Transcripts For CNBC Closing Bell 20240714

Falling back below 2 . As i said, the s p 500s essentially flat at this moment. The dows just lower the nasdaq down 0. 1 the russell looks down a full percent as regional banks down almost 2 . Joining us for the hour today to break down the Market Action is steve grasso from stuart frankel. Great to have you with us. Good to be here whats your take on this sort of softish session only a day or so after great positive trade news . You have a holiday week, so you have a shortened, abbreviated week you have people looking for either you had a rebalance on friday, you had end of quarter, end of month, end of week. People are starting to take a big, deep breath in. Seeing where they want to reassess, and and redistribute their Equity Holdings its all about the fed people are on fed watch right now. Thats really the only thing that is taking up the brain of a lot of the Market Participants right now. Even though trade is all over the headlines, its still fed. Fed still cut, but the trade truce in place you know, powell kind of walked back and bullard even who has been dovish walked it back last week. I think you have to really kind of watch where youre stepping in this marketplace. Powell only has a certain amount of ammo. And usually to fight a recession, the get cuts between 5 and 6 . He has nowhere near that now he has to walk the fine line give the market what it wants, what it craves, what keeps the markets going higher, but he cant give it to them as quickly as they want it. Lets get back to the top corporate story of the day nike and sarah, youve got Mother Nature details from the company. The company is responding to all of the backlash which has been the story of the day, and a rare second statement from nike. Ill share that with you nike is saying, we regularly make Business Decisions to withdraw initiatives, products, and services nike made the decision to halt distribution of the air max 1 quick stripe 4th of july based on concerns that it could unintentionally offend and detract from the nations patriotic holiday. Then they go to Great Lengths to say how patriotic they are ni nikes proud of its American Heritage and our continuing engagement, supporting thousands of american athletes including the u. S. Olympic team and u. S. Soccer teams we already employ 35,000 people in the u. S. And remain committed to creating jobs in the u. S. Including a significant investment in an additional Manufacturing Center which will create 500 new jobs. That would beoutside of phoenix, arizona, where the governor of arizona this morning has said that they will pull the incentives to nike in protest, compromising those jobs because he disagrees with the decision to pull the sneaker. Obviously this is striking a nerve at nike, being called unamerican. And being criticized for pulling the sneaker. Nikes just saying, hey, we didnt want it to be misinterpreted as a symbol of hate it was brought to our attention by colin cop ni colin kaepernc who they have gotten behinds they could have waved a flag and i dont know if that would have curtailed the hate theyre getting. Obviously theres a lot of patriotic people in this country. Theres the military that the flag stands for. Its offensive to a lot of people nikes stance on this. I understand that its offensive to some people in the country. But its really a fine line that they have to walk, as well did they say, to you was Colin Kaepernick unequivocally theyre not confirming that thats a journal reponew englao medicine thats the jour l journal reporting. By all accounts, its a point of contention and what makes people so angry who is he to be the arbiter of what is racist and what symbols are to be interpreted in certain ways i think me and a lot of people did not look at this particular version of the 13 original colonies flag as a racist hate symbol but once you learn about some of the places its shown up, you know, nike decided we dont want to be a part of that what about the main driver for why they make these decisions . Whether it was originally embracing Colin Kaepernick, the recent decision to pull the shoe in china by the japanese designer who had embraced the protests in hong kong or this. Is the primary aim doing whats right, or the primary aim whats going to be best for sales i think both. This is a company, and despite all of those controversies and there have been no shortage of them in the last year, nikes sales have rocketed. The stock has gone to a near record high. It has not affected them theres only upside even when all the noise is negative like were seeing on a day like today. And having said that theyre progressive they know their consumer better than we know their consumer. When they take a stand on Colin Kaepernick, despite the pushback, sales speak for themselves under armour is up three times what nike is up year to date 2. 5 times or close to 3 times. A lot of times when youre a stock investor the first story doesnt hurt you, the second story might hurt you a little bit. But investors dont have to pick whos right, whos wrong theyre agnostic when they look at the stock price, they want one that goes up more than competitors in the field. When you have the choice of under armour who people battle with valuation but has a three to one outperformance of nike the Smaller Company and profile more domestic leaning, had more of a tailwind when it came to the Corporate Tax cuts. Higher effective tax rate. Nike is down a little today well discuss more on that story coming up. Great additional reporting there to get the comment from the company. Lets get back to the other big stories were watching we have more from the Stock Exchange on the biggest moves. We have the latest on trade and were covering the auto sales number in chicago. Brian sullivan is at the opec meeting in vienna. Sima, lets start with you reporter we saw a oneday pop related to the trade truce, and that was it. Stocks lower, fighting toy to stay in the green fighting to stay in the green. The tenyear yield at a 2. 5yea low. That tilt is evident when you look at the sector check its utilities and real estate seeing buying. The real estate etf up 2 with every stock in that sector higher keep in mind this sector has an average dividend yield of about 3 when looking at the Real Estate Investment trust. One specific mover is hcp. It has a yield of 4. 5 one of the highest among its peers. And again, all 32 components are trading higher in todays trade. The dow trying to stay in positive territory yesterday it was financial that led us higher. Thats reversing today mcdonalds, verizon are leading, gold man and chevron are lagging. Chevron on Weaker Oil Prices back to you. In trade the u. S. Today proposes new tariffs on europe we have the details in washington kayla . Reporter the Trump Administration is adding another 4 billion to a list of proposed european goods that would see tariffs as a result of the longrunning dispute between boeing and airbus at the World Trade Organization the wto sided with the u. S. In a lawsuit against airbus that was first filed nearly 15 years ago. And that suit argued that airbus was illegally subsidized by european governments so the ustr in response is trying to level the Playing Field via it was on some 25 billion in european goods. Everything from Italian Cheese to scotch whiskey and the e. U. In retaliation has said it would hit back on about 20 billion in u. S. Goods from tractors to tobacco. That response back in april when we first heard from ustr were still waiting for a response from brussels to the administrations announcement yesterday. White house trade adviser Peter Navarro said on cnbc ustr will have another announcement in the coming weeks theres currently an august 12th deadline to refine this product list i imagine well hear from a lot of the companies involved. Thank you meantime, auto stocks on watch as new Sales Numbers roll in phil has more in chicago reporter the pace of sales last month roughly in line with expectations a pretty strong month. For the Second Quarter, and the reason were showing 2q numbers is because gm reports on a quarterly basis. Lets see how they did relative to their competitors and they were all fractionally lower for the Second Quarter again, the pace of sales overall still pretty strong. One storyline that did come out today, fiat Chryslers Ram pickup truck brand sales up 56 in the month of june that is a huge pop, guys, in any category but especially in pickup trucks. The ram outsold the Chevy Silverado in the Second Quarter, two straight quarters that that has happened look at overall sales pace and were showing you the pace on an annual basis most believe we probably came in at about 16. 8, 16. 9 million for the month of june. Quickly look at shares of tesla. We continue to await q2 delivery numbers. Whether or not we get them today or tomorrow, that is the number that people are looking for in the auto space right now what did tesla deliver for the Second Quarter guys, back to you. Phil, thank you turning to oil, seeing a big drop today as the opec meeting wraps up our Brian Sullivan is in vienna with more. Brian . Reporter guys, it was maybe a more eventful day than poland. Oil prices, first off, falling a couple percent during the day. Listen, russia coming out and solidifying a couple of things one, agreeing to that 1. 2 million barrel perday cut for nine months. Thats longer than usual they like to go six months for every meeting. Now theyre going well into 2020 agreeing its cooperation with opec, making opec a little bit bigger and directly and indirectly controlling about 41 Million Barrels per day of global production. But also in our interview with the Saudi Energy Minister said a couple of things of interest number one, i asked if he thought that global economies were going to slow down. He said no, he thought they would pick up. He also expressed concern about the levels of debt for u. S. Energy companies so a lot more happening at day two of opec here in vienna, austria. Brian, thank you so much. We have got stocks trading essentially what, just higher on the s p it is set for a record alltime closing high once again. Only fractionally higher the dow similar with the nasdaq low. The russell lagging significantly. The regional banks suffering there, also energy underperforming with oil prices down 4. 5 . Lets discuss more on the markets moves. Joining us, rebecca felton, senior Portfolio Manager at riverfront investment group. Steve grasso with us, as well. Youre a chief risk officer. Is it risky to be buying quits at these record alltime levels . Thank you for having me i think all of us have to agree that these valuation levels seem a bit extended given the fact that theres no real news or resolution on the trade front. And yes, the fed is positive, but valuations are higher and Earnings Growth is trending lower. What specifically do you have in mind in terms of what earnings season is going to look like well, right now q2 forecasts per fact set is for the overall earnings estimates to be down about 2. 5 which is a stark difference from where we were six months ago which projected q2 earnings to be up at around 2. 5, almost 3 so with ceos telegraphing more negative comments as it relates to expectations for sales and capex plans, its understandable why wall street has lowered those estimates quite a bit. Do you agree that earnings season could hurt equity markets . I believe that it could hurt the equity markets, but i think the backstop is going to be the fed. The fed gets wind of a negative Earnings Period or negative to the point that it will hurt the equity market, i think the fed will press a little bit on the dovish gas pedal so to speak why doesnt that encourage you to be more bullish, rebecca . Over the years post crisis when the fed goes easy, typically the market likes that. Right but we have to have Earnings Growth to see multiple expansion from here. And i think that there is reason to pause because last year in 2018, for the year, almost all sectors of the s p had doubledigit Earnings Growth when we start seeing negative numbers year over year for q2, it could cause some sort of a wait a minute, were were a little extended at about a 16plus trailing or forward multiple versus the five year and tenyear averages. Were right up at the highs. Steve, when you see the small caps underperforming like they are today, is that a concern for you . Sure. Theres a lot to be concerning in this marketplace. And i think rebeccas right to be concerned about the host of issues that shes worried about. But we both could have said that a month ago or a month and a half ago, and you would have missed the rip that youve seen in the markets right now so the markets are clearly focusing on stuff that professionals and fundamental strategists and analysts are looking arent looking at and its the fed, its trade, and its macro, not micro. So i think the market can still move higher inexplicably to a lot of the participants. Quickly, your picks in sellers of sectors of where to avoid some of the macro issues were looking deeper into some of the subindustries, certainly technology, its telegraphed that earnings will be down year over year in that area were tilting toward software and services in health care we have a bias toward medical devices expecting that perhaps they wont be as heavily scrutinized in the current regulatory environment. Rebecca felton, thanks for joining us thank you still ahead, well have much more on opec and oils drop when we speak with sadad alhesseini. Well ask where he thinks prices are headed and nikes decision to pulls it sneaker line. What it could mean for nikes brand going forward. Dow positive, up about five points well be right back. To a single defining moment. When a plan stops being a plan and gets set into motion. Todays merrill can help you get there with the people, tools, and personalized advice to help turn your ambitions into action. What would you like the power to do . Welcome back the s p just about on pace for another record alltime closing high the dow and nasdaq flat. The russell lags, down a full percent. Now to the market dashboard, mike heres a quick outline of where were headed to. Seeking selfhelp. Well get to that. Thats about Companies Seeking selfhelp, admitting to fault a little bit later then looking for some room for improvement. Thats about the kind of stocks that have not done as well as others in this market. Then giving credit where its due. Another way to look at the credit markets seeking selfhelp. Theres a report in the wall street journal today expressing that the pace of stock buybacks has come back a little in the First Quarter. Really a modest decline from record levels in the fourth quarter. But here is an annual look of just how much stock is being bought back. This, by the way, is 1 trillion thats basically where we got to almost, a little over 900 million last year. Thats the orange line heres where were pacing this year so pretty much close to last years pace. There is bayback announcements, this is not completed buybacks the other lines is where we were in 2016 and 2017 even if we come back off of last years levels, its hardly a loss of support for the stock market from this channel stock buybacks the other point often gets lost is that the performance of those Companies Buying back a lot of stock is theyre not automatically better than the overall market these are two etfs that track companies with heavy buyback programs, the spider buyback and buyback achievers etf. As you see over the last two years, theyve both trailed the s p 500. Now this is some with sector mix, some have a lot of financials and all the rest. They dont have a lot of Consumer Staples in utilities either theres nothing automatic about buying back stock and getting your share price higher. It is a source of support and new cash into investment portfolios certainly a positive i dont think its time to raise the alarms yet, though, guys maybe why dividends not quite as tax efficient, but more certain in terms of their cash return absolutely. Thank you and less political scrutiny, too. But fair point on the on the tax rates. But buybacks havent really worked that well necessarily why is a buyback a symbol of weakness for a company i think, well, youre saying because they dont have anything else to do with their money. I think if you look back to the Portfolio Managers and analysts, theyll point to buybacks as one of the reasons why the markets have outperformed or have performed the way they have recently but when you look at a buyback, a buyback cant by its nature run the stock up you cant be there on the open, cant be on the close, you cant have a plus tick theyre more a supportive bid versus aggressive bid. Nike under pressure after the company pulled a pair of sneakers that had an early version of an american flag, also known as the betsy ross flag in a new statement, nike says in part it made the decision to halt distribution of the air max 1 quick strike fourth of july edition based on concerns that it would unintentionally offend and detract from the nations patriotic holiday. Lets bring in eric desenhall, he specializes in these case and the head of labrea media gentlemen, thank you eric, ill go first to you how do you think nike is handling this . Look, a company like nike doesnt do this to be virtuous they do it because theyve made a calculated decision to reach a particular marketplace namely minorities and progressives so far, the evidence would show this is the right thing. Let me tell you the con founds confound number one is whenever you make decisions or policies like this theres going to be an invisible consequence. There are going to be people who will never take to twitter who despise you for doing it, and youll never hear about it, they just wont buy your product. Second, i think that companies that become activists dont and i use that term, social activism, not financial activism often dont understand that when you make activism a priority you have to understand that you could never go back you may think you are engaging stakeholders, but what youve really got on your hands is a partner. And you will always have that partner. That is the thing that theyre going to have to face. I think that theyve made the decision that its worth it. My question on this particular nikerelated issue is, surely internally before they announced the shoe in the first place they weighed out the pros and cons of using this particular flag. So why didnt they then stick to that decision . What changed after the fact . And if it is simply a highprofile celebrity telling them which way they should be acting, is that the right decision to follow it . Well, i think thats the confounding issue here is how did this happen, how did they make this mistake. And they may not have had the diversity inside and i dont want to pick on nike because i think theyve been known as a fairly Diverse Company but how did they not know that this was potentially going to offend people . Its obviously an unforced error. And how did they not know this was going to offend certain amount of people by coming out with this. That this was symbolic of certain things that harken back to slavery i dont think it does i mean yeah 13 original colonies stands for the revolution and american independence and other things. I dont think it was widely known. Yeah. I think youre making an interesting point which is a lot of people would look at that, and it wouldnt occur to them that this in this day and age where everybody is absolutely mortally offended by everything, i dont think that this is something that absolutely jumps out and kicks you in the teeth and i think one of the challenges is what im finding with companies is they often are so beholden to internal politically correct issues that they assume that external audiences will have the same reaction that they are having internally and they do a very bad job at anticipating hostile backlash. I think that theres a mythology that these companies are all so sophisticated that they couldnt possibly not foresee everything. And i think that they rarely do. You made a very good point. Continue i was going to say, eric, you made a good point that they have already chosen to be on Colin Kaepernicks side. Right im surprised that Colin Kaepernick didnt call somebody within nike and do this quietly and more low key and say, hey, guys, you may want to rethink this, and then nike would have quietly pulled it as opposed to make it a p. R. Moment. I think nike should be grateful. Its getting big play today. It getsing big play because its a relatively quiet newsday in the Business World right before the fourth of july holiday its a novelty shoe. Its not a shoe line its its a moment for them, and by monday, obviously i think we will be forgotten and this will move on. But it does reinforce what you said, eric, this is where nike has chosen to stake its claim as a company. And this is where theyre going. I dont think this is going to change i think its a speed bump versus a sinkhole for them. I think that thats right i dont think that this is going to be a huge singular issue for them i do think that what were getting at is the broader issue of Companies Taking on political issues believing they are that they are going to be universally beloved. And im seeing time and again a company, for example, will invite an Environmental Group internally thinking look how openminded and prague revenue i am, and progressive i am, and they find ive got the inlaws living above the garage, and i cant get rid of them. Exactly right good discussion thank you for joining us thank you weve got 35 minutes to go here before the closing bell dow, s p, positive territory s p up just fractionally, but that will do it for a new record close. Any close higher the nasdaq is down a bit the russell 2000 stands out as a laggard. Down about 1 . After the break, a downgrade for nordstrom and babyish note on roku bearish note on roku your favorite company. Big customer of theirs. Impartial on the stock price well talk about that next later, well discuss todays auto Sales Numbers with former chrysler president jim press 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 30 minutes left until the close. Time for word on the street. Ubs down grading nordstrom to neutral from buy it has category and price issues and that its Competitive Position is weakening. And concerns over competition, it also cut its price target to 40 a share from 56. And Rbc Capital Markets downgrading roku to sector perform from outperform saying the riskregard is less compelling the analyst on this was on power lunch earlier. Hes still bullish on the underlying fundamentals for roku long term. Sure. Its reached the price target as an analyst, how do you go from you have to go from outperform to sector perform when the stock is up 200 . Whats the risk regard at threw risk reward at that point . Youve hit the ball out of the park let it settle in he said he would be a buyer on any pullbacks that you see, any substantive pullbacks in roku. Look at the intro today, as well it sold off this morning, then people read the note did you realize that roku has been streaming since 2008 . Thats a long time they had a head start on a lot of players i not the interface is ease i think the interface is easier than others. I have the chromecast, i have a roku tv now. Ive seen the amazon product i think that amazon and roku are on equal footing but roku has a lot more choices on theirs versus the others. Theyre agnostic to the content. Doesnt matter theyre going to be a big launch partner for disney plus, for apple plus, a launch partner for amazon thats a big topic. Amazon pushes you to amazon prime. So roku is agnostic. So you wind up getting everything you could funnel through and decide what you like better theyre going to be in more and more tvs, more and more settop boxes. I think that it is due for ripe for a pullback when its up 200 you cant knock mahaney for backing off t. 30 minutes to go. Here are things driving the action, mixed action on aufwall street we are on record close watch for the s p 500. Any positive close would set a new record i think it would be the seventh record close of 2019 oil prices sinking as opec wraps up its meeting in vienna they popped yesterday. And yields on the tenyear treasury falling back below 2 time for a news update with sue herera hello, everybody. Heres whats happening at this hour after three days of negotiations, e. U. Council president donald tusk confirming that the European Union have reached agreement on their new leadership we have proposed an underline of the next president of the European Commission, and nominated Christine Lagarde has head of the Central Bank Russian foreign minister Sergei Lavrov urged iran to adhere to its nuclear deal and called on europe to offer tehran relief from u. S. Sanctions he spoke at a joint briefing with the visiting Irish Foreign minister and here at home, the ritz carlton in philadelphia is offering champagne from a vending machine. To get the chilled mini bottle of brut or rose, a consumer can purchase a 25 gold token from the lobby bar. And after inserting it in the machine, a robotic arm will gently lower the chosen bottle to the window without shaking it you dont want to lose any of those bubbles. Thats very civilized. But i figure that would still shoot the cork off quite aggressively even i would think so. Think you have to be careful when you actually do the cork. How has this not existed before i dont know. I was going to say im not sure theres going to be much market for that. You think its going to do well . Will. I think its going to be great. Are you kidding me id rather have whiskey come out of there not scotch whiskey if the tariffs are coming well see. Thats true no french champagne either. There we go why not french cheese as the focus . All the good stuff. Anyway. Sue, thank you see you next hour. The usa might be pop something champagne coming up. Trying to jinx them trying to jinx them. Getting grief on the floor. Im outnumbered aggressively up next, crude falling today as the opec meeting wraps up well discuss where prices could head next with former executive sadad alhusseini. And shares of Electronic Arts up nearly 30 this year the company is banking on its fortnite competitor to boost growth well debate what to do with the stock at these levels coming up. Gains building a little bit here the nasdaq going positive, the dow near session highs back to mike for the second dashboard. Mike calling this admitting to fault which i understand is a hard thing when appropriate. I cant confirm that companies in pretty large numbers are admitting that their Second Quarters are not going to be that great. Look at the history of the number invested p500 Companies Issuing negative guidance for the coming quarter essentially admitting numbers are not going to be as good as analyst expect whats interesting is obviously more than 80 companies, pretty significant when youre only talking about 500 in the index the last time it was this high or a little bit higher actually was the First Quarter of 2016. What was happening then . We had this kind of Global Industry slowdown. This recession near recession globally. And the stock market had a severe correction and then had to recover from the correction if you look at what the s p 500 was triading at back then, if w dial it back in terms of the forward p. E. Of the s p 500 for the last few years and go back to that april 1st of 2016, which would basically be the equivalent of today in terms of where we were in the quarterly setup for that quarter versus now, look at that. Almost 17 times earnings where are we today almost 17 times earnings bond yields, almost as low as they were then basically its a very similar setup. It looks negative. It looks like the earnings season will be sloppy. Can the stock market look through that thats the question now. It has happened in the past that if you have low yields and accommodative Central Banks the market can say this is a downturn in earnings but its going to pick up thank you so much well see you again in a little while. Oil finishing the session lower despite on, effect and allies officially reaching a deal to extend Production Cuts through march, 2020. The Energy Alliance hoping to prop up crude prices amid a waning Global Economy. Oil finished down 4. 4 the energy the worst sector on the s p. By phone from saudi arabia is sadad alhusseini, president of Husseini Energy and company Vice President. Thanks for joining us. Whats your take on the latest Production Cut and the fact that we have seen Oil Prices Slip aggressively down 4 well, its been very challenging obviously. I think the opec thing was very successful i think the fact that they arrived at a charter with the nonopec participants, russia and the others, makes their position a lot stronger. Theyll be able to be more effective in trying to maintain a stable market. Of course, the demand is weak going into the balance of the year but on the other hand, they are a much more defensive position to be able to manage that weak market i think the price correction that weve just seen is probably a bit short term i think its a bit overstate by the end of the summer we should be seeing slightly better, higher oil prices. So at year end it remains to be seen just what happens at year end. You have to key opec members that are under u. S. Sanctions, iran and venezuela and you have the u. S. Producing more than it ever has. So i guess im just wondering what power opec really has over prices these days. Yeah. Always have this in opec, skprenz iran i think theyve been marginalized the rest of the opec group working with russia should be able to put together a good, sustainable strategy to provide good, reliable oil supplies but also at a price that allows investments in the future of both the opec and nonopec be sustained. Thats very important. The Capital Investments in the oil industry have gone down very, very significantly since three, four years ago. And so there needs to be a higher margin to retain ability to provide oil supply in the long term. So that where do you stands on the Permian Basin and, more broadly, the recent discoveries over the last five to ten years in the u. S. And whether or not theyre perhaps going to be as plentiful as some people think well, theres no doubt that the shale Oil Developments have been fantastic. Theyve certainly brought the u. S. Production way up now were looking at 12. 5 million, maybe reaching 13 million next year. But on the other hand, this doesnt come without a price the oil that comes out of the shale is not as effective in producing transportation fuels and so you see this big gap between the wti and the conventional oils. And in the long term, although theres more opportunity to develop shale oil, the world is consuming almost 100 Million Barrels. And the total u. S. Production is still only 12 or 13 million. Theres plenty of room for the conventional Oil Production from other parts of the world to be involved in the oil industry do you expect the ramco ipo to come back to market at some point this year or next year yes thats been stated by the crown prince very clearly. He didnt set a time, but both he and the minister of energy of saudi arabia have said that the ipo is definitely on the horizon. Yes, and i think the outcome of the bond issuing that ramco did not so long ago was very encouraging. Both of those factors will suggest that the ipo is going to be back on track can you think they can still achieve a 2 trillion valuation which theyre seeking with oil prices under pressure like this . Well, thats a tough question i wish i could answer that its going to be a very, very profitable industry. The oil industry is going to be around for a long time oil has no substitute frankly. We all go for alternatives to oil but the volume that is required to keep the Global Economy running will always call for oil for several decades to come so it will be a very profitable business and that should invite Good Investments in the ramco when the ideal is put out thanks for joining us a pleasure. Steven, the s p 500 Energy Sector yielding 3. 7 according to fact set. Does that attract you no it doesnt you can make money its volatile. You can make money, but i do believe that if you look back on the xle, the etf for energy companies, its underperformed for last five years. Its actually flat for the last five years so i think its basically declining profitability. And you play those large integrated names, the problem is theyre not specific in any one space to move the needle i would stay away from energy. Weve got breaking news on auto sales phil will the Monthly Sales pace for june came in at 17. 28 million vehicles according to auto data that tracks all of the automakers sales. That is stronger than expected the expectation was for sales around 16. 9 million. The pace is 17. 28 million. Guys, back to you. Thats a good number. All right. Thanks well, anything can happen, as you know, in the final hour of trade how about the final 15 minutes any close higher on the s p 500 will set a new record high up next, the last chance trade. Later, former chrysler president jim press will join us lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. Healthier brain. Better life. 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 1 3 minutes left of trade. I think about barbecues and costco costco has been growing operating income for five years over 40 walmart has actually had a decreased operating income, Gross Margins have expanded. And the renewal rate on subscriber, on membership, is over 90 you mentioned the fourth, is this a shortterm play, or you like this so all my plays are always short term if you take a profit, no ones going to ever mock you for taking a profit. I believe you can still get a pop. This stock has performed already year to date i do see performing a little further, a little longer in the tooth. Its been one of the Success Stories in the retail complex. Great to see you as always im surprised youre not going with nike as a fourth of july pick . Under armour fourth of july pick always great to see you we have 12 minutes left before the close any positive close today is another s p record alltime closing high still about 0. 4 from the dow getting there and about 1 from the nasdaq we do have gains for the s p as we stand as we head to break, heres a count of the Companies Hitting new highs and lows in todays session. Closing bell, well be right back dont get mad. Get e trade, dawg. I have one kid in each branch of the military, but im command central. Its so important to us that verizon is supporting military families. When i have a child deployed, having a Reliable Network means everything. So, when i get a video chat, and i get to see their face, its the best thing in the world. And ive earned every one of these gray hairs. Military moms, we serve too. vo the network more people rely on, gives you more. Like military plans with a special price on unlimited, 100 per line, and big savings on our best phones when you switch. Thats verizon. Eight minutesing ing iunti close. Delta airlines raising Second Quarter revenue and guidance the demand for products and services remains strong, and the stock is being rewarded, up 1. 3 bitcoin, the cryptocurrency briefly dipping below 10,000 in todays session. Last week bitcoin was about 13,000 today recovering intraday is up 2 we are on record close watch for the s p. Up next, were covering all angles of the market in our closing countdown. Tomorrow, a special edition of the closing bell. 12 00 to 2 00 p. M. Eastern time to wrap up the shortened market trading day. As we head to break, look at the winners and losers in the dow. Well be right back with under eight minutes until the close. Hi walter. Join us for a walk . Id love to, but my legs and feet are so tired and achy. 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But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Less than five minutes to go time for the closing countdown lets trade this close senior equities strategist kevin harch hanks joins us looks like were going for two days of record closes. Does it feel bullish to you the way three of the indices were muted trade but make no mistake the crude oil move and the bill rally in bonds, the corresponding downward move in the ten year have weighed on the russell 2000 index that said, all eyes attorney a muted trading day on tomorrow only until noon, and then were all looking to nonfarm payrolls. The biggest data is in nonfarm payrolls i expect tomorrow to be muted, low volume that being said, we thought december 24th was going to be a muted session, as well we got a big move then never say never. The nonfarm payrolls is that a key thing as to whether we will see the fed deliver a rate cut later this month yes, and heres why this is last look at nonfarm payrolls and unemployment that Jerome Powell will get before the july 31st fed meeting. Hes running out of data pieces to make his final decision this is the biggest one of the month for sure whats taking the tenyear yield below 2 here today, kevin . Yeah, i think its just really strong moving the bonds we didnt have a lot of data today. All we had was redbook so this bond rally taking some people by surprise really taking its toll on remember, the russell is so heavy in regional banks. Really weighing on the russell the biggest mover in terms of the four major indices kevin, thanks for joining us. Great to see you as always up to mike for his third market. Mike calling there room for improvement. Yesterday the s p hit an alltime high. Only 11 of the stocks hit a new 52week high lets look at the breakdown of new highs versus new loez. The Stock Exchange, we were above 200, not bad a lot of the defensive stocks are loading that up. Thats not terrible. Look at this breakdown by bespoke, going into today, the stocks in the s p sit relative to the 52week highs you have here more than 40 of all stocks thats your scale on the bottom percentage of stocks are within 5 of the s p 500, say but you have a fifth of the market, more than a fifth of the market thats still more than 20 below. That shows you theres a lot of dry powder in the cyclical pressed stocks perhaps to have comeback you can lookali alitt this as rr improvement. Now to the nasdaq and bertha thank you so much tmobile is one of the stand yachts its higher today standouts its higher today on hopes that its moving closer to being able to close the sprint deal with a potential divestiture deal with dish meantime, chips today are selling off. Were seeing profittaking after the big move higher yesterday. Nonetheless we have 128 new highs. 21 here on the nasdaq including the nasdaq itself which is on pace for an alltime high close as the nasdaq this year has had more than 90 ipos, although a number of them today are also seeing some profittaking like the real which went public just on friday over to seema. A sluggish start for today, bertha but stocks regaining momentum in the afternoon. An 800 million bid to buy going into the close, according to our reporter who i caught up with. That helped get a lift into the afternoon. Turning our attention to global markets, european stocks despite the administration turning its attention to the e. U. Still closing fractionally higher, the s p 500 on track for a record close. We are higher by six points at 2,970 which means we are 30 points away from breaking 3,000. Sectors that led us higher defense. Some big names there, l3 harris, lockheed martin, northrop grumman, and raytheon, all posting gains. And one narrative that continues to hold is those Interest Ratesensitive sectors moving to the upside utilities, real estate, even gold all in positive territory. But one thing to points out is the weakness in retail that continues to be a consistent theme in the First Quarter and now into the Second Quarter. [ bell ] most agreeing the sector lower by 1. 7 . The s p 500 record high, up eight points at the height of the session at 2,972 the Dow Jones Industrials up 65 points, 26,787 yep, that will do it a new record closing high. Welcome, everyone, to the second hour of closing bell. Cnbcs senior markets commentator. A record alltime closing high for the s p 500. We just needed any positive gains. We actually got near the high of the session. In fact, the high of the session, up 0. 3 on the s p. Nice little runup in the final 10, 15 minutes of trade. The dow up similar as well as the nasdaq the russell very much the laggard today, down 0. 6 , in part because we did see yields set below 2 on the tenure regional banks suffered the weight on that index the other standout decline, Energy Stocks with oil down 4 were going to point out the places that did not feel euphoric as we reached new record highs how about the semiconductors do you know if this is about a celebration of the pause and the trade war, a truce in hopes of a deal, youre not getting the enthusiasm that you might think out of key sectors that would benefit like the semis which did close the day lower. Just really yesterday kind of losing the gains and then today, with the sort of lack of enthusiasm thats been a thing i dont think any of it was euphoric with 0. 3 it doesnt need to be to get another record alltime closing high when we had with one yesterday. Joining us art cashin, director of floor operations at ubs financial services, chairman of malden economics, and writer of writers breaking views joins the conversation mike, whats it to you in the action toward the record high . Quiet but firm. I think holding near the highs is okay. As you mentioned, you kind of unwound a little bit of that cyclical trade that benefited yesterday from the trade news. I mean, treasury yields, very compressed and then corporate yields following. I keep pointing it out, but its the straight math of how equities get priced. Thats i think benefiting things today. We had good excuses to get nervous if you dont like the way the russell trades, you dont like the way the transports trade thats been a pattern for a while. I think the market still has improvement in terms of what its handicapping beyond the fact that bond yields remain low and bonds stay up there. To that point, should we be concerned about the small caps, about the transports well, i think we want to watch them you know, youve got the international players, people benefit from the trade and small caps are mostly domestic so theyre not really in that game you benefited a little bit from the market internals, we had about 800 million to buy on balance for the close. Thats what put you on another closing record and so the market internals were good i think volume is going to keep going down markets are going to get thinner as we get into next week john, how do you interpret the recent price action in this seventh now record close of 2019 its the narrative. I mean, people are buying into the story. Theyre buying into the trade. And my concern now is if we dont deliver some tariff news pretty soon the rest of the world is having problems dige digesting all of this. And the rest of the world could end up infecting us. Europes clearly slowing down, the rest of the world is and on the russell, art was talking about, have to remember the russell just rebalanced friday you know, 400, 500, moving up and down so whats happening in the russell may not exactly be responding correctly for the first few days until we can get all that rebalancing done. And then it may start looking more like the market to your point on trade that we need get tariff news, is not getting tariff news not sufficient to allow markets to i think we get tariff weary we are tired and it really is causing problems in the Global Supply chains, the global markets, the rest of the world is clearly slowing down, freight indices are going down, trucking shipments are way down trucks themselves are off 60 percent, 70 of sales. So theres theres enough to make you worry even though employments at an alltime high, you know, the markets are at alltime highs. Lifes good, and yet were going to get a 25 basis points cut a strange world. Speaking of trade, trade adviser Peter Navarro did a bit with us earlier. We asked about the latest round of the u. S. China trade negotiations, whether the truce will still, whether investors should believe in it take a listen. Its complicated. As the president said correctly, this will take time, and we want to get it right. So lets get it right. In the meantime, in terms of the markets, i think its very bullish for the markets. And the two things that have to happen in the short run to get us dow 30,000 and above are going to be passing the u. S. mexico Canada Agreement and having the fed lower Interest Rates. Rob cox, what do you make of mr. Navarros characterization of the bullish markets and what we need to get to dow 30,000 yeah, i dont think there is any i dont think you can make the correlation that trade war is going to be good for the markets. I mean, thats just economically nonsensical. But there is this point where you know, its kind of useful for the white house to have this kind of on and off again trade war with china its politically useful, obviously at home. I dont think you heard anyone last week in the democratic debates say we need to go softer on china, right. This is a winningargument for donald trump its also winning around the world. I spent time talking to people outside the states they kind of like theyre glad that the United States and donald trump is doing this, but you really have to be careful. You push too far, and we are as as you were saying there, we are going to have a problem if we push too far. And europe goes into recession, brazil, any of these other countries. Then that brings us down into some sort of crisis of confidence and global in the Global Economy its really how close can they kind of balance this on again, off again to get through to the november, 2020, date to excuse me, to navarros point, do you think if u. S. Mca gets passed theres a further uplift in markets, or is that already expected its china and europe thats more important now well, you know, china and europe are up on top right now if you did get those things passed, it would be helpful. I think youd have a couple of days rally built into that but basically navarro said its not just the fed who needs to be patient. Investors need to be patient, too. He cautioned using youre not going to get a quick and easy answer out of this he also said, john, that tariffs and the trade approach has not weakened our economy at all. Its been the fed being too tight which has weakened our economy. I dont really see how he can say that is it making a huge difference no but hes talking his book. I mean he wrote the book saying that we needed to do this trump pulled him on to the team. No secret from my writing, i think tariffs are the wrong thing to do. Should we have been tough on china . Absolutely and theres a term for doing that but tariffs hurt the United States its clearly hurting supply chains and its digging into slowly and surely people are becoming more cautious youre not seeing people build buy more factories, theyre not doing anything theyre waiting to see how it turns out. And that waiting slows business. Rob, you mercedezbentioned e People International rehappy that this whole process is going on so say the germans where their economic datas suffering, is everyone united behind pushing china hard no. I mean, europe is kind of depends who you ask. But theres certainly a sense that when it comes to i. P. And also some of the actual issues the u. S. And european and other nations have been arguing about with china for years that theres at least somebody putting pressure on china. Because the it isnt the European Union, although by the way we got good news out of europe you know, that thats helpful in the sense that weve got, you know, consensus on leadership. But so i do think thats helpful. The other side is you hear it if you talk to people in china, there is nobody putting any pressure internally on xi jinping and on the Chinese Communist party to reform. And so the idea that donald trump is doing it, no, they may not agree with all of the exact measures that the United States is asking for, but it is a kind of a check and balance on the global system and on reform process in china thats generally perceived i think as a good thing. Companies giving a gloomy outlook ahead of q2 earnings according to fact set. 77 of the 113 Companies Issuing preearnings announcements gave a negative eps outlook for the Second Quarter thats the worst level since q1 of 2016. Mike, you had a chart on this earlier, as well to what extent do we feel that this is already priced in . By the time were given the warnings and the fact that most of the Cyclical Companies are trading well below the highs, some of it is priced in. To me its about whether its viewed as kind of backing off of earnings before they bounce a little bit in the second half. Or if this is kind of end of cycle spiral down. And we dont really know that. I think right now you still have the estimates in the second half of the year. Theres probably room for them to be cut, as well, before you good night down to zero. If we get to disappointments, is this a market setup for heavy punishing, the facts that its run up to record highs going into earnings season where we expect negative growth well, i think the trouble is slightly different remember in the last quarter, they cut pretty drastically their guidance, too. And they overshot the mark they had to recorrect. They may be doing that again however, if rates keep coming down, history tells us that the multitude the multiple for stocks may contract slightly so even if you had exactly the same earnings, youd be hard pressed to try and get stocks higher if the multiples are going to contract. John, what sectors do you think are going to suffer most this quarter this earnings season i think the retail sectors, any sector that durable goods. I mean, things people are becoming cautious. For instance, home prices are still rising, but theyre rising now at a much slower rate. Ye yearoveryear chances are down from what they were last year. Theyre increasing it, but theyre increasing much less people are just kind of pulling you in and its a cautious sign nobodys panicking but when you start getting these kind of earning warnings, theres something going on, and whats going on is the economy is slowing, not a recession. But it becomes vulnerable. And its vulnerability is when something out of europe, something out of china, that creates the problem. You read a newsletter that people follow, a strong following r. You telling them to get out of the market because the economys slowing and youre warrioried about youre worried about trade impacts . I think people should be hedged in this market. In my own things what we do, we actually diversify trading strategies and were about 40 long as opposed to being 80 or 90 at sometimes. Weve pulled it back in. Were not completely out of the market we could be. So it will cautious yes. Okay, john. Thanks for joining us. Art cashin, rob cox, thank both for joining us also. The u. S. And china may number a trade truce next, we will look at why new trade troubles could be taking off over aircraft subsidies. And then former chrysler president jim press tells us how the escalating trade tensions with europe could impact the Auto Industry. Welcome back another record day on wall street the s p 500 closing in uncharted territory for a second straight session. Closed near the high of the session, up 0. 3 seema modi is following for us and Bertha Coombs has the latest and boeing that continues to be a drag on the dow. Seema, lets start with you. Another choppy trading day but the third close high it was the sectors that led us higher, tech closed in positive territory. Speaking of technology, earnings estimates continue to be revised lower with analysts now forecasting an 8 decline in profits in the Second Quarter. And energy right behind that with oil prices of course continuing its downward trend. Thats not helping that of course another risk as we look at stocks at record highs. Back to you. All right thanks lets get to Bertha Coombs to check on todays nasdaq trade. Bertha the fact that the nasdaq composite finished higher today was a factor of the large caps again with the russell 2000 stilt in correction and negative again. Weve got the nasdaq composite and nasdaq 100, both about 50 points away from new record highs which sets us up if we get a very strong number perhaps on friday with the jobs number thats likely going to be very key as to whether they catch up with the s p chips today sold off after that big enthusiasm that we saw yesterday following the enthusiasm or the trade talks. We still dont have an actual date when the trade talks will resume back to you. Bertha, thank you now boeing shares as we said lower again today as the subsidy dispute with the europeans continues to heat up phil lebeau has the details. Reporter this has been a longrunning dispute going back 15 years ago ultimately through the wto, boeings lawsuit was ruled in boeings favor now the Trump Administration is saying, wait a second, there needs to be some remedies put in place here in orders for this to be enforced. So they are threatening up to 25 billion in tariffs on e. U. Goods. Weve talked about this. Weve had rahel solomon at a Food Convention where they talk about wines, cheeses, olives that might be tariffed europe is now responding saying, you know what, we may come back and put a 20 billion tariff on some u. S. Products, including tractors weve got some time here at least early august is when we expect the full list of goods and the next step to take place. Guys, this is heating up between the Trump Administration and europe and ultimately its because of the wto, that ruling and that lawsuit alo alo longrunning dispute its fair to say with educati agriculture and the policy the subsidies are indisputable when it comes to autos and to aircraft and airbus in particular yeah its more implied as opposed to outright. Sure. Right. And airbus has responded over the years by saying look at the tax incentives that boeing receives from the state of washington or other assistance that the company may receive in terms of tax breaks. Their response is those are subsidies. Now the wto has ruled in boeings favor, but there is going back and forth between boeing and airbus for a number of years phil, youve been covering june auto sales for us all day the results have trickled out. Give us some of your hot takes heres the bottom line stronger than expected 17. 28 million was the pace of sales, most were expecting 16. 9 million. Trucks and suvs, they remained the vehicles that people want. Phil, thank you so much fil phil lebeau with us. And former vice chairman and president at chrysler, jim press. Thanks for joining us. Lets start with the tariff debate and the autos who do you thinks the likely winner here . We talk often between the u. S. And china of who has all the cards. Who does between the e. U. And the u. S. When it comes to autos and aircrafts . Well, the fact of the matter is there are very few winners in tariffs. Its a tax and in this particular case with the u. S. Auto companies, theyre paying already if you look at the sales and, you know, i liked phils report, 17plus is a good number, almost 17. 3, if you look at it closer, the retail sales are down 2. 9. Fleet sales are up 3. 3 . Affordability of cars is a factor the average price of a car is now up about 1,000 more than it was last year. And of that 400 potentially is what the Aluminum Steel tariff was. And so when you slow down demand here, youre going to affect both the consumers and the producers. So i i dont really see i understand the idea of tariffs and the need for fair trade. But using tariffs like this, its kind of like using a baseball bat to play golf. Hang on were glad we have you, jim. We have those breaking numbers on tesla phil lebeau with the details phil and sarah, elon musk has said for some time we could set a record in the Second Quarter they have done that in terms of deliveries total deliveries, 95,200 vehicles delivered in the Second Quarter by tesla if you look at the vehicles that we want to focus on, the model 3 is what everybody has been focusing on. The estimate was for something over 74,000, maybe 74,100. They delivered 77,550. So more than expected. So again, thats why shares of tesla moving higher. Stronger than expected delivery numbers for the model 3. As well as for overall because the estimate on the street was for about 91,000 vehicles to be delivered. They delivered 95,200. No breakout in terms of regional deliveries but were going to hope to get mother natu more detail on that. Thats why tesla shares are moving higher. Interesting the share price reaction up 6 when this was in a leaked email, right what, the the 95,000 number it wasnt the number is new the record is anything over like 65 yeah. He said he was going to be close to a record. He did not say we definitely will set a record. And to your point, phil, the key thing is not the absolute record, its the relative performance compared to analysts and this is a beat which was the important thing. Yep is there beat delivered because production was strong or demand was strong or both . And which do we need to see more of in the coming quarters . They say theres not a demand problem, but they never give any indication exactly what type of reservations or hands raisers are out there hand raisers are out there. Its hard what the demand is remember when they had slower deliveries in the First Quarter, immediately analysts said, well, theres a demand problem must be a demand problem but elon musk has been very clear for several months that they do not have a demand problem. Now he has said that, some people have chortled and said sure, theres not a demand problem. Clearly they are meeting the expectations, exceeding expectations here, with 95,000 deliveries for the Second Quarter and model 3 betterthanexpected coming in, what, at 75,000. Yeah. The share price is plekreflectii up almost 7 jim press still with us, does there put to rest the concerns about demand for tesla i think the demand was there. I think a lot of this quarter was really done by stoking up production they had unfilled orders, especially outside the United States the model 3 filled a lot of that production needs they may have sacrificed some potential of the higher margin other vehicles well have to see. It does show well and, boy, ill tell you what, the green car industry itself isdoing very well now compared to what it has been doing do you expect a lot of competition coming on line, jim, in the coming quarters for tesla . Absolutely. All the major manufactures are really getting their Product Development on e. V. S ready, as well as hybrids, and the the fuel cell cars the green car market is not just in california. Its beginning to expand beyond. And if you look at telephoness production, half of their sales up through the end of this beginning of this year has been in the state of california a lot of this growth now for them is outside of california. And that shows the demand is growing for green vehicles throughout the country and and actually in other markets, as well, outside the United States. Just want to hit the stock move with you. Yeah. 7. 5 here, a nice spike for tesla after hours. Butt that in context. A lot off the lows, before the pop now what it brings it is exactly what used to be the bottom of a long twoyear trading range, 240 to 250. I think that its kind of interesting that we gravitated right back to that level well see. I also want to go back they did sell 90,000 cars in one quarter. It wasnt the First Quarter or Second Quarter, but late last year anything over 90 or 91,000 would have been a record they did beat by a few thousand. Musks tweeted in the last couple of moments Congratulations Tesla Team and thanks to the new tesla homeowners nothing groundbreaking in that nothing controversial they have lowered prices, they have added incentives theyre giving away i think that now its great, they have the demand in a quarter when they didnt have as many subsidies thats a great thing well see what the profitability is jim press to rounds things off on our initial topic, are there changes you would like to see whether tariff are the right roots between the Auto Industry between europe and the u. S. . Absolutely. I think first of all the tariff discussion causes so much uncertainty that its very difficult for the manufacturers, for all businesses, to make Good Strategies and plans the uncertainty is really difficult for the consumers, as well it affects the industry for many ways the my experience at toyota, years ago, was the voluntary restraint agreements where there were discussions underway to actually regulate the import volumes of key products or markets. And what that does at negotiation allows you to put pressure on the country involved for specific actions or changes or cultural changes in chinas case, but it does it in a way where they have time, you have an ability to discuss plans and strategies to implement, and it isnt just hitting them with a bat and trying to force the issue. The other the other thing i feel is that from a standpoints of the tariffs, we really need to take a strong position. I think everybody really supports the administration for taking a position on trade but it needs to be in a much more holistic way to achieve the results long term and not just a a hit for the headlines jim press, thanks for being with us. Want to go back to phil lebeau now who has more on tesla and the better delivery numbers. Stock still up 7. 3 now. One reason why the number continues to be strong is they have indicated that the backlog of orders has grown. It grew in the Second Quarter. In fact, they say specifically that they generated more orders than deliveries and so they head into we can with into q3 with stronger backlog theyre not giving us numbers, but thats a strong statement in terms. Saying, look, theres demand out there. We have a stronger backlog is it sustainable, phil well, i mean, they would say its sustainable you need to know where its coming from. They havent given a breakout in terms of how many deliveries to china, at least i havent seen it yet how many to stay here in north america versus europe. Look, china is the untapped market here. We know that their vehicles are hit with a tariff right now because theyre shipped from the u. S. Over there. So if they can get through the next, you know, six months until they get the plant in shanghai up and running, i mean, that is a huge arket and ive been over to china. I have seen the demand over there for electric vehicles. It is real it is much bigger than here in the u. S. And that is an untapped market that tesla thinks that it can fill over the next couple of years. Phil lebeau, thank you. Tesla up more than 7 after hours. The tenyear treasury yields did fall below 2 today. Theres a boon going on details next later, whether Electronic Arts new season of apex legends will be able to dethrone fortnite. Creating the perfect night. Just takes a little creativity. The light beer youve been waiting for has arrived. Lower carbs. Lower calories. Higher expectations. Corona premier. Has been excellent. They really appreciate the military family and it really shows. With all that usaa offers 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. Stock closed at a new record high today lets go back to mike santoli for the final dashboard of the day. Mike weve been talking for a few days about what a strong stock market half year it was going into the end of june look at the total return, though, in investmentgrade Corporate Bonds. This is the lqd, the Investment Grade Corporate Bond etf, up 13 . Its hard to express what a great year that is for essentially lowrisk instruments. Obviously treasury yields have been falling thats been a tailwind you have the 3 or so yield on top of it. The orange is the ag the total bond market, u. S. Bond market index, with a lot of government and mortgage bonds in there, as well also a really good help here at 6 we have this global rush to grab yield where available. Look at the chart that says here is in dollar terms where yield is coming from right now all of the government bonds in the world on a yearly basis now are giving 244 billion back to investors. Right . Thats i dont know, 30 trillion or Something Like that in bonds because of all the negative yielding bonds out there and the rest of it now global Investment Grade corporates cor s is more than te actual amount of debt. You have the huge grab for whatever safe yield is available in the world to the point where the prices of Corporate Bonds have gone up so much because theres not enough yield. This is why the s p 500 gets a bid for cash income investors. Right now the annual pace of dividends is 470 billion. Thats going to go up most likely as earnings go up so this tells you a lot about why the whole Capital Markets are flush and people just need to grab where they can for you going back to the first job, mike, how would risk yield have done, how would junk have done would it also be strong performers even better, absolutely, yes. I didnt share that because in a lot of ways that trades along with equities. There have been instances where you have a half year where its up 20 or something. They followed right along. The spreads are not as fight as they were in the middle of last year, but theyre tight. Some of the dividend stocks like energy, as we mentioned earlier, im sure well be wondering why they havent you have to really, really love the dividend. Right and be able to deal with whatever the stock price mike, thank you as always. Time for a news update sue . Hello, everyone heres whats happening this hour Vice President mike pence abruptly canceled a planned trip to New Hampshire after being called back to the white house for an unspecified reason. Pences chief of staff, mark short, telling reuters there was no emergency but pences plane never left washington a National Poll shows senator Kamala Harris has vaulted into second place following her widely praised performance in last weeks nbc news democratic president ial debate she trails former Vice President joe biden by two points in a Quinnipiac University National Survey 22 to 20 Vladimir Putin expressing condolences to relatives of the 14 sailors who died after a fire broke out on one of the russian navys deep sea submarines he summoned his defense minister for a briefing on the fire which is now under investigation and a Solar Eclipse is starting to darken the sky over northern chile tourists from around the world have gathered to witness the cosmic spectacle chile and argentina are the only places that the total eclipse will be seen you are up to date thats the news update, guys see you tomorrow all right see you then sue, thanks. Still ahead, much more on teslas big pop going on right now after hours. And analysts weigh in on the delivery numbers and the stock move straight ahead. Falling Mortgage Rates helping existing home sales rise last month but up next, the ceo of redfin tells us whether an exodus of chinese buyers in the u. S. Could lead to big trouble in the Housing Market uhoh, looks like someones still nervous about buying a new house. Is it that obvious . Yes it is. You know, maybe youd worry less if you got geico to help with your homeowners insurance. I didnt know geico could helps with homeowners insurance. Yep, theyve been doing it for years. What are you doing . Big steve . Thanks, man. There he is. Get to know geico and see how much you could save on homeowners and renters insurance. Welcome back chinese buyers have been the largest foreign bears of u. S. Residential bears of u. S. Residential real estate for years but they are pulling back. Diana here with more reporter in the First Quarter of this year, chinese buyer inquiries for u. S. Properties on juwai. Com a chinese real estate site were down 27. 5 from a year ago while they were up for properties in canada, the u. K. , and australia. Its called the trump effect aim combination of ant a combination of antichinese rhetoric, clamp down on visa processing, and tariffs. The trade war is hurting demand from chinese students, especially in california and texas where parents were buying homes for their kids to move into after graduation. In addition, the Chinese Government is cracking down on the amount of money chinese citizens can take out of the country and spend on u. S. Real estate back to you. Thank you, diana. Were going to discuss this further with glen kelman, ceo of redfin glen, you agree with that . The scale of the pullback in Chinese Investment in u. S. Property, and whats your take and why . Well, its declining this year it began last year in earnest. I think the u. S. Housing market has priced that in we can take it the main pullback was last year when you couldnt take as much money out of china to buy u. S. Real estate. Thats when we saw the really profound effect. Investment last year declined by about 63 . This year, i think its going to be a much smaller drop the indication is that its probably in the 20s, just baitsed on searches against based on searches against chinese sites. I would think its different in different parts of the country. Like on the west coast or in new york wed be more vulnerable of the drying up of chinese demand. Where do you see it getting hit the hardest . Youve got the absolute right markets. You also see it in university towns, you see it in city centers. So condominium buildings with 10, 20, 30 stories, those have often been the targets for chinese investors who are comfortable to that style of life so we see demand declining there. But the overall picture of the u. S. Housing market is so strong right now. We were really worried about it in the back half of last year. But today there still arent enough homes for u. S. Buyers to buy. The decrease in chinese demand is something that the market is going to shake off you are seeing foreign money get into u. S. Real estate through another trend you call ibuying talk us through what that is yeah. Thats the way youre seeing the market change. So youve got Tech Companies like redfin, opendoor, zillow, knock, and many others buying up u. S. Real estate and basically giving people who own a home an instant cash offer where we take responsibility for flipping the property, and it counts for 8 of sales in places like phoenix and the capital for that very Risky Business has mostly come from the middle east and the far east so if youre looking for the way that foreign capital is really deforming the u. S. Market especially in the sand belt, youve got these starter homes that are being bid up by Tech Companies that see a good deal and pounce on it im surprised to hear you talk about how strong the Housing Market is, glen. I mean, i know i know you do that usually but havent we seen some mixed signals on that front . Prices down whoa. Whoa, whoa, whoa theyre supposed to boom after lower Mortgage Rates and youre not exactly saying that right so in the back half of 2018 we were the first ones to say this market is much weaker than anyone realizes. We called it in august we were Even Stronger at the back half of the year when we said that it is going to end with a whimper, not with a bang. But now its very strong home builder confidence is reasonably high. Mortgage rates are falling and the home buyer is exquisitely sensitive to that because people can barely afford a place. And so with inventory declining, prices having their largest gain in seven months, im not just saying it because i work for a real estate brokerage. Im telling you the truth. The market is fairly strong now. And it wasnt very strong in the back half of the year. If rates go up again, were going to have a sharp correction all right fair enough. Thanks for correcting the record glen kelman, always great to talk to you. Next, tesla soaring after strong delivery numbers. Find out if this could spark a turnaround coming up [ done melody plays ] in big ways and in small, bank of america is here to help you get things done. What would you like the power to do . ® done your but as you get older,hing. It naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. Healthier brain. Better life. Tesla surging after hours after reporting betterthanexpected secondquarter delivery numbers. Dan nyes from Wedbush Securities joins us bull turned bear turned skeptic r. You inprmpressed no doubt this is a step in the right direction for musk and tesla. You got to give them credit. This is a strong rebounds from 1q in terms of unit models and number second half numbers and profitability. Theres where theres more wood to chop. No doubt questions still remain. Whats your take on the fact that theyve said that this is a growth in order backlog, as well is that a key factor, and if that is delivered in the next couple of quarters, are you going to be massively upgrading your price target . Well, thats key in terms of tea leaves going into 3q obviously we have earnings in a few weeks. But ultimately does that mean youll have orders and deliveries up in 3q and ultimately into 4q thats where theyre trying to say they could hit the numbers we continue to think that theyll rip the bandaid off and ultimately have to lower those targets over the course of the next few quarters. But this is one this company had their back against the wall, you got to give musk and tesla major credit here for what they did in the quarter the bulls win this battle right now. And i think obviously youll see the stock up, you know, significantly tomorrow as shorts have to go back into their cave to hibernate good way to put it. Dan, thanks. Dan ives, phoning in from wedbush. Coming up, a big video game battle e. A. Out with its newest apex lej gesean loing to take on fortnite in a big way. The impact on stock ahead. To s that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. Welcome back the European Council officially nominating Christine Lagarde to be the next president of the Central European bank. Lagarde saying in part she has, quote, decided to temporarily relinquish responsibilities as managing director of the imf during the nomination period the current president s term ends october 31st. Official appointment for lagarde is likely in the in the coming months the other point is that ursula van derleon, has got the european president s job, as well for all the tensions of the last couple of days at the european consul, some are asking about the german and french person in the top two jobs both of whom from center right Political Party backgrounds, all very proEuropean Union. This is a big win for european unity. You also dont have a hawk which is potential in the ecb role which, again, is important for markets. Only other thing id say, it does have to be confirmed by the european parliament. All of these announcements are framed as if theyre locked and loaded they probably are, but they havent been confirmed yet ill take the lagarde piece of this. Its somewhat surprising much shes a world leader coming int. She is by training and by background a lawyer, and has a front row seat and first class ticket to all world leader meetings at g20. This will be a bit of a change, becoming a central banker. However, you know, it has been asked of her by all european heads of state hard to say no to that also, you know, she is a person that firmly is a longtime believer in the european project and the euro and has a strong sense of duty when it comes to that so i expect this to go through what happens at the imf now is she is stepping down temporarily. David lip ton, the number two, will take over once it is confirmed as expected, then they start a new search project for the imf the big question for investors and the market implications, what does this mean for the somewhat controversial policy from the ecb theyre in deep negative Interest Rates now theyre stimulating for what looks like to be forever, and whether it is going to actually prop uptheir economy which has turned south i talked to her just in april about ecb policy and whether the ecb now easing again would do anything for the economy do negative rates work here is what she said. Well, they do that if you look at the rationale behind it. They do that because inflation rate is certainly not at the level where it is expected you know, they have this this 2 expectations minus or plus, but 2 close to. Theyre not there at all it is much lower at the moment, both in terms of core inflation and anticipated inflation. So thats the reason why they are moving in that direction, and it is we see that as completely legitimate. What we are also saying is mo Monetary Policy alone cannot address the current delicate moment where we are, and it requires those, you know, fix the roof, please, which means conduct the Structural Reforms which will boost productivity and that will support longterm growth that is absolutely needed. I think the takeaway here for investors, guys, is expect the same from drahgi she did two things there she justified negative Interest Rates because inflation is missing. Thats what he has been doing. She said, look, policymakers, it is time for structural reform. Thats what he has been saying as well. We cant just be the only game in town. Theres a limit to what Central Banks do. There is a long record when she was finance minister of france, criticizing germanys trade surplus, all of the rest of it, all of the things you might say to say, yes, you have to have a fiscal response here. And the key being it is not one of the last names in the last six to twelve months on the list and someone that probably would have been more hawkish interestingly, sarah, to your point you are surprised whether or not she would take this i completely get she was a politician by background, not an economist, and maybe she would have preferred the president of the European Commission job had that been available, too but either job, i would ink this, is a significant steppup from the imf. Im not sure. Being president of the ecb, if it is power you are after, has more power than the imf. Fixing certain, you know, em crises, the imf is at the forefront, but the ecb is second biggest currency bloc in the worm. She is a world leader and thats her domain. She has access to the meetings but she doesnt have real power amongst the biggest economies. Now she has power. Thats what i mean. Maybe she wants to go back into politics and it has been delayed in france or maybe she would have liked the Commission President job slightly more, but it is a big step up. So i would have been amazed if she turned down what the offer is. You dont turn down heads of state when asked for a job like this switching gears, Electronic Arts, apex legends launching the new season today and looking to take on fortnite in a way. Josh lipton has the details for us. It is now live. Eas free to play shooter made the prize debut in february, quickly attracted 50 million players. Ea executives saying apex legends is the Fastest Growing new game the company ever had and saying bookings or adjusted revenue from the game could be at much as 400 million in fiscal year 2020, though analysts say that the initial fehr ver for the game has cooled can ev spark renewed interest in the game and give the stock which is up 30 this year a lift back to you. Lets bring in michael packetor w pactor on the list more skeptical with the rating on the stock, michael . Does it factor into your bullish view i actually put it on the best ideas list because i know vince, who runs respond pretty well he told me how committed they were to making season two work and to continuing to have regular updates every three months or so he thinks he will reinvigorate the user base. I think it is right. This update is 18 gigabytes. It has tons and tons of stuff, ingame tournaments and stuff to reengage players i think that 400 million that josh talked about is probably light. I think the game probably will end up doing 500 or 600 million with upside if they continue to see user growth. Theyre at 60 million downloads right now. Probably about 40 million users. To get 10 per user per year is not crazy talk thats what harthstone did it is what overwatch does. It is an achievable target. Brandon, why are you more skeptical . Sure. I mean obviously this game came out of the gate pretty strong and has fallen off since as michael mentioned, vince, who runs respond, has said that hes extremely committed to making this game work but we actually noticed in an interview he did a couple of months back at a conference vince said, first of all, that he was not sure how much content was necessary on an ongoing basis for this for this game and what the cadence of content should be, and that they were just sort of feeling their way around it. It took them several months to launch this more sizable season two, and we believe that in the post fortnite world players want a very constant flow of content and of changes to the balance of the game and new things to engage in and that every three months is probably not enough there has definitely been a pop and engagement today we have seen it in the twitch viewership, but we are just not sure how sustainable thats going to be past a couple of days michael, i guess for the overall thesis on ea right now, how important is this game i mean where does it fit within, you know, the longer term earnings story for the company you know, it is a company that does over 5 billion in revenue, so were talking about maybe 10 of its revenue stream. It is a pretty profitable title. Thats probably throwing off 60 operating profit, so maybe, you know, near a dollar a share contribution on a 4 kind of base so it is pretty meaningful you know, brandon is right that gamers want content every day. Fortnite does big content drops every ten weeks. So i dont think every 12 weeks or 13 weeks is crazy late. You know, vince spoke at the conference i was actually a speaker at the same conference right before him and i saw him two weeks ago at e3 for four hours at my party. He is pretty confident about this i know the guy well. This is a big update ea, im really comfortable ea is going to hit its numbers, and i think you will see intermittent interstitial updates between the threemonth big updates. I think brandon is right gamers want it, i think vince is smart enough to deliver it and the stock is going up. Yes. Brandon, quick final word go for it. I just want to say the other issue here has been that the game was buggy out of the gates. We have watched some twitch streams today and a lot of the streamers, including shroud, who is a major streamer of the game, are reporting that theres bugs in season two. His servers were so laggy he had to leave the game in the middle, and it took him a long time even to get back on so we look to for vince and crew to fix the bugs as well michael and brandon, thank you both for joining us. Thank you. Bye back to the major market move today mike, s p 500 record alltime closing high as well the other positive being we were at the high at the session of the close, albeit up 0. 3 and did see small caps, transports underperform. There were opportunities within there for the market to sort of back off i think it makes sense to be in the sort of treading water mode. We do have some, you know, relatively significant economic numbers coming out in the morning, even though it is going to be a short day. You have pmi, durable good orders and things like that. I think the market is on a bit of edge to be 100 certain it is getting a fed rate hike it doesnt fully absolutely need because the economy is falling off a cliff. Pay attention to the move in yields below 2 , no data, what does it tell you i think globally you had a beeper move into negative for a lot of the developed market bond yields yes, it shows you despite the fact that everyone is pointing out that yields look oversold, people are too bullish on bonds, the move has gone too far, too fast, youre not getting a lot of relief there. Sometimes it is bearish because it means economic weakness. On a programming note, dont miss closing bell special time tomorrow, 12 00 p. M. To 2 00 p. M. Eastern time. That does it for todays show. Fast money begins right now. Fast money starts now live from the Nasdaq Market site overlooking times square, im melissa lee. Tonight, the s p 500 closing at a record high for the second straight day as a bull run wages on theres one name that has lagged the market for the last decade that the chart master says is about to break out you wont believe what it is we start off with breaking news out of tesla charging higher, the Company Reported delivery numbers moments ago, record ones at that lets get to phil lebeau with the