Josh brown its been a safe spot for august its entirely to be expected where bond yields. I was asking people today, you can have a 30year treasury, or and whatever up side you might get. Yielding 4. 17 , plus a buyback, which one do you want . I was amaze d you dont think tl is volatile . Or look at the balance sheet, too much dead. Theyre supposed to have a lot of debt. The other pushback is the bond picture details something recessionary but there are some categories better than Others Companies that have a business that seems to be less reliant on discretionary Consumer Spending. Its that they will provide padding or cushioning. I dont know how much cushioning there is left at these prices. Bo pisani is diving back into new controversial brexit headlines, and mike santoli nice rally. Energy stocking keep going down okay, most of the stocks are down, and many are near lows routinely. They had very missioned everyone results. Look at the months, and dillards and khols down, most of them down, their rally today, even with the yields down today, and finally same with the transports in the transports overall. The british pound following today. Thank god wilfred is back. No, they didnt that was the only reason i actually really like the new look i september them lets get to the story, though, the chance of a Nodeal Brexit rose today, as Prime Minister johnson reduced the numbers of Parliamentary Business days remain between now october 31st. Parliament will only sit about a week before being suspended before the 14th of october this socalled is not abnormal in itself, though the length of it under the current circumstances is extreme and has been labeled as, quote, constitutional outrage by the speaker john burko or change the Prime Minister, the lack of parliamentary time makes the former much harder, increasing the chance of a noconfidence motion in the Prime Minister early next week when parliament returns and is in session there you can see the pound 1. 2216 Deutsche Bank put it a the about 50 , the pound is not at its lows of the past couple weeks. The other good news that came last week was slightly higher chance of a deal, so kind of offsetting each other. The one thing you would say is that it reduces the time mps has to act, but it crystallizes opposition therefore, if a table of nocold front vote is tabled, he has a higher chance of losing it the focus will be on what will be a crazy week in parliament probably next week. I think its funny he has to ask the queen officially he does the queen hasnt been drawn into it yet if she rejected it, she would have taken a stand she has no choice but is accept the wishes of the Prime Minister. Whether do they use the sorting hat . In about ten days time if he loses a vote of confidence so whimsical, all this procedure stuff. It is, and it has all been taken to the absolute extreme at the moment as people are correctly saying, you know, thats why the pound has been at or near they longterm lows of late. When does the crown come back later this year a tweet today was season 17 of the crown will be interesting. Lets send it over mike santoli for the dashwe. Were going to call that tails and dogs who decide who is wagging who, also hit fight or flight, a bit of an emotional reaction, and prune ant plant, a look at the rebalancing activity we might be seeing even today, and then vaults versus volts thats a sector versus sector dinam nick first look at the interplay between the s p 500, the tenyear treasury yield. You have seen and i pointed this out maybe last week when we got a bit of separation, when the s p 500 attempted to escape the pull of lower bond yields. Were seeing again today, though i do think bobs point is well taken, were seeing a lot of this through the mean reversion activity, a bit of a bid, tech doing nothing today, even utilities down so you dont obviously weve been kind of captive to this relationship to alternates while. Job was talking about the 30year treasury yield dipping below a lot of equity yields its below the overall yield for the s p 500, very, very longterm chart. And then we have the s p 500 dividend yield thats a mislabel. It is in orange right here, and basically its equivalent. Lets just call it that. I dont think many investors are choosing between these two assets for a longterm allocation theyre very desperately afraid or they have to for some reason or another, and theres no yield left in the world. At marker of just how relatively inexpensive equities have become the longterm trend very steady, around 2 . Thats something you can almost counseled on, guys thank you very much for that. Stocks trading as we said, near the session high for more on todays market josh brown is still with us as well just want to pick up quickly not only have we focused on yield so much, but banking in particular as the yield has continued to invert. I think theres some technical things in the market that cause what looks to be very counterintuitive behavior on an hourly or daily basis thats not really overly important. Its not necessarily a linear onetoone relationship on a daily basis, for example, what a credit bred does or a yield spread does, and the sector that could benefit or be hurt by it its august 28th, right . A lot of people are just not involved, not engaged, and while theyre away, their algorithm might be fishing out some weak shorts it could be anything im making that up. A lot of the underperformers do well today. Its energy. Alisha one quick positive, though, to that point. We have done nothing since august 5th were the april on the 17, so almost an entire month of thrashing to and fro maybe thats a positive. The faangs alllooking terrible. There isnt any sector thats done well this month away from the yield. Maybe thats a good thing. I going to ask you, alisha, if you look at what actually worked in august, where there was leadership in a short of leaderless market, and utilities and reits are trading near record highs do you follow josh into those reit stocks . I want to reiterate something that josh said the stock market has also done nothing in a year. Weve had a lot of indigestion in that 12 months, both to the up side and to the down side its just an expression, but the market continues to stay within 5 to 6 of the alltime high because yields are so low. So you have to expect yields stay low, lower for longer to that extent you need exposure to the defensives for that reason having said that, theyre not cheap, but they will work on a tactical basis you have to know why youre buying them. If you understand you now theres pressure on yields, youre fine, but you need some optionality. If we do see easing in the next few weeks, is that good for u. S. Equities or conversely bad for them base odd what it might do to the dollar the dollar has a floor on it, but the interesting thing here is, for instance, why is the euro notats parity with the dollar in i think we have seen somewhat of a ceiling here as well any central bank cutting will be positive for equities, simply because itadds liquidity, so i think thats just very positive for markets. Having said that, the real issue with the dollar is china, and its let whats happen with europe its clear where europe is going. Its been obvious the last year. Alisha, thank for you joining us. Still ahead, stocks stages a rebound today, but Investment Sentiment at a low plus one wall street firm out with a new note saying its time for a change at tesla the analyst behind that call tells us the one thing the Company Needs to be doing right now. A quick check on our data tracker today. Mortgage applications calling 6. 2 led by an 8 drop in refi applications despite they are year over year on the lower rates. We have almost 45 anyones left to tradethe w , doup more than 2 hundred points welcome back to closing bell. 45 minutes left of trade time now for word on the streets. On esports calling it a high impact and investable sector with the 18 to 25 years old demographic. Josh, thats you i suppose it is, yeah i dont know that anyone is making any money from this other than a handful of influencers i notice its exciting but its growing at 23 . Its just video game making are making a lot of money, theres an etf for that it doesnt even own it own. Esportsletted company. Its not a big business. It might be one day. Naming jetblue as a catal t catalyst, noting that it has attribute to negate trading impact, its up 1. 77 on the nuts jmp saying they need a Stronger Team at cities la lets bring in the analyst behind that note joe, youve been a bull on the stock for some time. Says a new change for you to cried size the current level is musk one of those yeah. Well, for starters, part of the challenge is the conversation has been too much along eelon. Im trying to shift the conversation and say, lee at other companies, what britain and page did, what zuckerberg has done with sandberg evaluated against those companies, its not unreasonable for elon to be asked to share power. You were talking about the sorting hate maybe we cant put the hat on elon maybe that would help. The only reason this company has the market cap it has and the ability to raise money is because of the publics infatuation with elon. He is a positive on that side of the ledgers. Youve got to take what comes with the territory, dont you . Well, it depends. Its a different needle to thread its not true, if you look at other successful companies, a founder visionnary gets to be the captain of his own ship. Im saying the board does neat to get better and do what other boards have done is this a serious board in real life, or his cousins and friends . I wont comment on that, but i will say this is less about me criticizing elon hes a visionary he is what he is i will say its time for this board to get their heads up, look around add other successful companies, and learn from that saying elon is special, so we cant do anything. Are you still at 337 for the price target and telling people to buy and its governance . Yeah, this is where it gets sticky, right . Im obviously being a little critical here. Ive test driven the audi, the ipace, if theres a competitor to the model 3, i havent found it i am buying the company because of that. And ill tell you what, the day they bring in a strong operating partner for elon is the day i raise my price objective i will say that. Thank you for joining us on the call, joe osha a number that matters, 180, 180 a share has been supportd for this stock for almost six years. It has never been below, save for would you buy the 180 no, if it breaks 180, i dont know how you can stay. Six times the buyer have come in to reg could you that stock, but to me if you look at a longterm chart, that seems to be the line in the sand, where below that level tells a lot of big money have given much finally on the story. They may never do so its too soon to know. This has always been in my too hard pile under 40 minutes to go its a stock that for the month of august was down 12. 5 today, but its up today. Pfizer and utx also among the gainers. Peloton pedaling towards an ipo, a unicorn with huge losses thats set to hit the market. And well bring you results as soon as they hit. As we go to break, hes a check on how commodities are going today. Gold still solving at sixyear highs, silver higher once again. Were back in a couple minutes when i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. Stand up if you are first generat crowd cheering ent. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent, but it doesnt equally distribute opportunity, and paths are not always the same. Im so proud of you dad. [man] i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. uplifting music welcome back lets see what wall street is buzzing about. Peloton is filing to go public i think its a great product, by the way there has neversh ever been a longterm successful fitness stock on wall street im really sorry to say that out loud i know nobody wants i was here with the fitbit ipo the one thats proving me wrong, Planet Fitness looks incredible. Itsent been a couple years. Im not saying you cant trade names, but people are fat and lazy by nature they just are. You are the exception, i am the rule im going to tell you something, i do a fitness i dont know about the exception. You look phenomenal, even with the beard dont listen to her. Its fitness fad for every generation, whether were talking about the food or the equipment or the hot gym, it never lasts, it has its moment i can reel off a list of ballys lalanne, even equinox may go through a recession for it will have shake weight, like these are not longterm things theyre not even trying to make money. They sell happiness, i mean, come on. The people that use it, they really do love it. Theyre fanatical about it. Thats great. The retention rate is incredible, and when you shelled out two grand. Of course youre not going to cancel it, which is an interesting bonus point. The big reason theyre increasing the losses is what theyre paying to the Music Publishers thats a massive inanswered question it could be a bottomless pit. Well, pandora is paying the same licensing, like and that is not a great business. I think the bottom line is the retention rate is high, because theres not another one. You can go do this, go to a class or actually ride a bike. People are really into the mirror now. Im going to tell you, i hope im wrong. I root for Companies Like this to come along, go public, pay their employees a ton of money and do well. Just for me as an investor, i cant get excited about this. Another buzzy one, popeyes selling out of its new chicken sandwich two weeks avalanche the company provekted inventory would las through september, popeyes owned by Restaurant Brands international kfc tested out the plantbase sand wish, that sold on the in less than five hours. Im going to tell you, the Fried Chicken sandwich trade, its not popeyes, you dont have chickfila public yet. Its twitter this whole thing took place on twitter, not on inns that, not on facebook. They put on they sarcastically quote tweeted a chickfila tweet. That sparked the entire explosion of people running out to see what this popeyes hype was all about. It literally was not a promoted or paid tweet. It was a quoted tweet. Theyll be studying this in Business Schools this stock wil not budge. I think its primed for a launch and Restaurants International has also had a very good year. A lot of fastfood names have greatlooking charts. Time for a news update with the one and only sue herera. Hello, everyone heres whats happening at the hour dorian is now a category 1 hurricane with winds increasing to nearly 75 Miles Per Hour with stronger gusts the storm is currently near the u. S. Virgin islands. It is expected to continue to strengthen over the next few days as it heads toward puerto rico the ongoing Measles Outbreak is putting the u. S. At risk of losing the a zero measles status in october there have been more than 900 cases in new york alone, more than 1200 cases nation wide. Still pictures and satellite images suggesting north korea may be constructing a Ballistic Missile submarine. The images show kim jongun inspecting the vessel. It would be a significant step forward for north koreasa nuclear ambitions. And apple is a in an effort to give users more control. It suspended the program, but will relaunch in fall and let users opt in so be careful what you say thats the news update this hour back downtown to you, sara. See you next hour. Mike santoli has the second dashboard. The fight or flight hormones running through the market it seems like people are fleeing. Its a pretty commonly watched indicator so youre seeing obviously its on lace in this range, but this decline here is very telling i think it got below 20 yesterday. You had basically the lows in the Single Digits for a while last december, but remember in december you were on your way to an s p 500 it was an accelerated steep correction, so you did see a welling up of concern, of anxiety out there. All else being equal, i think this is basically a tailwinter for stocks to eventually find their footing. This can last for a little while, but i think the sentiment is something thats start to round into favor for the bulls, perhaps along with relative valuation. You definitely look like the stock versus bond is tilting towards equities right now thanks, mike. After the break, ubs slashes its view on equities ten of its allocations about where it thinking you should be putting your money instead through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Welcome back oil and Energy Stocks leading the market higher. Tariff news continues to dominate the headlines, additional tariffs will go into effect in september and december yields slip against. Theyre making fun of you. I know. We have a clever group. That was in a break, so well have to do it again. Youre going to have to deal with it a few hours. Our next guests firm just slash their equity exposure as trade tensions ramp up joining us to discuss is jason draho. How big of a shift is this for you guys at ubs as the Worlds Largest wealth manager i would say this is a modest shift. We have gone from modest overweight in equities from a week ago to now just a modest underweight. Weve gone a little more cautious, because these trade tensions continue to escalate, and then you look at the growth data, its just enough uncertainties its prudent to dial back risktaking, but on a longterm basis, it hand changed that much. Theres the debate about the relative yields, but they two. So just take the 30years treasury bond. If you bot the 30year when it was yields 2 po the 5 , the total is a pretty attractive return. The different yield, from our port are portfolio perspective at least its a more cautious play the next three to six months. As a wealth manager, we get this question from so if there isent in stocks, you have somewhere to drawing cleat, or do a rebalance into bonds of almost every during aand aye that it will not be there, is centered around the bond mark. Like having or Credit Rating slashed. I think u. S. Treasury has been so. We know theres less liquidity in the market, so that had be bad for growth, those will widen it would take miscataclysmic for the yields to rise nothing that we see at least in the nearterm horizon would suggest that even with yields low, it doesnt take much, given the Long Duration to get pretty good returns. And if things do improve, and we dont think its the end of the cycle. We dont think a recession will happen in the next 12 to 18 months, but if it gets better, we look to reallocate back into equities within equities, it looks like it looks like youre somewhat defensive, but you also like Consumer Discretionary in communication services, which would suggest the nonrecession call. Thats right. Say risk on in the secular and weve dialed that back to and the overweights that we have, consumer staple, quulter discretionary, those all play to the u. S. Consumer. If you look at the u. S. Economy, the strength is the u. S. Consumer, the job market, so we want to be positioned where theres strength thats where this weakness is, we would rather take a versus the potentially for the weakness in the global cycle. Jason is there any country or region in terms of equities, where youre significantly overweight theres a couple countries we like within emerging markets brazil is one of them. Its a idiosyncratic story based on issues of the reform thats of the legislation thats been passed, but over the long term should lift the growth also we still like china within emerging marks we think theyll do stimulus incrementally to offset the negative headwinds, but the stimulus has more beneficial for the domestic economy so those are two that we like. Jason draho, thanks for joining us. My pleasure thank you. 19 minutes before the bell here is where we stand in the markets. Hanging on to a more than 200point rally on the dow s p is up more than half a percent, nasdaq bounces to the opportunity of 1 , the russell 200 index is an underperformer during the month with more than a 1 day treasury yields are lower, which is interesting that stocks can bounce, though they made new lows earlier today once they came off those lows, stocks rallied. People are like, honey, how did the market do today . I dont know, the yield curve situation got worse, and stocks rallied. I really dont know what happened. Which is why the russell is one of the outperformers. Mike santoli told me not to read too much into the action two days before the end of the month. When we come back well quantify the geopolitical risk that could impact your portfolio. And the key things to watch in the earnings reports, when we co bk. Meac you should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. Some individual market movers, shares of tiffany are higher after an earnings beat this morning it also maintained the fullyear Sales Outlook even though most of the comps in the americas, europe and japan were lower, the bottom line being definitely rewarded theyre dealing with lower tourist activity in the u. S. , and the Software Company also narrowed Sales Outlook that stock well off the lows, it was down double digits this morning. Off to Retail Stocks after the choice, but also earnings from box, and josh has a preview . So, wilf, heres what we expect, a lot of two cents on revenue of 169. 5 billion that would imply a jump of about 14 . Stock is down nearly 20 this year its down nearly 50 in the last 12 months. The companys disappointed investors but lowering the guidance for fy 2020 that metric will again be in focus. The Company Guided between 688 and 692 million. Sara, back to you. Josh lippen, thank you. Well also get a slew of retailers after the bell Contessa Brewer has what to watch. Lets start with Williams Sonoma its trying to insulate the impact of the trade war, moving a substantial amount of production youve china, hiking prices in some cases it may have raced the profit outlook for year in may, and annual itses except comp sales to be up lets turn to pbh, with brands like Tommy Hilfiger and calvin klein it also has been tariff challenges last year it imported about 400 million from china. This year it cut its annual profit forecast by ten cents a share. Analysts look for an earnings decline of almost 14 . We have 12 minutes notice until the close. Were up about 235 points or so. Up next your lastchance trade were back in a couple minutes ty to extremely happy. Theres also angry. Im really angry clive actually, really angry. Thank you. But what if your business could understand what your customers are feeling. And then do something about it. Turn problems into opportunities. Thanks drone. Customers into fanatics change the whole experience. Alright who wants to go again . I do i do i have a really good feeling about this. Could you email me the part great about geicon, tim. Making it easy to switch and save hundreds . Oh yeah, sure. Um. You dont know my name, do you . laughs nervously of course i know your name. I just get you mixed up with the other guy. Whats his name . Whats your name . Switch to geico®. You could save 15 or more on car insurance. Could you just tell me . I want this to be over. 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. You. Welcome back we have just eight minutes left of trade were higher by 230 points utilities topping the list is energy followed by consumers discretionary, industrials and staples. Green across most of the screen. Russell, the smallcap index, leads the charge time for the lastchance trade josh so what if you could haved greatest investor of all time do the buy on the dip trade for you, assuming we get some kind of a nasty market event. Thats exactly the setup in Berkshire Hathaway im not currently long i might be before the end of this week. I like the risk reward it sounds silly. But hear me out. 195 has been support for the stock going back years the stock has been underperforming the market, but historically thats the best time to get involve. When hes crushing the market for a period of time, thats when hi strategy is most in favor. One of the main reasons i like it they a portfolio of u. S. Stocks, primarily, but theres another 125 billion in cash that berkshire has allowed to build up its not been allocated. Its not market timing per se, but holding it in reserve for a big opportunity. If youre a trader,ic like this trade for that reason as well. You have a defined down side youll know if youre wrong for bothsh so for both people, this stock could work for the up side. Lots of exposure to the banks. A lot of the negatives on berkshire, we all really understand, insurance and banks is the largest part of the portfolio. Tech is second, obviously most of that being apple, but look, heres a company thats underperformed for a long time, but has an ocean of cash to do whatever they want with it im not saying its a ledge, but a abu aye in a market environment that turns nasty six minutes left to go near the highs of the day. Time for the closing countdown herb morgan senior managing director cio at official market advisers herb, what is driving the rally today . Well, you have a rally, because i think people are realizing the recession just isnt imminent the data continues to come in good, and the excuses to call a recession just keep diminutishing. What about the end of the month coming up . Are you watching that closely . I think the thing were watching most closely is the three Central Bank Meetings in september, all three are indicating theyre going to continue to be easier and easier dont fight the fed. A year ago the recession was coming because debt to gdp was too high, thats not happening the yield curve is more inverted today and the market is up almost 300 points. At some point you have to accept were in a bull market and it will continue. Look, a lot of people are on vacation everybody was on vacation this month. There wasnt a whole lot of volume again, it just comes down to, look, this inverted yield curve, we talked about this two weeks ago. The inverted yield curve is not being caused by the fed raising shortterm rates its just the opposite theyre about to get more accommodative. We cant take thinks idiosyncratic signals and then makes these conclusions. Even brexit today, it looks like were getting a hard brexit, the pound is off a little, but the uk markets will hold it up. If we get central bank easing, there a risk that the dollar strengthens and that could derail u. S. Equities i think the drawer is overguyses, but its about the relative level of easing, and im guessing well guess more robust easing, and out of the bank of japan. If we get a quarter point out of the fed, its all about the relative rates remember, the rising dollar, sure, it has a bit of a negative impact on exports, but its a sign of a and relative interest rates, with the dollar to keep going up, thats another indicator were not likely to experience a recession in the beginning of 2020, like many are suggesting. Morgan, thank you a pleasure. The dollar is flat, if you look at dxy for the month. Yes, its been a strong dollar story over 12 months, but nothing like some of the hype were hearing certainly out of the president and others about how strong it is. Yeah, so much more to come with those actions well have to indicate and see, but we only have three minutes left to the close. Mike wilf, you prune whats overgrown and plant seeds for the future if you look at this estimate from wells fargo of likely or estimated rebalancing activity out of the bonds, by the way, first of all, look at december, that was a massive effect, because stocks have done so poorly here as the estimate for the monday end right now, about 11 billion. I look at this not as a mechanical, hey, wait for the money to move. Its more just a representation how its stretched, and anything will probably need mean reserious as a tillwind its a real indicator of just how stressed the relationship has gotten rick has a look at the bonds excellent, mike thank you. Lets start off with the dallas index. The last day of july it made its high for 27 months we continue to stick up there. It keeps coming back, tenyear over a twoday period, and considering yields are a bit lower, well do it again look at this chart the month of august, it drops 60 basis points yes, the rebalancing will be huge, theyre going to definitely be selling treasuries, and frankly, the nasdaq seems to be benefiting from that today. Hey there, rick, apple having the biggest impact following the news it is consider moving parts of the supply chain outside of china, possibly following googles lead. American Alliance Shares have been the best day since june, after a summer of delays and disruptions following the grounding of the 737 max shares down almost 7 of autodesk about the continued concerns of exposure to china. Adobe having the biggest impact. Now over to bob pisani a rally in a vacuum look at energy, banks, retail, metal, all had a big day, real estate, even gold, a rally in a vacuum finally much was made of the fact that the yield is now higher than the yield, what do you make about this . This sounds ominous, what it implies is stocks may be a better deal than bonds, as one player said would you rather have a 30year or s p with the yield of 1. 9 . Maybe that played a part in todays rally. Theres the closing bell the Dow Jones Industrial average up exactly 1 , 258 points. Welcome everyone the highs of the session was 260, that equates for the 1 , only one sector was lower there. Sara, we mentioned how the rally had been underperformers month to day thats really a clear theme today. How about energy, that was the best performer today yes, oil has bullish inventory data, industrialing also had a good 1 day again them came off their lows up 1. 5 for a week as a whole. Only down 3 but its on the wednesday on thursday last week, we were up for the week. Friday was the tweet storm on the trade. Lets see what happens over the next 48 hours. First, though,mike, can you read anything into the action . Reinforces this trading range weve been in. I know that sounds like a bid of a bores hey, the market remains sideways remember at the end of may i had to pull back that month as well. The s p finished almost exactly in the middle of where we traded i do think its because a lot of the scary macro signals have gotten into peoples heads nobody is staying in control having union these volatile periods to add to this exposure . [ inaudible question ] tesla, the stock is above 10 as it is, because it did appreciate from 170s up into the 230 range. Weve been Holding Strong there. Buying stratus, square, xylinx, some of the morse cyclical names here. As mike said, theres just so much anxiety were just picking or spots and names. Some of the them like swear may not have had perfect quarters, but we think theyre gaining human square i see ear are youre in teledot. Is this like the perfect wheelhouse where you think Companies May be more costconscious theyre going to sake if they can shift millions of people if they get used to telemedicine and internet medicine. Talk about what you see for that name i think millennial love it, but also elderly people love it. Yes, all of our portfolios are about better, cheaper, faster, new products and services. They usually do very well during a downturn. Did you buy it in the mid 50s in. Yes 134is, they bounced today, theyre 11. 5 off the highs. Who knows when the next one is coming whats really interesting, today ever corp isi, i believe, published a statistic that china is showing signs of live i remember in 2016 that all of the tax cuts and currency depreciation is actually stimulating that economies in ways that people are not appreciating now it has historically projected about the market, nears time to add respect. To position for a short he says that while the recession, investors should expect the up side first whats the best way to play that is there trust in that by the way, i would say the inverted yield curve has preceded all reser its been part of the preconditions, because it says basically guess what the market says the fed is done tightening will it do it on time is the market argues that out for a long time. And stocks benefit from it, because people think, guess what . A im well to say its part of the mosaic to be on the alert. May we have heightened rinks, but in itself, i dont see it because it doesnt tell you when. We have studied this intensively. Like were seeing now and the yield curve was inverted, with the steepest inversions occur this was the 50 years ended 1929 so through the roaring 20s. I think when the trade tensions clear or china powers through, that the unit growth will surprise on the high side and inflation will surprise on the low side all of these are deflationary. Its disinflationary. No, its costs falling, falling 40 per year. Do you think its craze that if i said, close your eyes bnd is up, gold is up luge and stocks are up 16 , is everyone going to be talking recession all day . You would say no, why would they everybody is making money and all we talk about is. I think theres a bit of a travel this year. The fact that you had a major low right before the beginning of the year, i think it distorts the idea but the coronation thats broken down, is that going to kick down at some point. Its just if you pick point to point, it seems ago if negatively correlated with the s p. They worked perfectly. I think the pushback on the argument might be the speed at which we have seen yields decline, especially lately i mean, yes, were in a longterm secular kind of bull market here for bonds. This is hugely bullish, however, for equities. Theres going to be a major rebalancing taking place at the end of this quarter. They have no choice. That speaks to the speed of the rebalancing should be pretty significant at well, in fact part of the turn today in the market was because of a rumor of the big rebalancing taking place before months end do you have a quick comment on stephanie mislanes takedown of tesla its pretty hard to argue with a lot of the facts you might now like the framing, but what would you say to the bulls and bears that read that. Im going to be honest. I didnt read it i read Michael Murphys piece today. I used to work with him at Capital Group on the west coast. He gave a brilliant, i thought, wellbalanced point of view on tesla, arguing about the Technology Stock it is, not an auto stock yes, they are going to have to execute, ramp and theyll going to need cash, we have assumed 10 billion of dilution. And you this i think its already had an ending its done. Its moved into the solar room, you know did you not see the bear case article, or you just refused to read it . I w anything. I should have seen it, but i didnt i will certainly look for it it didnt hit the stock guys, thanks very much weve got an earnings alert on box break even for the quarter, the street was looking for a lot there, revenue of 16 , and analysts looking for in terms of guidance, q3, a lot of one cent when you talk to financial analysts who cover this company, one question is about the growth rate he said box does need to grow faster hes putting the strategy to do that, though, talking about advancing the portfolio, trying to sophomore customer issues, and simplifies the goto Market Strategies coming up later, we will be discussing the other geopolitical risks that could threaten your portfolio. Were back in 90 seconds despite continued recession signals, bob pisani is having a look here. Beaten up stocks dont kid yearself, even as oil has relatively stable oil stocks , same story went retail they had very mixed earnings results. Tiffany saw compstory sales both up, especially department stories, all generally down on the month, all of them rallies on oversold conditions same thing with banks, theyve been down double digits, even though theyre up today. Transports another good example. Theyre down, 8 , 9 for the month. Yesterday well a really, oversold conditions. Sara, back to you. Frank holland . Going back to apple, the biggest positive impact on the ndx, that its possibly diversifying supply chain following googles lead. Speaking of all the faang names in the green today starbucks and booking holdings both finishing up more than a percent higher, u. S. Tech a mixed day. Adobe down more than 2 , also microsoft, nvidia, activision and ea, on a personal note, thinking about growing a beard. I like that, frank. Some support thank you very much. Global economic weakness headaching over the market, today brexit in the headlines. More on the negotiations in europe, plus Deutsche Bank out with a report saying we should settle in for a long, protracted trade war with china will they events tip the Global Economy into recession very good afternoon to you both. Fred, ill start with you. Is china trade the Biggest Issue still . I think its the biggest of all issues what is unusual is President Trump set in motion four megageopolitical issues were tracking, but china is the biggest. Theres nothing short than trying to change the way china operates you have venezuela, iran changing the mall lined behavior, and north korea trying to negotiate a nuclear deal. Very unusual to have four huge pieces of policy of this sort in play where the markets have gone wrong, they keep swaying back and forth, watches trumps tweets what theyre starting to see is a generational era of major power competition. Its not about tariffs going one way or another we have to start thinking about the costs to individual companies and countries of a potential increasingly decoupling of the worlds two most significant economies. How are you at the Atlantic Council thinking about how of this strategically will shake out for trump ahead of the election on one harsh, he has the ability to calm it down, get to the table, take tariffs off, ease some of the financial and economic pain you it seems to me were in a down cycle. In a down cycle, you dont want to have a trade war that speeds that downward flow i think thats whats happening as part of the reason why hes so intent in getting more interest cuts from jay powell and from the fed so and we all talk about trumps politics, but sometimes we forget about president xis politics he has the 7 onth an verse of the peoples republic october 1st. Hes in a trade war with trump and Technology War as well he hayes protests in hong kong, a weaker minority Muslim Minority hes cracking down on theres no way that president xi ahead of that anniversary can look weak. I think hes shifted from looking for a deal with the u. S. , to doing damage control, so dont do too much damage, but ride this out and start adjusting your economy for a long struggle and not for any deal in the near future. Amanda, lets talk brexit what are the implications of his move today to reduce the number of active days of the parliamentary calendar between now and the 31st of october. On the one hand what we saw is a normal procedure within the parliamentary system its the way of ending one legislative session, clearing the decks, having the queen clear out the new policies, and then moving into a new session what is unique today is the length of the suspension, which is five weeks. Normally we just see it for about a week or so what it is most likely going to do is lead the parliamentary opposition to trigger a vote of no confidence in Boris Johnsons government the opposition will have two weeks to try to form a new government one is a hope to pull toes a national for an extension to brexit if that doesnt work, we could be facing early elections in the uk certainly Boris Johnsons hope is by removing parliamentary interference, hell be able to negotiate a better deal with the European Union and try to jam it through parliament at the end of orbit, but thats quite risky in terms of what hes asking of the eu and his limited parliamentary path back home. Amanda, people expect the chances of a Nodeal Brexit to have risen do you think thats fair yes, but i also think the chances of an early election i think its enjected more uncertainty in apolitical charged and contentious process. How do you, fred, see the economic and political ripple effects of a Nodeal Brexit in europe and all way here in the united states. I agree with everything amanda said. Were ending the longest session parliament has had since 1642, but this is also an extraordinary break. What he wants is to cut off the time that parliament has usually you Call Parliament together when you want to solve a crisis he has a crisis. He wants to get them out of the way, and wants to limit the vote and october 14th, you have only then between then and october 31st for parliament to do anything about the Nodeal Brexit what im watching for is whether you have some people break from him on the torrie side i really think the british voter has a right to take another look at whatever deal sums in through a referendum the gap of what could come up, everything from a Nodeal Brexit or new referendum, these are dramatic days in uk history. Fred kempe, amanda sloan, thank you for joining us. Up next well break down the charts to look at the two sectors most impacted, utilities and banks. And well discuss pelotons ipo. Uber is hitting an alltime closing low. Box they were flat when josh hit the earnings about five minutes ago, now done some 6 well have more on that move dont go anywhere. Williams sonoma and pbh, Contessa Brewer has the details. Lets start with Williams Sonoma with a beat on the top and bottom line. Revenue at 1. 37 billion, and the earnings at 87 Cents Per Share versus the estimate of 84 Cents Per Share. The overall comps were up 6. 5 versus what antists had estimated especially the west e elm, which the company says the biggest Growth Opportunity, sales up 17. 5 followed by pottery barn they say its because of crossbrand initiatives, and improved customer initiatives. Fullee guidance you can see the stock now down by 3. 5 to pbh, the Tommy Hill G Hilfiger with a beat, with eps at 210 versus 1. 88, as the estimated revenue at 2. 36 , the very weak Third Quarter guidance ceo says we are pleased to report we saw continued outperformance by the european businesses. Including the impact of protests resulting in a more promotional environment. Thank you, contessa. Williams sonoma selling off sharply despite what happened to be good number over to mike for his final dashboard of the day. This one vaults versus volts, bank s versus utilities they basically bray on opposites sides. This is a ratio of these kbw bank indecent. So its banks divided by utilities. But back to 2015, so from this high to this low, it was approximately 35 Percentage Points of underperformance by the banks again the utilities. Almost exactly the same as this high to this low very recently it doesnt mean its going to end right here, but this low was almost to the day when the tenyear treasury yield bottomed, so thats just your context. Of course all weve seen here is a tiny, tentative halting recovery against the utilities, but its a pretty interesting relationship i would also say, mike, the basics have the ability to have a their relationship is the absolute level of yields and both the level and the shape have been so bad, of course it has been on the long end, presumably thats where you would sweet the bigger spring higher. Mike, thank you very much up next on closing bell, well get reaction to the days afterhours retail earnings. And speaking of consumers, we will explain why a sudden slowdown in spending by yelty americans could be a recession red flag that story and much more coming up welcome back hi, sue. Hello, everyone, heres whats happening a new study shows the teen girls on Birth Control may face a higher risk of Mental Health issues later in life after surveying data for more than 1200 women, canadian researchers found that those who used Birth Control as teens were more likely to face depression than those who did not. The queen prupd a suspension of parliament. Hudsons bay is selling lord taylor to a rental service. It gives the exceed control of the brand, intellectual property and 39 stores. And finally thinking of slacking off at work to play fantasy football a new study shows employers tend to lose about 9 billion due to the lack of product activity, but it might not be as bad as it seems. The morale boost can help keep employ aye around in this tight labor market so schedule your draft you are up to date sara, back downtown to you Williams Sonoma and pbh reportereners, the stock seeing some volatility. Shares are weak are. Gas beating estimates just now the only one thats up is guess. We were just looking through Williams Sonoma. What looks to be a pretty strong quarter. I guess the stock had run about 31 over the last three months whats the story here . It was pretty much a fabulous quarter, and west elm was fabulous, so it was even better than anyone expected they raised guidance for the year its hard to find something wrong here other than the stock has run up yes, they had a great number they said things will be fine. Were seeing the growth we expected, i thought it was a great report i lesss talk about the one that was up, guess, legitimately up in your eyes . They were pretty back in north america and great everywhere else. I didnt think they would be as good enter nationally. So maybe the street thought, maybe theyre getting it right again, and it was surprisingly strong i thought they would be weaker than what they reported. Jan, overall the argument from economists and from strategists from traders lately, at least the optimistic one, seems to be the u. S. Consumer is in great shape were getting that out of the all the economic data, out of the earnings report. Do you agree after digging through and listening to all the Conference Calls well, you have to admit, walmart and target were good do it yourself was great tjx wasnt quite as good, but online was great there was nothing wrong with anything we got out of amazon or anybody elses join loon report. The only things that looked tough were full price retailer look at these guys today, they all turned in good numbers, so i think the consumer is really, really healthy i think its simple that they all have a job, theyre working in record numbers, the wages are going you have 3. 5 the quiter has nothing to complain about. Theyre not watching the tariffs. Business is good at home. Would you be recommending a im a big fan of Williams Sonoma either way i would be owning the stock. Theyre doing all the right things the crossmarketing is working even though its a tough, competitive space, they do a huge amount of big online and maybe about as much online as offline sales like i field about costco or walmart, you should own Williams Sonoma. Quickly, jan, you want the consumer is not watching the tariffs, but the Retail Executives are today we got confirmation from the u. S. Trade rep that theyre set to go into effect in september and december, the remaining chinese imports, which including apparel, footwear, a lot of the products made in china. So in your view, who is most exposed, who do you avoid . Thats what pbh just said, right . We had this great quarter, but were lacking forward and were going to be more cautious so people who still have exposure, if youre five below, for instance, happen your business is coming out. On the other hand right now theyre says tariffs will happen in september and december, but we never know exactly whats going to happen with also dont know how the plants will react and how the Exchange Rate will react. So a lot of it gets absorbed by the plant that doesnt want to lose the production. Right now were seeing cotton prices half of what they were last year. Even shipping costs are down so some of it gets absorbed in the supply chain and the rest at the retailer almost nothing is guess passed through so far to the customer so thats why were worried about the earnings we dont know how much can be absorbed in the system before it gets to the retailer pbh lowers guidance good to check in with you, jan thank you. Up next, peloton filing for an ipo, but cautioning it may not achieve profitability in the future well discuss whether or not thats enough to scare off investors, straight ahead. Welcome back lon,eoi to debate that listing and whether you should buy it, next. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back peloton filing for an ipo saying its a Media Company also. What exactly do they mean by that peloton saying its a Media Company that engages to addictive original programs. The ride is in music and video services, a Consumer Trend working in its favor, but peloton warning, we may be unable to license a large amount of music or certain popular artists, and in our business, operating results could be materially harmed. Peloton is currently fighting a 150 million lawsuit filed in march by the national might have been publishers association. It alleged copy right certainly a risk. Julia, thank you lets bring in Michael Kawamoto for more first, michael, how do you define peloton is it a Media Company . Its an important question for wall street, right that determines the valuation. Yeah, yeah, i think thats a valid point. If you look at the valuation they want, you know, thats over eight times trailing revenue if it is a Media Company, that valuation is obviously much more pala palatable if it is a Consumer Products company, that valuation could be steep i think thats part of the equation there, is how wall street perceives not only what this company is, but what it could become as well. What do you think, michael, of their retention rate of customers . Theres been different takes on how its been calculated. Yeah. Yeah, i think its impressive to have a sub1 monthly churn. I think some of that is youre buying a 2200 cycle, or a 4,000 treadmill, so i think that fixedcost there anchors people to the platform on the flip side, they have proven time and time again that people love part of what theyre doing, so thats a big part of why people stay with peloton michael, how big do you think the market is here the likely market that peloton can address, in terms of buying the hardware, staying with the service. Im wondering how much exactly they have to displace, you know, Fitness Centers and all the other way that is people may exercise. Yeah, yeah, so when you look at the Industry Data for treadmills and bikes, you know, they already have a meaningful share there. So one of my concerns around their domestic Growth Opportunity is theyre rubbing up against that market size there. So thats concerning there, but i do think that they have a very ample opportunities abroad they still have relatively low brand awareness, so i think theres a big opportunity there. The question is, how much marketing will it cost them down the road how significant, michael, is the music licensing troubles theyre facing at the moment yeah. Somehow im still not a lawyer, i dont have a great answer for you there. Obviously you want this to go away as quickly and quietly as possible, so you can theres no overhang on the shares when they begin trading weve see with Companies Like spotify and pandora, these have been ongoing issues. I dont have a great answer, but its definitely something to keep an eye on. Michael, thanks for joining us. Yeah, thank you so much exposure as well on peloton, epps Nbc Universal is an investor in the company. Up next well look add whether wealthy americans are sendg ina warning sign by cutting back on their spending, were back in a couple minutes when i see obstacles, i create opportunities. soft music when i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Whlets do it. . Come on. This summer, add a new member to the family. Hurry in and lease the glc 300 suv for just 419 a month with credit toward your first months payment at the mercedesbenz summer event. Going on now. Welcome back lets check in on some of todays after Hours Earnings box falling a slight beat on the top and bottom line. Telling josh lipton that the volatility of trade disputes and tariffs does not make for a stable macro environment both feeding on the bottom line. Five below missing with guidance largely below expectations the only spot below, the guests reporting numbers and jumping after hours. The overallamerican consumer may be strong right now but spending by the wealthy is slowing down our robert frank looking at what it could mean from the broader economy. Robert. Hey, sarah. Spending by the top 20 has fallen below 2017 levels economists worry about what they call a trickle down recession. Luxury real estate is having the worse year since the sale of homes priced at 1. 5 million falling by 5 in the Second Quarter. Theres a threeyear supply of mansions and luxury homes in aspen, the hamptons, miami, other highend areas retailers are struggling with barnys filing for bankruptcy, nordstrom posting threequarters of declines. The share of National Spending of the top 10 of consumers is falli falling while the middle Class Consumer is picking up the slack. Mark zandi writes, if highincome consumers pull back any further their spending will be a significant threat to economic expansion the lights have not gone out but dimmed a bit at the top as you could expect with market volatility and this group most susceptible to a global slowdown guys. The other thing i was wondering, robert, when i saw your story earlier, how much i dont know if you can quantify this, but you also have got issues like soft you have the Chinese Investor slowdown in the u. S. Just more on the why and some of the factors that are contributing beyond just the stock market. So each of these sectors has its own i had jreasons for decl. You could argue the most exposed to the online onslaught from amazon since they have such high prices Real Estate Market is salt driven in new york, new jersey, connecticut, california, but what is interesting is it is occurring in highend areas of miami, in texas, areas that colorado, that are not subject to salt. Then you have weird things like the collectible car market where the top has just collapsed and the bottom, the entry level, is doing the strongest. So what started in real estate, which is the top, the weakest, is spreading to the other areas. Your why is the big question do they know something we dont or is this a signal that this is a group that internalizes the market anxiety first and then it could flow through to the rest. Robert, luxury homes, presumably much less linked to where rates are as well. Absolutely. In new york city half of all deals are cash at the very high end it is 80 or more. So, yeah, Mortgage Rates making it more attractive doesnt really help that market. Robert frank, thank you very much. Thank you, guys up next, your wall street look ahead the key things every investor needs to watch as we head into a w adg y ene me back to retailers have been the big movers on earnings after hours tomorrow we will get a broad read across the sector as well before the bell, dollar general, dollar tree, best buy, abercrombie, dfw, now called designer brands, and after the bell ulta beauty as well as Tech Companies dell and workday, that will give us one more read on the state of Consumer Spending right now and also on how the retailers are preparing for tariffs, best buy in particular. Last quarter, had a good quarter, and then started talking about tariff impact. I think the stock was reacting poorly. And this is the quarter you have to lay it out and have everything ready. Because now the tariffs are confirmed. Holiday crunch time basically is here for them. I think thats true interesting trade dynamics in this group though. You have waves of declines and then short squeezes and the positioning going into the number, like williamssonoma you saw today, it seemed like a good report and guidance and the stock trades off. And tiffany this morning which missed across the top line. Absolutely. And reacted positively on the bottom line beat. Williamssonoma the opposite after hours. Mike, the other takeaway from today, what is underperforming, banks, russell. It seemed like that, yes. Trying to sort of declare independence from yields and not quite fully successfully in terms of the stock market. Tomorrow though we get gdp numbers. Shouldnt be a market mover but it might change the conversation a little bit. A revision, another look. Supposed to be 2. 4 for the Second Quarter in terms of just thinking about whether the u. S. Economy is really creaky or not right now. Also, a reminder how much stronger it is than the rest of the world. For sure. Does the beard come back tomorrow we will find out. Maybe it will fill in tomorrow. I feel it was popular, got good reception. Were out of time, that does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new york citys times square, this is fast money im melissa lee. Your traders on the desk are tim seymour, brian kelly, steve grals o grasso and guy adami one strategist says the countdown to recession is officially on. He will layout the timeline and when he sees the markets up and out. Box and williamssonoma moving lower after reporting. Later, a royal rally
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