Transcripts For CNBC Closing Bell 20240714

Barbara doran from b88 Capital Partners good to see you, barbara less than two weeks until the official u. S. China trade talks kick off and a new wrinkle as to what will actually happen when both parties meet. It is definitely a new wri wrinkle today. For me the bigger concern emerging is what happens to the consumer all of the consumer data this week was pretty terrific, except for Consumer Confidence numbers. Housing, et cetera, we continue to have strong wages, growth, that sort of thing but for the first time, were seeing Consumer Confidence down a little bit, consumers and surveys are saying, hey, trade issues have crept into their head and, you know, my real concern is the margins of companies, if they start to do layoffs, that hurts Consumer Confidence, and stops spending and that is the underpinning, which by all accounts, we all agree. By the way, the china has got markets spooked. Nasdaqs down 1. 6, the laggard of those indices. Bob is with us for the full first hour, which is great even better, seema is here for both hours welcome, by the way, seema im glad to be here by your side lets focus on the big stories were watching today eamon javers has the latest on a potential white house move to curb u. S. Investments in china bob pisani watching the selloff here at the exchange wilfred has the details on wells fargos new cfo. And deeirdre bosa wraps up a crazy week that report earlier today that crossed the fire that got the markets attention was that the United States and folks here in the white house are considering various elements of ideas that would stem capital flows from the United States to china. My understanding is that report was 100 correct, but the big caveat here is this is the very early stage of a conversation and no decisions have been made, no timeline even for a decision on this. It would be a dramatic step, potentially. And the word im getting is this is all being considered in the terms of Investor Protection the idea here is to protect american investors from investing in Chinese Companies that may not be exactly what theyre purported to be. Thats where things stand now. But well follow this next week and see if it actually gains some traction. Eamon, fair to say that this came as a surprise no just in terms of the potential measure, but the tone weve seen over the last week, which has been an improving one. You can imagine behind the scenes, white house officials, even as theyre talking to the chinese and scheduling additional appointments with the chinese, as our Kayla Tausche reported last night, they would also be considering ways to amp up the pressure on china, as they get the chinese to the table, to say, hey, we really need a deal here and we need it soon this would be a measure that they could deploy that would do that and certainly today, you see the effect on the markets and the effect on those Chines Companies it has, im sure, gotten some attention in beijing. Eamon, thanks very much as to the effect on the market, lets get to bob who will break it down for us its a nice, quiet friday and all of a sudden its 11 30 and we get this announcement about restricting u. S. Investments in china or looking into it and boom, take a look at the s p 500. We were up about five points and you can see we were sitting at the lows for the day heres alibaba trades right here, up on the day and all of a sudden now were down 6 theres glenn who trades it. Does he look happy to you . No, not right now. Heres what everybody is debating three central points and got most of it from eamon there. Number one, could the federal government come in and tell the New York Stock Exchange or nasdaq to delist the stock not clear, theres a contract between the exchanges and these Foreign Companies. Second, could you come in and tell global index providers to exclude chinese stocks these are private companies. Theyre doing contractual obligations with private firms thats not clear at all. Finally, could you stop the Government Pension Fund from investing in china maybe, thats a possibility. Heres a statement from nasdaq one critical quality of our Capital Markets we provide nondiscriminatory and fair access to all eligible companies. The statutory obligations of all u. S. Equityics changes to do so creates a vibrant market that creates the diverse Investment Opportunities for u. S. Investors. The key word here is nondiscriminatory. A lot of things to chew about on a friday afternoon albeit, bob, where theres a will, theres a way, as weve seen with tariffs and allies under the guise of National Security yes, absolutely look, there have been four decades, discussions, wilf, about auditing and auditing procedures to Foreign Companies that list in the United States there have been questions about Russian Companies listing down here, using local auditing standards. Turkish companies. Now there are questions about Chinese Companies. Theyre all legitimate questions, of course, obviously, its all wrapped up in the trade and tariff wars. 108 nasdaq companies, Chinese Companies listed on the nasdaq meantime, wells fargo naming a new ceo, ending a sixmonth search following the abrupt exit of embattled chief tim sloan wilfred, you have that story i do, indeed, wells fargo has appointed charlie shaft as their new ceo. His appointment is a big win for wells fargo, certainly relative to where expectations have gotten to in the six months since sloan stepped down scharf has Retail Banking experience from over a decade at jpmorgan, payments and fin Tech Experience at visa, where his share Price Performance far exceeded s p financials, but so did mastercards, and custody and Asset Management experience where his performance lagged s p financials, but was ahead of his main rival, state street his farris aim will be getting the feds asset cap lifted the First Priority is to make sure we get the regulatory issues behind us, to help create the foundation that we need, to continue the build the company at the same time as i get up to speed, working with the rest of the management team, make sure i understand exactly what their priorities are and how that fits into a broader strategy. And if that means we want to, of course, change on some of those things, those are conversations well obviously have with the board and well get back to you on but i think the Business Model itself is fundamentally sound. And its a question of how we go about driving the business in order to get him, wells will allow him to be based in new york city, rather than San Francisco. And theyve paid up, as well, 2. 5 million base salary, but with incentives, his full firstyear salary could rise to over 20 million this comes on top of 26 million in wells stock in lieu of bny mellen awards he will forfeit. We await any political response. Shares trading higher as investors welcome the drawnout search process coming to an end, guys, about 3. 5 his main task at hand, you would say, is storing the companys reputation its getting the fed asset cap lifted, which comes with restoring the reputation and once that happens, you probably will see another leg higher in the stock. But, just to see the move today shows how much was sort of pentup in terms of just answering that simple question of, can they move forward rather than be stuck ina lull moving on, endeavor capping off a wild week for the ipo market, pulling its listing just one day before going public. Peloton, which debuted yesterday, down another 4 today. Dee deirdre bosa is in San Francisco with more on the fallout endeavor and peloton just the latest stumbles. Theres uber, lyft, slack, smiledirectclub, some of the most anticipated names to go public this year, they continue to languish well below their ipo prices some are starting to wondering, is the socalled ipo window closing and what does that mean for other unicorns like airbnb and door dash. At least here in the barrier, the panic button isnt going off yet. There are still plenty of recent ipos that have certainly come way down from their peaks, but are Still Holding on to impressive gains theres zoom video, still more than double from its april debut. Crowd strike holding on to gains of nearly 60 . And pinterest up nearly 40 from its ipo price. Some says investors creating highmargin names differently is a sign of a healthy market guys, back to you. D. , thanks very much for that bob, what was your take on this sort of turmoil in the ipo market does it hurt the broader listed companies or not no, i dont think it hurts the broader listed companies, but i think its a reflection of whats going on in the market right now, which is in general big risk aversion. We saw the big momentum names down a lot, of which i own a bunch, but their down anywhere from 15 to 20 , similar to last december the question is, will they come back in . 120 ipos have happened this year, half below their listing price, and i think that its really companies with revenues that have solid outlooks those are the ones performing. And those that arent are the ones that are getting killed and i think the responsibility there lies with the bankers who really have to be advising these people i do want to mention facebook. If you remember, back in 2012 in may, theyve priced at 38, stock went up to 45, you know, opened at 42, went up to 45, closed just a tad over 48 within the next few months, it was cut in half. And of course, we know whats happening. In terms of the worthiness of some of these businesses, im not sure being below your offering price means all that much, but i think it does reflect the general mood of the market and i think the bankers have to do a much better job of really pushing back on management who want to get the maximum dollar its a good point stocks down about 167 points for the dow with 50 minutes left in the trading session. For more, lets bring in patrick palfrey with Credit Suisse patrick, you dont really believe in this rotation continuing out of growth and into value tell us why. Well, if you take a step back, you know, investors are investing in environment and over the last 12 to 18 months, what weve seen is Interest Rates on the tenyear go from roughly 3. 25 to bottoming around 1. 4 investors are lookinging for safety and security, because the economy is perceived to be slowing and theyre looking for growth and where can they find that thats really the reason why we saw low volatility in Growth Stocks outperform. What happened in the beginning of september, we saw a potential thawing in the chinese trade relations, as well as some other positive macro factors, Interest Rates popped on that, so investors said, maybe this trade is over, i need to unwind it in reality, the backdrop is not getting any better we expect Interest Rates are down from here that growth trade, that low vol trade, that no value, that is going to be the trade thats going to work Going Forward. So the kind of Communications Services tech sectors, which are bottom of the pile today, you use as a buying opportunity . Yes, absolutely in reality, what we dont want is we dont want economic cylicality in our portfolios we dont want to own industrials, dont want tone materials. Interest rates are falling, we dont want to own financials in that environment, where do we gravitate towards . Companies with growth, technology communications, there are places where investors want to be because the growth is going to be there and they have shown it time and time again if you look at some of the winners so far, small caps are up 5 . Beaten down energy names are down 5 to 6 are these the kind of sectors you want to own . I dont think so. The small cap is really just a bounce, you know, off of really love levels, because the small cap names are the ones that are really getting hurt, whether its china issues or slowing growth, theyre the ones who are seeing real pressure from their margins. And energy, energy is so independent on supply, demand dynamics, which seems to weekly change, depending on various geopolitical factors so if i think the exons of the world, anytime those come down, yes, you can buy the big integrators and be fairly safe in terms of that but in general, i would stay away from those sectors. Patrick, earnings season, do you think that has the power to disappoint, surprise on the upside i think were looking at a backdrop for growth that is roughly flat on an earnings basis. And thats likely where were going to come in its not inspiring and investors will say, what is going on theres a few interesting things happening. We have issues within the tech margins and within the oil space. But whats important is if you take a look at the Typical Company and the s p 500 which is what most people own, the growth rates look much better for that Typical Company. And thats important thats the reason why were not seeing the market sell off, despite the fact that we had this anemic earnings backdrop. Right now with banks, its difficult to get inspired with an inverted yield curve, its just a backdrop that makes it very difficult for them to profitably lend. Patrick, great to see you still to come, grading wells fargos new leader, well speak with two analysts about Charlie Scharfs appointment and whether investors should be cheering the move later, new details from the cdc on americas vaping epidemic well fill you in on the latest and get reaction from the head of the Vapor Technology association, as we head to the break, heres a check on our data tracker, Consumer Sentiment topping expectations for september, with a reading of 93 and personal income was up in august stay with us closing bell will be back. After my dvt blood clot, i wondered. Could another come around the corner. Or could it play out differently . I wanted to help protect myself. 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Tell him were flexible. Dont worry. My dutch is ok. Just ok . in dutch tell him we need this merger. in dutch its happening. just ok is not ok. Especially when it comes to your network. At t is americas best Wireless Network according to americas biggest test. Now with 5g evolution. The first step to 5g. More for your thing. Thats our thing. Welcome back to closing bell. Time now to get the word on the street wells fargo initiating lyft as outperform with a 60 price target its faster than expected Revenue Growth and demonstrated profitability in lyfts new businesses that same team also initiating on several internet stocks today of course, facebook, quote, that kid in class usually in trouble, but getting good grades. Kind of maddening, but impressive, nonetheless. Theres deeper analysis than just that, as well and calls google a digital ad leader and tech bellwether the firm also raised its price target on amazon to 2,300. And evercore cites nearterm upside for tinder subscribers, growth from in asia pacific. Bob, which of these stands out the lyft one is great timing to initiate, as this has slipped significantly, but clearly pretty bullish broadly on those internetrelated initiations, theyve got yes, yes. Did you also want to talk about match . That one i find all the internet ones, you know im not going to disagree. I own all of them. And even though theyve been under pressure this month, i think these are longterm winners. And for everything that he outlined and lyft also is interesting, because theyve done a good job really gaining share from uber from a standing start. They really have a very different focus than uber, where theyre focusing on mostly on the u. S. , intermodal, scooters and bicycles and their recent numbers were pretty good higher than expected revenue per rider, their margins are increasing i kind of like that call i dont own the stock and im not likely to buy it here, but its interesting now, the match call i found very intriguing he made a very compelling case and when you look at it from a secular viewpoint, online dataing is very mainstream across all age groups. Pretty much worldwide with the growth in internet and mobile usage, youve got a great secular story. And of course, they have 45 brands in this area and four of the top five however i would not buy it here you might have a good shortterm trade, however, facebook just introduced its own dating app. Free Online Dating two, three weeks ago. And you know what their billions of users, their ai is superior but despite all the competition and even the intending move from facebook, match, and tinder is still the Market Leader here in the u. S. And they will be for a little while. Because it will take people a bit to get used to it. But to me, its like aol was the leader for a while and you had other things that come in that gradually wore away. Because you look at match, its not growing that much, its an older demographic and some of the other ones go younger, but i think its a matter of time a lot of my millennial friends like league and bumble, but surprised to see tinder still doing very well. 40 minutes left in trade and the dow is currently down 120 points s p 500 down about 25. So were just off the lows of the session. Coming up, defending wework its a company under fire, pulling its ipo and replacing its ceo. Spe e speak to two bulls who say deitthchaos, the business could still have real value. Were back in a minute dont go anywhere. With licensed agents availablep when 247,d it. Its not just easy. Its havingjeromebettis onyourflagfootballteam easy. Go get em, bus ohhhh [laughing] cmon bus, cmon hey, wait, wait, wait hey man, i got your flag i got your flag, man i got your flag its geico easy. With licensed agents available 24 7. 49 nothing woo 49 nothing woo but were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Welcome back weve got 37 minutes left of trade. Here are the key things driving the action the white house are discussing a block or limits on u. S. Investments in china that sent stocks sharply lower midday tech stocks, software, f. A. A. N. G. And semis all in the red. And new data on personal spending and Business Investment comes in soft. The tenyear remains below 1. 7 time now for a cnbc news update venezuela payment Nicolas Maduro blasting President Trump for allegedly seeking regime change in venezuela as a way to divert attention for calls from trumps impeachment. Maduro returned from a trip to russia this week where he held a meeting with russian president putin. The former Dallas Police officer on trial for the shooting death of a neighbor broke down in tears while testifying in her own defense. Amber guyger became emotional as her attorney asked her to recall the night she shot and killed a man in his apartment 15 people were arrested in Climate Change protests in atlanta. Demonstrators were taken in for blocking streets and stopping traffic. There have been Climate Change protests around the world today. And joseph wilson, the longserving american diplomat whose clash with the administration of president george w. Bush in 2003 led to the outing of his wife at the time, valerie plame, as a cia agent, has died. Plame says that the cause was organ failure. Joseph wilson was 69 you are to to date this is the news update at this hour seema, back to you lets send it over to mike santoli for todays market dashboard which includes a look at wells fargo thats where were going to start. Heres whats ahead. Save the wells, or the market seems to think under a new ceo thats a possibility and adopt a unicorn. This is another angle on the rough road that a lot of these new tech ipos have had it takes a village look at what the majority of stocks are saying in this recent phase of an attempted rebound in the market and finally, a thousand points of fright. Look underneath the surface of some of the Consumer Confidence indexes here save the wells here, take a look at relative Performance Chart of wells fargo over bank of america this is about when the wells fargo crossselling scandal came to a lot of attention. This is the underperformance of wells fargo versus bank of america since then its down on a relative basis almost 50 and just perking up. I think you could argue, it was already making a little bit of a subtle comeback before todays news and take a look at valuation thats the other piece of this wells fargo through much of its history traded at a nice premium to the group, in large part because they were considered to be great at crossselling, i would add. Right now the pricetobook ratio is obviously in a downtrend, butstill trading above book this is wells fargos price to book, essentially right on parody its trading at about the same value as bank of america not perfectly analogous, but largely. This is kind of the raw material, perhaps, for a relative comeback of wells fargo, guys. Mike, its a great chart, particularly that first one highlighting the difference. I guess, as you well know, the first year, year and a half of that, did it also see bank of americas own valuation improve quite significantly, not just wells slippage. But amazing comparison wells fargos new ceo has held multiple wellknown roles in finance and on the street, but hasnt done a ton of media interviews so who exactly is Charlie Scharf the biggest mistake you can make in business is sit around a room and think you have the answer to everything and we have 25 million customers out there that are telling us every day how they want to do business with us i work hard to create a culture of accountability and compliance at bny mellen and ensure we are the best we can bay. I certainly didnt anticipate this opportunity coming along. Wells fargo is just a completely unique franchise and the opportunity to lead it, as ive said many times on the call, it is just an unbelievable franchise. For more, lets bring in Equity Research analyst for morningstar and jerrod karcantoy eric, whats your take on this appointment . I think this is a home run for wells fargo. And honestly, we didnt expect them to pull something off of this magnitude we were advising investors, you know, you really have to be prepared for alan parker to keep the job with how long its taking and issues around payouts, things like that. To get someone with this caliber, this kind of experience and reputation, i would say its a home run for wells jerrod, do you degree i would its a solid trouble. You know, charlie left jpmorgan unceremoniously, right after the financial crisis did a good job at visa never really got on track at bank of new york a solid hire, no doubt about it. To go with somebody from the outside of his caliber is positive rather than having to go with an interim ceo and make him permanent. But hes gotlift i ing to do, a lot of things that need to be done to get wells back on track. Wells fargo has dealt with a series of scandals and lawsuits. Perhaps it will take some time to see what kind of strategy scharf will bring to wells fargo. Yeah, so, obviously, still early innings. He hasnt done anything yet. Havent even technically started as ceo just yet. I guess, you know, home run on the ceo front in my opinion just compared to what they were up against and the likelihood of really getting someone like that, compared to having to have parker stay on the job no reason to believe he hasnt done a good job, but also, no Previous Bank operations experience but what i will say, you know, thats just the ceo aspect of the wells situation. Youve still got the asset cap, a potential round of fines to get through, as gerard said, still a lot of heavy lifting left so you can cross the ceo box off, but still a lot of work left to be done, for sure. Bob, as mike pointed out, similar price to book to bank of america at the moment, but relative to wells own history, its quite a cheap valuation would you be a buyer here . I would not be in a hurry to buy it i think the bottom has been put in and its got a nice healthy dividend yield of 4 , but as both gentlemen pointed out, its going to be a long time getting this ship turned around. One of the important things and one of the big challenges for him is he was an outsider. There clearly were cultural problems at the firm, it just wasnt a oneoff or one bad apple. In addition to figuring out a new Strategic Plan and what businesses to be in and where they cut expenses, which is probably the easy part, figuring out growth and getting the culture to change. Thats going to probably be a big change in personnel. So i think theres time, if youre longterm, very longterm investor, its probably the risk reward is probably pretty attractive here. Gerard, if they do get the fed asset cap lifted, what should be number one on the todo list for wells fargo i think the very first action is to take a look at what needs to be fixed and take a very large charge and really lower expectations for investors and have a gradual, steady turnaround not only do they have to get the asset cap lifted, of course, they have to rebuild their reputation this has been a tough scandal for them theyre doing the best they can, but the real focus now is to grow the core business and were seeing in their results that theyre continuing to struggle to grow net Interest Rate revenue. And having the asset cap lifted eventually will help that. But the first thing is take a hard look, a big charge upfront, lower expectations, just put it behind them, this issue with the problems and then just start moving forward. I guess taking a step back, eric, if the fed does cut rates again, how much pressure could the banks be under the fed cuts rates . We already have one more rate cut built into our own models. Any cut on the short end will pressure them. Rates lower in general is not good for the banks so they will definitely come under more pressure. We are already accounting for at least one more cut in our own projections. I dont think that tanks the story. I think, you know, if you have a thesis that rates are going to go down to zero, i would stay away thats not our own thesis at this point, but one more cut doesnt worry me too much. Eric and gerard, thanks very much for joining us. Youre welcome. Still to come, we have your last chance trade and barbara is picking a name in the cyberspace well reveal that call, ahead. And after the break, impeachment and the trade war. Well ask former australian Prime Minister and Asia Policy Institute president , kevin rudd, about new pressure on President Trump and what it anfomes r americas negotiations with china. Tomizes your Car Insurance, so you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty plants capture co2. What if other kinds of plants captured it too . If these industrial plants had technology that captured carbon like trees we could help lower emissions. Carbon capture is Important Technology and experts agree. Thats why were working on ways to improve it. So plants. Can be a little more. Like plants. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. 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. Welcome back 25 minutes left to trade we are trading off the lows. The nasdaq is down 1. 3 . Its the laggard the dow low was 170 points or so lets send it over to mike for the second installment of the dashboard. You know, i think we have to wait for monday on that, wilf. But i do take requests keep em coming. Right now, though, the question is, does anybody want to adopt a unicorn . As weve seen, the really harsh receptions have gotten to peloton, uber, lyft, slack, a lot of these highly touted privately financed ipos. The question is, is it really bumping against parts of the Public Markets and it seems like perhaps, yes, this is the arc invest innovation etf 1. 5 billion etf, has a lot of these emerging growth companies, these Disruptive Tech names. And it has struggled in the last couple of months, as you see there. Right when the market peaked around july 31st so the whole wework drama in here it doesnt seem like the whole category is being thrown away, but theres a rethink for these aggressive Business Models that havent shown profitability. But if you look at a fiveyear version of this same comparison chart, you can see how much of a lead was built up. Clearly giving back some outperformance and i think theres a reassessment of just how much to pay up for a distant future growth, guys. But mike, it was really just a sort of period in late 18, early 19 when all of that outperformance came. Thats very true, as well and the Largest Holding here is tesla. Its a certain type of a lot of biotechtype names and things like that. Its obviously going to go in and out of favor but youre right, it has been a big ramp in the last year and a half or so mike, thank you you get back to some of the bigcap f. A. A. N. G. Growth. Is that why youre attracted to them i own a lot and im still waiting. Particularly with the uncertainty over trade, we dont have any nearterm catalysts coming up, i think they could get a little bit cheaper and anecdotally, people to not rushing to sell. Theres the marginal seller. But for whatever reason, people decide to rush for the exits, we could see a little more downside i dont see a trigger for that, i dont see that happening, but im being a little more patient. We have seen this very notable rotation out of big tech i guess the question is, does that continue, especially as earnings season kicks off in about two weeks . Will these companies be able to surprise to the upside thats the question people want to see if the fundamentals are really still there. Theres also the regulatory overhang and breaking up in privacy. You may see expenses go up dramatically attorney general in every state, just about, suing them so you could see some increases there, particularly for facebook but i dont see any fundamental change for any of them in terms of the demand characteristics and whats happening in this area im still waiting. Maybe closer to earnings, well start to nibble. After the break, former australian Prime Minister kevin rudd weighs in on china trade and whether the impeachment inquiry of President Trump changes the game and well look at the ceos behind recent ipos and whether larger than life personalities are hurting the market were back after this. 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. A new kind of credit card. Created by apple, not a bank. With a better way to track where you spend. A new level of privacy and security. Daily cash you get back every day. And no fees. Not even hidden ones. Oh, and if you happen to be somewhere that doesnt accept apple pay yet, theres this. Nice. [upbeat action music] pilot were going to be on the tarmac for another 45 minutes or so. The white house reportedly weighing a curb on u. S. Investments into china, possibly blocking all u. S. Financial investments in Chinese Companies. And dom chu has a look at how chinese stocks are reacting. Its not a great day, is it, dom . No, maybe even the possibility of taking away the listing abilities in the u. S lets put up four of the stocks that are chinesebased Internet Companies that trade in the United States. Alibaba, you can see, youre down 5. 5 , baidu down almost 4 . Now, the reason why i highlight these, these are chinese Internet Companies that are listed here in the United States these names are more volatile. Lets put them all in aggregate. Those four stocks are also four of the Biggest Holdings in the crane shares internet etf, that etf is off 4. 5 . And you can see here, has moved down towards session lows. This particular etf has been really hardhit because of that move in those chinese names. And for those viewers keeping track at home, when it comes to the u. S. Markets versus the Chinese Markets, its been a pretty big divergence. If you look at that particular etf, were down 17 . Look at the overall market in china verizon the s p 500. That particular move, its a pretty big divergence. The orange lines, 18 for the s p 500. That gap is getting wider. As we talk about the trade war, wilfried, seema, does it come down to the u. S. Market versus the Chinese Market and what does it look like it looks like the Chinese Market right now is playing a little bit of catchup to whats happening in the u. S back over to you guys. Dom, thank you. And i believe you own chairs of alibaba. How does this report change your thesis alibaba the the dominant online retailer in china, with, i believe, about twothirds of market share would this actually affect its ability to grow . Its a good question. I even recommend it on the show, because it had gotten clocked in june over trade worries. When you look at their fundamentals, the trade concerns are not going to affect it listing is another matter. It could make it a little hard to own here, but we have to look at the ownership base, which this just happened today its not going to change fundamentals i think a buying opportunity in setting up the stock is down nine points. If it goes down monday, i would be adding there. This does not affect the fundamentals, and i dont think from what weve heard so far, there are real issues as to whether any president could make this happen. Lets continue a discussion on china trade kevin rudd, former Prime Minister of australia joins us now. Hes currently president at the Asia Policy Institute. Good to be with ou. So was this a surprise turn in tone after what had been a more constructive week on u. S. china trade relations or kind of par for the course and were going to bump around like this for a while a lot of bumping around, and certainly in the last two weeks, weve seen two sets of developments, both the chinese and the american side have announced probably three sets of tariff exemptions, all designed to create a positive atmosphere for the substantiative trade negotiations, which will resume on the 10th of october then in the other direction, you have the president of the United States, mr. Trump, unleash, i think, on the 24th, about three days ago, in the United Nations general assembly, the fullscale attack on chinas trading practices. Not exactly on cue with the rest of the trade strategy. So you would be a little confused as to what signals are being sent out maybe it makes sense in the white house, but im not sure theyre going to see it that way. Kevin, you follow the chinese closely and are known for reading the tea leaves how could the china respond if the white house moves forward with delisting Chinese Companies here in the u. S. And cutting financial ties between china and wall street, which has been a growing destination for a lot of Big Companies in china i think one of your earlier contributors got it right when you said, what powers does a u. S. President have as it were, to forbid u. S. Companies from investing in china so there may be a gap between the president ial rhetoric on the one hand and full president ial powers on the other. But what i think the chinese fundamentally are concerned about is the general drift towards, lets call it, longer Term Economic decoupling trade, weve just discussed. But when you start to move under tech and the huawei matter, thats big but then you start to talk about finance, whether its on stock markets or more broadly, restrictions on fdi, and maybe digital finance, because that affects the alibaba stocks, we find ourselves in a more dangerous ball game. My own hope is we can stabilize this through achieving a trade outcome before the end of this year i think thats still a prospect. Kech, what do you make some of the debate about whether the chinese now, whether its because of shortterm political pressure on the president and talk of impeachment or just broadly the fact that were only 13 months away, that the chinese will wait now until theres a new president in 2020 or potential new president , of course, in 2020 . Thats an excellent question. And i think i would have had a fairly definitive answer on that prior to the announcement by nancy pelosi on the 24th of september, that impeachment proceedings were going to proceed. Absent that, i think the chinese had basically factored in all the variables in american politics and concluded on balance it was best to proceed and try to do is balance by years end but i think on the impeachment matter, it throws owl a whole new variable, which i dont think any of us were anticipating and therefore, it depends now, wilf, i think on two things. One, how substantiative is the political problem now for President Trump . Or is it just one of those things that comes and goes in american politics . And secondly, if it is substantiative, then the chinese calculus will be, how big will he play the diversion strategy, which is to throw rockets and bombs, metaphorically, at least, in chinas direction, trying to be the tough guy on china in the lead up to the end of the year to subtract attention from his substantiative political problems here on the home front. For me thats an open question and hangs entirely how substantiative this impeachment matter over ukraine is in the president s eyes how do you thinks chinas National Days could change the dialogue as we await those trade talks to officially kick off on the 10th of october . I think from the chinese perspective, 1 october is almost exclusively a chinese domestic april matter its all about the legitimacy of the Chinese Communist party. The message will be simple the country was a wreck in 1949. And the communist party put it back together. And look, guys, 70 years later, weve turned this country into the worlds second lornlge elar by one measure, the largest economy. Its a domestic celebration. In terms of the impact on sentiment, i think the chinese are deeply pragmatic theyll simply rye to make a bottomline call about whether the president will be pushed offcourse from his previous posture on the substance of the trade negotiations but the new impeachment reality. If they think this is a passing phenomenon, i think its a prospect well get a deal before the end of the year. Kevin rudd, thanks for joining us we have just over ten minutes left until the close heres where we stand, lower, albeit off the lows. The low of the session was down 170. Sthae ad well have your lacnctre. Dont go anywhere. Edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Dont get mad. Get e trade, dawg. Six minutes left to go barbara, what is your last chance trade right here . Last chance trade is palo alto networks. This is a Market Leader in security platforms thats selling at a discount. Its down from about 20 from its high, because they had a bit of a bumpy last quarter. I think related to strategic transition from their cloud plmpl initiati platform initiatives that came in up 180 year over year. So its working. This is a company that has made very smart acquisitions and integrated them well in the last couple of years into faster Growth Markets theyre gaining shares and new customers and crossselling into their customer current base and they should have about 1 billion in Free Cash Flow over the next few years so this is, i think, a good buying opportunity the stock is down about 3 today along with others. Is this something youve been buying recently or held for a while . Ive been buying for a while. Theres been a lot of volatility in all the tech names. Ive been adding selectively that stock down 3 today. A buying opportunity weve got five minutes left of trade. Lets get to the closing countdown and trade to close with sean cruz, Td Ameritrade trader talk us through that intraday selloff, all on the china headline, was it it looked like we would have a pretty decent day at the outset it looked like we had china extending some olive branches going into these trade negotiations and that gave us a little bit of a rally. We saw vix back off towards that 15 level looked like we would have a pretty solid ending to the week and we got the headline that theres actually maybe another tool this administration can use when theyre trying to put pressure on china. Previously going into these trade discussion and negotiation meetings, you put things on the table like dialed up tariffs so it looks like theyve moved on from that and now theyre looking at other things they can use to put pressure on china and that is what we saw today. As a result, you saw the vix rally up north of 18 you saw markets sell off it looks like the only thing thats really in the green right now for us is financials and the vix is backing off from those intraday highs, getting around that mid17 level. Whatd you make of the selloff in tech today, sean i think it makes sense when youre seeing some of like this when youre talking about capital flow in and out of china. Thats the next level for what were looking at in terms of putting pressure on china. And these tech companies, that access to china is key for them. And you have to wonder, is china going to retaliate and make life a little bit more difficult for thiz companies that want to do business in china. But i think its something that we have not seen yet sean, quickly, your key focus for the an ex week one more time, wilf your key focus ahead of next week im still keeping an eye on the energy sector. I think we havent really heard the last in this story with iran i think theres the potential for a little bit more of a dialing up of tensions over there and that could push oil a little bit higher. Within the energy sector, you can maybe look at diversified majors like exxon, but you may want to stick away from the refiners that will represent a higher input cost for the refiners, but could benefit some of the exploration and production companies. Sean, thank you lets send it over to mike santoli for this has third dashboard. Seema, it takes a village to raise a child. It takes a broad participation of lots of stocks to lift the market into a sustainable rally. Lets first take a look at the s p 500 over the last year, just to put this weeks moves into some context this is the advanced decline line thats okay. We needed a net 650 advances in the advanced decline today to go to a new alltime high we didnt get there. Thats been supportive, but so far, a little bit of a stutterstep. Were not necessarily previewing new highs for the s p. If you do look at the oneyear of the s p 500, as we just had before, this is the fourth trip below 2960 in the last two and a half weeks we pretty much are kind of barely, barely staying above the top of that august range we also bounced today in the afternoon off the 50day moving average. Its nip and tuck as to whether were hovering in the zone of the july highs or not. But so far, looks like the close isnt going to be necessarily as ugly as it looked even a half hour ago lets get out to chicago and talk to rick santelli. As we get closer to the end of the quarter, so many things to think about, the end of quarter if you wanteding issues, the fact that this coupon auction of 2s, 5s, and 7s all settles on monday, 113 billion. And lets look at a quarter to date of tenyear were down one on the day, four on the week, and down 32 basis points on the quarter thus far look at a 20year chart of italian tens 82 basis points. They had record low auctions today. 88 base points on tens 6 on fives dollar index, quarter to date, its up 3 kate rogers, we had that 50day in our sights earlier, its now long gone. Hi, rick, thats right. The nasdaq is lower by about 1. 25 here looks to be about down about 2 here on the week also today, we dipped negative for q3 and also lower for the month of september its all those big tech names that are shaving a lot off microsoft, amazon, facebook, and google taking off between 5 and 14 points. Facebook said to have its worst week of the year micron, another big loser here, down more than 11 , saying that the china trade war is quite frankly hurting its business, and finally, looking at peloton, were on that ipo watch. That stock looking like it will close down by about 2 today bob, over to you we lost up five points just earlier in the day, kate, and then were now down about 16, 17 points after word from the white house was considering reaching restricting u. S. Investments in china there you see some of the chinese stocks that trade here alibaba, jd. Com, baidu, all notably down no bounce in the ipos. Not just peloton, but pagerduty, pinterest, a new low, and slack also an intraday low one more day to go in the month. The s p is up about 2 for the month, a little less than that dow closing the day down about 65 point s. If youre just joining us, welcome to the closing bell. Im wilfred frost. And im seema mody in for sara eisen, along with mike santoli, the dow falling around excuse me, 67 points s p 500 ending lower by half a percent. We did close off the lows of the session, but as you can see here, the nasdaq, the clear underperformer, down over 1 tech, the worstperforming sector, vnlfinancials, the only sector thaet ended in the green we found the bottom about 3 00 p. M. , a decent amount of buying into the close, though, clearly still down for the session overall. Just want to show you facebooks stock for the week, which is one i picked out, seema, because down today, 1. 7 down quite significantly for the week as a whole, almost 7 f. A. A. N. G. Has been under pressure, facebook in particular, and a highlight of some of the challenges weve seen in the past week with the s p down a full 1 for the week as well. Kate rogers just pointing out, worst week of the year for facebook i had my eyes on shares of micron weak demand from huawei and that stock closing down 11 joining us to talk about the overall market, barbara doran, ceo and senior Portfolio Manager at bd8 Capital Partners. And andy rothman, Investment Strategy at mathews asia on these headlines out of the white house is looking at blocking u. S. Investment in china mike, once again, china dominating the market discussion it really covered the action today. I will say, this market keeps getting testedby these new little threats or perceived threats. So far, its been resilient, but how long can you absorb these blows. Every time you get a quick reflex reaction to one of these china headlines, it has paid to bet that its going to be unwound a little bit it seems to overshoot in a very short term, because nothing much has changed about the broad parameters of what we know and how scared would the chinese be there have been so many rumors about china recently, i doubt theyll be worrying about this too much. It hasnt been confirmed, we havent seen any details, and how much sense does it make. Were talking about the chinese economy, which accounts for a third of Global Economic growth. Thats a larger share of Global Growth from the europe combined and we want to couple from that economy . Thats a broad debate we could have had for the last two years. What is your take on howand th key date will be when president xi and President Trump sit down together at the apex summit in midnovember barbara, how are you recommending clients to position themselves as we await those trade talks to kick off. Im not recommending any changes at all because as you pointed out, weve had so many head fakes on the china trade. Even if the talks kick off, somebody can storm off, they can end without any real agreement so i think people are hoping that the president does not impose greater tariffs as he has threatened to. Larry, whats your take on how were set up in the broad market s p 2961 ending the week i think the equity market has been pretty resilient. If we had the negative headlines we had, with the restriction on flows going into china and some of the soft ipo activity, you would have thought we would have had a pretty big selloff. But the reality is, for the week, we ended up just slightly down, maybe 1 or so, and thats in a month where unusual we really have a tough time during september, but even with this us being down 1 , were still up for the month, but i think when we revert back to the fundamentals over the next couple of weeks, where we get some toptier Economic Data and some earnings, i think we actually go higher and go back to record highs by the end of this year. Speaking of data, Consumer Sentiment slowed in the month of august, not the best sign as the market has been banking on a stronger consumer amidst a weak manufacturing backdrop i would say the consumer data this morning, as well as durable goods, confirmed this idea that, you know, things didnt fall off a cliff in the late summer, but they moderated activity moderated, were in this 2 gdp growth zone. You know, the market can probably be comfortable with that, if theres help from somewhere else, its okay as long as we get another fed rate cut or Something Like that but in general, the bond market today, reacted with lower yields, so therefore, kind of a little more of a, you know, kind of a slow growth message there so i do think that doesnt give the signal for stocks to race to new highs, even if they have been relatively resolute in not breaking down. Andy, whats your assessment of the state of the chinese economy at the moment. And how much pressure they are under to do a deal i think from an economic perspective, theyre not under very much pressure at all. The consumer part of the economy, which is the largest part, the biggest contributor to growth, is holding up really well, just like it is here so i think the pressure in china is more about the longterm. They need to get through this tariff dispute to avoid this turning into a real trade war or semiconductor war, but the state of the kmi economy is good and Market Performance has been pretty good so far this year we have some data sunday night on pmi, what are you expecting from china im not paying all that much attention to pmis. Because thats the smallest part of the economy that gauges is not all that accurate. What im looking for is in a couple of weeks, were going to get the Consumer Spending numbers and income numbers for the Third Quarter and i think those will be Pretty Healthy you think china will cook up the data because of the China National holiday falling on tuesday . Im sorry do you think the chinese will cook up the data a little bit . Cook up the data. Because of the national day falling on tuesday i dont think so. The national day helps i think the data is pretty accurate we have a lot of ways to check it for example, last year gm sold more cars in china than it sold in the United States so if mary barra is giving us good information, we can double check that against the chinese data this is, i think, the best consumer story in the world right now. Larry, we saw the u. S. Dollar, the dxy close above 99 for the week, not a huge gain as a whole, but nonetheless, quite near highs of the year whats your take on that and whether it will weigh on earnings in the quarters ahead i think you bring up a great point. With earnings season, i think that will be a big story, but i think it is a two and a half year highs when you look at the dollar if you look year over year, which is what earnings are calculated off of, the dxy, the tradeweighted dollar is up about 4 and if you look versus currencies like the euro, its up like 6 i think youll see a lot of commentary out there about how some of this strength in the dollar is starting to hamper earnings pretty disappointing report, barbara, from carnival yesterday. It closed down, i believe, about 9 and again lower today. Next week, we hear fromb bed bat and beyond, lennar, some other consumer stories what are you expecting i think it will depend on the industry lennar could be a positive story given what were seeing recently in the Housing Market . I dont think theres a broad generalization that we can make. I think its industry specific and in the case of carnival, it could be very stock specific guys, well leave it there. Thank you all for joining us now, wework getting its Credit Rating slashed further into junk territory and reportedly halting all new lease agreements, but up next, well hear from one Silicon Valley banker who lays out the bullish case for the Embattled Company were back in 90 seconds dont go anywhere. 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. I need all the breaks as athat i can get. Or, it is already working in cities like tokyo. At liberty butchemel. Cut. Liberty mu. Line . Cut. Liberty mutual customizes your Car Insurance so you only pay for what you need. Cut. Liberty m. Am i allowed to riff . What if i come out of the water . Liberty biberty. Cut. Well dub it. Liberty mutual customizes your Car Insurance so you only pay for what you need. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Peloton shares falling for a second straight day after its ipo. Is it just fundamentals that are hurting recent offerings, or are the largerthanlife personalities of some ceos to blame . Deirdre bosa has those details d. Seema, what it takes to build a company may be different than what it takes to run one the most recent examples, of course, ubers travis kalanick, weworks adam neumann, in both cases, they built their companies into some of the most valuable companies in the world, but when it was time to go public, they turned out to be more of a liability. For some of the biggest unicorns over the last decade, put it well this morning on cnbc. He said, you cant not invest in the slightly crazy genius. Theyre the ones that tend to do great things now, we looked at a pitch book study from a few years ago they looked at exits for Companies Led by founders versus those led by professional ceos it found that founders would get a higher median valuation. Also, perhaps, surprisingly, it found that founders bring their company to exit nearly half the time that professional ceos do of course, this has been a big year for unicorn ipos, with founders at the helm well see if that trend continues. And a big one to watch is air b airbnb all three founder rs are still running the company. Its a great point. Unlike ride hailing where wall street is still trying to understand the industry and the path to profitability, with airbnb, there are two major Online Travel operators that already exist, are already profitable, and therefore, you could argue, analysts and investors are much more aware of how they make money. Those two companies being booking holdings and expedia thats right. And a very important distinction you just mentioned it, how they make money airbnb makes money, at least on an ebitda basis, its been profitable over the last year. Thats a big difference when we talk about some of the ipos that have struggled this year, uber, lyft, smiledirectclub, these companies with massive losses. Airbnb will be an interesting one, but we dont know anything about their corporate governance, we dont know if theyll have adual craft structure, if their founders will be able to take control, and well learn a lot more about them as we head towards it its been a tough week, as we know, for wework, but that hasnt stopped the bulls lets bring in sandy cory with Horizon Partners and charlie, very good afternoon to you both. Charlie, if i start with you, are you fully a bull or only now that its cut against price target theres sort of two sides to this theres the underlying model and the company itself and everything that its gone through with its governance issues you know, i think the underlying model has really benefited a lot of companies from disrupting real estate, separating the need for signing a lease, getting stuck into something longterm, from the daytoday of running a company. I think thats positive. I think that model generally works. This company, specifically, though, has a lot of issues to it i mean, how much money the founder has taken out of it. Theres questions about sort of where the board was along this whole time, being overvalued to the point where it cant go public these are real issues specific to this company. Sandy, are you i know youre optimistic on weworks financial model, but are you worried about its financial position, because its only sitting at around 2. 5 billion of cash, and it was expected to raise about 4 billion in its ipo. Well, i think that, given the high burn and pulling the ipo, you have to be somewhat worried. That said, i think that softbank and the vision fund do have ample capital. So i think they really will control the pursestrings and i think thats the explanation for why there is just a change with the ceo. And so i think theyre going to continue to fund the business for the foreseeable future but certainly, i think theyre worried and were seeing that now, given all the changes theyre making at the top. Charlie, there are reasons to be fearful of the broad commercial property market, if wework starts to have a few troubles i think a lot of the issues are specific to this company, but the fact remains, i mean, wework is the largest real estate holder in new york city, at the moment. So, yeah, there are going to be probably some renegotiations or attempts of leases there could be some empty spaces, that frankly dont get full that they need to get out of so i think there are some issues, but new york city is a real growing and thriving Startup Community i think there are companies to fill them. I dont know if theyll be able to entangle themselves from the nnl a financial and economics of those leases you mentioned there were deep enough pockets to keep funding the business, but it seems that public investors might be able to look through the governance if they did have confidence that underlying it all was a business that scales. Subleasing space to startups or businesses on a shorter term than your own leases on its own isnt necessarily a revolutionary business it doesnt seem like it has necessarily a defensive position, so how would you make the other side of that argument . Those are good questions. And i would say that wework does deserve a lot of credit for innovating with the coworking model. And i think even if youre bearish on wework, youll admit that in five years, therell be a lot more coworking space out there. That said, i think where they really missed strategically is focusing on Unit Economics and really using technology and scale to prove that, as well as innovating on User Experience with technology. So if you look at other players who have taken a fixed cost and made it variable and used the internet and technology to innovate, Companies Like netflix and amazon with aws, they have made spectacular businesses with that model, but theyve also focused on economics and technology, and i think wework leadership has really been focused on other things, at least in the past few years, judging by a lot of the headlines now coming out how much of the blame falls at softbanks feets . Well, i think theres a lot of blame to go around, but i do think a lot of it does i think if you went back in time to great growth Companies Like take starbucks, early on, when they had 100 locations and went to the ceo and said, hey, take your growth plan, triple it, dont worry about Unit Economics, i think it would have been pretty bad for starbucks. And i think thats kind of what happens here with wework and i think that if the board and the investors had pushed harder on Unit Economics and really using technology and not as a show pony, but really using it to improve User Experience, i think the company would be in a much better position now they wouldnt have probably raised it at a 47 billion valuation a few months ago, but i think they might look more like peloton, which has also that model of taking a fixed cost, making it bearable, using technology and internet to make the experience better. I think its a model that can work, but its easier said than done charlie, you think the trouble that a lot of these tech unicorns have been facing is not only a wakeup call but on investors like yourself to push these founders to think about profits early on, versus right before theyre about to go public absolutely. I think there are a lot of governance issues here and i think one problem is having a board thats entirely composed of investors who benefit in the shortterm from the markups of another round of, you know, from softbank or some larger player. It makes it easier for them to raise their funds. Looks like the company is performing well and i think this is a really bad situation for investors in the longer term its interesting to me that wall street execs are worried about the governance that might come from an Elizabeth Warren or somebody like that, but from my perspective, i think Good Governance is good for capitalism i think its really important to make sure that these valuations dont run away with themselves, the founders done take 700 million out of a business before employees get paid out thats the environment i want to be an investor in, where we can sort of work within a set of guardrails so we dont get into situations like this its a good conversation. Charlie and sandy, thanks for joining us today thank you up next, we will break down the charts to see why the latest reading on Consumer Confidence is raising a red flag for the market and later, we will debate whether the government needs to epn and enact stronger regulation over the vaping industry it begins by being privately owned. With more than 85 years of experience over multiple market cycles. With Portfolio Managers who are encouraged to do whats right over whats popular. Focused on helping me achieve my investors unique goals. Can i find an Investment Firm that gets long term the way i do . With capital group, i can. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant 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. Welcome back lets send it over to mike santoli for the final installment of the market dashboard. Calling this 1,000 points of fright if you look across the board at a lot of the Consumer Confidence sentiment surveys, youre seeing a lot of welling up of concern over the last month or so. This is one rendering of a couple of questions that are asked as part of the Consumer Confidence survey. They ask consumers, do you expect stock prices to trend up or down over the next six months and do you expect bond yields to be up or down . These are not experts in investing, but it is a good gauge of the public mood this combines those people who say that stocks will be down and bond yields will be down this is as this line goes up, youre seeing negative outlooks on the markets in the economy. So what you see here is obviously, crossed above this 55 mark, we were there in 2011 around the time of the Big Government shutdown. That was a near miss on a perceived recession downfall this, of course, is during the financial crisis thats not a surprise. But outside of recessions, you rarely do see it pop above this level. I will point out this, this was 1998, another situation where there was a market scare, but not a recession. It feeds into this area that you had more concern building in terms of perceptions of the outlook than youve had in terms of the realworld economy, at least just yet so i was about to say, is it a good predictor it tends to be. While its like Everything Else we look at, which is, if, in fact, we are on the precipice of a recession, this is going to be essentially prescient, not contrarian but on balance, when you have markets that are so close to their highs, its much more about, i think, fatigue with a lot of the outside headlines than it is about realworld activity mike, as always, thank you. Up next, we will hear from a Top Executive at the Vapor Technology association over his lawsuit against new york states ban of flavored vaping products. And later, we will discuss whether netflix can survive the mpits y swars, as new coetortrtoteal its crown. This is the family who wanted to connect. And find inspiration in new places. Leading them to discover were woven together by the moments we share. Everything you need, all in one place. Expedia. Tv aas many safety features powas the rx, the new. The lexus rx has met its match. If theyre talking about you. You must be doing something right. 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. The amount of Student Loan Debt i have im embarrassed to even say i felt like i was going to spend my whole adult life paying this off thanks to sofi, i can see the light at the end of the tunnel as of 12pm today, i am debt free not owing anyone anything is the best feeling in the world, i cannot stop smiling about it at verizon, were building the most powerful 5g experience for america. Thats why the nfl chose verizon. Because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans. Can experience 5g all at once. This is happening in 13 stadiums all across the country. Now if verizon 5g can do this for the nfl. Imagine what it can do for you. A little techno for this friday afternoon time now for a cnbc news update with sue herrera good afternoon, sue. Good afternoon, seema good afternoon, everyone heres whats happening at this hour a Law Enforcement official says investigators that examined the burned out wreckage of a scuba diving boat have not been able to determine what ignited the fire that killed 34 people off the california coast the official says parts of the vessel have been sent to labs for additional testing columbus, ohio, has reached a 450,000 settlement with Stormy Daniels over the porn actress arrest at a strip club last year. Her federal defamation lawsuit against several columbus officers alleged that they conspired to retaliate against her because of her claims that she had sex with donald trump before he became president the state of washington is hoping to place a ban on the sale of flavored vaping products governor jay inslee signing an executive order asking his States Department of health to issue an emergency rule to ban the products i am confident this executive order will save lives. I am confident it will save children from a lifetime of nicotine addiction i am confident it will reduce this epidemic of youthful vaping that today is driving parents and grandparents crazy across the state of washington. You are up to date, thats the news update this hour. Guys, i will send it back downtown to you. Wilf sue, thank you, as always have a lovely weekend. You too now Charlie Scharf will become the most senior of Jpmorgan Chase chairman and ceo, jamie dimons former protege, when he takes up the role as ceo of wells fargo earlier today, dimon told me, quote, charlie is an excellent choice for this Important Role he has great experience, high character, and is a firstclass leader his name is one of many highprofile leaders who have learned their trade at jpmorgan under jimon. The Interesting Development today, though, is this will be the first time one of his proteges becomes a direct rival, as opposed to a partner like when scharf was at visa, or just an international competitor. Dimon would no doubt point out that he also has a very strong crop of current proteges indeed, gordon smith and lake were considered for the wells job themselves possibly ahead of scharf i guess, guys, overall, when you run the largest bank in america and do so for well over a decade, you would expect some great leaders to emerge from underneath but this is pretty impressive when you look at the crop across wall street now. Absolutely. As a matter of fact, too, you had on that list at least two former proteges who have had two ceo jobs youre thinking if you rose to the top of jpmorgan, youve got that status and you were able to project that out from the rest of the industry. The other thing as well, and this applies to Goldman Sachs with Lloyd Blankfein when you have been a long tenure, its bad luck if you want to be the successor if the ceo then lasts for a decade, which is another binary factor in whether people have to move on or not some move on with goodwill and blessing, some have a little bit more of an acrimonious departure. Every few years, you have another class of apparent potential successors that make it or not. Any idea if lake or smith wanted that job t a wells fargo, given the type of challenges they would have to deal with i think thats the most interesting insight in terms of how things turned out. And i would say according to my sources that lakes shuffle in terms of role with jen peepsec, who is now cfo and lake is head of the consumer, is that was something that was in the work, but probably for late this year and got moved forward to early summer to put at rest the possibility that she might leave. In terms of would she have wanted it . Who knows . But by making these changes, it made clear, you have the path to much more senior roles if you stay here. At jpmorgan at jpmorgan going back to the appointment today for wells fargo, initially there was four to five pretty highprofile wellwounded individuals linked to the role they didnt get the job quickly, and thats why the expectations fell away. Wells fargo cant attract any of these people, were now considering extending adam barrack. Thats why those share prices jumped so much scharf is of the caliber that six months have passed they would have already tried to appoint him if he was on the list whatever factor has changed. You can take the job and stay in new york you know why he insisted on staying in new york . Its the only place where they pronounce his name right Charlie Scharf how do other people its a good name for a new york accent. Joe kernan is definitely trying to catch my eye throughout this mornings reporting on that. But anyway, wells fargo ending the day up 3 to 4 yes, indeed still ahead on the show, netflixs recent plunge has left the stock in the red for the year up next, were going to discuss whether netflixs best days are bendhi it, as new rivals prepare to start streaming dont go away. Orlando isnt just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. The cdc issuing a new warning today, urging people to avoid vaping thc products after a 13th person died from a mysterious lung disease this week and new cdc data shows out of 514 cases it investigated, nearly 80 reported vaping thc compared to 58. 6 of those using nicotine for more, lets bring in dr. Robert taryn, professor and researcher at uc chapel hill, and tony abboud, executive director of the Vapor Technology association. Gentlemen, great to see you both dr. Taryn, ill start with you do you think the real kraeeal c here is vaping thc, which is the psy psychoactive ingredient in marijuana, or vaping in risk people have been inhaling high levels of thc for years and we havent been seeing this type of disease in comparison, everything weve done studying vapors lung shows that vaping is bad for the lungs. It has massive changes, and that i think sos that are bigger than seen with smoking. Tony, you represent the vaping industry, so what do you make of this data that is pretty concerning finally, we have the cdc focusing on the real issue here, which is what we have been asking them to do, which is the black market thc products. What we doe know is the new York State Department of health determined, this vitamin e acetate substance which has been introduced into these black market cannabis products is what is being linked to almost every case that they have found in the state of new york. So the fact that the overwhelming percentage of these cases are related to thc products is the real issue and more importantly, people have been vaping nicotine in the United States for almost ten years. We havent seen anything like this, which is why even the former commissioner of the fda has said, this is not related to nicotine, necessarily. Its probably the introduction into the marketplace of some black market products, and thats what they have found. They just did another bust up in minnesota where they caught 80,000 products. The nicotinecontaining products have been heavily regulated by the fda since august of 2016 and the fda actually knows all of our ingredients, because those ingredients are on file with the fda so we have to take issue with these facts and facts are important. Whats tony missing in your view i think the fda had a rule in 2016 saying they could regulate ecigarettes but they havent started regulating them yet. And all ecigarettes are technically illegal right now, because they havent been regular utilitied. I think the whole market needs to be urgently regular utilitied by the fda nicotine itself is toxic, which causes proteases to be released in the lung, so nicotine isnt safe, and it can take years for cigarette smoke to cause lung disease. Who knows, from 10 to 2030 ye, 0 years, vaepors may get the same disease as cigarette smokers everything weve looked at in the lung suggests theyre not safe at all. Tony, your response well, i think that the im not a doctor, nor am i a researcher, but i would defer to the large bodies of science that have been developed on this issue. The Royal College of physicians as well as Public Health england have evaluated all of the Peer Reviewed research from 2015, 16, 17, and 18 and they have determined conclusively that based upon all of that research that ecigarettes are at least 55 safer than combustible cigarettes its not a correct statement to say that these products are not regular utilitied by the fda. Red dont forget, our constituents and our products have not cannot have been changed since august of 2016 so the notion that all of a sudden they are causing some problem in the marketplace is incorrect, especially when we know that there has been an introduction of illicit black market thc products. And everybody knows, including the fda that people smoke for the nicotine, but die from the tar and the smoke. And that is why in the realm of harm reduction, it is too important for us to not take into account what ecigarettes can do Going Forward any one study that may be done on lungs is obviously limited in that context, but the body of research thats been evaluated by major institutions and governments, such as the english government itself, is absolutely essential. Especially given the fact that there are vape shops inside hospitals in the uk. So we have a comprehensive review on the lungs coming out in the british medical journal on monday, which a number of us look to all the evidence as of the last year and weapon find most of the evidence zbesuggests that ecigs are not safe and that comment that ecigs are safer, that was not made on any any actual biological data so that number itself is incredibly flawed and dangerous. Gentlemen, important debate thank you for joining us well have to leave it there thanks so much. Still ahead, upping the ante in the streaming wars, apple setting its sights on the big screen what that could mean in its battle with netflix. Welcome back netflix stock plunging over the past few weeks, down 30 from its 2019 peak in july. The stock is in the top ten worst performers in the s p 500 for the quarter, as a looming threat of streaming services from the likes of disney and apple are leaving investors wondering how netflix will stand out in this new streaming environment. Joining us now to discuss is jason hirschorn, now ceo at redef. Very good afternoon to you thanks for having me. Headline is, youre still pretty bullish on netflix, not concerned by these new competitor entrance. People like to say, everything is a netflix killer netflix is the Market Leader theyre the one to beat. The only difference is that the hunter has become the hunted and in terms of why youre not concerned by an apple or a peacock or an hbo max, why is that netflix really understands whats going on in media right now. They foresaw that content would be pulled. Thats why they upped the amount of originals they would be doing. They have forgotten more about product and technology than these new services have built. And to be honest with you, the at t of the worlds or apple have not done directtoconsumer services before. So i think they have a leg up. And i dont think theres a lot of talk about international. The amount of minutes that are lost must television is not satiated by the amount of content thats available today, so netflix still has a lot of growth in the u. S. , but in europe, theres only 5 of viewing in the uk. Theres a lot of upside there. Although in the latest earnings rors, netflixs subscriber numbers shows its showing a slower pace of growth. Reed has recently said theyre going to amount production and the amount of stuff coming up in the uk. A catalog for these services breed engagement, but its the number of originals that gets new subscribers. So it becomes an arms race on content, you have netflix, disney, apple all pay, as much as they can. For us, were happy, let them kill each other, but its an arms race right now. But im not sure as a consumer i want all three. Its a very good question i think that right now, specifically in the u. S. , netflix and amazon prime are really the bedrock of the home i think on average, what would be a cable home may have three services Going Forward, though, depending on economic strata, the way the economy works out and frankly taste, who will have four and five and six and seven and niche businesses will also have a role, if you look at what starz has done globally, its a niche business you know, whats gone on with the stock, you know, it got up to 170 billion valuation. A lot of that has bled away. Maybe thats because its no longer the only way to play this area and theres no doubt about it, they were ahead of things on originals and tall rest, but more recently, a couple of things that have gone on, they paid 500 million for seinfeld after saying, dont worry about these sitcoms were losing i would not say that seinfeld is a bad purchase these catalog programs still breed the engagement, which you get a lot of value out of. But im not worried about, they have a great original slate coming up. And what they understand differently is the velocity at which netflix releases stuff you have it in your mind that i dont want to let go of it, because during christmas other places, theyre dumping a tremendous amount of things out there. Tonight im going to the premiere of the irishman, that is a netflix movie theyre making moves in film so you get to see nit in a Movie Theater . Its going to be released in theater . Media is cyclical. I think they need to make moves against the Movie Theaters, but i think what youre seeing with apples announcement today around theyre releasing movies in theaters is really appeasing artist who is still want that big screen debut what do you feel about content costs overall in terms of how much all of these Companies Pay fper hour of content. Has that peaked and do you have a viewed on the pulled endeavor ipo, which of course is linked to the content creation game sure, i havent i saw the news, i saw it was pulled, i havent looked at the specifics, but were obviously seeing a lot of failed ipos recently in terms of expectations and some nervousness about pricing. In terms of content costs, ill say this netflix has overpaid for things, because they were playing a different game they were going for a land grab, not for shows or networks, but for the entire video space and look what happened they are the First Service that has 150 million subs worldwide ultimately, when they got the 50 million, they have pricing power. So often when youre build a show and go to a Production Company and netflix says, i love what you have, theyll say, cost plus 15 or 20. Its been cap for the creators, but there will be a lot of people working in the Media Business in the next couple of years as this race continues but some analysts say, they have to be careful on pricing. Its the most expensive compared to disney and apple, which is basically free its a great point, but i would say this, those services are different. Disney is super serving specific generas and people netflix is video they are building big shows like stranger things, but also smaller shows that address smaller audiences. Its a little bit different. You have to think of netflix, if you have to use the example of cable its a bundle its a bundle it doesnt have channels, theyre generas. Well, crowded playing field, but thats what makes it exciting as a consumer thanks for lending your expertise. Up next, it looks like pot and wine dont mix in the field, that is. Jane wells is standing by with all the details. Jane reporter seema, theyve been growing wine grapes here in Santa Barbara county for almost a half century, but there is a new crop in town over there across the way under that white plastic sheeting whene me wco back, can they grow together, when closing bell returns. Tensions between pot and wine growers are growing out in california jane wells with that story hi, jane. Hey, seema, these are wine grapes across the way in the white structure is Legal Cannabis this county handed out far more permits to grow pot legally than any other county in california one reason is a lot of people were doing it any how. But one problem popped up as the industry grows pesticide no Legal Cannabis can have any pesticide residue on it forcing some growers of other crops like avocados or grapes sometimes hand spray or use less effective products but thats also costing them. Probably down two to 4,000 per acre cost in both lost quality and the cost of having to do it the way we did it. No one wants to get into a lawsuit around drift people just want to farm the crops regardless of crop and get the product to market. A lift lawsuit is not good for anybody. All right its a scary as a tarrant la in the vinyard we had to show you that because thats breaking me up while this county has been generous with permits up in napa county where they have the more expensive wine its at zero. Back to you. Jane, would they look would the farmers look outside california, pacific perhaps the Pacific Northwest a growing destination or pot and wine . As you know you cant cross lines. You can have farms in more than one state but any cant Work Together this is prime, prime real estate for growing just about anything, including cannabis were just showing you this. Its freaking me out look at this thing im sorry. I just had to show it. Oh. Wow, be careful. A Little National geographic. Its come this way its coming this which. At highspeed please be careful. Please be careful. Oh, my god. Its headed to the wine its towards the tarrant la. Im coming right for it. Give me i think it wants the cnbc logo hat we will 11 you there please be safe jane wells as always outstanding in the field live, tv. Gosh she is close to it. Up next a block bumpertobumper deal, sony and walt disney reaching a deal that has spiderman fans cheering well tell you the details only pay for what you need. Liberty. Liberty. Liberty. Liberty. 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. Tv aas many safety features powas the rx, the new. The lexus rx has met its match. If theyre talking about you. You must be doing something right. 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. Each day our planet awakens but with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Liberty mutual customizes your Car Insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. From one expirspider to ano. Sony and disney reaching a deal to continue the spiderman movie julia has more. Spiderman, sony announcing its deeming up with disney to produce the third film in the spiderman homecoming series and the web slinger will appear in a future marvel film this is interesting because its a reversal after in august be sony which owns spiderman rights and disney controlling the rest of the marvel characters announce add split saying they wouldnt sprouse spiderman and wouldnt appear in movie was the avengers. Now the terms of the deal are undisclosed. But disney was looking for as much as half of Box Office Revenue after getting just 5 in the prior deal now the deal is zienzed to be a win win. Sony gets marvel expertise producing the movies the last two spidermans alone grossed 2 billion worldwide and disney gets to keep the marvel ufrps intact and maintain a consistent tone and story lines across the films guys i have to say i feel like this is a franchise they milked a bit too much but, you know, each to their own. I guess the figures say otherwise. A billion plus. Fans would disagree fans disagree. Fair enough julia as always thank you very much final thoughts, mike on the market quite a big amount of selling but the final hour of trade at least found a bottom. Absorbed to the some degree market softened up for sure but not lasting damage yet we are getting the month andy in next we can. There is anxiety around the whole trading repo bank funding business if that passes i think you might have people maybe we dodged the bullet. Good or bad for stocks. I think it should be good for stocks because september will have not lived down to its reputation as being so bad you didnt have any more stress in the financing markets. But tough to say though because market hasnt been persuasive in saying it wants to go high sfwleer we are out of time have a relievly weekend that does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new york citys time squares s in fast money. Im membersa had traders tim syria. Steve grasso guy adam judgy and joined by jeff mills chief investment offers at grid more trust. The new twist taking down the markets new reports the Trump Administration considering blocking u. S. Investment in china. That includes possibly delisting all chinese stocks from u. S. Exchanges. Those headlines sending stocks sharply lower today. Lets get the latest on the developing story eamon javers live at the kwhous