Transcripts For CNBC CNN Newsroom With Brooke Baldwin 20240714

Joining us is lindsay bell i hear you, i think earnings seeing the twoweek bounce in the market, whats happening with expectations . We are seeing second half earnings, especially the Third Quarter numbers come down a little bit this is going to be after a Second Quarter where we see a decline of 1. 4 . Thats the expectation as we all know, earnings coming in better than expected. I would expect flat to up slightly in the Second Quarter but it is all about guidance as it always is because these tariffs the numbers havent been accounted for in the second half. Broad come a wakeup call it was. Theyre expecting 500 billion of imports to be tariffed by the end of the year so we wouldnt be surprised to see more companies to do that with us for the first hour of the story. Kayla tausche has the latest, meg terrell with the latest and phil lebeau at the Paris Air Show kayla . Theres hearing under way, a last roadblock to President Trump putting those new tariffs in place on the remaining chinese import this week hundreds of companies are testifying, most are saying tariffs are bad for businesses and consumers but a few like dan nation running a North Carolina cotton mill said its necessary. Chinas been let run rampant forever and you have to stop the insanity and do something. There are 99 other countries to source from. Other than just china. Who are playing by the rules. There will be seven days of hearings and comment and july 2nd is the new deadline after which President Trump can introduce the tariffs. Thank you sticking with trade, huawei out with estimates of the impact from the u. S. Ban. Josh with the details. Josh sara, thats right. Huaweis founder forecast revenue down 30 billion over 2 years to suggest Revenue Growth here roughly flat both this year and next huawei is a force. Number two maker of mosmartphon on the planet. Customers are feeling the pinch, too. Broad co broadcom slashed their revenue forecast. Thanks very much for that tune in on wednesday to the exclusive interview with huaweis founder and ceo that will be a big interview turning to a new deal in the pharma space as pfizer bets big. Meg has the story. Pfizer is spending more than 10 billion for array bio pharma it involves identifying the biology driving disease, in this case multiple forms of cancer, to target it the deal is sparking speculation about more m a both for other Cancer Companies like blueprint medicines as well as other potential targets. All those stocks are up, guys. Back over to you. Thank you Paris Air Show is under way an the battle between boeing and airbus is front and center phil lebeau on the ground in france with more phil here, its the story of two companies flying in completely Different Directions start with boeing which is not announcing a lot of orders as it focuses on the 737 max grounded rean i suring customers with a fix and is working towards getting the plane recertified. Hers the ceo talking about where boeing is in that process. Certainly we expect to have that happen before the end of the year as we said. I cant give you a timetable were keeping our Airline Customers in the loop to know whats going on and important to to focus on safety thats the most important thing here. Boeing is not expecting to do recertification flights for the 737 max this week as some reports had indicated but dont be surprised to see that happening in the next couple of weeks. The other story getting a lot of attention here in paris is with the airbus a321xlr. Think of it as a replacement for the boeing 757 and connects mediumsized cities further apart. Deliveries of the xlr are expected to start in 2023. Guys, back to you. Phil, thank you very much. Now investors seem to be waiting for the decisions this week and g20 next week joining us is jason, good afternoon to you do you think the market is expecting a cut . I think its clear that market is expecting two cuts by the end of the year. One this week not one this week two cuts by the end of the week. So there is an expectation that the fed should ease. I think there is probably some sort of which the fed made a policy error tightening the last time last year i think thats especially true given the context of a potential trade war between now and the end of the year and escalation of the trade war. People are saying jim grant on squawk box this morning. People are saying that the fed could cut as soon as this week. It could. Why is that its not what the bond market is expecting but telling you something that the equity market isnt and you dont want to come pou compound maybe by making another policy error by staying too tight too long i think that the problem is that the headline data by and large is not weak enough probably to justify a cut and then you get into again theres a credibility issue that the fed might have to wrestle with. We talked so much about the fed is an event about g20. Should we talk about q2 earnings certainly i dont think anyones really thinking about q2 earnings or Corporate Management teams and so i think its something that will kind of come fast right after fourth of july holiday. Well come back and start earnings season and something that investors will have to face front and center after the two bigger events and the fed being today holding up the market to some extept with the weak Empire Manufacturing data point and Industrial Production last friday was pretty decent but yet like you said the fed, there is a credibility issue here because theyre supposed to be data depend ent an the data is solid on the economy. How do you interpret the economic backdrop where the market has been relatively strong yeah. But i think a lot of that is really driven by an expectation of a fed rate cut. And some sort of expectation the trade tensions between china and the u. S. , theyve eased to a certain extent and the rhetoric is not worse and i think people are still leaving this the door open for potential for an agreement between the end of the year seems likely in both countrys interest so people dont want to get too short and i think makes sense given the amount of the fact that 10year treasury yields at 2 what lindsay, which sectors are you positioned for in light of these moves we are still overweight the Communications Sector and health care its a defensive tone to our overweights but its hard. I know people talk about the valuation in the tech sector stretched and the china trade situation weighs on the sector and hard to not be in the sectors. Communications services leading the way and after the may selloff these are the sectors that led investors flocked to these sectors. Communication services having a particularly strong day. Jason, how would you be positioned given the big sort of question marks around event risks . Yeah. I have a little bit more of a value stock buy. A lot of this is dependent whether you think the economy will surprise in the second half of the year or not if you think the economy is weak or muddle through 2 real gdp growth its making sense if you think theres a chance to be better than expected which is what we have been betting on you would be in financials and industrials and technologies and making a bet you know on a trade deal making a bet on trade deal and the fed cut. The fed cut is a layup at this point unless the trade deal is struck in a week or two but the trade deal is much more of an i guess a question mark. Jason, we heard from josh lipton of huaweis trouble International Smartphone sales down 40 last month. Can we extrapolate of how theyre hurting and apple is not and tim cook doesnt expect a big fall in china. I think both countries have the u. S. In my opinion has an economy thats built looking at gdp equation to withstand a trade war better perhaps than china would china is more sensitive to that and might have, might have more political flexibility. Now, you saw with hong kong, maybe its not quite as robust as people thought so both i think both countries dont feel it seems clear they dont feel as if theyre winning or theres no reason for them to even engage in a strategic retreat or anything along those lines. As far as apple, i dont know specifically but seems to me that doesnt seem like a big incentive to move any time soon. How can you really game out expectations whether knowing that the next chinese imports to this country will be taxed it is hard to do. Thats why you havent seen the numbers for Fourth Quarter move very much and with apple, the analyst is positive on it. Ever since foxcon made the announcement to move their prefecturing facilities outside of china to accommodate apple is a number one private employer in china with 1 Million People there so this is a huge deal obviously helps apple avoid the tariffs. Might not be a robust year for iphone sales this year given a lot of customers are waiting for 5g and kind of gives them a cushion. Also gives President Trump a little bit of the upper hand with china at the beginning of this year, when china and trump decided to really kind of butt heads and forego a trade discussion and we had the big may selloff on that, both Economic Data points out of both countries were very strong and now seen china Economic Data points weaken. So theyre feeling it much more than we are. Were going to leave it there with you, jason. Thank you. We are at 0. 2 on the s p still ahead, heading to the tariff hearing frl an interview with a leader whos testifying this hour. Thats what hes telling lawmakers about the impact on the industry. Plus, facebook is rallying hard today ahead of the expected crypto announcement this week. An analyst is ahead of the news with a bullish prediction for the stock. Heres a look at todays data tracker Empire State Manufacturing index, new york area activity, turned in the biggest slide ever to negative 8. 56 also got home builder confidence slipped in june with the nahb survey falling to 64 versus 67 estimated reading. Well be right back. Ents need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. Give me a quality fund that helps me get clients closer to their goals. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. 44 minutes left of trade dows up 55 led by boeing. Send it over to mike santoli mike sara, thank you we are hitting the bid in a moment big art auction house buyout today. Hitting on the topic you talked about, unearned benefits corporate paper on fire in a good way and Corporate Bonds and then the bucks tale, stocks and the dollar, how does that relationship change over time in take a look at this chart of sothebys from the moment it first listed back in the 80s. There you go may of 1988 first listed this is an unusually good tell for what the market is doing or going to be doing. You see the really sharp peaks right here thats 1989. Thats before the recession before the early 90s. And then you got 1999. That led the nasdaq peak by about a year and here october 1st, 2007, almost exactly with the stock market peak. And then you also get the bottoms there, too that is 09. This is 2011 essentially an exaggerated version of whats going on in public asset markets but it kind of stopped going up with the stock market here in the last few years and i also find interesting the buyout deal at 57 it is about within pennies of the alltime high. Probably no accident of early last year. Whats interesting is that art and auctions and all that are an exaggerated version of discretionary income, wealth, how confident well think people are. I think it is interesting that its operated this way and also when its private its going to deprive us of a signal it worked pretty well over the years. Interesting, mike, given how high the margins these companies charge the two auction houses charge on a sale that they havent been disrupted by the ebays of the world and command the fees and Business Model is disrupted in almost every area and the elite luxury aspect meant they stay protected. As high as the fees are, theyre not very profitable. They seem not to run the business to have all that money fall to the bottom line because theyre constantly spending money to jet around the world. That theyre not really all that great of high margin business and i think its ofly sothebys represent you in a sale or bid at the auction is a luxury good. Are there any other public companies, stocks you watch, mike, for the boom bust indicators. Not quite as good you have to go to areas perhaps the actual luxury goods makers to operate that way. In past cycles, Something Like a Morgan Stanley or Goldman Sachs does that. Bummer we wont have it under 40 minutes to go thank you. See you in a bit. The dow up about 50 points we have been hovering higher slowly drifting after two strong weeks all day Long Technology is a standout Communication Services, the fang names, all doing well today. Also come back for some tech stocks that sold off hard on friday. All despite yields slipping really near their recent lows. 308 i think where the 10year yield is. After the break, a rare downgrade for disney and a bullish bet on deere later shares of Goldman Sachs have lagged over the last year and the firm might be on the verge of a big structural change [ alarm beeping ] wake up theres a lot that needs to get done today. Small things. Big things. Too hard to do alone things. Day after day, you need to get it all done. And here to listen and help you through it all is bank of america. With the expertise and knowhow you need to reach that blissful state of doneness. So lets get after it. Everything is all right what would you like the power to do . ® all right you mighyour joints. Nge thfor your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. [mus ive got so muchut lack of love to give for love] ive got so much more to give, baby to start your retirement plan, find an advisor at massmutual. Com [sfx mnemonic] welcome back time for word on the street. Dow downgraded the firm cites persisting global trade issues to reduce the earnings outlook. Imperial capital lowering the rating to inline and maintains the price target of 147 a share the firm saying most catalysts built into the stock also deere upgraded to outperform on expectations that rising corn prices to drive stronger demand for farm equipment. Disney seems to be the most interesting. What do you think of that call we still like disney a lot. We think the premium valuation, a lot of people cite is the problem with the stock, it deserves that premium valuation. Theyre going to be full owners of hulu eventually and this year is an investment year with the fox acquisition and then synergies and set up for strength into the future. Credit where credit is due to imperial upgraded the stock and up since then downgrading purely because of the performance valuation. Their target price is a couple of dollars ahead of where the stock is the deal is also interesting saying that this is all about corn because 25 of u. S. Crop receipts apparently is corn. Planting is late yields low anyway but add to that the flooding and we have seen corn prices up a lot. They say a oneyear lag of corn prices and machinery demand and deere will be a beneficiary of that. This is one thats really impacted by the trade war and the corn, the increase in prices, you have to offset that with the strength of the dollar to hurt these guys to be in the space theres other stocks that you can really look at and were cautious with hold rating on deere. Stock up off the back of that upgrade. We have 35 minutes left of trade at the moment. The dow up by 50 points. 0. 2 on the s p. The nasdaq leads the way up. Coming up, the fake meat frenzy has chains struggling to keep up with demand. Well speak with a executive from white castle. An analyst said facebooks announcement could be a meaningful upside catalyst for the stock and e ocisp. Thstk u man stand up if you are a First Generation College student. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent. But it doesnt equally distribute opportunity, and paths are not always the same. Im so proud of you, dad man i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. We have 32 minutes left of trade. Here are three things driving the market the fed decision. Treasury yields near lows and fang stocks. Time for a news update with sue herrera. The u. S. Ambassador to to lapd saying that sending additional troops to poland is a wholly defensive measure and helps poland to equip it to defend its borders. Were talking about is merely defensive, a country being able to defend its borders and historys proven particularly here in poland that one has to be very careful with regard to its neighbors and be able to defend itself. Thats all. French president macron said he regrets irans announcement he spoke at a News Conference in paris with the visiting ukrainian president. Hometown food company and adm Milling Company are recalling select bags of the best bread flour due to potential risk of e. Coli with more than 4,000 cases of the flour made at adms buffalo plant. No illnesses have been reported. Check the website. That is the news update this hour sue, thank you very much. Lets send it over to mike for the Second Market dashboard. Hi. Calling this unearned ben its. The benefit of a stock market near the highs without really earnings expectations coming through. You guys have been hitting on this lindsay will forgive us for fact set data here but you see whats happened blue line over the past year or so earnings forecast for this quarter that were in right now declined meanwhile stock prices pretty much remained supported. Yields collapsed high quality, large Growth Stocks and also obviously those bond proxy stocks. How much can we stretch this relationship theres nothing too significant of the magnitude of the lines and sort of means something and related to the way that the stock market and bond market is telling different stories and maybe rescue this picture. Look at how the next four quarters are supposed to shape up based on Consensus Forecast earnings and here we are hoping that we get bailed out by the fundamentals this year and below the flat line and then going all the way up to about 10 for the First Quarter of 2020. We really dont know what we deal with in terms of Interest Rates and the u. S. Growth picture and does seem as if were trying to stretch the relationship and not a historically high valuations necessarily given where yields are and some point perhaps they have to be a reconciliation of where stocks are and where earnings are not getting them coming through, guys. Its optimistic take, guys. That is the question can stocks continue to go higher as earnings expectations continue to drift lower . Yeah. Thats the key earnings will continue to drift lower and what that chart shows you is theres hope and mike used the word hope around trade, a trade deal getting done or talks resuming and then also the fed. The fed put is really holding up this market. Thats where we are at right now. I hope you will forgive us for fact set data. Ill let it slide this time. Theres a payments plan for facebook known as libra happening tomorrow big name partners are mastercard and paypal and the next guest said it could be a disney analyst day moment and if you dont remember what happened, shares of disney popped 11 after the investor day april 11th revealing the disney plus streaming service, the price and things investors got excited about. Michael, we should say youre not alone. Rbc, suntrust, hyping this big moment for facebook tomorrow why are you guys so bullish about the crypto opportunity for facebook seeing the news hit last thursday, talked to a couple crypto investors in the space for more color and context and i think off of those conversations that led us to come out with a note first thing friday morning to aggressively get more bullish on the stock you know, look if we step back big picture and just think of Growth Stocks in general, i think that multiples as a general rule get driven on the basis of what expected growth is but what are new product cycles, what incremental tams i look at this i have a company thats got 2. 7 billion users globally across their platforms as they reported on the last Earnings Call and what piques our interest is emerging markets with 70 of the users and only about 28 of ad revenues and theres a real gap opportunity to go ahead and close there. So michael, what a portion of your upgrade and optimism of what this means for the share price is down to fundamental increase in earnings and revenue off the back of it and what portion is down to the fact that it might attract that kind of cult crypto investor following so just to clarify, we didnt upgrade the stock. We had a buy rating on the stock. 220 price target on the basis of strong fundamentals so with this point quite frankly even when we initiated one of our concerns about the tech space in general is regulatory and obviously quite a bit more noise about that so i think we are already baseline not really expecting that aggressive of a multiple and the thing i would want to try to different yate is this is crypto but theres Something Different about bitcoin and some of the other things that folks have historically focused on the Crypto Market and where facebook is trying to go with this, really meant to be a stable current sy and the underlying value and just basing this on what we have been reading in the news should be based on six of the major global currencies and i think a challenge around crypto to debate what is really worth in terms of the value but basically retailers and we saw quite a few Large Internet Companies chosen to partner with facebook as well as in the payments space are probably unwilling to accept Something Like bitcoin if you dont know what the value could be a month from now could be up or down 10 and i think that facebook is addressing that. Really setting themselves up to have this have more mainstream adoption. Are you as excited as these analysts about facebooks crypto plan we do like Facebook Stock we have a buy rating on it but i dont know that the cryptos the next catalyst to drive this forward. I think that they have more things going with regards to ad re knew, especially coming from instagram. This is going to be a stock, though, that is going to be in the crosshairs from a political perspective. Going forward. So you do have that little bit of an overhang but despite the privacy concerns daily active user data has remained quite stable and we do see upside for the stock in the future. Does this in any way attract more scrutiny over just mean that theyre not as focused on the scrutiny i think we know more when we see the white paper tomorrow i dont want to get too far out of the facts at this point and i think to me at least a big statement seeing them choose to go to market with an open coin and coming to market with an at this point roughly 100 partners is speculated as pointing so i think they conceivably could put themselves in a regulatory light or walk the line appropriately theyre in the spotlight at this point so i think theyre working that closely. Michael, sorry to cut you off. Were running out of time. Is this a revenue driver for the company . If so, how at this point, im not making any assumptions about what you get incrementally. I think through the incremental behavi behavior targeting revenue they could choose to expand into not clear until we basically see the white paper. Could be peer to peer lending, could be cross border dollar transactions theres a lot of potential ways to take it i dont want to get too far ahead of the cart. Thank you for joining us. My pleasure. Facebook stock up 4. 3 today. We have 23 minutes left of trade. The nasdaq does lead the market up higher. Just around 15 basis points of gains for the dow and the s p. Up next, changes coming to Goldman Sachs. Well tell you what investors need to know. Grubhub shares are higher today after a partnership in the breakfast wars this is my headquarters. This is where i trade and manage my portfolio. Since i added futures, i have access to the oil markets. And gold markets. Ok. Im plugged into equities. Trade confirmed. And i have Global Access 24 7. Meaning, i can do what i need to do. Then i can focus on what i want to do. Visit your Online Broker today, to learn more. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Welcome back 20 minutes to go heres where we stand in the markets. Dows up 27 points the best performing group right now in the s p is energy and Communication Services both good for gain of more than 1 despite weakness in crude oil. Lets get to Rick Santelli for the bond report. I said the 10year at 3. 08 i meant 2. 08 yeah, no. Thats a freudian slip as a matter of fact, the tone was set at 8 30 eastern with empire at minus 8. 3. You see the chart there. You know Something Else that comps october of 2016 . 3year bond yields at this area. Not only that, with the last Manufacturing Index of ism comped to the same and an intraday of 10year notes. Unchanged on the day two more basis points lower and they have fresh lows back to september of 2017. Back to you. All right thank you. New changes coming to Goldman Sachs says the Firm Planning to merge four separate units for a new division and the new unit to invest in private companies, real i state and hard to access deals putting them in competition with blackstone and kkr. Wilfred, how meaningful of a change is this i think significant business perhaps not as significant as you might immediately think and they have done this sort of private equity type of business and sat under the investing and lending sub sector or known as the Merchant Bank and not changed. Of this new entity coming together, four Business Units makes it sound like a lot and 20 of did nthe new total is mo. Why are they doing this . Trying to compete with blackstone and kkr its not transformation in terms of the new business they try to do and talking about it more why that change . Look at the multiples, the likes of a blackstone and Goldman Sachs and traditionally goldman with a great multiple and they didnt have great ones and look at the share point performance of the two and we do do this well talk about it more part of their broader switch towards more trance parent sy under the new leadership, Earnings Call, investing in lending is a sub sector with growth and a black box in the past this shows that they dont want it to be anymore. What is your feelings on Goldman Sachs and the month of june were underweight the financials but with regards to Goldman Sachs one of the few banks we have a buy rating on and we like it since David Solomon took over and reinventing the business almost and focusing on the fee revenue and thats really smart especially in this uncertain environment and kind of rebalancing their traditional Investment Banking and trading business theyre so wellknown for. The other interesting thing on the nonrecurring business could be great for this squaequ. M a is picking up and thats something that usually goldman in a better position than others on this . Always the best position for that generally Morgan Stanley famously won out on uber and either way both of them will do well on this across here but whether that offsets softer trading revenue we will have to see. They have guided lower and markets under values. They think. To this point, if thats the motivation on the pe story then does show theyre frustrated by the share price and the other thing that weighs on the share price is 1 mdb is not settled. Goldman sachs under pressure with the financials again today on the low yields. Up next, last chance trade and the ceo whos testifying as we speak on capitol hill about how tariffs are impacting his industry. As we head to break, heres Companies Hitting new highs and lows in todays session. [leaf blower] you should be mad at leaf blowers. 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We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Under 12 minutes into the close. Check in on individual Market Movers grubhub higher today on news that dunkin is partnering for the Delivery Service following the launch in new york city, dunkin plans to expand in the coming months. Grubhub trading up about 3 . Do you see krispy kreme with a new style of donut, as well . Filled. Do they deliver it . I dont know yet. Thats key. Well see. Countdown is on until that times square location. Well be live. Target said the registers back online after a systems outand left shoppers at a stand still across the krcountry. It was not related to security or a cyber attack or anything like that. That stock down about. 75 i was in the target yesterday. Register was fine, especially at the selfcheckout desk i only bought a deodorant. Not there for two hours. 11 minutes left of trade lindsay, what have you gone for . Tiffanys our stock analyst upgraded this at the beginning of the month. Bad news is priced into the stock. Weak q1. Cut guidance it is trading at 18. 2 times on a forward basis and underperforming the sector in general. We like it seeing sales improving in the second half the one bright spot in the Earnings Report that the local sales, the domestic sales, were very good but trade, china, still obviously going to be an overhang on the sector but i think once you get sales going you get margins improving. We think thats really conservative given the tail winds that they have from product costs coming through and mix and other things and something that investors should consider going forward. Down 33 over 12 months so i guess playing into the analysts upgrade. Theres value there. All right thank you. Up next, covering the angles of the market j. Heres the winners and the losers in the dow. My experience with usaa has been excellent. They really appreciate the military family and it really shows. With all that usaa offers why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. It was funny because when we would call another insurance company, hey would say oh we cant beat usaa were the webber family. Were the tenneys were the hayles, and were usaa members for life. Get your usaa Auto Insurance quote today. Pass pas through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. You should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Welcome back to the closing bell. Six minutes left of trade. Theres the sector heat map. The nasdaq is top of the major indices. Financials at the bottom materials also down the best part of a percent. Six minutes left to go time for the closing countdown lets trade the close with mike lewis. Mike, hows the market positioned ahead of a key fed meeting this week . Positioning is very light its been the case over the past three or four weeks. We have seen kind of gross leverage, net leverage in particular, from the hedge funds sort of near lows. So positioning is light heading into the fed so we think its a pretty big time for the fed and what they say is very important. So you think the week ahead is quite binary for markets. How big a move up or down do you expect on wednesday based on the decision itself or the rhetoric from the fed thats an interesting question the implied move for the s p is only 80 basis points, very low i think people are taken aback with that because its a very big decision keep in mind the street, the markets are pricing in about three rate cuts into year end and the fed still with the dot plot has a hike built in and a big delta between the two of those. For an 80basis point move baked in is surprising and i think the reason we see that as somewhat reasonable because it is based a lot we believe on the trading desk at least that the g20 and trumps meeting with xi is a big part of what the fed does. So i think wednesdays move is a little bit maybe undersold 80 basis points you could have a bigger move especially if the fed doesnt produce that the street is expecting. Positioning is light, mike. How do you view the last two weeks and getting mild follow through today on a sort of quiet catalystless day not easy to say. The fact that the path of least resistance appears to be higher what does that tell you . Yeah. I think the bounce is technical in nature. Again, theres such a big unknown with what happens with trump and xi and the trade and youre stuck within this band of 2700, 2900 maybe overshoot either way and not surprised to see the bounce we had and into wednesday its possible to continue to grind higher theres something called the prefed drift which is when you study back to 1994 in environments like this you tend to get most of the move in the equity markets in the 24 hours proceeding a fed announcement an a grind higher into wednesday and looking for the fed to kind of let the street know that they understand where the markets are being made, why theres such a difference between the dot plot and again if you dont get it it could be confusing and six or seven trading days until you get a g20 announcement and i think higher volatility over the next couple of days after wednesdays probably somewhat is likely. Mike lewis, thank you for joining us. Thank you. Lets sempbd nd it over to e santoli. How about a look at fixed income calling this corporate paper on fire corporate debt is very much in demand look at the lqd, the ishares Investment Grade bond and just today at 121. 82, nosed above this level here, 121. 79. What does that mean . It means that lower treasury yields are also pulling corporate yields down and reducing the cost of corporate capital. It is supportive of the stock market higher bond prices reflected in a higher price for the etf is actually very well core lated to stock markets nicely supported before this high in the lqd price you had to go before the 2016 election and unwound the higher yield move and i think more worried of the message of compressed yields not seeing corporate spreads keep up and reduce the cost of capital for companies on a net basis, thats a probably positive thing so just something to keep in mind as we talk about the quote message of the bond market lets look at the nasdaq with bertha. Thank you very much corporate spending today fueling a rally in bio tech. After pfizer bought Array Pharmaceuticals for over 10. 5 billion, spending some of the other potential targets today to new highs including unicure and facebook is really the catalyst today behind the communications strength and that strength in tech facebook right now is the best performer of the fangs for the quarter after having lagged for so long. Also chips flat on the day some huawei makers hoping for a reprieve on the sales. Over to bob at the nyse. Light volume. Real estate is historic high territory. Bank stocks lower today. Energy moved higher. Strange. Oil closed lower Energy Stocks up essentially 2 below the historic highs and waiting for the fed to set a stage for an easing cycle on wednesday. Market want it is fed to leave the door open for a rate cut theres the Dow Jones Industrial average bell closing near the lows of the day just up 7 points lets take it over to the closing bell. If youre just joining us, very good afternoon to you along with mike santoli look at how we finished up the day on wall street high ir across the board a small range we saw in tells of the dow trading. Closed up just above the flat line there as far as the s p 500, losing some steam really into the close. We did get a positive close, though, after two straight weeks of gains Communication Services, real estate and energy that took us there and financials and materials all weighed on the major averages technology a real shining light today, especially the fang stocks facebook having a good day and small caps. The dow itself and a wide range for the sectors, Communication Services up more than 1 . Heavily led by facebook. Financials down just shy of 1 and the empire state, weak yields stayed low. Hurt the banks very much a yield play for those banks that suffered and the worst performing sector. Whats fascinating is continuing to see strength in these hot ipo names. Beyond meat up another 12 today. Crowd strike up 9 today showing for whatever reason late cycle, the fact that fang hasnt been as hot lately or hunger for new, young fast growing companies, it continues to happen on wall street. The renaissance ipo outperforming the market by double today. Still to come, hearing from the head of the min apparel and Footwear Association joining us today is lindsay bell with mike lehman. Mike, we await the Federal Reserve and watch this market, what were you watching the Market Holding as steady as it has for four days in a row and interesting how the market is patient waiting for the fed to say theyre no longer patient and whats going on. Growth Stocks Holding the market today. Russell 1,000 growth up. Value stocks down a little bit thats been the story and we dont know the overall macro picture. Is that why the ipos do so well is this. Certainly an extension of that, yeah looking for singular stories with an organic tail wind about that company it is not about is the economy going to be great and therefore can crowd striker make the numbers . Mark, you remain bullish overall . I am the leaders of the market continue to outperform. We have ipos which are telling the Investor Base theres demand for new securities and zsh. Do they need to go lower this week i think thats an indication. The fed will try to stay independent here and they have some room on the other end not as rates near zero the independence stays the way it is. When you say the leaders continue to lead, who specifically are you talking about . I hate to be on top of the fang stocks but i think they continue to outperform we saw acceleration in the last companies in the last quarter. They have accelerated the growth and continue to see that through the summer and the leadership stays the same. If people look for a more defensive option which sectors would you look to . Health care we have seen it pick up a little bit. The news today on m a, a big year for health care m a, within the bio tech space you have more drugs approved under the Trump Administration and certainly a positive for the sector and remember health care, if youre worried of the second half of this year, trade, the fed not cutting and doing their insurance cut, this is a sector to be in because health care was the only sector that ended up in the second half of last year versus all 11 sectors in the s p 500. I think if we talk about the action today you have to talk about the new York Manufacturing activity index what happened there . And how do we interpret it we have been talking for a while things are slowing we have a president who likes to tweet about tariffs and a lot of disengagement for people investing and seeing that flow through the numbers. I think it is a little bit like you said upsetting because thats the overall markets tone right now. I think the growth sectors stay growthy and value sectors stay value. Youre not worried about the negative print reading a record drop or something i think you have to have an accumulation because its relatively narrow, one region, and people say we had a little bit of an inventory build in the First Quarter. And youre going to put an asterisk next to the numbers but i think you cant have the story become, wow, the economy is really accelerating to the downside because right now the stock market is priced for a rate cut people want that they dont think the economy needs. I mean, mike, are you s surprised how calm equity markets have been . Does that make sense when were awaiting a big decision . I think it makes sense in terms of the levels. You had a 5 orr so rebound from the may selloff and then you kind of, okay, no longer oversold and kind of work off this level for a little bit. It makes sense to me and nonetheless it is kind of unusual to hold in place below the record highs. Lets talk more about the big event which is the Federal Reserves june meeting, kicks off tomorrow investors watching to see if the fed makes a move on rates. Jim tells us this morning he thinks the fed will take decisive action. Market has been conditioned to demand a rate cut when it feels a little weak in the knees and the fed has been inclined to so grant i think theres an almost uncanny consensus that the fed needs to be easier thats my view is to cut in june that is to say, wednesday. You disagree . That would be a surprise. I think i do. We saw the fed with the qe, two sectors slower seem like they get their footing. Cars and homes and the fed ice didnt the work so far and still a little bit worried or at least cautious because the fed wants to stay independent. We have had a president saying they shouldnt be. I think they will be and no cut. They pivoted pretty clearly in december with rhetoric if the passionate stay independent mantra at play would they have then i dont think so. Im going to take the other side of that. It seems so me that the risk for investors on the fed meeting and not that theyll cut rates or not but use language to describe theyre bripreparing f rate cut is it enough to satisfy this market where the bond market is fully priced in a couple of cuts we wont know that. Theres interesting work out there on how not to use the word transitory. He wont. We are atentative to Downside Risk to the economy. We stand prepared to act quickly to remedy that or Something Like that. Whats interesting about the game theory situation, jim grant, he believes that the fed is kind of a servant of the market if you believe that, yeah, sure, maybe they give you one this week if you dont think that its an interesting game theory problem because theres a 20 implied chance they go in june based on the fed fund futures i think you have every meeting being live if they go in july, why not just go six weeks earlier theres the question i dont think they want to they havent prepared if market for it. They want to be patient and kind of wait and see if they can. Mike, to your point on jims question, jims point and how you tackled it, they could still taper to what the market wants to hear changing the rhetoric. I think thats kind of a baseline thought of what they will do, yes. They can also change the expectations for gdp and Interest Rates and one cut still in for this year and if you note one hike. Excuse me, yes. One hike but if you look at history, though, the difference between the fed funds and core pce you usually see about 6 Percentage Points difference before you see a cut. We are at less than a percentage point cut between the two numbers right now so clearly the market is giving a message. What do you think, mark, about this idea that the fed to wait to see what happens out of g20 i dont feel they think that way. Their mandate to be that, thats less important for them. I think they have seen the economy slow and want to do a wait and see the economy is fine. I dont think they would say that but perhaps behind closed doors that would be the thinking given i mean, the tariffs. The tariffs risk is big and also wouldnt you if you thought there could be a deal and cut rates by a quarter point, maybe even indicate another one to come and you get a deal or maybe the market comes to terms with where trade is, and then the nasdaqs at 8500 or something in a few months, how does the fed feel, right 98 going into 99, a bubble. Thats the risk for them going too soon. Back to equity markets. Which of the fang names do you like the most . Facebooks the stock du jour to like. Our analyst is very specific of why. Obviously the things are humming with instagram and get the legislative fears behind them, youll continue to see the sass stocks continue to do really, really well. You have to play in the i wouldnt call them broken but i like the ipos of 2018 that have not outperformed docusign is a great story and you want to Pay Attention to those and another one we took public a year ago, last week we had a big ipo in fiver but up word coming back and its a theme for a decade. Thank you for joining us. Lindsay, great to see you for the last hour, as well. The head of the American Apparel and Footwear Association just testifying about how President Trumps tariffs on china could hurt his industry and raise prices for consumers he joins us next. Fake meat frenzy led to shortages at restaurants and sent the stock soaring stocks close the day higher but the market did lose steam in the final moments of trade bob, lets start with you. Low volume, i would say very narrow trading range today lost steam late in the day a great mover like home depot just had a phenomenal month. 188 a short while ago and moved up several days and closed off of the highs thats a reason that the dow moved to the downside. Closing not far from the lows for the day. Key story remains Interest Rates. Noting utilities, high on friday Investment Trust also historic highs. Todays rates remained low yield hungry investors dying for a day to get into the market 2 from the historic highs fed got to convince the market theyre cutting rates soon but they dont want to sound too panicky or like theyre concerned about the economic environment. It is very tough getting the tone right on that one. Bob pisani, thank you for that nasdaq outperformed today. Bertha with an update. Communications sector, best performing sector today and fueled by facebook, a strong day for facebook and it is now the best performer among the fangs for the quarter up better than 13 . You would not have said the same thing when we started this month. Meantime, facebook expected to have some kind of an announcement tomorrow. Chip chips today took a breather. They were among the worst performers in the nasdaq and beyond meat isnt only ipo doing very well here luckincoffee with a surge. Silk road up 140 since they debuted and turning point up 140 , as well, since its debut and seeing the successful ipos here back over to you. The moves have been huge. Thanks. The u. S. T. R. With a hearing today on tariffs of chinese goods. Commerce secretary ross did speak with our phil lebeau saying the president has no problem adding the tariffs if needed. Very hard to put timetable on things i think that we will eventually probably make a deal but if we dont the president is perfectly happy with continuing the tariff movements that we have already announced as well as imposing the new ones that hes temporarily suspended. Joining us fresh from the appearance at the tariff hearing is Rick Helfenbein thank you for joining us. Thank you im hot off the witness seat and i just heard secretary ross and i do remember at one point in time he, too, was in the textile business so in spite of what he is saying im sure he feels some of the pain that we feel break down for us the current state of play for your industry and the numbers that you face and why youre so fearful of tariffs being elevated. Well, our industry is heavily entrenched in china. We have 42 of our apparel, 69 of footwear and no place to go so if we get hit with this amazing 25 , you know, we are already heavily tariffed an have been for years our average on apparel about 12. 5 now and youre going to add 25 to that . Thats 37 i dont think the American Consumers going to like that. And when we look at the numbers and you think of the shear volume of 550 billion, thats like a Million Dollars a minute and youre going to put 25 on top of that and think that consumers not going to notice got to be kidding. This is a disaster in the making im sitting there and im looking at the eight members of the panel and reminded me of the eight band members on the titanic. The ship will sink an theyre trig to do their job and play the music and keep us calm we are not so calm we are truly upset and truly panicked and we see whats going to happen and were trying to get that message to the administration please, please dont tax the american consumer. This will be the largest tax increase or one of the largest ever in america. So, rick, in the meantime why cant manufacturers and footwear manufacturers be moving as much as they can of that production outside of china into vietnam, bangladesh and moving for years anyway yes we have been moving for more than five years because the price of labor goes up in china and everyone tries to move out the problem is the american consumer, they expect a lot from us they want the environment, they want sustainability, they want us doing right in product safety and we have had trouble getting the other countries up to speed. Number two behind the United States and vietnam thats 55 of the market and in india, indonesia, bangladesh, 70 of the u. S. Market we dont have a place to go. We are stuck so if we get hit with the tariffs its going to be really tough. Its going to hurt and hurt big time. Youre stuck forever . Theres no medium or longterm options . Yeah. Theres a longterm option takes ten years to get out of china and the interim our retailers are going to struggle through this our brands are going to struggle through this theres no way to do this and do it quick and just the mere threat of it has people running for the exit doors we are very worried. We havent yet, rick. Have they . They havent done so yet and so far the consumers not really felt the effect of tariffs cpi numbers hasnt risen perhaps the companies are taking on the hit and not seen it on the consumer yet. You know what the truth is . We were able to finesse 10 . We cant finesse 25 and it hadnt hit all of us. Now theyre talking at the core. Theyre talking all apparel, all footwear you hit that, its trouble with no place to go except as we know we have said it many times prices go up, sales go down. The net result jobs lost not good for us. Not good for the economy and america and, you know, write frankly we are just scared we are really scared and we hope the administration is listening. So last time i heard you like this, rick, was when you were lobbying on behalf of the industry against the border adjustment tax, a serious consideration from the treasury. You did win that one yeah. Do you have hope that theyll be listening this time, too . I hope they are listening they listened because that was a really bad idea and they all knew it and they finally backed off because it wouldnt go anywhere this is different. This is, you know, article 1 section 8 of the u. S. Constitution says congress is supposed to be in charge of tariffs but they have outsourced it to the white house and now the white house is using it as a tool they weaponized it they believe its a good way to bring people to the table. Well, may be it is it is not a good way to solve our probables. Rick, thank you for joining us we appreciate it. Thank you. Up next, well break down the charts to see what the dollars moves signal about the equity market. Walmart firing the latest shot against amazon. Find out what that is lateon longell. R read Earnings Reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with td ameritrade. People know aflac. Aflac but not when to use it. Do i use aflac when the kids get slime in the plumbing . No. Thats home owners insurance. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com dow closed higher today by just about 23 points lets go back to mike santoli. This is an oldie but goodie. The bucks tale take a look. This is from jim paulsen today very, very longterm chart this is the correlation of the dollar index and the s p 500 both rising together or falling together below zero, inversely correlated and the case since around 2000 or 2001. What does it suggest well, i guess jim hiypothesizes when growth is strong and the fear is to overheat or the economy overheat and inflation is the risk and the fed of course will have to come in to quash that inflation then when the dollar goes up it kind of restrains inflation and encourages stock investors and the opposite here. When growth is low, when the dollar is high, could be more deflationary and the relationship is kind of flat lined in the past few years and not been particularly strong one way or the other still negative and not getting more negative right now. In other words, the stock market we weres not more sensitive to u. S. Dollar moves and both range bound for a while at the high levels. And the range bound is negative 0. 3 to 0. 2. Not like its 1 for 1. Never fully determinetive of whats going on. Its a general drift it is not really a strong catalyst. Generally the thinking is if the dollar an the stocks are rising together in tandem you are in a good situation. When it is reversed then its more of a headache. It means that the market is sensitive to something going wrong in that whole relationship. Never want to have to worry about the pesky foreign profits. Right. Exactly. Thats the thing. Time for a news update with sue herera. A strongette quake hit Southern China killing two people and injured 19 more the u. S. Geological survey warned significant damage. It was a 6. 0 magnitude quake aftershock of 5. 2 hit the same area a bit later. At the paris auto show nasa announcing to take women to the moon in art memis saying it wans them to reflect todays more diverse astronaut core. This time when we go to the moon we go sustain bring and with a diverse, highly qualified core with women and under a Program Named after the twin sister of apollo artemis we spend women to the moon for the first time ruis Food Products recalling packages of frozen breakfast wraps and may contain small rocks and best if used by dates of january 17th and 18th of 2020 check the freezer. Youre up to date. Back to you. All right thank you. Up next, fake meat so popular right now theres a shortage at white castle a Top Executive at the chain joins us next. And slack getting ready to go public through a direct listing. What to expect an how it differs congp ren o mi uhe o closing bell. Welcome back shares of beyond meat surging today up 580 in total since its ipo. But as demand heats up restaurants like white castle which was one of the first fast food chains to sell the impossible burger beyonds rival facing shortages bring in Jamie Richardson from white castle thank you for joining us. Good to be with you thank you. I want to take you back to your decision to stock impossible was that a long process where you weighed up impossible and beyond and why did you choose impossible it was a really thoughtful process and i think we found in our friends at impossible a really great friendship and partnership and worked on it a long while and able to celebrate the oneyear anniversary in april. Its been a great partnership. We and they have learned a lot customers love it. Whats demand been like strong. Much stronger than anticipated recent monthses especially as more news spread i think people had a natural curiosity and told them their friends and came back to buy more and people love the impossible slider. Are you sold out . Are you having supply problems temporarily we are working through that as we speak and will have it back in the restaurants this week and shifted our shape from being a round burger to a square burger. Thats what were known for and customers crave and the transition is a hiccup in terms of keeping the supply lines full but everythings ready to rock now and excited about that. And, jamie, how committed are you to impossible and to them exclusively . Do they make you stay exclusive . Could you add beyond you you ware you worried . We dont have concern of missing out. The friendship with impossible is real. We are a family owned business around for almost 100 years. We look at over the long haul and solving problems and the response of customers is overwhelming and with our 10,000 team members the response is overwhelming and we know we have a winner and we are excited about what comes next in the friendship. Jamie, in the year you have had this available have you been able to tell who is buying it . Meaning, is it replacing other things on the menu customers who otherwise perhaps not in white castle . How do you think thats working . Its really interesting were seeing with the younger customers, a lot of these individuals gone with a plantbased diet and you can be that veto vote by the way, here among friends, we dont use the phrase fake meat so we have seen recent announcements from tyson foods and purdue you know, the traditional meat players. Getting into this whether its a blended version, a pea protein with chicken do you think theyre able to do what impossible and beyond meat have done which is fully alternative meat with Plant Protein . Yeah. I dont know what theyre able to accomplish but heres what we do know. Working with impossible, they have put the study to this and done it in a thoughtful way and something that tastes great and i think thats so important in terms of success in the marketplace because theres no tradeoff and so for our customers they love the taste and put it on the white castle original bun with one perfect pickle and you have a winner. Do you find that customers say i want the impossible burger are they aware of the brand or do they seek something thats not real meat . No. I think theyre absolutely aware of the impossible slider and the partnership to brand it that way and something we have known since 1921, the home of the original slider with the first impossible slider. Absolutely we benefited from good News Coverage and people becoming more aware and people want to sample and try we serve omnivoers and people order a double cheeseburgerer with extra bacon and an impossible to go with it it has broad appeal an the taste separates it from the rest of the pack. Jamie richardson, thank you for joining us. Crave on, my friends. Up next, the delivery wars are heating up walmart now upping the ante in the grocery aisle. Well explain when closing bell comes right back this is the couple who wanted to get away who used expedia to book the Vacation Rental that led to the ride which took them to the place where they discovered that sometimes a little down time can lift you right up. Flights, hotels, cars, activities, Vacation Rentals. Expedia. Everything you need to go. Expedia. The flexible class schedules d me tremendously. Allowed me to go to work full time, run my catering business and be a mom and parent. When i reached this accomplishment, it was like, its here, its happening, its now. We at Southern New Hampshire university are the ones who succeed. We are the ones who break through. Welcome back the delivery wars are heating up and looks like walmart is taking onamazon with the newest grocery shipping option. Courtney reagan has more on that. Hi, wilf. Theres a 90 unlimited Pilot Program for grocery in houston, miami, Salt Lake City and tampa. It wasnt announced officially and spotted by tech crunch walmart not sharing many details other than saying its in addition to the free pickup and individual order delivery options already in place in much of the country target, walmart, amazon, they have annual subscription programs in place for deliver ri amazon charges 15 a month if you want amazon fresh, those grocery products targets shipt program 99 bucks a year for unlimited delivery and its from target and other retailers with that subscription walmart and target with channel options just last week target added a sameday delivery option without a membership for 9. 99 an order theres no option for sameday delivery on amazon unless youre a prime subscriber meaning most of them offer membership and that one day without membership except for amazon theyre sticking to that prime subscription if you want same day. And grocery, courtney, seems to be a priority for all three do we have a sense of whos growing the Online Grocery Delivery Business the fastest . Its so interesting that we are talking so much about Online Grocery delivery and we know in general in the market is such a small portion of the pie it is Something Like 5 or under in the United States for Online Grocery delivery we know that wall administrators grocery comparable sales and all in, thats delivery and in store are growing and thats helping to drive that instore delivery growth and as far as online delivery numbers we dont have insight for the individual retailers but like you said, grocery is such a key category especially for a walmart to drive that repeat purchasing and traffic. It is more than half of their sales so getting that right is really the key to success for walmart. Yeah. It feels like its totally up for grabs. Courtney, thank you. Thanks. Earlier this hour, we spoke with the ceo of the apparel and Footwear Association and heres what he said about the tariffs. Prices go up, sales go down the net result jobs are lost not good for us. Not good for the economy or america. And quite frankly, we are just scared we are really, really scared and we do hope the administration is listening. Representing all of those apparel and footwear manufacturers. What did he say . More than 60 of footwear manufactured in china and large percentage of apparel said he couldnt just flip a switch and go to vietnam. He said that you could finesse 10 . Right. 25 is too big a bite and it is an interest thats operating in deflation forever and dont feel confident about the ability of raising prices at the consumer level. 10 versus 25 makes total sense. I think there was a line in there, as well, that they could never move production which sounded a little farfetched. Clearly they cant flick a switch and change it but to suggest impossible to ever move it. The point is true the traffic is a problem the Comp Store Sales is a problem. They dont have pricing power. Correct. Either they eat it and hurt really badly or pass it all to the consumer and thats still a big what if. With the economists saying either prices go up as a result of tariffs or choice goes down right . So thats the fudge factor in there. It might not be economy wide inflation as a result tariffs but individual markets. Retail biggest source of jobs in this country. Still ahead here on closing bell, the buzz on wall street, ubs facing backlash overseas well discuss. The lexus es. Every curve, every innovation, every feeling. A product of mastery. Lease the 2019 es 350 for 379 month for 36 months. Experience amazing at your lexus dealer. Time now for the buzz on wall street. Ubs reportedly facing backlash in china over comments made by paul donovan one of chinas state owned Infrastructure Companies China Railway financial core excluded ubs over comments of chinese pigs perceived as offensive by some in china. He commented on the spine flu outbreak saying, does this matter it matters if youre a chinese pig. It matters if youre eating pork in china ubs is clearly not an American Bank but i wonder whether reaction by the chinese is elevated given that the trade wars are ongoing and i think surprise all around at both ubss stern response and even more so by china. The last note by paul donovan said in an apology for any misunderstanding about my comments he said we removed it and it was about inflation and chinese inflation prices rising. To all that read the reports, colliely the intention. He is quite funny intended as a light comment who knows what sensitivities get enflamed in translation and everything it is hard to me. It is pretty fascinating that one economist note that was offensive can lead to a major response like pulling a bond sale for an institution. Crazy. Speaking of european banks, deutsch bank stock higher today as it continues to take steps to restructure itself and turn around the operations and planning to create a socalled bad bank which will hold about 56 billion of noncore assets as the ceo continues to shift to the private wealth management. Does this help deutsch bank . So embattled. Focus on that and not the other reported changes and i see as more important. Toxic assets sexy terms and they clearly attract attention but its actually only about 10 of their assets and share price underperformance which is huge i think is more based on a profitability issue as opposed to any question of whether they go bust and the bad assets are really terrible. Profitability is very low. Why . Retail bank is suffers with negative Interest Rates and germany and the Investment Bank is for a long time trying to shrink to higher returns and hard to do so i think the changes there are more interesting and she ric away from equity trading and focus more on the fx trading and supports the rest of the corporates of Transaction Services the question is whether thats too little too late the bad bank with the focus today and not sure thats the focus. Not the key issue although a decade after the crisis you have 10 of the assets characterized as destressed in that way and not a contagion issue really. Thats important to note. If you look at deutsch bank versus the euro stocks bank index over 6 months or 18 mon s months, deutsch bank is bank not only are we not really talking today about one of the big european banks being potentially contagious for other european banks and were definitely not talking about that in the way that we were in 2010 to 12. In fact, all of this has been a beneficiary for the Investment Banks and theyve taken business and these moves probably suggest that theres more business to take up next, your wall street looks ak ahead and everything atve investors needs to have on their radar. Closing bell will be right back my experience with usaa has been excellent. They really appreciate the military family and it really shows. With all that usaa offers why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. It was funny because when we would call another insurance company, hey would say oh we cant beat usaa were the webber family. Were the tenneys were the hayles, and were usaa members for life. Get your usaa Auto Insurance quote today. Lets take a look at how we finished up the day on wall street quiet trading with gains coming off the board coming off two backtoback weeks of gains for the markets. It was the nasdaq that did the best of the big three, up 0. 6 Technology Communications and services in particular the fang names, facebook, amazon, netflix, google all shined brighter than the rest and the small caps had a good day, as well and so did Energy Stocks even with crude oil closing lower. We are looking ahead to the big things, the first day of the fed meeting, of course, kicking off. Facebook could reportedly announce the cryptocurrency and adobe set to report results after the bell. Also on tap this week, leslie picker is here with more on that leslie a direction listing is an unconventional method for a company to go public and it involves buyers and sellers coming together on day one to find a natural place for the stock to trade direct listings involved several key distinctions from the counterpart initial Public Offerings. A initial Public Offering in three major ways one, no underwriters and in an ipo underwriters will find investors to market the shares and help set a price based on demand direct listings instead involve Financial Investors and from the same wall street firms and these bankers provide advice and help with the discovery of the opening price. Financial advisers cost less, and they cost a third of what the company would have spent on the ipo, saving the company about 100 million too, no cash the primary purpose of a direct listing is to create a Public Market for the stock by allowing early investors to sell and newer investors to buy three, no roadshow traditional ipos, require executives to spend two weeks on the road visiting with investors to drum up demand. The direct listings require one day and just a few hours to pitch any investor who wants to tune in. Direct listings continue to be successful and they have the potential to subplant what would have been other ipos as well as some of wall streets fee, guys . No lockup period for the founders and do we have any indication of what level of sales any of those people are intending to do in the short term what is the big question mark there is no way to know where a a a traditional ipo will be in six months and anyone can sell on day one if the price is high enough and you feel compelled to do so and people see that as a potential risk for companies that pursue a direct listing instead of an ipo. This whole idea of how prevalent this is. Its interesting that spotify and slack are the two prominent examples so far and if theyre representative of who is a good candidate to have a good listing and you need a good brand name and have multibillion in private value, already and essentially not need the branding exercise or the marketing of a deal, of a roadshow independent thats right. You need to start with the letter s. Im kidding. You cant raise any capital through that first day now you can raise more capital from subsequent, secondary offerings and so forth, but you need come well capitalized to a direct listing which both slack and spotify have been able to raise ample amounts of capital in private markets as have other unicorns so i do think youre right where you need to have a brand name and you need to be adequately capitalized and you probably want to have a decent amount of investors who are ready and willing to sell otherwise there wont be a market for your stock. Leslie, you mentioned the fees for the big Investment Bank and how worried are those Investment Banks that are more successful direct listings can start to change the focus. Theyre not that worried that most companies will opt for the initial Public Offerings and they wont fit into the category of being a brand Everybody Knows and will come to the table for so i dont think theyre quite freaking out just yet. That said, if this deal goes off successfully this week, it is another data point for more companies to pursue and if there is more of a kind of infrastructure for lesser, well known companies to do this path, then perhaps you could start to see more and more companies pursue a direct listing as opposed to an ipo. Guys, one fan of this method is actually tom farley who used to work on the New York Stock Exchange yes we talk to him all of the time he was tweeting out just last friday, chewy gave 50 million of gains and 80 cost of capital and i dont understand why more companies arent direct listing. Is it a way for them to save money and not put so much money on the table the thing is with the direct listing youre not leaving any money on the table because youre not raising money in the first place. They need that money to wage the ridehailing war the ipo was the way for them to go because they needed that capital to invest into their business, but hes right there is no money to leave on the table because you arent raising money in the first place. The offset is the fact that these companies spotify and slack have raised money privately in the last year or so so they dont need to in the Public Markets and probably the same Investment Banks have . Difference needs it was just a year earlier. Its not zero sum, but it is different. I think the leave the money on the table is completely hindsight and hypothetical the price it finished at the first day of trading was want available. Bottom line, if im an investor forget if im a bank if im an investor does it matter if i buy into a direct listing or an ipo . Not much. No, it really doesnt. Leslie, thank you focus back on the Broader Market mike, the Sector Performance essentially flat. Essentially flat. A lot of waiting the day before the fed gets a decision we often have a little bit of a lift, but yeah, i would imagine it would remain pretty steady the question is what tone the fed strikes and just how much they will start telegraphing that theyre going to move from patient to cutting mode. Yes. Whether its imminent or just out there somewhere. We are out of time as always, thanks very much. That does it for closing bell qwest fast money begins right now. Fast money starts right now. Live from the New York Stock Exchange overlooking times square im melissa lee. Pete najarian, karen finerman, dan nathan and guy adami it seems like no end in sight, but one wall street strategist says all of the mania could be a sign of a it up, well explain plus former commissioner Scott Gottlieb will talk about the tech deal and whats next for cannabis and the fake meat phenomenon we start off with a little bit of deja vu stocks right now near alltime highs an