23 compared to ' # 322 the, and we're geared for it. cheryl: well, you've been in business since 186 of, so i think that does say something about how you maneuver, obviously, the volatility, the ups and downs of the markets. at the same time, yeah, i want to talk about small business lending. you've got sides of your business as well whether it's auto dealers, auto customers, that is changing, in particular on the retail side as auto loans are now more expensive. what do you see there? >> well, a auto lending, we to a lot through the dealers. it's called indirect lending. we're one of the top ten auto lenders in the country as well, and that business is always a risk-return analysis, and right now with rates up, we've actually pulled back a little bit. but the performance of the portfolio, our portfolio's exceptional. there's sill a terrific shortage of cars. our floor plan levels are almost
at record lows. up a little bit this past quarter, but it's hard to find cars at many of the dealers. you're hoeing some good pictures where there's inventory, but that's not always the case. cheryl: yeah, yeah. >> so there's a lot of order from the if oem and takes, in some cases, months to get delivery. cheryl: interesting, i guess it's not a surprise considering the supply chain issues that we've seen. real quick, td's u.s. commercial lending chief, he says loan demand is growing even with the federal reserve rate hikes. and that kind of goes in line with what you're saying. but what do you see going into 2023? >> i think loan demand will stay strong of there's just a dynamic goingen on throughout the country right now where you're seeing businesses invest. there's a restore shoring of jobs that were moved offshore because of supply chain issues. there's a foreign direct investment in the u.s., arguably, the best market in the world right now for business
expansion. and so there's a lot of activity. we see a lot here in the midwest, certainly in central ohio. you saw a chip announcement not too long in greater kilometer bus, last week there was a honda announcement with their electronic battery partner of $3.5 billion. so there's a lot of activity going on in addition to the intel announcement earlier this year. cheryl: hey, you know what? you expand a plant, you expand the real estate footprint. people need to move in, buy homes. steven, thank you very joining us we certainly appreciate your time afternoon. and we want to let our viewers know, be sure to join me every week on the fbn prime real estate block. american dream home airs every wednesday night at 9 p.m. eastern time right after mansion global, and that is only right here on fox business. well, at this hour we are going to be talking about charlie gasparino from yesterday. remember he told liz that sec
chair gary gensler had a plan to change market making? well, will this potential change many leadership after the midterms thwart that agenda? shar charlie's going to talk about that when he breaks that next. take a look at the big board. we are breaking new session highs, as you can see, dow up 755. a strong market as we go into your friday evening. happy hour a little bit earlied today to. we'll be right back. ♪ ♪ i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones ♪ ♪
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liz: with just 17 days left until the mid-term election gop members of congress planning to grill the sec chairman on a long list of new rules for new investors. is the chairman lawyering up over the controversial rules? charlie has new information. charlie: there are two major i controversial rules there will be litigation on. it's the esg stuff. a lot of people believe that goes beyond the sec's mandate. what investors want to know for investor protection issues.
not the environment. that's the epa. and he's promising a massive change in the market structure. it's about how do we route retail trade to small investors to put in a lit market where it's publicly disclosed. people are saying that's not going to do much maybe other than raise prices. the way it's handled through alternative markets there is a competition of overflow from the robinhoods and thus they get free commission. those are the two issues i think people are projecting a lot of legal challenges. because of that, sources are telling us the sec is looking for ways to prepare for these lawsuits. they are bringing in outside legal experts. they hired one already. fox business has learned that
the securities, the corporate finance division handled georgetown law professor brian galley on rule making advisement. he is a main advisor for corporate finance division on these potential legal issues. the sec is worried that there is growing bipartisan support or opposition to a lot of these rules. these are a lot of democrats sending him a letter saying be careful what you do with market structure. you may be going too far too fast. there is a lot of controversy around this stuff. it doesn't look like he's backing up. he's going to outside experts to get advice on these issues. if the republicans get the house, there is a question on the senate, but if they get the house there will be tremendous challenge sons capitol hill.
that will emboldenment legal community and the conservative groups will go after the esg stuff, already they filed some suits. vertu, a big market maker, citadel could sue on that market making aspect. it hurts their business obviously but they are going to stay why blow up a market that doesn't need to be blow up and challenge it in court. robin hood could do the same. there is very little evidence we have seen that small investors aren't been fitting from the market. he's trying to say because it's obscure and market making is made in the exchange venues, darg pools, that we don't see the prices. the rules say you have to match
at the best price. if you put all this together, it's going to be a legal "s" show. brian gally is already on staff. people are talking about potentially more outside lawyers. this is somewhat unprecedented. it's not unprecedented to have outside economists brought in. but outside lawyers is unprecedented levels. they don't have their horses internally. the i.g.'s report said they don't have enough staff, people are quitting left and right. liz: the closing bell did it well. major averages higher for the week. the dow on track for its third straight week of wins. the rustle 2000 is on track to finish the week higher.
there is the russell. you can see a gain of 3.5%. our closer follows the little guys. talk to me about these markets. obviously we are having a strong day. is this a volatile continuing story? >> we don't know what the future holds. but we do think that for small caps in particular, and that's what we do at royce, the future outlook is pretty bright. the reason for that is simple. the trailing returns in the market the last five years have been he people inic. when you have trailing returns in the zero to 5% range. they are about 14% on a prospective basis. these are very attractive returns and they are abofg average.
the mix when elevated like it is now is an indicator of positive future returns for the asset class. we think valuations look good in small caps. reporter: the small bank lending environment. >> we like financials for a number of reasons. we think wire entering into a different interest rate regime. it feels like interest rate environments could be different going forward. that's something that's been a huge head wind for the sector and the last 3. >> -40 years could become a tail wind. a company like home bank shares we think will do well in the environment. a majority of their deposits are in florida and texas to great growth markets. they have a conservative credit
culture. in an environment like this they can thereby for their customers to make loans. they can come out of this at a much better place than when they went in. >> reporter: you have got a broader market. these gains you are showing us, very good points particularly in florida and texas with those companies. stock is down? buy low, sell high. we are snapping a losing streak. 31,000 number. major averages posting am up week. larry kudlow coming up next. [♪♪] larry: hello, folks, welcome t