Transcripts For CNBC Closing Bell 20240714

Well and apple. That event is just wrapping up now. Announcements shaking out in the stocks of different competitors. Were going to fill you in on all of that action but joining us for the hour is steve grasso from stuart frankel. Steve, great to see you. Good to see you its amazing. Not necessarily a major move for the averages today or right now. Everything is slightly lower and actually, if you look at the week, the dow is actually flat so far to start off the week and yet theres been this great rotation talk to us about that. The rotation is coming out of growth into value. How long does that last is how long the market will be under pressure and for now, it probably will last a little bit longer, but get a trade deal, throw everything i just said out the window and you see everything rally back people are making the analogy back to 09 and 2016, with this rotation that lasted for a couple of weeks. I dont think it will be that long do you really think were going to get a trade deal sooner rather than later . I think that President Trump looks at this is his best indicator of how hes doing, how the market is doing. And if the market sells off enough, i think that youre going to start to see the wheels start to spin again, and that will rally the overall market. All right well, lets focus in on the big stories were watching today Julia Boorstin is in cupertino with the latest from the alfred event. And Kayla Tausche is monitoring two stories out of washington. Trade and a highlevel departure that sends oil lower but julia, lets go to you first on apple morgan, apple announcing three new iphones, including the iphone 11 that will start at 699 also announcing two versions of its new iphone 11 pro. Both of these have three rearfacing cameras, a longer battery life and are water and crack resistant. The 5. 8inch version will cost 599 and the 6. 5inch version will cost 1099. And they will all ship on september 20th apple also announcing some new details for the launch of its appletv plus it will cost 4. 99 a month, thats half of what some analysts projected and the first shows will launch november 1st with one year free if you purchase an iphone, ipad, or appletv. Take a listen to tim cook. Our mission for appletv plus is to bring you the best original stories for the most Creative Minds in television and film stories that help you find inspiration, that are grounded in emotion truly, stories to believe in stories with purpose these iphone announcements, this appletv news hitting a number of streaming stocks we saw netflix, roku and disney all turn lower on this news. Were learning that roku shares are off more than 11 . It seems like that price point is really impacting those other shares now, apple also introducing a new series 5 apple watch also, new ipads, a seventh generation ipad, a big focus on health, big focus on the better quality screen and also announcing a new tradein program for the iphones. A lot of news out of cupertino here today guys, back over to you julia, a lot of news. Thanks very much for being on top of it all for us lets bring in tom forte from da davidson hes got a buy rating and a 270 price target on apple. Whats the headline for you today . The two Key Takeaways from apples announcements today are the 4. 99 price point for tv plus we were more interested in the price for appletv plus than the specs for the new iphones. What were you expecting 9. 99 its a shot across the bow for netflix. And the tag line for apple iphone 11, it should be, buy the iphone 11 before the government raises the price on the iphone 12 the fact that they did actually cut the price, that iphone 11 is starting 50 cheaper than the previous model, are you surprised by that . Surprised, but pleasantly surprised. I think last year, the expectation was the higher price points would suck up the lower unit volumes i think what youve seen over the course of the year, as the smartphone markets matured, apple has had to be a little bit more aggressive on price did they do any of that price based on the tariff issues do you think that that made them this year, they basically got a free pass from the u. S. Government to the extent that they delayed the enactment of the tariffs. I think that was a huge benefit for apple. All right tom forte, were going to be talking to you a little bit later in the show, as well, to break down all of the details we have been getting this afternoon in more depth. Meantime, steve, youre invested in apple, right . I am. I have been invested in apple for quite some time. But if you look at that Services Number that contributes to revenue, its just under 40 billion. Obviously, theyre going in the right direction. Theyre throwing everything they can at the model to replace the hardwaredependent model and theyre making a lot of headway. And i think its a shot across the bow not only to netflix, but disney with their streaming prices so im still bullish on apple. All right. Well, bank stocks are in focus today as jamie dimon speaks at the Barclays Global Financial Services conference, and wilf has the details on what he said. Youve been following all of these discussions all day very indeed. And he was preparing, he said, for the possibility of zero rates in the u. S but did not expect them to materialize. He added that he thought that rates were already plenty low. He downgraded fullyear net interest income, but only marginally, 57 billion rather than 57. 5 billion and that continued key theme from yesterday, for downgrades relating to lower yields were not too bad. He was constructive on the u. S. Consumer and relaxed about the cycle overall, saying well not have the same level of losses this time. His biggest concerns were trade, china, and Hong Kong Hong kong is a flash point. And trade might be where both sides want to do something, theyve kind of got themselves wrapped up in complex negotiations they are very complex. And next year, i dont know, but taking the trade war off the table is a good thing. To have mature negotiators to try to get it done the stock is up 0. 8 , 0. 9 today, adding to strong gains yesterday. Strong gains, as well, for the last couple of weeks weve seen a bit of a yield pickup anyway in the last couple of weeks, but i think the theme of the last two days has been these Earnings Guidance release from all of the banks, small and large. And they havent been too bad, relative to what they could have been, given how much yields had dropped since the last update. I think he has to be happy with whats gone on in the last couple of days, when he starts to see rates bounce. And we were just talking about this a couple of weeks ago, we were eyeballing that one spot, 31 level on the tenyear and now weve rallied significantly on that basis from there so i think this is going to help the laggards, this is going to help the financials. This is going to help things that were challenged with the inversion of the yield curve, so hes got to be happy, at least, for the last couple of days, even though the overall market is lower i think definitely. And as weve seen that play out this week, i would also point out, theyve had a decent run over the last two and a half weeks. The final week of august, as well first week of september, youve had quite a big jump theyre not now that far from the highs that they reached when the market hit highs, but certainly cheap relatively to s p 500. Financials one of the sectors in the green again today meantime, a number of developments coming out of washington today, as well, including new headlines surrounding china trade and a big shake up in the Trump Administration Kayla Tausche has all of those details for us hey, kayla hey, morgan National Security adviser john bolton is out after a monthslong policy disagreement with President Trump and his secretary of state, mike pompeo. And just days after secret talks with the taliban were called off. The departure of the administrations Foreign Policy hawk shaved a dollar off wti crude oil, still down about half of 1 . Secretary pompeo briefed reporters with treasury secretary Steven Mnuchin this afternoon. They said President Trump could meet irans leader at the u. N. General leader in new york, but the maximum Pressure Campaign would continue secretary pompeo and myself and the president are completely aligned on our maximum Pressure Campaign i think you know weve done more sanctions on iran than anybody and its absolutely working. Now, the president has made clear, hes happy to take a meeting with no from conditions, but we are maintaining the maximum Pressure Campaign. Meanwhile, the South China Morning Post reports china plans to sweeten its offer to washington to get a trade deal by buying more u. S. Agricultural products a u. S. Based source tells me chinese officials made this offer in a call dwebetween principles last wednesday evening. The source called the proposal modest with china wanting a delay or perhaps a cancellation of the escalation of tariffs expected for october 1st no word on whether the white house agreed to that morgan kayla, thank you. Weve got 50 minutes left of trading and right now stocks are fractionally lower with the dow down about 40 points right now, well off the lows of the trading session. But within the market, some sharp moves below the surface. 2019 darlings like starbucks and visa are sharply lower laggards like macys and kraft heinz surging today. For now, lets bring in bob dahl thanks for joining us. The fact that we have seen this rotation out of growth into value the last couple of days, good or bad for the Broader Market mixed, as you commented earlier. I think look, the market was pricing a recession starting tomorrow morning, in my view and thats why everything defensive and high growth was bid way up and the laggards that are coming on now were just buried we dont have a great economy, but good enough that we can rotate a bit i think there are more legs to this rotational trade, assuming there is no recession anytime soon and thats my working premise. But the s p 500, overall, youre saying, was already pricing in recession i get it when people say the bond market was, but s p is not cheap overall. Not the market as a whole, necessarily. But what was going on inside the market in other words, utilities priced way up here. Machinery stocks priced way down here that was saying, economy, curtains the market itself, i agree with the tenor of your question, not necessarily focused on a recession. Steve, what do you think about the rotation weve seen the last week or so . Does that continue from here so, to bobs point, it depends on where rates go from here so when you have rates ticking up aggressively as weve seen in the last couple of days, you dont have to reach for the rei reits, the utilities and the staples. But as soon as rates flatten out or start to come back in, well see where the rubber hits the road i am long a bunch of chemical names, so im happy about this, because theyve been so beaten down so well see how long it really lasts from the point of conception until conclusion. And theres a lot that could happen with the overall market head winds and trade and Everything Else that needs to be digested so, bob, have earning expectation comes down enough for third and Fourth Quarter of this year . Adore do you think weve got further to fall . Further to go and even next year consensus is still plus ten next year my guess is plus five or six is more reality so well have more earnings debt degradations as time goes by which is not great for the market doesnt mean it goes down, but it cant make forward progress up quickly, top sector pick for next year . Its more about common factors. Free cash flow, give me the Free Cash Flow and please reinvest it in your business before you give me a Dividend Increase or a share buyback. Bob, great to see you we have a news alert on uber deirdre bosa has the details for us reporter wilf, uber says that 345 people across its engineering and product teams have been let go that makes up about 8 of the combined organizations and comes shortly after 400 people were let go from ubers Marketing Team in a statement, the company says our hope with these changes is to reset and improve how we work daytoday, ruthlessly prioritizing and always holding ourselves accountable to a high bar performance and agility. Interesting choice of words there, ruthlessly prioritizing. Dara took over as a consensus builder. We may be seeing a change in tone from uber and perhaps some more ruthless decisions. Is this desperate cost cutting to help turn around a share price, dee reporter well, as he says, theyre doing what needs to be done, but i should also note that they have lifted a hiring freeze in engineering, so i would call this them trying to get back on track and show investors that theyre willing to do what it takes, including letting people go, to get to that path to profitability deirdre, thank you very much na for that still ahead on closing bell, investors are waiting two major Bank Decisions over the next few weeks well talk to don kohn for his expectations about the ecb and the fed. And more uber news a new bill making its way through californias State Government that could put pressure on both uber and lyft well discuss the potential fallout ahead. And as we head to break, heres a check on our data tracker. The Nfib Small Business optimism index fell by 1. 6 points in august to its lowest reading since march and u. S. Job openings fell in july for the second straight month, according to the jolt survey, slipping by 31,000 stay with us closing bell will be right back [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. Stand up if you are first stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Whai tell clients, etfs can follow an index, but which ones target your goals . Its not about quantity. Its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back we have 43 minutes left to trade, were down 32 points on the dow. The spread today has been up 22 or down 112 at the low but you can see, the major indices all trading slightly lower as we stand. The big cap indices, i mean by that the russell is outperforming let me send it over to mike for todays market dashboard hey, mike. Heres what weve got for you. Take a closer look at this violent reversal action. Office space, kind of another slice of that, looking specifically at the commercial real estate stocks my favorite year, going to look at the s p in the context of some recent market history and then the money pit thats about the money that might be in households homes right now. Up the down staircase. So weve been talking about this kind of radical rotation thats been happening in the last couple of days its not as simple as out of growth into value. Thats certainly one aspect of it heres a look at a couple of etfs this is the msci momentum index. And from a pure value etf, the cheapest stocks in the s p 500 you dont often see the kind of mirror image action like that for two etfs representing both large cap stocks that shows you lots of money in motion so its coming out of not just growth, but defensive stocks essentially, secular growth or brandnew consumer stocks. Also crowded names so things like software, everybody was in a lot of the Big Hedge Fund stocks are being sold off hard its the systemic strategies that have owned a lot of what have been working in a slow growth environment and own almost none of the cheap cyclical stocks. Thats also reversing. To me, its not so much a careful reassessment of the market, its partially that at the margin, but yields going up kind of told you, this trade had gone far enough, at least for now, were seeing this radical reversal unclear how long it lasts, if its really just kind of a stutter step or a hiccup in this trend. Or if, in fact, its going to blossom into something different, a different market phase, guys. Its a good chart to capture the discussion weve been having since the start of the show, mike you just need a red stapler, thats my request as these next two hours play out youll have to explain that one to wilf. It was something workplace, movies, but i dont know what the 20 years ago, youve got to go back for that one youre dating us both okay thats the answer im too young. You can be dated as much as i can, morgan, so youre fine. After the break, shares of wendys getting slammed as the companys breakfast plans take a bite out of 2019 guidance. Well speak to an analyst who just downgraded that stock, next and later, well get some more comments from jamie dimon including his take on President Trumps desire for lower rates and w hofin Tech Startups are affecting the big banks. Dont go anywhere. Closing bell back in two i can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Welcome back to the closing bell. It is time now to get to word on the street. Piper jaffrey downgrading altria to neutral and lowering its price target from 94 to 64 a chair. The firm citing less confidence in its outlook for the Company Following discussions of a potential merger with Phillip Morris that stock is about flat right now. Credit suisse out with a new note on netflix, saying app downloads are rebounding so far this quarter however, for stocks to rebound, the Third Quarter results would have to come in well ahead of expectation for maintaining outperform rating on the stock, of course. Shares trading down today, 3. 3 , because of that apple announcement, 4. 99 onl a month for appletv plus coming up gugen h gugenheim downgrading wendys. Guggenheim views this news as a sign of slower nearterm momentum in its lunch and dinner business its down 10. 5 today. And we are joined now by the analyst behind that note, matt defrisco from guggenheim matt, very good afternoon to you. Thanks for joining us. Good afternoon. So on the surface, you could say, launching into breakfast is a good thing, but you disagree i think longterm, it could be a good thing. It could create more sales, but the nearterm would be its pressure to the Free Cash Flow so i think people are looking for a higher target than maybe what would have been indicated so they polled their 2020 guidance stay tuned to october 11th, their analyst day for an upgrade on that. So speculation is, how low is low if theyre going to pull it back wendys tried to pull out breakfast nationwide before, a couple of times before why would this time be different . How do you know this, morgan . She was the only person waiting outside . So i have a long history in fast food and my dad is still right now burger king franchisee, so i Pay Attention to the space for personal reasons. This is about the fourth time theyve been going at it now in the last 15 years. Prior, they tried to roll it out regionally now theyre going to go they told us this morning, 5,800 restaurants will roll it out very fast in 2020. So it will probably have some National Advertising support behind it. Theyre really going to commit to it for more than just lets see what goes for one year theyll go for multiple years trying to push this down its a tough category, in that theres an established player in mcdonalds with over 17 share does it hurt mcdonalds it does you saw this three or four years ago when taco bell got in. Taco bell is new to breakfast in the next five years and they took a couple of points from Mcdonalds Mcdonalds is trading down 4 today, as well it also announced its own a third tech acquisition, its third one for the year what do you think about that well, since easterbrook joined, hes been a little bit more forward thinking, trying to get rewarded for tech investments. This stuff with investing technology, digital menu boards at the drivethrough line. Technology is a way to communicate with a Younger Generation and i think its a shift that theyre all trying to up their game as far as the communication with the demographic you were out with another note recently, u. S. Coffee, the next beverage battleground quickly, whats the main takeaway and the top pick in that space theres a lot of innovation going on, i think were atan Inflection Point right now in coffee where theres an opportunity of an umbrella for a healthiering an. The Younger Generation turns to coffee as a healthy alternative to energy. The conclusion is that starbucks is a brand you want to be aligned with because of their brand equity with coffeeand their authority with that. So both in their store as well as in multichannels. Steve, what do you think about this space any standout holdings for you . Mcdonalds was the poster child for success in the industry and obviously, on a yeartodate performance, there are others that have been outperformed it but when you talk about skews and drivethrough and how much of a percentage of the business actually comes through drivethrough, theyre getting hit because of this value versus growth play in the last couple of days. But i think if that unwinds sooner rather than later, you start to see money flood back into mcdonalds, because as the gentlemen says, they are the ones that seem to be the most valueadded to your portfolio. There we go steve, thank you matt defrisco, thank you morgan, ive always been loyal to mcdonalds in the past, but because of this new information, burger king, next on the list. We do have the impossible who. Growing up, we also had Dunkin Donuts franchisees those have since gone away, but my coffee addiction started very young. Lots more to come on closing bell. Back out to peinfothcurto r e latest on the apple announcement and which announcement means the most for the companys future. Dont go anywhere. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Just under 30 minutes left to go of trade and we are lower by 36 points on the dow. Here are the key things driving the action weak economic pressure putting pressure on stocks early, but hope for a trade deal helped erase some of those losses and a little bit more selling in the last hour or so. A highlevel departure if the white house that plays into the trade negotiations and apples event wrapping up this afternoon, which is moving tech and media stocks, more on that to come in just a moment it is time now for a cnbc news update, though, with sue herrera. Hey, sue hello, morgan hello, everyone. Heres whats happening at this hour as wilf just mentioned, President Trump firing National Security adviser john bolton, saying he had significant disagreements with him bolton was seen outside the white house west wing making phone calls earlier this morning. He will be replaced on an acting basis by charles cupperman, the deputy National Security adviser. You guys understand and we have now said, they just didnt align on many issues and thats where thats why we are where we are. Were moving forward obviously, charlie cupperman is in that position israeli Prime Minister Benjamin Netanyahu vowing to annex the strategic heartland of the west bank if he Wins National elections next week he is offering a vision that would likely end any remaining hopes for establishing palestinian state. On a lighter note, how about this hasbro is launching a new version of monopoly, miss monopoly in that game, female players will get more money than their male counterparts. Women will collect 240 monopoly bucks while they pass go while the men will pass the regular 200 miss sue, im not just against this because its a threat to my unbeaten streak on monopoly thats last eed 17 yea now wow but surely this is an arbitrary rule, like, this is quite clearly unhelpful for an equality campaign. It feels like a headline here, it does, a little bit. The backstory is that you know on monopoly where you collect real estate, theres no real estate in this board. Its meant to highlight the entrepreneurial spirit of women and so which i get so when you want to buy something, youre not buying a property, but you might buy an invention that was put forward by a woman and i get those aspects, but the 240 versus 200 when you pass go i think it goes to the disparity in the pay scale sure. Anyway to be continued next time i play, im playing the traditional model, because i guess were just going to have to test it out here on set some time. Because i want to win. See you next time were going to send it over to mike for the second installment of the dashboard wilf, well, youre talking about monopoly and buying Real Estate Office space here this is the next movie youre going to rent after you buy burger king for the first time this is a look at the real estate sector. Vnq is very big, Vanguard Real Estate sector fund basically, compared to the s p 500, you see, really good outperformer over the last year, but down about 2 weektodate this is part of that exact same trade. The winning sectors, the stable dividendyielding sectors have been sold out in this kind of mechanical rotation, but even look within real estate, this is todays action, in four different big reits that are within the real estate sector, the S P Real Estate sector so big winners on top. American tower, krmpb towcell pe towers, down 3 to 5 where mall reits basically getting picked up. Even within real estate, everyone was crowded into the data and cell phone reits as opposed to the cyclical real estate consumer ones this is going on throughout the markets and this is going to be churning up, i think, a lot of action for a while to come mike, thank you very much for that im also afraid to admit i have had burger king plenty of times, just not as often as mcdonalds, in the years past. Now apple wrapping up an event just moments ago among the biggest announcements, iphone 11, 11 pro, and 11 pro max. And an updated apple watch and the Company Unveiling its appletv plus pricing at 4. 99 a month and apple arcade also costing 4. 99 a month. Joining us to talk more about it, lauren good, Senior Writer at wide, and tom forte from d. A. Davidson is back lauren, since youre joining us for the first time, youre there at the event, whats been getting the most buzz on the ground there reporter i would say that the iphones are certainly getting the most buzz. Its true that we have entered an era where apple is focusing more and more on services, which is a growing business for the company. And of course, sales of the iphone have slowed but i think when people come to the fall hardware event, theyre still most interested in seeing whether or not apple is going to be able to push the phones excuse me, the phones forward in some way, innovate in some way, and so i think theres been a lot of focus on iphone 11 pro and pro max. Tom, compared to previous events from apple and given the fact that it is shifting, its trying to move beyond iphone, really focus on leveraging the installed base, what did you think of this event . So definitely feel like going into the event, this was the lowest expectations weve had for an iphone event, most likely ever and i think its part of their shift away from iphones, which were 60 of their sales last fiscal year to more services so, again, i think the 4. 99 price point is more significant than any of the specs on the new iphones. I do think that working in the companys favor is this sense of very low expectations for the iphone, and you have a patient Investor Base watching them transition away from the iphone into services. And then lastly, i think that the threat of tariffs raising the price next year, even though next year should have 5g, which could be a catalyst for unit sales could result in better than expected unit sales for the 11 tom, lets go to the 4. 99 price point for the appletv plus service. Rokus down a lot. Netflix is down a little bit do those two moves make sense to you . Actually, i would argue, theyre inverted so if you think they should be higher or just that netflix should be down. Roku should be up and netflix should be down a lot more. So the fact that apple when is the last time or when have you ever been able to say that the apple product or service is the least expensive of anything . And i think the answer is never. So the fact that theyre pricing their subscription video on demand service at 4. 99, a dollar below, for example, disneys hulu, suggests that apple intends to take a lot of share here and theyre just getting started. For roku, theyre the only platform that lets you have essentially everybody. Disney plus, appletv plus, amazon so i think that this is a huge benefit for roku the net negative is that if you have an apple device, youll get the service for free but on a relative basis, they dont sell very many appletvs, especially versus iphones and ipads. So i think roku should be trading higher on the news, not lower. Steve, the fact that apple is actually trading fractionally higher now win me, i mean, it sd the day in the red you tend to see these apple events, its one of the situations where we get the news and the stock gets sold off. What is is that telling you, that were seeing the inverse happening here i think its the gift of low expectations everyone knows that thats what usually happens with apple so its the reverse of basically what weve seen historically to be the case. And youve also had the head winds from china tariffs just battering the stock for most now. But it does have a technical problem when you look at the stock. Its got to overtake these resistance levels, 215, then 233. So theres two major mountains to get to toms point of 270 im a hoper right now. I am a believer in the product, but i am a hoper in the stock move lauren, what was new on the wearables front today . Reporter on the wearables front, there was a new apple watch, as had been expected, the apple watch series 5 no major design overhauls and really no major changes. It looks pretty much the same. You can get it in some new casings, they introduced a new kind of display that offers an alwayson display, so you dont have to flick your wrist up all the time to see the time and that sort of thing but one rumor, one persistent rumor that was floating around before the event is that apple would finally introduce Something Like competitor, which is something that its competitors offer in wearables we didnt hear anything about that today it is very difficult, from what i understand, to get accurate sleep tracking analyses from the wrist. It could be something that apple didnt feel it was ready for it could be indicative that its battery life still isnt all that great and sleep tracking happens overnight when most people are charging the watch. Wearables is a very important business for apple its growing, it is number one globally in the wearables market it tends to not give numbers on that, because it bundles wit air pods and other things. But it is an important business, but at the end of the day, its an accessory for iphone and something that keeps people locked into apples ecosystem, which is what i imagine the company is most focused on right now. Yeah. Well, a lot of headlines coming out of that event today. Lauren good and tom forte, thank you for joining us to break some of them down thank you merck is one of the biggest drags on the dow as we stand, the dow is down 24 points, by the way. Meg terrell has the details on whats in the drop in merck shares meg, over to you. Its a draft proposal from House Speaker nancy pelosi thats been circulating that has pharma investors today on a bit of an edge it would enable direct negotiation on 250 new medicines. Whats new here is that theres also a provision that would make the governmentnegotiated prices available to commercial plans as well this hit names like merck particularly hard today. Its come back a bit since earlier this morning it had been down about 5 . Other names from pfizer to bristol to abbvie, surprisingly actually in the green right now and biotech, too, is holding up as well. After an initial wave of concern, many are coming to the conclusion that the plan goes too far and it will be dialed back, but evercopprps isi says what happens next could be on a trump tweet. He backs the idea, that could mean it has traction for everywhere else, were still watching trumps twitter feed, guys back over to you its just another day trading the market and watching that twitter feed meg terrell, thank thank volfefe feffay coming up, their lastchance trade. That is what is next. Plus, weworks largest investor now urging the company to delay its ipo weve got details, coming up 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. We have 15 minutes left to go here and the dow is hugging the flat line. Lets get a check on individual market movers, though. Shares of ford are falling today after moodys downgrades its Credit Rating to junk status they cite the weak Financial Outlook for the move and shares of ford are trading down about 1. 5, almost 2 june 1th you picked this. And june 12th is my birthday. Do you want to talk about that instead . Not at all. This one didnt work out for me i would rather talk about mcdonalds if this value versus growth starts to have a little bit more life to it, you could start see ford catch a bit out of this, but it has not worked out thus far. Is there any reason to be concerned about what this means in terms of cracks in credit when you see ford downgraded sure, when you start to look at the monster amount of debt that ford issues and ford has, thats what saved them during the financial crisis so now its coming back to haunt them its sort of ironic, the way its a 180 from what actually gave them life and they didnt file for bankruptcy. In the meantime, weworks largest investor, softbank, will be urging the company to put off the ipo. Deirdre bosa has the details back in january, newman says wework was for an ipo and according to leslie pickers reporting that hasnt changed. They want to push forward with the road show until early next week, even if its biggest outsider investor, softbank, is not ready. Despite a few vision fund wins, massa sans record is taking a few hits recent weakness in uber and slack, thats weighing on returns. And a big markdown of wework could raise uncomfortable questions as softbank tries to raise another 1 hurrica00 billr its Second Vision Fund guys deirdre, we also want to ask you about some of the news thats coming out of lyft, thats just crossing regarding some of the new safety features. What can you tell us about that, as well . Thats right, theyre rolling out some of these new safety features in the wake of the Sexual Assault lawsuit that was filed about a week ago two new features here. One is smart trip checkin thats using data to actually predict when people need help. The second is Emergency Assistance access to 911 from the application. Now, in the suit filed about a week ago, lyft was accused of failing to use its own technology to protect passengers and not doing enough to respond to reports of sexual abuse guys, this is part of both ridesharing companies, uber and lyft, making efforts to implement more and more safety features to curb sexual abuse from drivers back to you. Deirdre, thank you. Shares of lyft are up 2 right now. We have got 12 minutes left to go here. And actually t, the dow just turned positive. Its up five points. Steve, whats your last chance trade . West rock, its wrk has been a name im going to give you three. Theyre all in the same bucket wrk, west rock, olin and tr trinsaya as long as that lasts, these will rocket, and doubles and triples in some of these names when you talk about west rock, youre talking about a beaten down paper, mill, packaging. The other diversified chemicals. You start to look at that, you really need that rotation. And you also get paid to wait. So they have incredible yields on these names theyve been thrown out and now if you start to see that transition or that rotation, have a little longer in the tooth, these things are legitimately could double and triple are these domestic focused or so theyre all over it depends like olin really partakes in the home builders, too there are some chemicals in there and plastics in there. So you have things that are both here and abroad, as well but the whole group has been under an incredible amount of pressure, because all that anyone focused on were the largecap tech names and now when youre starting to see wework valuations be questioned and the governments scrutiny on facebook and google, people are saying and investors are saying, why do i have to look there you could fall incredibly from the lofty heights by these spaces you know we want to hold you to account in your future appearances on the show, so which of the three is your actual last chance trade lets do wrk, but i am long all three. Okay, wrk, and should we give you the start of day price rather than the close of day price . Whichevers more birthday his birthday was a couple of months ago well give him the healthy morning price. Burger kings on me done. Steve, thanks very much. Up after the break, well have the closing countdown just 11 minutes left of trade, and after the bell, well have Earnings Results from hrh that stock is up around 70 over the past three months. Plus, former fed vice chair donald kohn tells us if he thinks the European Central bank will cut rates stay with us experience the style, craftsmanship, and technology that have made the rx the leading luxury suv of all time. Lease the 2019 rx 350 for 399 a month for 36 months. Experience amazing at your lexus dealer. Doprevagen is the number oneild mempharmacistrecommendeding . For 399 a month for 36 months. Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. [spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu 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 we have got just seven minutes left of trade. There is the sector heat map for you. Weve got real estate at the bottom down 1. 6 tech is suffering as apple disrupts the market once again energy leads the way, up a full percent, followed by materials and industrial small caps. The russell outperforms the bigger cap indices so its six minutes left to go in todays session. The dow is hugging the flat line the s p is trading right around 2970 joining us now, it is time for the closing countdown. Weve got kevin hinks with Td Ameritrade what are you watching into this trade right now . Its late in the earnings season and the names are getting a little thin, but rh. Com is a good one to watch after the bell why is that . Its had a big run, as you just stated its up near its alltime highs. Its got a big expected move the front in implied volatility, 121, thats implying about a 14 expected move. Thats really close to 10 it was 15 midday. Its backed off a little bit but still percentage wise for earnings, thats a pretty good expected move. From there, we go to Macro Economic data for the rest of the week weve got ppi on wednesday, cpi thursday, and then retail sales, Consumer Sentiment on friday so once we get through some earnings, one by one, were going to go big data for the rest of the week does the ecb matter, kevin, for u. S. Equities . Absolutely it does. I think thats a big thats 7 45 eastern time, right before we get our cpi data. Thats going to be a volatile morning for bond market, for sure if they i dont think theyll move rates, but theyll definitely probably announce more qe coming out of the eurozone the selloff weve seen in tech and Communication Services stocks, how worried are you about that to the Broader Market i think this is just what youre seeing here is one of those fascinating trading days where this rotation youre seeing out of some overbought names. Jamie dimon just came out and said that trading revenues will be better for this quarter with the volatility that weve had, its got to start showing up in the financials in terms of increased earnings revenue so i think this is just a natural rotation you see the tenyear back to 1. 7. This is just, i think, some overbought areas, just coming back into its normal balance i think you said trading revenue will be down 10 perhaps that was a little better than expected. Some constructive comments on the net interest income. Kevin, overall, the rotation that weve seen, which sector in terms of the sectors is performing the best at all if you look why the russell is overachieving, because theyre so heavy into regional banks. If you look on a heat map, theyre getting some lift. And people are rotating into regular industrials. Obviously, real estate and utilities will get hit as rates go up, but i think industrials and banks, both regional and big financials really are having a good day today and seem to have a little leg here. Kevin hinks, thanks for joining us wilf, before we get to this favorite year that might be a model for this current year, lets take a look at New York Stock Exchange breadth advancers versus decliners, talking about the rotation, its the very largest name in the big cap indexes that are getting sold off, but the average stock is outperforming so its been net positive pretty solidly all day. Just about subpoe17 pto 13 righe now, lets take a look at a fiveyear chart of the s p 500, just to track how this year, 2019, the tracking against 2016. Weve talked about it a lot. Longterm trading range that lasted for quite a while finally, a breakout of that range. And then a little bit of a selloff that was an august top back in 2016 and of course, you took off after the logistics. Now, is this a little bit of a selloff before taking off we dont know. We dont know what the catalyst will be. But you had really low bond yields and defensive leadership and that switched after people got a little more clarity on the potential Growth Outlook thats something to keep in mind another eventful day in the bond market lets get to Rick Santelli for that absolutely, mike. As a matter of fact, all paper looks a bit like for paper today. Look tat a oneweek of tens. Theyre up eight basis points. And pretty much everything youre looking at on our curve and the european curves, up close to a month, give or take look at one week of bunds. Highest close since the sixth of august and finally, lets go back to our tenyear the double potts in 12 and 16 within we didnt violate them. That is huge rates keep moving higher one thing for sure, nasdaq didnt spend one minute in positive territory today, did it, seema mody you are absolutely right, Rick Santelli. Nasdaq has been underperforming the s p and dow over the past two days and today it was largely dominated by losses in large tech a notable move in shares of netflix after apple unvideo gamed pricing and its launch date for its streaming product, appletv. Keep in mind, shares of netflix are now down about 18 in the last six months. And then theres other losers beyond tech. Starbucks and ebay and as we keep on the developments out of hong kong, ctrip, the chinese booking site, guiding rain shower for the Third Quarter, due to those protests, weaker bookings has been a pain point for a lot of the booking sites and hospitality players. Now to bob pisani. Since thursday, we have had a bottom in treasury yields and we have had a rally in cyclical stocks that is continuing in today, seema. So transports having a great day. Norfolk southern, some of the deep cyclicals like caterpillar strong defensive names that have been momentum stocks recently have been lagging merck, proctor, cocacola, kimberly clark, all lagging so far. Its those momentum names that are sort of pulling back weve had fin tech stocks like paypal and visa, theyve been strong all year. Waste management has been strong wallet disney has been strong. Thats what a momentum stock is. They have been lagging here. Theres definitely rotation going on in the market we are closing at the highs for the day, the Dow Jones Industrial average up 60 points. Welcome to the closing bell. Im Morgan Brennan in for sara eisen. Im wilfred frost alongside mike santoli a fantastic final 15, 20 minutes of trade to the s p positive the nasdaq was just negative at the close. The dow, as bob pisani just said, closing at the highs of the session, up 70 points or around a quarter of 1 the small cap russell index did outperform, up 1. 25 , largely because of its weightings in the likes of energy and banks that perform well morgan, the chart im picking out is the Energy Sector today, over ten years, yes, energy was the best today at 1. 3 , but similar to the banks, already been performing well over the last two weeks and the interesting thing on Energy Sector today, oil prices were higher earlier today. They turned around on the news that bolton was out. But the Energy Sector held firm. And its a similar thing playing out with the transports as well. That average finishing up 1. 5 today. You look at a oneweek chart of the dow transportation average, its up nearly 7 . Its now performing better yeartodate than the dow industrials. And it is some of those beatup names, like avis, like ryder, like fedex that weve seen sell off over the past year within that average and i think that, too, is also speaking to this value play. Also the fact that maybe some of the Economic Data has not been quite as bad as feared and some of the freight data may be showing signs of bottoming certainly one to watch as we try to decipher where were hat in terms of economic strength joining us, alicia levine. But first, to mike santoli and the fact that we did see the dow finish up 73 points at the highs of the session yeah, it firmed up towards the close. And in fact, under the surface, obviously, a lot of back and forth movement, but a net positive because most stocks had been up. The s p has more or less held last weeks 2 move above that august range weve. Talking about the violent shifts back and forth in terms of styles and types of stocks and sizes of stocks. To me its just an unwind of some trades that got very stretched. Yields got too low, people got too down bate about the economic outlook. Growth stocks that seemed to be immune to the cycle got pushed too high a lot of crowded stocks and one this process starts to work in reverse, i think so you see a lot of the systemic strategies just kind of unwind that, go to the sidelines and see what actually settles out from there. But bond yields at onemonth highs has been kind of the green light for this entire process. Mike, thats the same reason why tech is the worstperforming sector for the week, down 1. 2 or are there other sectors at play, as well . I think its mostly that, its expensive secular Growth Stocks that basically people were hiding in for the most part microsoft down over 1 on a given day like today it shows you that thats not really about a substantiative move semistill strong, apple firm, yet tech down shows you the rest of the Software Group is being taken apart. Alicia, your take on this market and are there opportunities . There are definitely opportunities. We think the defensive trade got too done at the end of august, and we were seeing signs that the sibling libcyclicals could. Yields, probably at a bottom now, although we think yields could stay lower having said that, theres definitely a cyclical play here. We think financials could be pretty good. I would be careful in energy, just because i think theres longterm structural problems in the Energy Sector. But i do think this is pretty much a green light for all of thosesectors that have really been dismissed when you say structural problems in the Energy Sector, you mean output, too much of it versus Global Demand i mean, i think that the Global Demand is not going to be there on a cyclical basis. And to the extent we have so much production coming from the u. S. , youre going to have a cap on prices. Ultimately, if you look at longterm chart of wti, it does not look promising to break out over 70. It just has that low and slow look david, does the Economic Data in the u. S. Support a rising and steepening yield curve i dont think its inconsistent with it i mean, the data really hasnt been a big driver of any of this weve had services strong, manufacturing weak, its all the same sort of story weve been living with all summer i think the story is, weve got an ecb meeting this week, a fed meeting next week. If both of them act pretty do dovi dovishly, which is likely, well probably get a doj that wants to get involved sometime in q4, and then all of a sudden were talking about globally coordinated stimulus, when everyone was talking about tightening not so long ago, especially at the beginning of the year i think were just waking up to the fact that this could be a pretty exciting time for Central Bank Stimulus and yields were at the wrong price more that. And theres no recession coming, so you have good enough economies with all of this global stimulus. Its actually a great recipe for the market but to that point, david, what happens if the ecb this week and the fed next week arent as dovish as the market expects. Morgan, i think these are really important meetings. We do have laguard teed up and i think she will be a different character than draghi, but thats way down the road this is draghis final stand this is his way to go out with a bang tee it up nicely so you have a launch pad to go and i think some of the political stuff thats happened with the fed, with bill dudley and ive been writing about a lot of people have been tualking about, it puts the fed in a position where they dont want to be political. More of a reverse psychology on you, morgan. You were one of the few that sort of agreed with bill dudley. No, i was happy that he did it i never agreed with anything i was happy that he told us that politics matter. Because they do. And once you expose that, you kind of have to sort of push it back a little bit. So i think one of the things im looking for is a fed that actually is going to try to preserve its independence and one way to preserve your independence is to not look like youre fighting the president so much and that could be a more dovish fed. I think you have two things that could be working in the next week that are very interesting all right a more dovish fed sounds like youre actually if youre trying to stake a claim in the ground and avoid politicization, given the trump tweets, we have had it im just skeptical if you want to avoid it if you want to avoid it, you certainly dont want to come out with a really hawkish view, because everybody is going to say, okay, now youre going against the president and acting politically. What do you do to fight it i dont know, a little reverse psychology on the topic of rates, Jpmorgan Ceo Jamie Dimon did address the president s desire for lower rates earlier today. Ive never known any president who wanted higher rates. So for everyone to be surprised, im surprised. Number two, its obviously that to justify that position, that when were at 1. 5 and somebodys at 0 , well, yeah, that is. But theres no reason that currencies and countries have to move together. None they have different economic situations, are reflected differently in the economic curves but i do understand the sentiment. I think that rates are low are plenty low we already have inflation at 1. 5 i dont think rates is the issue thats holding back america. He said the bank was prepared for lower rates, zero rates, even, but not expecting them he also addressed the threat from tech and new entrants so far, you havent seen them eat our lunch in everything, not even one thing you know, and so but i dont say that in arrogance. What i said to my own people, whats true, theyre going to, somewhere. We could have been square. Banks trading sharply higher for the week as a hole, up again today, jpmorgan up 1. 3 . For more on jamie dimons comments, check out cnbc. Com overall, the other bullish factor he talked about is if we do see the cycle turn douwn, he doesnt think it will be as bad as last time around, saying losses were 10x a normal skpoik them center was the banks. I think thats pretty persuasive and i think the market is kind of there i dont think the question has been that i dont want to own banks because theyre systemically vulnerable and theyre going to basically be at the center of this smoldering crater around the next recession like they were the last time its because they just dont see them as levered to make as profitable, you know, use of a good economy as they used to, even though they do look cheap and if the economy if the cycle goes longer, they should be fine. Alicia, do you like the financials here . On banks, but also some of the other financials, we dont talk about it as much, like insurers, for example. So the insurers have been very strong because its a bit of a safety trade. Theyve been strong. We think some of the fin tech, even though it was hurt in the rotation, that really feels like the wave of the future and it will just be exponentially growing in the way that the Big Money Center banks cant, so we like those as well but ultimately, the entire trade goes against a sector, you have to start looking at it for the Strong Companies that can survive. And the other thing about the financials is that its sort of a selffulfilling prophesy, because with rates cratering, you had this stampeding out of the sector because the thought was, these banks cannot make money. And we heard this week at the Investment Conference is that in fact, the net interest margins will be okay for most of the large Money Center Banks and that was very comforting for investors, that even with historically low rates and an inversion of the yield curves, the banks are doing just fine. Dimon, what was your take on those comments i dont think a bank that collects the excess on reserves is going to be lobbying for lower rates anytime soon he makes quite a bit of money when the rates go up youve got to tang that with a little bit of a grain of salt. I certainly do but i think, it is a strange world, where fed funds rate is the highest rate in the g20 across all yield curves. Greece is at 1. 5, and 50 basis points on the two year we have really, really high rates relative to the rest of the world. It strikes me that this fight against inflation, which is nonexistent for all intents and purposes, near the target, is something that the fed cant defend very well and i do think theres a story line with the change of the framework for the fed, like we were talking about in the summer, that comes after the election thats going to be quite dovish but right now, its all about politics at the fed. And youre going to fight with this sort of the tweets on one side and the sort of bill dudleys on the other and its a little bit messy, but my bet is the story line for the fed turns out to be a little bit more dovish than people are thinking at this stage david, alicia, great to see you both thanks for joining us. Still ahead here on closing bell, to cut or not former fed vice chair don kohn will tell us whether he thinks aith wl banks will lower rates agn iseek and next week. Closing bell back in 90. Welcome back apple unveiling new iphones and details about its Upcoming Streaming Service at its annual launch event josh lipton joins us with all the highlights hey, josh. Lets start with apples bread and butter, that iphone franchise. Apple ceo tim cook taking the stage today and debuting three new smartphones for his fans, as the new lowerpriced iphone 11, faster processor, 6. 1inch display, better battery life thats going to be priced at 699 so interestingly, about 506 bucks cheaper than its predecessor,r, which has been apples best seller. And then on the high end, for those that want the best apple is offering right now, the iphone 11 pro at 1099 with a 5. 8 inch display and the iphone 11 pro max, thats 1099 one question for investors, do you think apples focus here on the stronger battery life, the improved camera system, is that going to win over consumers . Those are often features that are High Priorities flogged in surveys by consumers it wasnt just the iphone, though we also had an emphasis on wearables today. We did see a new watch that, of course, has been a bright spot for apple. The new watch will start at 399 and 499 with 4g Network Connectivity it comes with a new feature like that always on display, which just means you can see time and notifications when you havent raised your wrist. That will land in stores on september 20th and finally, we did get what investors wanted, more detail on those new services appletv plus, that streaming service will roll out november 1st. Its going to cost 4. 99 per month for a family account, which surprised some, given the reports we had been seeing and apple arcade, that new game subscription service, we got a date there, too, thats going to launch september 19th also for 4. 99. Guys, back to you. A lot of headlines coming out of that event, josh. Thank you for putting it into perspective for us lets bring in casey newton, Silicon Valley editor for the verge, and Alex Morehead good afternoon to you both patrick, ill start with you did you hear anything or see anything from this event that would change your investing thesis around apple . If i can wrap up today for apple, it was a push i saw some highlights, i saw some lowlights, i think we saw enough today for apple loyalists to say in the camp, but i didnt see anything today that necessarily moves android, windows, or even chromebook users over casey, whats your take on the iphone, whether theyve announced enough with new functionality or lower price points to get people to upgrade in the near future on the plus side, they do now have more prices where it would be iphone owners can get into the game you can get that iphone 8 for 450 now so i would expect youll see some people coming on the low end there. On the high end of the market, when you look at the features theyve announced, those are really for photography enthusiasts, people who really get into the nittygritty detail of taking photos and making videos its hard to imagine that thats going to reverse the year over year declines weve been seeing in iphone sales. So patrick, you said that you believe that apple moved the needle in its own ecosystem, but not with android and window users. When you see disney and netflix sell off on news of a 4. 99 video streaming service, you think what was the price more ambitious than you were anticipating or is it what you expected so the price was lower than i expected at 4. 99, and i think for those premium iphone buyers, its going to be a nobrainer. I think apple will do well here. I dont necessarily see them in the same market as Netflix Netflix has a much wider offering the only thing apple has to do for success is to have that show like hue lye with the hand maids tale that you have to watch. The bigger risk for apple, i think, with the iphone, to add on is on pro, wheres 5g qualcomm talked about 150 5g phones coming out, the majority in china i think it will make a difference in the Fourth Quarter of this year and the First Quarter of next. Mike, the fact that apple rallied more than 1 into the close here, is this a reflection of the Broader Market or a reflection of the event, or both it was kind of vacillating all day. It wasnt as if the event finished the and the stock went up or even during the event. I think it was somewhat picking up of some of the lessercrowded name like apple, but in general, i think it seems like a net positive now, the issue with the subscription service, the Video Subscription Service is interesting, because i think you saw the panic run through the competitors, because maybe the total Addressable Market in terms of revenue for this whole class of services is not as high as we thought. If were talking about 5. Think about that think of 200 million subscribers. Its 1 billion a month to apple. Its 12 billion a year. What are they spending on content . Is that a real bonanza for apple . Not really, but as a defensive move as a way to protect the ecosystem, its worthwhile and its a big price gap now with the higher price points of the netflix or the hbos of this world. Certainly not marginal difference cas casey, just to ramp things off, what was your takeaway on the watch . So, i think the watch is actually maybe the needlemoving thing here for apple that apple watch 5 is going to have a display that is always on, which sounds like a small thing, but when youre talking about a watch, its kind of a big deal so i think youre going to see a lot of people who are maybe holding off on buying that apple watch, that decide that now is the right time to get in so i expect a nice little bump in that business for apple this year casey and patrick, thanks for joining us thank you weve got some breaking news out of washington. Eamon javers has it for us hey, eamon reporter thats right. Were learning a little bit more now about what happened between john bolton and President Trump, the National Security adviser resigning today. The president surprising amou lt of people with that tweet. What im told by a Senior Administration official here is that bolton did not actually talk to President Trump this morning after their tense conversation or interaction of last night what im told is that bolton had a staffer drop his resignation off with the outer oval office staff today and never directly spoke to the president about this and as for this remarkable dispute here between bolton, who says that the president never asked him to resign and the president who says that he did ask for that resignation, Senior Administration official telling me, quote, the president s story is much more plausible given the facts. He asked bolton to resign and he did. And this official dismissing boltons statement that he slept on it and then resigned this morning, texting me just one word, convenient. So a real sense of hostility here and a dispute over the basic facts of what happened and whether bolton was asked to resign or not, guys. Back you the key thing, i guess, for markets, oil prices came off their highs. Does this suggest a less hawkish position on various issues, but particularly iran . I think it does for now the key is, youre going to have to wait to see who the pick is for National Security adviser and read the tea leaves on that name once we get it. No names are being floated from the white house right now. But nor was bfor now, bolton wah more hawkish man on iran than the president himself. Maybe in more deal making mood, the president is, especially ahead of that 2020 reelection effort this is a Development Well have to watch very closely eamon javers, thank you for bringing us that additional color. Meantime, we have an earnings alert on dave and busters, also on rh, and meg terrell has both of those companies results for us. Hey, morgan, well start with dave and busters, it was a beat in the quarter, but investors not responding that way. Earnings came in at 90 cents a share versus expectations of 84 percent. The stocks down more than 10 , though, as they lowered their fullyear guidance in light of the competitive environment and comps for the quarter were down 1. 8 that was more than the half of a percent that investors were looking for. So you do see dave and busters off there. Different story for Restoration Hardware, a big beat on eps for the quarter, coming in in at 3. 20 versus expectations of 2. 70. The company also raised its fullyear guidance for this year for the third time this year and has some interesting commentary on tariffs and china in the release, saying regarding trade with china, they dont expect current tariffses to achieve their stated financial goals. And the increase is embedded in its guidance for the year. They continue to receive pricing recommendations from vendors morgan, Restoration Hardware up more than 5 back to you. Meg terrell, thank you. Mike santoli, were talking about two consumerfacing stocks, two very different stories. Rh, though, given that china exposure and the fact that it does have that manufacturing footprint and that supply chain that is overseas really perhaps the more notable here. Its more notable also just the performance in this quarter the stock continues to just obliterate the shorts and theres a lot of them out there. About one third of the share float is short till. It really just kind of defines this idea that they have these massive luxurious stores and huge physical catalogs and all the rest of it it seems to be working for now so i think that right now, on a day when a lot of the Popular Hedge Fund pages are blowing up, being short rh after hours right now doesnt seem to be working 5 s its more than doubled since early june, as well. Massive, massive performance from rh. Up next, we will look at whether the owners of the Company Behind oxycontin could be the next target in state wstsgastpid makers stay with us servicenow put our workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. Welcome back several opioid makers have already been hit with state lawsuits, but not the owners of one major drugmaker that could be a target. Meg terrell has the details. Its Purdue Pharma thats at the center of the thousands of lawsuits around the opioid epidemic, and the company has most recently threatened bankruptcy if it doesnt reach a settlement this month, but the two sides appear to be far apart on the settlement deal weve been speaking with several state attorneys general this week who say the Company Rejected two offers over the weekend. One of the issues is how much the owners of perdue pharma, the sackler family, are offering we want the sacklers to actually put in real money to help deal with the problem, because there are people who are suffering. Meanwhile, the sacklers are already named in several state lawsuits, including in minnesota. That states attorney general, keith ellison, says bankruptcy for perdue wouldnt stop suits against the family if sacklers are named in the complaint, their liability cannot simply be washed away with a corporate bankruptcy. Now, north carolinas ag, josh stein, hasnt yet named the family, but said he would if perdue files for bankruptcy without reaching a settlement. Perdue declined to excellent and the spokesperson for the sacklers hasnt yet responded. Still to come, two major central Bank Decisions on tap and both have big impacts on the market well speawi dk thon kohn about his expectations for the ecb and the fed. Welcome back time for a cnbc news update with sue herrera. Hello, wilf hello, everyone. Heres whats happening at this hour at a white house briefing, treasury secretary Steven Mnuchin and secretary of state mike pompeo were peppered with questions about National Security adviser john bolton being fired. Im never surprised let me ask it and i dont mean that on just this issue and i think secretary mnuchin would say the same thing we work very closely with the president of the United States i think we have a pretty good understanding of how hes thinking about things. A walkway in iraq collapsed, setting off a stampede that killed at least 31 people and injured dozens more in the holy city of karbala. It happened as thousands of Shiite Muslims marked one of the most solemn holy days of the year here at home, Senate Majority leader Mitch Mcconnell said there will not be a senate vote on gun background checks until President Trump confirms what he would support. Mcconnell says its a waste of time for the senate to pass a bill if President Trump wont sign it into law you are up to date thats the news update this hour guys, ill send it back downtown to you morgan sue, thank you. Two huge catalysts on the agenda for investors we have the ecb Rate Decision this week and the fed next week. Joining us to discuss is former fed vice chairman and brookings senior fellow, donald kohn thanks for being with us today i think im going to start with the ecb. The expectation that certainly investor markets this week are watching us to see whether we get some sort of stimulus package, and if so, what specifically that could look like your thoughts . Well, im not as familiar with the ecbs tools as iam with the Federal Reserves, so im not sure about the specifics. But i do think that inflation is running well below their targets. The economies in the eurozone are weak overall, especially germany and to some extent, italy. So the prediction that inflation would get back to target, i think, is not you cant make that prediction. So i think they do need to take some action and some Decisive Action to move the ecb economy back towards their inflation target and to bolster growth there. I know theres an argument that maybe they caught to keep their powder dry that something worse will happen down the road and they need to theyve got limited scope to ease and they need to save that scope for another occasion, but i dont agree with that. I think when youre in a situation like this, youve got to act and act decisively in order to head off something thats much worse, where your ammunition for sure wouldnt be adequate what about the argument that theres a new president coming in, in just one meetings time and shouldnt kind of make massive, drastic new bits of action ahead of that change in presidency well, i think i dont know how much consultation theres been between the new president and the old president and the outgoing president but i think i mean, i think theres something to be said for a consulttive process, for making sure that youre not doing something that she would find not acceptable. But i do think that theres some action is needed maybe you dont need to use it all. Maybe you need to save some for her to consult with her governing counsel, but i do think youre putting it off and putting it off is not a favor to the incoming chair, the incoming head and its not a favor to the citizens of the that work in the european union, in the eurozone looking ahead to next week, and the fmoc meeting there, it would seem like, at least based on Market Expectations right now, a foregone conclusion that the fed is going to cut. Do you, i guess, agree with that expectation. And if so, by how much is it the beginning of potentially more stimulus versus this idea of a midcycle move so i agree with the general Market Expectations that the Federal Reserve will cut the their target Interest Rate another 25 basis points at the upcoming meeting i think they have ample reason to do that the u. S. Economy is fine its growing around 2 , has been growing around 2 for the past about year the Unemployment Rate is low, 3. 75 , but there are Downside Risksthere from the trade war and the global slowdown. And inflation is oning a bit below their target its some of the more recent data have seen a bit of a pickup, but its still running below their target so i think buying a bit more insurance is the right thing to do at this meeting what im not so sure about is where they will be going after that. So i think being on alert for another possible sort of an easing bias is the right thing to do. The Downside Risk is the low inflation. But after they reduce in september, therell already be pretty substantially below where they thought, at least in june, the neutral rate was they had the neutral rate between 2. 5 and 3. Theyll be between or 2. 75 and 3, theyll be between 1. 75 and 2 before september so they already have a percentage point many there. You have some pickup in inflation, the economy is doing fine so i think i would be looking to see whether the incoming data suggested that the economy would not that inflation was not going to pick up and the economy was going to be slower than i expected, but im much less certain than the market seems to be that we need a whole bunch of decreases here some fed officials have acknowledged that that general outlook about the economic situation, but have said that because of the way the yield curve is set up, and of course, global yields. The fact that the short end of our treasury market is so high in yield relative to the rest of the world, suggests that its not making an economic call to maybe cut a couple of more times just to bring that in line what do you think . So i think every countrys Interest Rate needs to be attuned to whats going on in that country taking account of whats going on in the rest of the world. But i dont think you can drive your Monetary Policy based on what the ecb is doing or the bank of japan or the peoples bank of china, for that matter so i think you need to know what theyre doing, but just because theyre easing and their Interest Rates are lower doesnt mean your Interest Rates should be lower youve got to figure out the effect of what theyre doing and the effect of their economies on your economy, but theres certainly no automatic adjustment of our Interest Rates to theirs. Thats why we have Flexible Exchange rates so that monetary policies can be keyed to the domestic needs of each economy where did you stand on bill dudleys oped i thought it was wrong and harmful. I thought it was wrong because congress has given the Federal Reserve a mandate, a dual mandate, for maximum employment, stable prices. They have given the Federal Reserve some independence from shortterm political pressure to pursue that mandate and the fed needs to keep away from politics they need to apply the best Economic Analysis possible to achieve legislative mandates thats what jay powell has been saying and i completely agree with him and lean against whatever else might be asking the economy. Whatever the source that might be driving the economy away from the dual mandate, they need to lean against it and pursue those. Thats what Congress Told them to do, thats what they should do and i think whats harmful to the Federal Reserve, because i think it fed submissions that the Federal Reserve that by not lowering Interest Rates enough now might be motivated by political political things. And similarly, say by lowering Interest Rates, you saw some of this in a wall street journal editorial a couple of days ago, that throwing doubt on what they did during the Obama Administration so i think it if anything, if there were suspicions out there that the Federal Reserve was shaping its policy to influence elections, it would lose its independence i think it was a very dangerous thing to do. Donald, thanks for joining us today. Nice to be on thank you. Up next, we will look at whether the sharper than expected increase in credit card spending could be raising red flags about consumers taking on too much debt. And later, find out why a new bill in california could be a major road hazard for erub and lyft were back in a couple of minutes. Ive done all sorts of research, read earnings reports, looked at chart patterns. Ive even built my own historic trading model. And youre still not sure if you want to make the trade . Exactly. Sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. See, your stress level was here and i got you down to here, ive done my job. Call for a strategy gut check with Td Ameritrade. Welcome back to the closing bell. Lets send it over to mike santoli for his final dashboard of the day, mike morgan, a money pit not sure if youre aware sometimes what people refer to as a home that keeps requiring more investment. Kind of the Household Expenses get out of hand. I know a Little Something about that a different kind of money pit related to a home. A lot of talk about a big jump in credit card balances in july. People say, wow, is that household Balance Sheet in rough shape. This suggests, no, because Mortgage Rates have gone so low, this is the orange line right here, that this is how many existing mortgages are now in the money and potentially could be refinanced with benefit because of lower rates this is right up here. And obviously, that is historically very high number. When do you have to go back to probably 2016, we always referred to this would theoretically be a way that consumers could refresh their spending the balance of home equity loans over the past couple of years. I think it might have been on amazon prime day or other factors. But in general, the household Balance Sheet is in okay shape here similar comments as well from jamie dimon as well earlier today in terms of his happiness about credit quality and the consumer in particular mike, thank you. Up next, gearing up for a fight over lyft taking a stand against a california bill to label drivers as employees how that might impact the oc, mi up. Os really . 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And fidelitys rate is higher than etrades, Td Ameritrades, even 10 times more than schwabs. Plus only fidelity has zero account fees and zero minimums for retail brokerage and retirement accounts. Just another reminder of the value youll only find at fidelity. Open an account today. California attempting to rein in the gig academy. State expected to Pass Assembly bill five this week, which would entitle gig workers to benefits like employment and force Companies Like uber and lyft to reclassify their drivers from independent contractors to employees. Early uber investor bill gurley appeared on cnbc earlier today to talk about how this may impact the company i hope all regulators will take the time to understand that most of these drivers greatly value freedom and flexibility to be able to work whenever and wherever they want theres no job at starbucks and mcdonalds that you can come in monday and tuesday and not show up wednesday it takes scale to be able to get involved with government and adhere to regulation, so oddly i dont see it as a negative for the stock. Joining us now is aroon sandarajan author of the sharing economy. Thanks so much for joining us. Delighted to be here. First, quickly, what are the key things that this bill would alter . It would certainly change the cost structure of any platform like uber or lyft or door dash or postmates it would make it harder for them to have parttime workers or people who sort of plug in during rush hour and then plug out. And over the long run, it would increase fares and it would make it harder for the next startup that is sort of building itself based on flexible providers to actually emerge. So it will probably strengthen ubers sort of dominance in the long run a lot of people, of course, are saying that this has been done in the name of the worker, to help the worker and protect the worker will all workers welcome this . No. Im sure there will be a subset of workers who will like the benefits and like the fulltime employment status. These are the people who sort of wake up in the morning, drive for 10, 12 hours a day, do this five days a week but a majority of drivers like the fact that they can switch off the app at any time, you know, go to pick up their kids from school. There are millions of uber and lyft drivers who are doing this as transition work to supplement other income and so i think if you think that it will be universally welcomed by workers, thats sort of deadon wrong and in particular, the workers who will no longer be able to drive for uber and lyft are certainly not going to welcome it i realize that this is all being framed in california as you focus on the employees in the gig economy. However, we have seen this fight play out before, this idea of independent workers versus employees. I can think of fedex and that has gone through the Court Systems in the past. Is that the expectation here that youre going to see this bill challenged again through the court system oh, absolutely. If it passes, i dont expect any real impact for at least a couple of years. While uber and lyft challenge and it sort of weaves its away through the court system but even the question is an old one, i mean like even before fedex we have microsoft sued by contract workers i think what people have to realize is that the world of work has change in a way that has taken us away from the predictability of people who work as fulltime employees. I expect in 20 yeerps the majority of the work force will not be fulltime employees but Something Else rather than to trying to sort of retrofit the new work models in the old employment buckets what the California Assembly should be doing is coming up with ways to figure out a, why do workers want to be employees the one who is do dont want the inflection ability they want the protections and benefits extend the protections come up with creative funding model, the 401 k to extend protections to not just employees but all categories of works because the nonemployees will be the majority. Thank you for joining us. Delighted to be here. One to watch. Taxing the wealthy Warren Buffett and bill gates and jeff bezos could have lost billions of dollars if the Elizabeth Warren tax plan went into effectuate the well discuss it when closing bell comes backs r rett savings with pacific life and create the future thats most meaningful to you. Which means you can retire, without retiring from life. Having the flexibility to retire on your terms. Thats the power of pacific. Ask your financial professional about pacific life today. A new study claims the lists beth warren tax pran would have cost the worlds richest people hundreds of billions over the past two decades had it been in place. Robert franke is here with that. The richest americans have a net worth of nearly 1 trillion but if the war and on wealth tax plan was in effect since the 80s. They would have less than half the economists creating the tax say say side from raising 200 billion in revenue it would reduce the welt cap between at the those at the top and bottom. The tax would be 2 on welt over 50,000,003 on wealth over a billion if in place since 198. Jeff bezos weather only 87 billion. Sintsds 160. Bill gates down to the last 336 billion losing nearly two thirds of the frrn and warren would have to get by upon a mere 30 billion. But you can tell with the annual wealth tax poefr a long period of time, it really has an impact on the top. It does but this is how warren and co should frame it with the smrking only hearing small vinyls not anything large 36 billion left for buffett so what. Still ahead of a lot. I think the issue more is how much it would raise. And i think, you know, to the point larry somers and said look its more than 25 billion a year instead of 200 billion a year. I dont think anyone is feeling sorry for those losing at the very top the question is it starpts at 50 50 is a lot of money but over time that could chip away at a family frrn fibrin with a small business. Robert franke thank you for breaking that down. Yes. Its a big day for ipos on dock pell a ton road show and smile direct club pricing all slated for tomoowrr we have a preview what to watch when closing bell comes back 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. Servicenow put our this changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. Announcer do investors like what they say strategy and market reaction. Squawk on the street, 9 00 a. M. Eastern. Welcome back a big day for ipos tomorrow. Leslie picker here with a look at what to watch hey, leslie. You should expect to see pell a tons terms filed first thing tomorrow morning well see what price range pell a ton plans to market to investors as it kicks off the road show. Values is key here guys as investors reconcile all the fitness companys various businesses from software to hardware, media to logistics timing, though, for the road show may change. Then after the bell tomorrow smile direct is expected to set price for the initial Public Offering at the high end of the range. The maker of teeth aligner could raise enough to make it the 50 largest of the year. Dont miss tomorrow cnbc interview with Steven Mnuchin tomorrow morning 8 00 a. M. On squawk box quick final thoughts, mike, todays session, the tech selling was it apple related. No apple was up but sort. Apple putting pressure on rivals i dont think so. It was a matter of mostly just the Software Stock that did well, winner sold laggards bought but two days in a row with a the flat s p. Antitrust scrutiny as well zwloo doesnt help. Thanks for watching fast money begins right now. Live from the Nasdaq Market site overlook new york city times square fast money. Oom melissa le pete narjen. Team seymour, guy adami on the big show tonight trying to work it out we work attempt to plou ahead with the ipo ziet a call to shelf the Offering Bold on gold with a blinding 2,000 an ounce target our rgt traders debate that. A chip on that and starbucks feeling the heat was it apple day something going on in cupertino, li