Transcripts For CNBC Closing Bell 20240714

Joining us for the hour to break down the market action, keith bliss. Good afternoon to you. Thank you very much, wilf really good to be with you snapshot of today, why are we selling off . Number one, you have low volumes coming into july you usually have the spike in june on the weekly volumes were seeing that today. Listen, you got to say the news is really washing over the markets as it relates to boeing. The downgrade we had at apple, people are getting nervous about what fed chairman powell may say and may not do at the end of the month. I think thats why youre seeing a little selloff in combination with that is we did get overbought in the dow a couple weeks ago are traders talking about the fed and whether they may not cut at the end of the month . Youre certainly seeing that in the discussions that you have with traders and investors alike. Youre not seeing it reflected in the fed funds futures yet still an overwhelming majority of people think were going to get a 25basis point cut i think whats also washing over the market is you had a number of people thought the fed would cut 50 basis points in july. Ive never seen that the Economic Data just doesnt support that in fact, im one of the people that say the Economic Data doesnt support a 25point cut well, lets get to the big stories. Wilfred has the latest on Deutsche Bank. Phil lebeau is covering boeing lets start with bob two days in a row, but if you look at the leadership board, pretty narrow today. Energy stocks up earliey on, bu thats faded a bit big names all on the up side here real estate and utilities leaders today. Weve had retailers like under armour and gap helping Consumer Discretionary. The dow, all the big leaders there. Home depot, nike, mcdonalds not only up today, but theyve been leaders in the last 30 days or so, up 6 , 7 , or 8 overall. Finally, no new highs today. One exception. Another historic high for cocacola. Back to you. Thank you very much the nasdaq underperforming the major averages today lets get to Bertha Coombs for a breakdown. Hey, wilf Biotech Sector is the biggest decliner, trading on heavy volume today analysts at Piper Jaffray noting the biotech funds saw outflows for the tenth week in the last 14 last week sentiment was colored in part when President Trump said hes set to issue new executive orders on drug prices in the coming days meantime, apple accounts for about a quarter of the nasdaq 100s decline on a downgrade net app getting cut over at citi to a sell. China related names giving back a lot of last weeks games, though chip makers micron and amd are bucking that trend morgan bertha, thank you shares of Deutsche Bank sinking after the firm announced a major Restructuring Plan and wilf, i know youve been doing a lot of reporting on this and following this what can you tell us as you said, a major Restructuring Plan that includes 18,000 job cuts. Thats from a total head count of 94,000, creating a bad bank to wind down 76 billion yeuros f assets no need for a Capital Raise immediately. The headline of this plan is that theyre closing down their equity trading business globally thats a bigger move than had been expected. The ceo, christian sevving, saying the bank had simply spread itself too thin last year, Deutsche Bank made 2. 3 billion in equity trading globally that compares to 7 billion for Goldman Sachs and jpmorgan or 2 or 3 billion for some of the european players so the market gains to come would be more significant to the european players than the u. S. Guys nonetheless, this should be good for all concerns the question for deutsche will be does their market share also slip in businesses theyre still operating in too share price over the last month shows investors welcome the change of direction in general the move back today shows theres still plenty of questions over execution risks yeah, with a stock down, what, 5 right now, it does beg the question, is this actually going to work . Down 5 right now up 13 in the last month, albeit from an incredibly low base. As to whether it will work or not, theres a positive you can say, which is that within trading, their strength had always been in the macro area of things, not in equities. Theyre keeping that part. And of course that part is also what supports their Corporate Bank all of that can continue on the flip side, other parts of the investment bank, like equity, Capital Markets ipos, can that really continue without equity trading or will that slowly start to slip market share . Separately, as well, of course, the retail bank in germany still faces negative yields. Thats the sort of debate youve got and why the share prices bounce a bit from its lows over the last month still, on any historical chart, incredibly low keith, your reaction to this in terms of what it means in terms of other potential shifts around equities, equity trading, et cetera for other financials certainly equity trading is something we know quite well the firm was founded on that thats what we do. Thats the majority of our business equity trading in u. S. And Global Markets has been in secular decline for the last 15 years. Two things have conspired against that one is the rampup of technology then Market Structure changes that you have here in the u. S. And globally, which has allowed large Asset Managers to access the markets easily, very cheaply, the same as brokerages used to do representing their orders in the marketplace. With that, you have a large number of brokers, ourselves included, continuing to compete for market share where the pie is actually shrinking. So you get two things. You get commission compression, which has been going around for years. The pie is actually shrinking. Deutsche bank as a fundamental bank, as a commercial lender, they have certain Capital Requirements they must adhere to in their overall bank. What you have in equity trading and equity Capital Markets and underwriting and investment banks, thats a heavily intensive capital business therefore, they have to make decisions about where capital goes capital goes where capital gets rewarded and when youre eighth in the League Tables and when your business is slipping dramatically, you have to make decisions about cutting that business thats precisely what they did interesting as well to round this off f this does prove to be the right decision and it works, then the criticism is, well, why didnt you do it a year ago, two years ago, three years ago you could pick any time since the financial crisis if this proves to be the right decision. Well, i think thats absolutely right on dbs behalf, theyre not an amazon where they can keep taking losses and keep acquiring capit capital. But i think the other part of the story is if db is successful in this, in retooling their entire bank, that will be the first domino to fall youll have other banks maybe on the fringes of equity trading and the Capital Markets, lead tables, m a advisory theyll also make the same decision if that happens, floriitll y even more to the big u. S. Investment banks with fullservice offerings who are sort of like amtz azon at the moment they can afford to take the hit at the moment. The equity business can be very lumpy, whether its equity trading, and weve seen slack volumes. They have the capital and can continue to acquire equity business by smoothing out Revenue Streams from other businesses goldman can do that. All right smart conversation i want to turn to another market loser today. Thats boeing. Shares of that stock falling today as well. New fallout surrounding the troubles 737 max plane phil lebeau has details in chicago. Morgan, this is getting a lot of attention because its the first really big cancellation, although its not technically a cancellation it was just a commitment to buy these planes heres what it was a lowcost carrier out of saudi arabia had committed to buying 50 maxes worth almost 6 billion. Now theyve said, uhuh, were going to switch instead. Our plan is to buy airbus a320. These two stocks typically trade in tandem. Thats if tnot been the case, especially over the last month boeings max backlog stands at about 4400 planes. We get updated numbers tomorrow. Phil, as always, thank you. President trump had more harsh words for the fed this weekend, saying the decision to raise rates has kept the dow from hitting new highs europe is not doing well at all. Were put at an unfair Playing Field when they cut Interest Rates and when they pump in a lot of money and we are taking money out and Interest Rates have gone up. If the fed didnt do what it did or if it did even half, we would have a dow that would be as good as it is doing, but we would have a dow that would be anywhere from 5,000 to 10,000 points higher. Lets bring in terry spath from sierra mutual funds to join the conversation although, keith, ill start with you. That clip and thought process begs the question that if the fed doesnt cut in july, do we see a meaningful pullback in equity markets i dont think so. My call has always been we would see a slow grind higher and melt up inside the market if people still anticipate were getting a cut in july. I think if the fomc and Jerome Powell stand pat in july, i dont think itll have too bad of an effect on the market you may see a little more trimming around the edges. As i said at the top, weve been overbought in the markets for some time. Youre going to see that pull back but quite frankly, it begs the larger question. Some of the president s comments are completely incongruous with economic modeling. If you have a robust economy, then you should be raising rates to actually stem the tide of potential inflation. What weve seen in the marketplace, however, is the deflator has been pretty tame. We still move forward. Wage inflation has not really garnered or gained traction in this i think it gives a little wiggle room for the fed but the further point is lets be completely candid about where we are on the political cycle. The white house knows quite well where they are were from a general election, 16 or 17 months away in the modern history of the United States, no incumbent party has been voted out of the white house if the economy is expanding. If people think were long in the tooth and theres potential for a recession in 2020, thats going to be a problem for his reelection. Theyre going to do everything they can to stave that off terry, where do you fall within this emerging rate debate do you think the fed cuts later this month in so, by how much right i mean, i dont think that the fed has got the data to cut rates at this point. The fed is independent the u. S. Economy is still going strong the jobs report certainly supported that we havent been torpedoed by all these discussions about tariffs and trade talks. So i think the fed cuts when theres a recession on the horizon. Theres four horsemen of the apocalypse we look for that have occurred before every single economic recession the first being an inverted yield curve, which we do see on the other hand, unemployment is still strong, Housing Starts are strong so we dont see this recession on the horizon we dont see any horsemen declaring the educational background is near in that case, the fed should be staying put at this point. Terri, that said, positive view relatively speaking on the u. S. Economy, but do you prefer highyield bonds in the u. S. Rather than u. S. Equities . Absolutely. What i think is going on is just a state of confusion you have a u. S. Stock market thats tapping against alltime highs pretty regularly seems to believe the fed is going to engineer a very perfect soft landing on the other hand, you have the bonds market with the threemonth Treasury Bill above 2 and the tenyear trying to drop below 2 . Thats just not normal so that says to us that theres a state of confusion we want to go after return but manage the risk. That means Corporate Bonds over to equities. It means emerging market debt over emerging market equities. Thats how our portfolios are positioned right now terris thesis actually falls in line with what youre saying. If you dont believe theres a recession on the horizon, you invest in highyield bonds theres very little, if any, default risk youre going to get rewarded for that for not being in a recession. But i do think as an equity player and person, over the longer term horizon, equities have always provided the best return for an investor again, if you dont believe theres going to be a recession any time soon, and even if the fed were to hold Interest Rates steady or nibble or take a scalpel to them and pull them back 25 basis points, then youre right i think equities is the better place to be. Terri spath, thank you for joining us thank you, wilfred. Still ahead, a new poll found a group of investors was buying last month while everyone else was selling well tell you who was bullish plus, well drill down on two competing analyst notes on apple as the stock takes a leg lower today. Why one firm says sell and another just add the stock to its conviction buy list. Thats coming up the cloud i need . It has to keep up with sales, supply chain, inventory it needs to track it all, from cincinnati to singapore. Ooo and protect it all. Customer records, our financials, they better be secured. But i also need easy access, to manage data across my clouds no matter where it lives. So if an auditor shows up, i can be a step ahead. Thats the cloud i want. Is that to much to ask . Expect more from your cloud. Ibm cloud. Tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. We got 43 minutes left of trade, and right now major averages are poised to start the week lower the dow is down 120 points right now. 26,800 is your level of course, anything can happen in this final hour lets send it up to mike for the first installment of todays dashboard. Mike first a quick look at whats coming up. First, above average in this technical sense, being above average is not always a positive thing then baby bears. Baby bear markets. Were going to do comparisons with history after last fourth quarters baby bear market and capitalization confusion lots of different messages being sent by different size companies and their stocks then driving demand. This is an indicator, a macro indicator thats a positive, does not look like prerecessionary numbers. First of all, above average. The s p 500 came into today kind of stretched above its 200day moving average it was about 7. 5 above it coming into today. Thats a relatively wide spread. This chart below is that spread between the 200day moving average and the index itself what youll find here is that its the highest level above the 200day average since about march of 2018. That was before you had a bit of a pullback, kind of a retest of prior lows but i would consider this almost a way to look at it as glass half full, which is any pause or pullback we get here is just an innocuous rest, a breather for the market to kind of cool off a little bit and come back toward that longer term trend line. As you see here, in 2017 and 2018, it remained relatively high above that average for quite a while, 3 to 7 or 8 . Its not necessarily saying the market has to go down a lot, but it would be understandable if it did take a breather here, guys i see were going with abcd here were going with alphabet, a little alliteration thats the surface level theme, but below there, you might come up with a bit of a different thread well see what comes out oh, thats a cliff hanger right there. Just going back to this chart you just showed, the fact you drew that line and it takes us back to march of 2018. That was around the same period or right before or right as the Trump Administration was leveling the first tariffs on china and really taking a much more hawkish stance on trade in general. Any read through to be had there or just coincidental i would say thats around the time that upward momentum got restrained you didnt see these kind of very forceful rallies. The market became very mean reverting, meaning it would go up a little bit then pull back weve been in this choppy trading pattern. Thats probably one of the policy or macro overlays on the market that maybe explains some of this action mike santoli, thanks. Keith, quick question you said earlier the dow was overbought mike was looking at the s p overbought was the nasdaq not, russell not . They never got to that level. The s p was for a time, but it pulled back. Michaels analysis is good, but were still way above the longer term trend line. All right well, weve got about 40 minutes before the bell. Right now the dow is down 124 points the s p is lower as well two Straight Days of losses is what were poised for. But keep in mind, record highs just last wednesday. Up next, a tale of two apple call well tell you why one firm says to sell the stock and another just added apple to its conviction buy list. And later, we work is one of the most hotly anticipated companies in the ipo pipeline. Before it goes public, it may be lls s g to raise billionof doarin debt. Well explain. T to carry cargo. Or to carry on a legacy . Its show of strength. Or its sign of intelligence . In crossing harsh terrain. Or breaking new ground . This is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedesbenz summer event, going on now. Lease the gla 250 suv for just 329 a month at the mercedesbenz summer event. Mercedesbenz. The best or nothing. Like. A business borrowing solution to help get a little more space with a lot less mom. Or home insight, to search for a new house within your budget. Because, they really need their space. Pnc make today the day. Welcome back to the closing bell. 36 minutes left of trade weve done 124 points on the dow. The sectors for you, real estate and energy top at the bottom, materials down significantly, 1. 2 . Health care and industrials also it is time now for the word on the street. Citigroup downgrading verizon from neutral to buy. The firm seeing rising competition in rising and longterm risks to pricing and margins. Thats been pressuring the stock today. Guggenheim initiate on best buy. And two opposing notes on apple today. Rosenblatt saying the company will face fundamental deterioration from slowing iphone and ipad sales and decelerating Service Revenue growth meanwhile, needham adding apple to its conviction buy list, saying its a company transitioning to one based on subscriber and Services Growth i guess this is the classic debate the bull will be to look past shortterm hardware pricing issues, focus on the longterm software and sales the other, not that is the fundamental question can they effectively engineer a move to services, which other platforms have done and have been capturing that share. And i believe that is the real question that they need to have. It is true that weve now gotten past the point where companies have planned obsolescence for the actually devices i see it in my own family where my sons are holding on to their iphones longer, primarily because i pay for them but theyre holding on to them for longer because they still provide a great amount of utility. Youre not going to have that kind of turnover in the devices. Theyre going to have to move to services needham is making that bet and a lot of people, at least here in the u. S. , are still making monthly installment payments on these phones as they get more expensive stock is down 2 right now its trading below that 200 level, though just fractionally. How much is the china trade situation overhang on this name . I think a fair bit. Thats what youre seeing investors worry about. This whole nationalistic pride in companies that are coming on. If you take a look at the huawei situation, there is some concern that the Chinese Government will start to steer almost all chinese nationals and all business, which is the worstcase scenario, into those products as opposed to apple products or do they do something more drastic, which really starts to cut off the market for apple, knowing its a big u. S. Tech firm apple below 200 bucks, down 2 today still ahead, the wealth tax debate two factions of the Democratic Party are at odds over Elizabeth Warrens proposal. Well break down the battle ahead. And despite trade war tensions, chinas shanghai composite index is actually outpacing the dow so far this year take a look at that. Well look at whats behind the rally and whether its too late to get in. Stay tuned vo the hamsters, run hopelessly in their cage. Content on their endless quest, to nowhere. But perhaps this year, a more exhilarating endeavor awaits. Defy the laws of human nature,at the summer of audi sales event. Get exceptional offers now. 30 minutes left to go. Here are the three things driving the action ahead of the close. Investors are awaiting fed chair powells testimony later this week shares of apple are weighing on the tech sector. And health care is underperforming. Time now for a cnbc news update with sue herrera. Hello, everybody. Heres whats happening at this hour iran has begun enriching uranium to 4. 5 , breaking the limit set by its nuclear deal with world powers the International Atomic energy agency, that is the u. N. s nuclear watchdog, confirmed that iran surpassed the enrichment threshold. Israeli Prime Minister netanyahu is calling on world powers to escalate pressure on iran in response to its breaching the 2015 nuclear deal. He accused iran of trying to lash out to reduce the pressure against it democratic president ial candidate Elizabeth Warren raised 19. 1 million in the Second Quarter the massachusetts senators fundraising leaving her behind only south bend mayor pooete buttigieg and former Vice President joe biden. And heather mills, the exwife of paul mccartney, and her sister have received an apology and a settlement from a now defunct british tabloid. They sued Rupert Murdochs news group nubs over the alleged hacking of their phones. She called is the highest libel settlement in british history. Youre up to date. Thats the news update this hour back todown to you. That phone hacking related stuff still wrapping up years later. Still there sue, thank you. Well, lets send it over to mike santoli for his second dashboard. Mike morgan, looking at some baby bears. Late last year we started to talk about the precedent for the market to have these mini bear markets, down 20 or so in a short period of time then a strong rebound when there was no recession immediately imminent so here is a tracking of those three prior episodes this is from fidelity. 94, 98, 2011 those are the colored lines. The white line is the average of those experiences. Theyre lined up with their market lows right here the yellow line is the current path you see were tracking relatively well compared to those other averages if i would make a cautionary note in terms of extrapolating from here, in all those other times, the economy did react sell rate after you did get a dovish move by global Central Banks, and also in 1994, there really wasnt as much of a decline. That was a little bit of a different platform we were building off of. So its not necessarily the case that, you know, this is all going to work out great because of course, we have had 20 declines and then rebounds in markets. When you did subsequently have a recession. Im thinking about, for example, 2001 after 9 11, which was in the midst of a bear market so you obviously cant take this as a reason to own stocks or get more aggressive, but it is interesting that when you do have a big cleanse, a big 20 drop and a rebound, its not always over after a few months, guys mike, thank you very much very interesting comparisons there. Now, the lira weaker today after turkish president erdogan unexpectedly fired his central bank chief wilfred, president erdogans dismissal of the Central Bank Governor due to a disagreement over Interest Rates has raised a number of questions over the Central Banks independence. Over the past year, erdogan has been calling on the central bank to lower rates, but the central bank in turkey has been pushing back, pointing to surging inflation as to why Interest Rates and turkey need to stay relatively high. The move comes weeks ahead of turkeys Monetary Policy meeting, where economists now expect a rate cut. In response, the turkish lira has been moving lower. Back to you. Seema mody, thank you the other big thing to watch with turkey is the fact youre getting comments out of both turkeys erdogan and Russias Putin saying delivery of a Missile Defense system is moving forward. If that happens, you could see the u. S. Slapping sanctions on turkey a lot of developments to keep an eye on in terms of that country. Shanghai composite down more than 2 , meantime, today, posting its worst day in two months for more on china, lets bring in James Sullivan, head of Asia Equity Research at jpmorgan. Thanks for joining us. Good afternoon. Why has the shanghai composite outperformed this year versus the u. S. Markets . So i think we have to recognize the fundamental driver of the chinese economy and the fact that has shifted squarely aware from manufacturing and towards the Services Economy as emerging markets continue to mature, what were seeing is a lot of their manufacturing is actually being targeted at domestic consumption rather than exports. That fundamental shift in the chinese economy is sterilizing it to some degree from the slowdown in Global Growth that were seeing you add to that the scarcity of global gret, and investors have really targeted the Chinese Market this year that said, the data out of whether its china or the rest of asia has got worse recently is it a little worse or significantly worse . Great question. Toef lo we have to look at the twostage growth of the Global Economy right now. On the one hand, you have the consumer which is spending very, very strongly. On the other hand, because, in our view, of significant geopolitical uncertainties, you have Global Confidence at its lowest since 2012. The impetus to the Global Economy from cap ex out of the business sector is extremely weak, partially offset by the consumer side. Going back to china for a minute, weve seen a lot of stimulus measures implemented over the last year or so but if the fed cuts rates later this month, will china do the same the thing to watch is really the currency so the two numbers that were most focused on now in china are seven and three. Three are the foreign currency reserves you saw that increase last month, which gives some degree of wiggle room seven, the Exchange Rate the key risk here when you look at the political overlay is you start to see the chinese let the yuan sterilize the impact of some of the trade policies that were seeing coming out of the u. S. Administration. If that happens, the risk is that theyre seen as weaponizing the currency, driving secondary impacts and responses from the u. S. You see this titfortat strategy come into play. We talked earlier about the nationalistic fervor thats coming on because of the trade talks and the trade wars do you see that also reflected in a little bit of shanghais performance as investors are trying to get ahead of that curve a little bit, if theyre selling more to chinese nationals . I think its more driven by the scarcity of Global Growth, but i couldnt completely discount that. The danger were see from a political overlay perspective is populism and nationalism really coming to the fore across many countries around the world the danger that creates for my area of the world, emerging markets are ultimately about trade. Theyre ultimately about growth differentials. If you start to see a deglobalization phenomenon because of populism, because of nationalism that has significant impacts on relative performance. What is the percentage risk of a major collapse in chinese growth rather than it just ticking down by half a percent each year . I think its actually quite small. The Chinese Government is almost unique in its ability to push fiscal and Monetary Policy in the same direction at will and the centralized control over every element of the chinese economy is very different than what we see in economies such as the u. S. Im looking at these notes from you you talk about the japanification what does that mean . Low rates, low growth, low inflation for an extended period of time. If we look at what that meant for japan from a bond and equity market perspective, it led to the jgb being one of the strongest markets. It also led the topix to be one of the weakest so you think thats going to happen in europe is that your implication the risk were seeing now if we tie it all together, the politics are driving nationalism. Nationalism is driving deglobalization. Deglobalization is driving a less efficient Global Economy. The implication that has is significantly lower growth on a goforward basis at a structural level. Thats something that has absolutely bearing on Interest Rates and outlook. James, thanks for stopping by James Sullivan of jpmorgan weve got 22 minutes before the bell, and here is where we stand with the major averages right now. A lot of red across the board. The dow is down about 0. 4 the s p is also down about 0. 4 . The nasdaq one of the bigger underperformers today, down about 0. 8 small caps also underperforming and slipping back into correction territory weworks road to an ipo may involve raising billions of dollars in debt meantime were going to discuss those detail and if its a risky bet for investors. Plus, for the first time in two years, tdameritrade is seeing a trend between the general public and millennials as we head to break, heres a check on chipotle, general mills, and cocacola those Companies Hit 52week highs earlier in todays session. Closing bell after this. Quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. Money reserve announces the Immediate Release of u. S. Governmentissued solid gold coins for the incredible price on your screen. These Gold American eagles are official gold coins of the United States and are being sold for the price on your screen. Pick up the phone and call americas gold authority, u. S. Money reserve. With nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u. S. Money reserve is one of the most dependable gold distributors in america. [narrator] today the u. S. Money reserve is releasing official Gold American eagle coins at cost for the incredible price on your screen. These governmentissued gold coins are official u. S. Legal tender made from solid gold mined here in america and fully backed by the United States government for their gold weight, purity, and content. Do not delay, call now to purchase your Gold American eagles for the amazing price on your screen. Gold is now on sale at prices unseen in years and this year could be one of the greatest goldbuying opportunities of all time call now while vault inventory remains. As one of the largest u. S. Gold coin distributors in the country, the u. S. Money reserve has proudly served hundreds of thousands of clients worldwide. Dont wait another minute, call now to purchase your American Eagle coins at cost for the amazing price on your screen. Welcome back heres a look at the dow heat map. As you can see, nike tops the list apple right at the bottom, down over 2 , as we discussed below 200 the dow is down as we speak about 0. 4 , as is the s p. The nasdaq lags down 0. 75 wework may be looking to raise billions of dollars in debt ahead of its ipo. Morgan, the whole idea here is to inspire more confidence. So according to a source familiar with the zeadeal, theyn be looking to raise 3 billion to 4 billion in debt. The total offering could grow as big as 10 billion over the next few years. This person cautioned that while ceo adam newman has met with jamie dimon, nothing has been signed yet they called the potential Capital Raise a, quote, bridge to profitability, which is reminiscent of that path to profitability that investors keep talking about for uber and lyft wework had net losses of 1. 9 billion last year. Raising debt could be a way to take off some of the pressure in an equity race and sort of calm that recent debate around its valuation. In terms of that valuation and what the debt raise would do, it is one of the biggest ones still in the private markets. How do you are private investors valuing it its a great question in weworks case, they have money from softbanks vision fund, which we know goes in with huge checks. Its lost private market valuation, 47 billion the information, had a good piece about how some of the mutual funds were marking down their valuations to as little as half of that so you know, i think that the way to think about this debt raise is wework going to market and saying, look, we can still raise money and well get to profitability. Maybe not a path, but at least a bridge i dont see how this would convince Equity Investors theyre in a better position this is debt raising that will be above ipo participants in the cap table, and i dont think most of them will be hoodwinked and think, oh, theyve got so much cash on their balance sheet. Theyre very profitability it doesnt really change the fundamentals its also slightly desperate, isnt it i think you could argue, why would you want to buy into an ipo with that much debt on the books, but i think it buys them more time. What wework would argue is they are profitable in some 06 of their more mature markets. But i dont know do you believe that story . The other thing we need to look at, and ive not seen a term sheet, but the debt service will come from the cash flows of Profitable Properties they have around the globe so its not necessarily being structured against the corporate parent therefore, its in a little bit of a different mix than the corporate just taking on a full debt load and therefore degrading their balance sheet. I do think that theyre doing this because they have serious cash needs they have an aggressive Expansion Strategy and there is a lot of talk in the market that it would be a down round if they sold equity again. Heres what i would find concerning about that. If you see a market downturn, if you see a recession, do see real estate prices plunge, what does that do to the servicing of the debt i think what youll find is where are investors going to be willing to take coupon thats going to be in their calculus again, this isnt an outright bond market issuance its some kind of facility with Goldman Sachs and jpmorgan who, i imagine, will be top of the list on the ipo when that comes out as well. Theres a lot of questions of whether this is justify neszing the numbers, trying to make something look attractive. Absolutely. And look what were talking about today. Adam newman being in the same room as jamie dimon and David Solomon a few weeks ago. So it is changing the narrative a little bit theres still lots of questions. Wework has been reporting their financials for a number of quarters because they did raise debt about a year ago. Thanks very much. Up next, weve got your last chance trades, plural, today two and despite a drop in mortgage rates, new data shows a surge in apartment rentals. Well explain that coming up and as we head to break, here are the biggest laggards in the easdaq 100 so far this yr. Closing bell will be right back dont get mad. Get e trade, dawg. Is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things 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. Tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Xfinity mobile is a designed to save you money. Whether you use your phone to get fit or to find the perfect gift, youll use less data with a network that automatically connects to millions of wifi hotspots and the best lte everywhere else. So you save hundreds of dollars a year on your wireless bill. Xfinity mobile has the best network. Best devices. Best value. Simple. Easy. Awesome. Click, call or visit a store today. Welcome back to the closing bell. Lets check on some individual market movers. Symantec is the highest performer. The stock higher, up 3 . Nike getting a boost from the u. S. Womens world cup win over the weekend team usa defeating the netherlands 20. Nike is seeing a surge in jersey sales. Stock is up almost 2 right now. As a very smart cnbc. Com article points out, one of the biggest winners in all of this arguably, sponsor of 14 out of 24 teams, including 3 out of 4 that made it to the final four, including the u. S. Womens team. And u. S. Shirt sales for the womens team outselling the mens team as well, which is a statistic i love the delta in terms of added interest, im not sure its in the u. S. , but in european nations where womens soccer was significantly behind weve seen a massive catchup now the hope is it lasts the very fact that it outsells the mens jerseys here is a great statistic. Huge, huge kudos and congratulations. Yeah. To team usa even though they beat england on the way to the final the best team won. Thats all we can say. They did miss a penalty, which would have got them into extra time it is what it is fair enough what do you think of nike theyre going to be good performers they have a very aggressive sales staff that goes after all kinds of professional brands they really they made the decision years ago to go into global football. Theyve been very successful we have nine minutes left were going to get your last chance trades, plural. You have two for us. Ill be brief the first one is Teledoc Health care sector, ageing population around. That ageing population, like myself, is on the tail end of the boomers and is inclined to acquire and consume services over the phone thats what teledoc does if i could do that with my health care, im going to do that i think thats a good trade there. The second one is an industry theme. Its the cannabis theme. I like Canopy Growth Canopy Growth is the 800pound gorilla in that market they recently sold off because of a management shuffle. I think longer term, the fundamentals as well as the theme is there for that stock to really perform well. Okay. Two for the price of one today keith, thank you very much my pleasure great having you with us for the full hour. Keith bliss there. Thank you the major averages on pace for their second straight day of declines we have just eight minutes left of trade up next, well cover all the angles in our closing countdown. And as we head to break, here are the winners and losers in the dow. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. 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. Welcome back five minutes left of trade time for the closing countdown lets trade the close with mike lewis, head of u. S. Cash equity trading at barclays. Mike, is it the nonfarm payrolls number thats hurt equities two days in a row now . Yeah, i think thats safe to say. That, coupled with probably slightly increased positioning from hedge funds any sort of inclination that you get the fed is going to be less accommodative with a better payroll data, i think near term with higher positioning levels gives the market a little jitters. But the volumes have been super light. We dont really give a ton of credence to that i do think that powell testifying to congress on wednesday and thursday and anything they say about Monetary Policy will be obviously watched pretty closely what would you expect the fed chair to say about Monetary Policy this week i cant imagine hes going to say a ton different than hes already alluded to my guess is theyll say they stand ready to act if need be. Theyre looking at the kind of trend with the payroll data. And obviously the manufacturing data worldwide my guess is with the move at fed funds, july is probably still active but you know, its anybodys guess what he says on wednesday and thursday, but i can promise you it will be very closely followed mike, whats your take on the vix at the moment . It was up a full point earlier pared back a little bit. A sign of things to come over the summer yeah, i mean, its possible vol stays very low the vix and volatility in general is something that is low. I think that rate vol is going to be a big component of that. So once again, not to keep saying the same thing, whatever kind of messages or rhetoric you get out of the fed, if you see a bump in rate vol, it would go to equity vol, would be my guess. For right now t stays low. Given that, i think that you know, the path of least resistance as long as vol stays subdued is somewhat a grind higher in equities the caution is positioning has crept up any kind of less than dovish signals that you get from the fed is youll see more market jitters for sure all right mike lewis, thank you. Great thanks, guys over to mike santoli now for his third dashboard. Morgan, thanks. Calling this capitalization confusion. Look at the breakdown of Performance Today based on the size of the difference stocks. Bigger has been better s p 500, large cap, down about 0. 5 look at it on a oneyear basis much more stark. The s p 500, a much more quality trade. Its been linear large, better than middle, better than small, better than micro. Is this late cycle behavior . Is this earnings visibility low in general could be all the above the good news is have to watch these relationships, but now lets get over to the nasdaq with bertha part of the reason the russell is underperforming is biotech is underperforming here. Investors have been wary of the sector over drug pricing issues. That said, its the chips that are downed from the fourth day in a row apple is the biggest drag, along with some of those big f. A. N. G. Names as well. Thats whats Holding Things lower. But we have some tech names higher today, including micron thats bucking the trend western digital. Costco at a new high bob, today we have both Consumer Discretionary and Consumer Staples outperforming. Thats right. Consumer discretionary has been a real Leadership Group there, bertha thanks very much the leadership board pretty narrow today we had Energy Stocks up earlier on, on oil strength, but that faded. We had big caps like exxon, chevron up earlier on. The rest of the group that was on the upside were defensive sectors like real estate and utility stocks retailers like under armour nike, gap, all helping Consumer Discretionary. The Leadership Group there, thats done really well in the last month the biggest names there, home depot, nike, mcdonalds. All bigger than 100 billion these Consumer Discretionary leaders have been strong for the last month, up 6 , 7 , or 8 elsewhere, no big news on the fed or trade today mostly dominated by Morgan Stanley, downgrading Global Equities to underweight, saying earnings expectations too high. Theres the closing bell the Dow Jones Industrial average down two days in a row today down 120 points. If youre just joining us, good afternoon welcome to the closing bell. Im wilfred frost. And im morgan brennan, in for sarah eisen, along with mike santoli. Stocks settle here into the close, getting a look at the major averages kicking the week off in the red. Second straight day of declines. The dow finishing the day down about 115 points or 0. 4 26807 is your level there. S p, similar losses today, down about 0. 5 , 2976 nasdaq underperforming, down about 0. 8 russell 2000 small caps as well as transports slipping back into correction territory we saw a yield tick up again, hold above 2 , similarly overseas yields picked up a little bit the dollar pretty flat after gaining last week. So the move in the dollar and in bonds a little more risk on than the move in equities overall joining us to talk about the market day, larry adam, chief Investment Officer at raymond james. Also, chris ailman at california state teachers retirement system welcome to both of you mike santoli, ill start with you and your assessment of the action today it was definitely the market cooling off a little bit the past two days you had kind of run up to this record high on wednesday. Just enough suspense after the jobs number about the fed outlook that i think its going to keep kind of a wait and see type of mood out there todays decline didnt really threaten even fridays lows in the major indexes. It seemed like it wasnt a major rethink of the overall situation. But just with powell out there and we got inflation data this week, it seems like the market is taking the excuse to have a little bit of a breather here. The banks again kind of leaning on the downside. That Deutsche Bank news was not taken as a net positive for the rest of the group. Im not sure is that the fact its moving it . I dont know if it is but it wasnt an excuse taken by value buyers to say, okay, maybe this is a little bit of an all clear type bizarrely, Goldman Sachs and Morgan Stanley were down the most, over a percent youd probably say theyre the biggest beneficiaries because they have a higherpresence the vix, i think its july the market has been kind of calm you would expect it to maybe bleed lower a little bit, below the 14 level i do think we have the fed uncertainty keeping it propped up a little more than it otherwise would be larry, what do you think about equities at these levels, the s p for example . Were right at, it looks like, 2975 well, weve turned a little more cautious here in the near term, as was mentioned if you look at the month of june, weve been up almost 7 , 8 since the beginning of june i think its normal to have a period of correction by the way, we usually have 2 two to three pullbacks were just waiting for a better buying opportunity i think in many ways, people had gotten too optimistic about what the fed is going to do, about the trade issues i think a lot of that will have some disappointment here in the near term and provide us with another opportunity. Chris, two days in a row of selling. Whats your take i would agree with the prior comment. This market has been oversold in june remember may was such a terrible month. June was a very positive month i think the market needs to come back and assess where the fed is going to go. It certainly got ahead of itself in terms of Federal Reserve expectations Morgan Stanley downgraded its outlook for global stocks today, saying investors havent fully priced in weaker gdp data and, quote, the positives of easier policy will be offset by the negatives of weaker growth its the classic central point, mike, for, you know, will you only get a cut if the evidence is bad enough . The other point in the Morgan Stanley noted, which got a lot of attention today, is generally where valuations are and where Global Equities are. Exactly valuations to me are certainly not a decisive reason to own the moorkt theyre not stretched, but if you believe theyre fair, its only because you think this slowdown is just a little bit of a lull and not a really persistent decline in Economic Activity so that is where the front line of the debate is right now has the market priced in enough of softness in earnings by now because its only going to be this plateau period and its going to pick up again if your bet is no, that its going to be a more persistent decline in the Global Economy thats going to drag earnings estimates lower, then i think it makes sense to turn a little more cautious. Whats interesting to me is you have citigroup going underweight by a small bit relatively recently you have a lot of caution out there. The consensus sell side target for the s p is below where were trading right now. That tells me that nobody has got high expectations. On a contrary basis, thats probably a positive. It would be unusual for a lot of these firms all at once to call the top. Chris, are you cautious yeah, no, id have lower expectations i think the market has gotten ahead of itself. I would agree with what mike said its normally a contrary indicator, but i think most of these firms are really looking around the globe and realizing that the economies are very slow obviously with europe. Ive heard people my equity desk made the comment that japan looks like one of the better economies. Thats really saying the scale is slow growth, and i think well see sloppy earnings. So not horribly disappointing, but sloppy earnings reports and gloomy outlooks from companies theyve got to be more pessimistic and more realistic in their expectations. Sloppy but not potentially an earnings recession is that the read through there i wouldnt say an earnings recession, but the street has been expecting such good news. I think weve got to see a period where things slow down. Youll have some good news in the tech also weakness because of all these trade fights larry, all things considered, do you still favor u. S. Equities over the rest of the world i do. I still like u. S. Equities i think the fed is going to take that insurance cut i think the important thing to determine there is that it doesnt matter how many cuts they actually do, but the more important thing is does it extend this economic expansion that were in. I think it will. If that continues, i think that continues to support u. S. Equities because when you look at the fundamentals, you have a better growth trajectory, better revisions. The sector composition of what youre actually investing in is much more favorable here in the u. S. You have more tech you have more health care. You have more Consumer Discretionary. I think those are the sectors that are going to do the best going forward. All right well, investors are pulling their money from actively managed mutual funds in the u. S. And europe investors pulled more than 30 billion from active funds so far in 2019. Thats according to data from morningstar. Thats the most in three years meantime, passive funds are growing in market share. Those are up 2 from last year mike, the read through here . People are just looking for lower cost options and they have been for a while. So many structural reasons for it to continue i think it would probably take a major market break and a rethinking of exactly, you know, what you want your portfolio to do for you it has the benefit of transparency, of low cost. You have the Financial Services industry trying to gather assets and Financial Advisers trying to keep more of the lower fees for themselves, therefore lower costs, passive products are the way to do that so i think its a very difficult its a very difficult trend to fight, except by tbecoming more transparent in active strategy and maybe having competition, which is already happening. Chris, i bet youve got a strong view on this. I do, very much so. Were 70 passive in the usa, 50 passive in nonu. S for us, we can operate that here in our own shop at West Sacramento at very low costs so very effective. And i think june kim on my staff pointed out an important point youve been in a tenyear bull market so if youre an active manager, even if you have a little bit of cash, its a drag on your performance. They have a really hard time keeping up when the market is running so strongly. But if we have a bit of a bear market or a sloppy market like we had in may and december, then active management can come back. In my view, honestly, they have that decent product, but it is overcharged, too expensive, and so net of fees, they underperform the general markets. I think the Retail Market has picked up on that, and youre going to continue to see inflows into passive funds for a long time larry, your thoughts . I think were at the cusp of possibly seeing active Money Managers outperform. Looking at a lot of the research we do, for example, last year you saw the smallest dispersion between the best and worst sector in the s p 500. The narrowest in history already year to date, youve started to see that widen. So between the widening youre seeing at the sector level, at the individual stock level youre starting to see a lot more dispersion, and then at the regional level, right, from the u. S. To europe to emerging markets, i think all that dispersion leaves for a lot more Fertile Ground for Money Managers to outperform i think we could be at the cusp of seeing some of that outperformance from active Money Managers larry and chris, thanks for joining us my pleasure thank you very much still ahead, one group of investors was buying in june while everyone else was selling. Well dive into the results of a new Investor Sentiment report next and later, its the question wall street will be mulling over all month. Will the fed cut rates at its next meeting weve got a debate on how the jobs number and this weeks congressional testimony could impact that decision welcome back major averages closing out the session with their second straight day of declines bob is here with with a look at the biggest movers Bertha Coombs doing the same at the nasdaq i just want to highlight the problem with the transports today. Once again, shippers and Logistics Companies having problems your fedex, j. B. Hunt, robinson down to the downside Airlines Holding up much better overall. Thats been true throughout the year a great day for Consumer Discretionary stocks home depot, nike, mcdonalds up 6 to 8 in the last month they were leadership stocks today. Home builders also not only good today but many of these are up 20 , 25 on the year guys, back to you. Bob, thank you. Lets get to the nasdaq now and Bertha Coombs, who has the biggest movers there morgan, apple was the biggest weight on a downgrade today, but also netapp getting downgraded to a sell over at citi you did have large cap tech driving lower. And for chips, four Straight Days of declines it was biotech that was the real drag today they finished off of the lows, nonetheless, with continuing worries about drug pricing concerns among those bucking the trend here were also among the retail names, those consumer names. A lot of retailers get prepared to hone in on amazons prime event next week. Back over to you bertha, thank you millennial traders are breaking from the rest of the market for the first time in two years. T. D. Ameritrade is seeing a divergence between millennials and the general public, according to their june imx survey joining us now is chief Market Strategist at t. D. Ameritrade. So lets talk about that age gap differential for the First Time Since november of 2016, our clients were net sellers of things not just equities but overall. By a big margin well, yeah, a pretty good margin, particularly in equities even more so than fixed income i think one of the interesting things about this is it shows that although, you know, as the market is at alltime highs, at the end of the day it was a good first half of the year for retail traders i think theyve gotten to a point where theyre like, okay, there is so much on the horizon. Maybe we should take some risk off the table overall. I think its interesting they didnt go equities right into fixed income, which is the pattern we usually see we saw sellers of equities not going necessarily into fixed income so this is a very interesting trend overall. To your point on the introduction, millennials were actually in that buyer of stocks what were they buying millennials were actually buying things they know. Tesla. They love tesla. Tesla goes down to 200, youll see millennials buy it beyond meat, Canopy Growth you know, uber particularly. One of the interesting things we saw, the ipo came out, the stock went down pretty good in the first two weeks of june. Our clients were buyers both of those weeks, particularly led by our millennial clients these are yiriskier names. These are more momentum names. Kind of surprising i agree but what were their parents told buy things you know. If you think about those names, those are names that millennial investors know to that point, i think you make a great one, i dont know that you want to necessarily hold them forever not a single one of those companies i named is turning a profit yet and you want to get to where they are turning a profit, but what is your time frame for holding them were you buying uber just on the thought that, you know, it got a little overdone on the downside, or were you hopefully, not maybe yet, building your entire portfolio around it. Talk to us about apple and the price sensitivity. Absolutely. When apple touches 200, our clients last month kind of thats when they came out to sell it. If it got near or above 200 and this was across the board. Our clients came out to sell apple overall. I found that very interesting because you and i have talked every month for quite a while now. Our clients are usually buyers of apple its still the number one holding at our firm. So i found it very interesting that as it touched 200, maybe with their design chief, et cetera, people came out and sold it overall particularly the last two weeks of june is when we saw people sell it. One of the other stocks interesting on the sell side was netflix. Netflix has been a darling netflix was a seller again, strong among our millennial investors as a seller and disney being a buy so i dont know if thats giving us a signal perhaps about disney plus, but i thought that was also a very interesting relationship apple and netflix both, to some degree, range bound apple is at 227 the fall of last year it fell well below that, went up to like 211, fell below it so its had this kind of back and forth. Maybe theres conditioning involved there absolutely. And a lot of people to the point of it being the number one held stock, a lot of people have held it for a long period of time seeing pe j. J. , thanks for joining us always a pleasure still ahead on tthe closing bell, mike santoli heads to the tell straiter. And apartment rental demands seeing an unexpected surge the reason why and the big Market Impact when the closing bell comes back welcome back lets send it over to mike santoli for his final dashboard. Morgan, we did a, b, c. D is driving demand. Weve been looking at these cyclical indicators that have shown signs of looking like prerecessionary type trends, whether it was average weekly hours last week or Consumer Confidence theyve rolled over in a way that says maybe we should be on alert for something worse, like a recession. This is heavy truck sales. It was actually reported friday. This is a monthly number this is for june its pretty fresh. It shows right near the alltime highs. Not quite at the highs but just barely below it. What youll notice is theres always been a sharp decline in this number before the shaded areas, which are u. S. Recessions a very longterm chart going back to the 60s so every single time you were leading up to a recession, this indicator peaked beforehand. Its almost purely commercial sales. Its heavy trucks. Its not something that you buy for fun or just because you like the look of it so this is a net encouraging signal that the u. S. Economy, anyway, is not in necessarily a bad trajectory you know how i feel about this chart im like totally digging it right now. Youre talking about heavy duty trucks its a lot of money that goes into an order, of a sale of one of these trucks. I just wonder how this drives against some of the weaker freight data weve seen and the fact the transports have been tumbling you know, i dont know specifically because this i dont think its necessarily all about kind of container shipping and 18 wheelers. Some of it is going to be other types of trucks that are a i little more domestic oriented for construction and things like that so i dont know how to explain it except to say that typically you only buy a truck if you see the demand out there for your business you have to put this in the positive column. As a flip side, which i think is pretty telling and indicative, european truck sales of late have seen a couple warnings in terms of the direction of sales there and General Capital goods orders have not been great this is a particular, maybe Small Business type indicator or Something Like that. Mike, great stuff thank you very much. Time for a cnbc news update. Sue herreras got it for us. Heres whats happening at this hour. President trump tweeting he will no longer deal with the British Ambassador to the u. S. Following the leaks of his unflattering cable assessing the Administration Trump says that he doesnt know him but he is not liked or well thought of within the u. S. The president also criticized outgoing uk Prime Minister theresa may. President trumps new york state tax returns could be given to congress under a new law in his home state that was signed by democratic Governor Andrew Cuomo today. Republicans called it a purely political move that will never stand up in court. Jeffrey epsteins bail hearing has been moved from this thursday to next monday, july 15th this after he pleaded not guilty to sex trafficking charges following his arrest over the weekend. He will remain in jail until that bail hearing. And First Lady Melania Trump visiting West Virginia to learn how a city at the center of the nations Opioid Crisis is grappling with it. She participated in a round table with federal, state, and local officials in huntington. You are up to date thats the news update this hour back downtown to you diplomacy is dead, sue. Ouch yeah, it appears at least for the moment it is well, theres going to be a change, of course, soon. There is. Absolutely maybe it will improve again definitely a lot of coverage of that back home sue, thank you you got it. Still ahead, to cut or not to cut will we actually see the fed slash rates this month were going to debate that next. And later, earnings on deck pepsi and levis both set to lharoesults tomorw. Wel ve a preview for you back in a couple minutes these folks, they dont have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps. Com print discounted postage for any letter any package any time right from your computer all the Amazing Services of the post office only cheaper get our special tv offer a 4week trial plus postage and a digital scale go to stamps. Com tv and never go to the post office again today, lifechanging technology from abbott is helping hunt them down at their source. Because the faster we can identify new viruses, the faster we can get to stopping them. The most personal technology, is technology with the power to change your life. Life. To the fullest. Welcome back, President Trump taking aim at the fed this weekend, saying its Monetary Policy is keeping rt u. S. From competing with other countries if the fed knew what it was doing, they would lower rates, and they would stop quantitative tightening if you look at europe, what theyre doing, theyre pumping money in and theyre having rates lowered so they can compete with us. For more on what trumps criticism means for the fed, lets bring in cofounder of the Economic Cycle of research statute, and ethan harris, head of Global Economics at bank of americamerrill lynch. Good afternoon to you both if the fed is the fed keeping Monetary Policy in a position that is preventing the u. S. From competing worldwide . Well, thats a big one. On fed Monetary Policy, i think i have a pretty clear view and really really, in a way, this broader discussion we have an Economic Growth slowdown, cyclical one thats ongoing we have a totally separate inflation cycle slowdown we talked about that a while back on the show its the elephant in the room, that theres this inflation cycle downturn now, from the feds perspective, right, their dual mandate is whats going on with jobs growth and inflation. These cyclical downturns were very much at odds with a fed tightening cycle so first you saw bond yields peek out last fall, kind of getting in step with whats going on with cycles then you saw the powell pivot also, i think belatedly, getting in step with the Economic Cycle. Whats going on globally, they have other cyclical issues too i dont want to get into any kind of currency wars here, but from a cyclical, keeping it simple perfective, the door is wide open for rate cuts. When the president goes on a tirade like that, whatever this weeks content is, whether its based on the ecb or powell, does it lessen the likelihood he gets that rate cuts you know, i wonder about that i think thats a really good point. It makes it very awkward, right . The fed ought to be or is intended to be independent, a steward of whats going on with jobs and stable prices this is the basic idea there might have been some drift in when they do. You hear a lot about financial conditions so thats maybe broadened it out a little bit but if we keep it simple, keep it straight and clean, whats going on with the cycle in growth, whats going on with inflation, the door is wide open for cuts if someone is telling you you have to do something, you know, i say that to my 7yearold, he doesnt like that. He says, no, i dont want to do it ethan, is the fed essentially backed into a corner right now, either because of the president s commentary or also just because of the feds own commentary and the way the market has reacted to it well, i dont think the fed can in any way allow political pressure to dictate their policy if they give in to political pressure now, its going to get a lot worse down the road when were in Election Year so theres no point in surrendering to this now you just got to stick to your knitting, focus on the economy, and do what makes sense. I think to some degree, theyve painted themselves into a corner i think the fed needs to Start Talking to themarks and give u a better hint about whether theyre happy with what they see. Right now the markets are saying youre definitely cutting in july the feds message is we may cut in july. Theres a big gap there, and the fed hasnt helped by not giving any guidance so this big meeting with congress on wednesday, the Committee Meeting is going to be extremely important. Powell needs to start becoming a little more specific here. But ethan, hes changed his tune pretty significantly over the last six months. Are you saying he has to spell out specifically the bond market is right, were going to cut in july, or specifically, were not going to cut in july that goes against what central bankers do in their press conferences and comments in between meetings for years you dont want to go into a meeting with a market certain youre going to do something youre not sure you want to do thats the problem right now the bond market has decided because theyre not talking, it must mean yes, it must mean they indeed do plan to cut at least by 25 basis points so the longer they remain silent on that question, the more the markets are determined that its going to happen regardless of the data its extremely important that if they really believe they want optionalty going to the meeting, you dont want certainty pricing the market you want the markets to be uncertain so you can go either direction depending on how your debate goes. So i think its been a mistake for them not to communicate more clearly with the markets that being the case, do you think that the lack of an absolutely clear intent to push back against what the market has priced in is its own answer from the fed . You know, i might be talking my own book here i im looking at cycles. Theres a clear growth rate cycle downturn its in the data if youre willing to look at it. Im talking about the rate of change its decelerating. Same with inflation cycles thats a little more difficult, i think, for the current fed to grapple with were not talking about the level of inflation, but is it decelerating it peekaked last july any way you cut it, cpi, core, headline, whatever, its decelerating so they have the data to do it now, a couple months ago we had a weaker than consensus jobs number that kind of gave a little cover friday we had stronger than consensus. Month to month, its a bit of a, pardon my language, crap shoot, but youve got decelerating jobs growth, nonfarm, year over year jo jobs growth at a 17month low. So youre fairly bearish. Well, slowdown. Youre talking a lot about cycles is the end of the cycle inevitable oh, yeah. Its totally inevitable. So were heading for some kind of downturn now im being very specific were in a growth rate cycle downturn it will resolve itself either in a recession or soft landing. That has not been determined yet. This is our fourth one within a year, regardless of rate cuts . Well, itll be determined one way or the other within a year, typically. It would be unusual for it to go on any time you enter a growth rate cycle downturn, the risk of recession starts to rise when youre in an juupturn, the risk of recession is extremely low. Being in a decelerating phase, the risk of recession is rising. Were slow walking towards it. Powell said something to the effect of an ounce of prevention is worth something i think like a stitch in time saves nine i was counting how many quarter points cut could be taken. Its actually nine, in theory. So it could be helpful to move here in july, but its still, by our count, kind of late in the game i have a feeling well be talking about all this a lot more over the next month ethan, quickly, final thought. Yeah, so i disagree completely the economy of course is slowing down we just came out of a massive fiscal stimulus and have a trade war going on the question is, is it slowing enough to warrant a cut . Never before in a cycle have the fed cut with payroll job growth over 200,000 i mean, were even on a threemonth average growing 170,000. The data right now dont justify it maybe theyll go anyways, but just because were slowing down doesnt mean the fed has to cut Interest Rates thank you for joining us. Thank you thank you up next, apple under pressure the tech giant on the receiving end of two dueling analyst calls, and those details are ahead. Later, another blow for boeing the airline losing out on a big order just as its gearing up to unveil its june orders and delivery numbers well preview all of that coming up it all started under this buttonwood tree. Twentyfour people came together to sign an agreement that created the stock exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. 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. Welcome back apple shares under pressure today. The move comes amid mixed notes on the street. Rosenblatt downgrading the stock, while needham added it to its conviction list. Josh has the breakdown so rosenblatt downgrading apple, saying they face fundamental deterioration over the next 6 to 12 months. Needham adds apple to its conviction buy list, saying its transitioning to a Company Valued on subscriber and Services Growth. As you mentioned, apple shares down today, though still soaring nearly 30 so far this year. Another apple news, steve jobs could be critical of tim cook. Thats according to walter isaacson, speaking with cnbc this morning in my book, steve says almost what you just did, how tim cook can do everything, can do this, but then he looked at men and said, but tims not a product person on the other hand, cook and his eight years now as ceo has overseen the continued extension of the iphone lineup and the companys move into all new product categories like the watch with an estimated 70 million sold, air pods, and of course those Brand New Services too. More jobs commentary from none other than bill gates as well. I have yet to meet any person who in terms of picking talent, hypermotivating that talent, and having a sense of design of, oh, this is good, this is not good so he brought some incredibly positive things, along with that toughness. Guys, back to you josh, what was your take on isaacsons comments on the departure this morning and how tim cook responded to some of the wall street journal criticism . Well, i think its fascinating. Were at this moment where johnny ives steps back there was thatarticle in the journal saying he was stepping back because he was distant, he was frustrated, a company that was more focused on operations than design. And cook, of course, pushed back on that article very publicly and forcefully, called it absurd, in his words i wonder if, you know, if its operations and design, whether one supersedes the other or whether apple in 2019 is just so much bigger an broader an the company that johnny ive first joined maybe its just that a company that doesnt sell tens of millions of products but hundreds of millions of products, its that operations design just have to work more closely hand in hand more than ever josh, thank you very much apple closing at 200 bucks today, down a couple percent a news alert on a potential bank deal. Seema has the details. Piper jaffray is nearing a deal to buy privately owned Sandler Oneill. Both investment banks are well known for orchestrating smaller deals, sandler with its expertise and advising banks on merger, equity offerings the deal could be announced as early as tuesday, according to this report. Keep in mind private equity firms bought a roughly 40 stake in Sandler Oneill in 2010 seema, thank you very much for that mike, small deal, below 500 million. Not really related to the Regulatory Environment because these arent retail banks that have significant assets on the balance sheet. But a sign of what we got a snapshot of in the Deutsche Bank of needing scale, wanting to cut costs if youre in this kind of Investment Banking space pressures in institutional brokerage, sales and treading, research it reminds me of what steeple has been doing, rolling up some of these smaller investment banks. Kbw, i believe part of the rollup. That was always the comp to Sandler Oneill. Up next, a democrat divide Elizabeth Warrens wealth tax has sparked a big war in the Democratic Party well take you behind that battle ahead this is mia. This is mias pulse. With pressure rising, and racing. This is also mias pulse. That her doctor keeps in check, so she can find balance. This is mias pulse, and now its more stable than ever. This is what medicare from Blue Cross Blue Shield does for mia. And with over 80 years of healthcare expertise, imagine what we can do for you. This is the benefit of blue. Welcome back to the closing bell. Apartment rental demand is showing an unexpected surge. Diana olick is here with why well, morgan, we thought as millennials grew up that apartment demand would fall off, but we have not seen that yet. Apartment demand actually spiked, up 11 from a year ago that in turn pushed rents up an average 3 nationally to 1390 per month. All according to real page, a Real Estate Software and analytics company. Despite the rent increase, a record 82 of renters still say renting is more affordable than owning, according to freddie mack thats up dramatically from a year ago i think millennials ultimately aspire to have homes, but i think its still the american dream, but i call it the dream deferred its deferred because of student loans, the lack of having a large amount of equity he says he does not think the apartment market is overbuilt because demand is coming from both millennials and downsizing baby boomers back to you. Diana olicki, thank you. Switching focus. Elizabeth warrens wealth tax sparking a bill war in the Democratic Party robert frank has the details well, it all started when larry summers, the former treasury secretary and obama economic adviser, published an oped in the Washington Post criticizing warrens wealth tax. He said that revenues from the tax would, quote, likely disappoint and would probably raise 25 billion to 75 billion a year rather than the 200 billion projected since the rich would find ways of avoiding the tax. Now, the two economists who helped create that tax fired back at summers saying, quote, hes just assuming the wealthy cant be taxed they said most wealth today are in stocks, which are easily valued and proven and taxed. And the irs enforcement would be strengthened under the war on tax. The fight then moved to twitter, summers saying hes always for taxing the rich but would rather do it by fixing loopholes, appropriately taxed Capital Gains, and tax compliance. Then, very cool to attack young academics for doing policy Relevant Research and offered summers a bet. If the wealth tax yields 80 of our estimated revenue, quote, i give you 10 of my wealth. Otherwise, you give me 10 of yours. Summers wealth obviously a lot more than these guys where are we settling, though, robert, across all the Democratic Candidates as to the best way to tax wealth if its assumed all the candidates are going to offer up some way to offer an increase in taxing wealth. Is it an arbitrary wealth tax . Well, until this fight, it was all about who could get the most attention warren got the most attention. Until this, there hadnt been any real serious analyses over which plan was either more effective, more just, and would raise more revenue thats why i like this fight it was about, look, will it work, and how much would it raise . The other tax proposals, most of which center around Bernie Sanders estate tax, talks about increasing the income tax, theres talk about Capital Gains tax. None of those have really been analyzed or scored on how much they would actually raise. It work based on history and where weve seen implementation of wealth taxes, you know, are much higher rates for the wealthy. Has it worked . History says the wealth taxes do not work. In the 1990s, 20 countries had them now its only three. And they they raise very little revenue because the wealthy are good at avoiding it. You could argue that particularly in places like new york city theres already a wealth tax, its just delivered through an annual property tax absolutely. Thats the same sentiment as its on an annual wealth or capital chunk as opposed to an annual income. Thats delivered that way, through a high property tax. Thats a smart point. Some of the European Countries dont have a property tax. This a very important point. Exactly in new york city, you know, its kind of high yeah. Relative what the annual welcome to west chester, my friend we have a higher income tax, so property taxes in new york are supposed to be low theyre creeping up very high. Were highly taxed i was going to say the only thing that would affect the revenue estimates is if Something Like this happened even it for another reason the market went down absolutely 80 absolutely. 80 of the wealth of the the wealthy is financial they didnt bake that in at all the idea thats getting bandied around which is easy to criticize, i would think all of us would agree on, is taxing Capital Gains before theyve been realized. That is particularly regressive because people might really suffer if it falls again unrealized gains. Thats senator bidens proposal. Very few people have proposed that robert, great debate. Thanks thanks. Our own resident tax man. Next, the wall street look ahead. For your heart. Your joints. 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. Lets take a look at how we finished the day on wall street. The dow finishes down about. 4 . Similar for the s p 500. The nasdaq trading about. 8 lower. Small caps and transports the big underperformers today. Second down day for the major averages, but keep in mind coming off of those record highs we saw the middle of last week pepsi is set to report results before the bell tomorrow earnings are estimated to decline 7. 5 year over year while revenues are projected to increase 2 . The companys topline results are expected to benefit from the Strong Performance of its snack business which continues to deliver solid returns. Still, pepsico has seen weakness in its quaker foods north america segment. Its down about. 3 but strong yeartodate performance definitely one to watch now to some other events on our radar for tomorrow levi is also set to report results. That after the bell. And boeings june orders and deliveries hit tomorrow morning. Lets start with a preview of levis Courtney Reagan has that its the second report since going public in late march Analysts Expect earnings of 13 Cents Per Share on revenues of 1. 297 billion investors will look for continued strength in International Sales with improvement in china and when it comes to tariffs on levis goods, that are manufactured in china and imported into the u. S. , levis recently said the impact is negligible guggenheim analyst bob durble, expects growth in the directtoconsumer business which he estimates would expand Gross Margins by as much as 100 basis points shares of levi up 35 since the public debut that outpaces the xrt retail etf down 4 in the same time frame thank you so much boeing is set to release its june orders and delivery numbers tomorrow phil has a preview of that for us phil like so much of everything that revolves around boeing, it is all about the 737 max now the backlog now is approximately 4,400 planes there have been no firm orders placed since the grounding remember, only going through the end of june. Cancelations year to date, 68, though a chunk were due to a bankruptcy of an indian airline. Max production is what people are focused on right now remember, they dropped it down to 42 per month from 52 per month. Were unlikely to see any deliveries until later this year which is an impact for southwest, american, and united. By the way, as you look at shares of boeing, remember that they had news over the weekend that flyadeal, a lowcost carrier out of saudi arabia said it is not going to go through with a plan to buy 50 maxes and is switching over and will go with the airbus a320 my question on is that is how easily can people switch based on the contracts they have agreed before given are the contracts always flexible or given the two disasters, does that give all the airlines leeway to be like, look, sorry, guys, were changing our plans depends on the level of the contract in this case, this was basically a memorandum of understanding. A letter of intent we plan to buy 50 of these boeing 737 maxes, and now they already have some airbus models. They said, you know, were not going to go that way were going to stick with airbus thats not a formal contract its far different when its a firm order and they have signed, then it becomes much more complicated canceling it how is this rippling out to key suppliers for boeing now i mean, i look at shares of spirit arrow systems finishing down 5 today, presumably on the heels of that cowen note, flagging the impact this could have in terms of longer term delays to production right the bigger question for these suppliers, morgan, is will boeing cut production again. Remember, they kept the delivery rate of fuselages from the spirit arrow systems facility in wichita, kansas, to boeing at 52 per month. Now, theyre staying there, and boeing says were not going to change that. But the question becomes increasingly as these planes start to back up, will that have to drop down at some point phil quickly, does this make that British Airways deal look even more surprising to you, or does it just suggest to you that theyve probably got an unbelievably good set of pricing . They got a great deal willy walsh never misses a trick, does he it was a smart time to make the deal with boeing but again, that is a letter of intent thats not a firm order at this point. So those numbers will not be reflected in the june data that comes out tomorrow okay. Phil, great stuff. Thank you so much. Boeing ending down 1. 3 . Mike, final thoughts, a minute left in the show two days in a row of selling but not aggressive selling not aggressive. No its more just the market settling back a little bit at least thats the way it looks for the moment i wouldnt be surprised if you saw something similar tomorrow the markets very sensitive to kind of listening intently for hints about this fed move because its the next obvious thing before we get a real flood of earnings. We do get the jolts report tomorrow the job openings and leaves and things like that, and in the job number on friday, there was an unusually high number of people who were unemployed who decided to leave their jobs, which is a bullish sign for the labor market well see if thats confirmed by the jolts data in the morning. We get the fed chairman two days of testimony, fed wednesday through thursday yes fed minutes on wednesday and also inflation data, as well yeah. So it all filters in, and that will kind of tide us over until we get real earnings coming in ill sell sarah you said levi and pepsi arent real earnings theyre real but bellwether that does it for closing bell. Fast money begins right now. Fast money starts now looking at times square, im melissa lee. Tonight, apple at a crossroads as the tech giant pivots are the best days behinds there stock . Transports in trouble, sinking back into a correction but theres one name in the group that chart master it says a screaming buy. First, the markets and it was just last week that stocks were hitting fresh record highs. Angelser singing, and it looked like there was nothing stopping this rally but it was a snap back to reality today as the dow sinks triple digits, down nearly 200