Transcripts For CNBC Closing Bell 20240713

And were looking ahead to earnings jpmorgan, all on deck. Joining us is dan nathan from risk vertical advisers what are you watching today heading into tomorrow . The fact that the dow is onle we had these massive surges in stocks yet, we dont have a whole heck of a lot of content about what that means, other than buying ag and a lot of Market Participants right now feel like weve seen this movie before and we kind of know how it ends except that this time, its a threepart Netflix Series that we have to stay tuned for. And we may have to stay tuned for multiple seasons Binge Watching is what youre saying were in for Binge Watching on the trade front. We are flat, as we said volumes down a little bit. But there have been a lot of intraday moves, as well. Lets focus in on the big stories were watching today bob pisani is watching the Market Reaction. And well break down all the latest trade headlines phil lebeau following a c suite shake up of boeing but lets start with eamon reporter not a whole lot of people actually came to work today at the white house its a holiday, so a lot of folks stayed home, so were left without a lot of people to talk to about it. But ultimately, what were learning is that the chinese do seem to want an additional round of talks here before this is all said and done. The state media notably did not call the phase 1 deal that the president has been calling a deal nay didnt use that word, deal thats interesting to note f the president tweeting, the phase one deal, final id and signed soon. The president still pushing that optimistic line here, what they agreed to in the oval office was an agreement in principle. He says they can get it done and signed relatively soon still nothing yet on paper for us to look over, though, wilfred. Eamon, secretary mnuchin this morning, though, pretty optimistic, offsetting some of the headlines the prior 24 hours that have taken the optimism following fridays good News Reporter he said theres still a lot of work to do, but he said hes optimistic that they can get there he said that that december round of tariff increases will go into effect if they dont have an agreement by then. But he says he does expect that they will be able to have the agreement by then. Dan, are you buying into optimism here about the trade front . No, if you think about to over this past year, weve basically had market tops that have corresponded with some optimism about trade or about moving forward on some sort of substantiative deal. And im of the belief if the biggest headline that came out of phase one was the buying of ag products, to me, this is not why we have tariffed ourselves into a trade war with china. To me, any signing of a deal that just deals with ag products is going to be disappointing to most Market Participants lets see how the rest of the market is reacting and get to bob pisani for that and the trade hneadlines after the truce, whats next . Take a look at the s p futures, when everyone realized the stories came out this morning that the chinese want another round of negotiations, just to get to a written agreement on phase one, the markets drooped this was preopen, and frankly its had a tough time recovering since then and as usual, when you get less optimism on trade, you get cyclical names weaker. So industrials all on the weak side today some of the energy stocks, retail stocks, generally, also on the weak side just also want to mention the markets flat to low, these recent ipos tend to have a much tougher time of it there was a little bit of news out for them crowd strike was initiated at a sell over at citigroup and smile direct, there was a new bill in california that may negatively impact their business, as well. Its been a tough time for some of these recent ipos bob, thanks very much lets bring in andy rothman. Thanks for joining us. Is your take a little bit more optimistic in terms of whether to believe the optimism that came friday on the trade deal . It is im more optimistic than the last time we spoke about two weeks ago. Remember, what the chinese said recently is not new. The president himself in the oval office with leo hough on friday said the deal hasnt been completed yet. It has to be papered in his words, and that continued negotiations would take place between now and when he meets wl xi jinping in midnovember thats not new and i also looked back to what the president said on friday and tweeted on saturday, which is, hes already calling this an Historic Deal for american agriculture. Hes already said that theyre close to process on Market Access and intellectual property and he said this is going to be a great deal dffor china. So hes giving political china for xi jinping to go ahead with the deal but andy, overall, certainly as it relates to the phase one part of this deal, is it a comprehensive deal or a bit of a copout you know, i dont really care my bar is can we get back to where we were a couple of years ago . Admittedly, its a low bar, but we need to remove the tariffs on both sides, and i think the president has decided that a deal that allows both sides to remove the tariffs is better for his reelection prospects than no deal. I think thats probably where were headed anything else on top of that is gravy, but removing the tariffs allows both sides to actually Start Talking about the other big Strategic Issues with the relationship dan, weigh in here, if weve gone through all of these tariffs, all of this impact to the Global Economy, what was the trade war all about, if were just getting back to where we were a couple of years ago listen, andy, with all due respect, it sounds like youre reading the white house talking points theyre the ones that started the trade war in 2018, theyre the ones that put these tariffs in place an effort to get leverage on those much bigger issues, so to me, i just dont see it as a net positive whatsoever weve already done the damage to the Global Economy and i know that its one thing to turn a stock market based on some tweets. Its another thing to turn the Global Economy and i think that once we get that sugar high of whatever that first deal you get, then we get to the real stuff. Why were in the trade war to begin with, contessa its a great point about what this does to give both trump and xi cover when you go out to farm territory, whether its north dakota and soybeans or louisiana and soybean, the thing that you hear is a real question about whether you can support a leader whos been the cause of economic failure on your farm the president has tried to get around that by having these subsidies paid to american farmers. But the real question is, can they start selling again to china in this Global Market . I dont know andy, how important is the ag part of this versus what Corporate America cares about . And thats the protection of intellectual property . First, ive got to say, ive never been accused of reading white house talking points before in the last couple of years. Thats interesting but lets look at this from a couple of perspectives is this going to be a great deal for america in terms of where we were a couple of years ago when this started we just dont know, because we havent seen any details but the president said he was going to make progress upon protection of intellectual property. And i believes th thats possib because thats good for china. Because the most ip theft in china is Chinese Companies stealing from other Chinese Companies. So i think theyre ready to make more progress there. But from an investor standpoint, the most important thing is, are we going to go back to where we were before. Are we going to remove tariffs from the equation . Remove from the equation the uncertainty, which has had a huge impact on Business Sentiment and capex spending in the United States and a similar impact in china and get back to business for investors, thats really the key issue. For the political analysts, sure, we can look at whether this all made sense. But thats secondary to me right now. Andy, what about the pressure in china for them to concede some ground and make a deal . The trade data this morning saw exports down 2. 2 year on year imports down 8. 5 year on year are they feeling the pinch as i said on the show a couple of weeks ago, this is not really putting a lot of pressure on china this is no longer a tradeoriented economy net exports last year, less than 1 of gdp. And the u. S. Only took 19 of total chinese exports. What the chines are motivated by are avoiding the tariff dispute escalating into a fullblown trade and tech war, because they really are dependent on american semiconductors andy rothman, thank you so much for joining us. Weapon appreciate your perspective, your insight, your experience lets go to boeing now the companys ceo has been stripped of his chairman title phil lebeau has those details. Phil, what are you learning . Well, contessa, this is a decision that came the board made on friday without Dennis Muilenburg the new nonexecutive chairman is David Calhoun. Hes been on the board for basically a decade hes a lead investor hes going to be focusing on oversight. And boeings push to make it clear, not only to regulators, but to their customers as well that safety is a top priority there. Does this will this change anything at boeing ubs out with a note today saying wed expect decisions to be more deliberate and likely more risk adverse. What about Dennis Muilenburg, its all about the max and making sure it gets back into service in the fourth quarter. Theres a congressional hearing on october 30th. Hell be grilled at that hearing. The max recertification has to happen in the next ten weeks if theyre going to meet their projection to get it certified by the end of the year and at the same time, they need to maintain the current production rate of 42 per month. A lot on the plate for Dennis Muilenburg who is now streictly ceo, no longer chairman and ceo. Phil, if this is the right mou move, why do it now . Why not earlier . Youve got that hearing coming up. You want to send a message if youre boeing or the lead of boeing to washington that they understand the significance of whats happening with the max as well as the other reports regarding the 737ng, some of the questions about the shortcuts. You want to send a message before that hearing that we get it, were making changes not just with this, but there is a lot a Safety Committee theyre streamlining how engineers can bring up issues so that they are alerted quicker in the upper ranks of management. This is all part of the push to make sure that the message is out there that safety is a priority at boeing which i get phil. And my question totally the other way around, if this is necessary to get a message out there that boeing puts safety first, then how is he still ceo . What youre suggesting, just throw him out, get rid of boeing im not suggesting that im asking, how do they come to the conclusion that its necessary for them to remove the chairman role i understand . Theyre saying theres too much on his plate, essentially not only is he worried about the max, but also worried about the 777x, the 737ng issue that comes up and they have some problems when it comes to their military programs so when you look at all of that, that a lot on any one persons plate and their belief is he will be better focused if its just on the max, while David Calhoun is working on other issues, primarily the oversight and making sure that its clear, the culture is going to be changing or will be amended at boeing phil, as always, thank you very much. Boeing stock down 0. 4 or so today. Where do you stand on this stock . I think youre looking for a blood sacrifice in secession terms. Is that what were going for here to the point hes got a lot on his plate, hes had ahell o a lot on his plate for the last six or seven months, so if this decision is the right decision, why wasnt it done earlier this stock is trading down almost identical to where it was after it gapped down after the lion air crash in march. So its taken off some of the excess it had. Heres a stock where investors and analysts have already taken down earnings estimations dramatically so recouping a lot of what they lost this year the same for sales, down about 17 . So heres a stock thats trading below a market multiple on the out year its trading well below its kind of average historical multiples. And if investors belief this is just a 2018 19 problem and management is still in tact and theyre the right people to run this place, you have a cheap stock looking forward. Ill tell you this whats come out of all of this investigation over the last year is theyve had qa problems for a long time. Theyve taken advantage of their situation, their cozy situation with regulators and that sort of thing. The culture does need to change and then consumers and then airlines, everyone has to get back onboard that this is a safe plane to fly on. Organizational psychology the culture does not change through leadership change. Half the organization has to change for there to be a culture change and were not seeing that and nowhere close to that at boeing right now tha just my bit on organizati organizational psychology. Coming up, facebook fights back against president ial candidate Elizabeth Warren we have details on will it could affect the stock, next and later, steven roach on where our negotiations with china go from here what does it mean for busine at a aadn losing bell. [spokesman] if youve tried college but never finished, group cheering 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 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. 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. 43 minutes left to go. Lets get a check on the individual market mover now. Shares of pg e falling today on news it has rejected a 2. 5 billion offer from the city of San Francisco to buy its power lines. San francisco offered to buy those assets in early september, eight months after the company sought chapter 11 bankruptcy that stock right now, as you can see, is off by almost 4 on the day. Meanwhile, weve got dueling stories out on facebook. Deirdre bosa has a look at the payment exodus from libra. And ylan mui has more on the fight over fake ads. Wilf. Visa, mastercard, all out. Having some of the Worlds Largest payments processors was always the major muscle behind libra. Were also seeing nonpayments Companies Drop out too ebay, booking holdings this morning this could have represented use cases for the Digital Currency these are the remaining members of the association, but this is a quickly changing list, as you know, guys and weve reached out to many of them just check if theyre still participating. Well hopefully know more soon as a meeting of the libre association concludes today. Guys i get this is somewhat embarrassing and awkward for facebook, all of these companies are pulling out. But on the flip side, how have these companies allowed themselves to be official ll lle to facebook if they werent committed. The heads of communications for all of these Companies Must have approved facebooks origin release, if not higher than the heads of kpuncommunications so its pretty awkward for them, as well, is it not thats a great question on the flip side, you could have someone asking, how can they afford to pull out think about facebooks scope its billions of users. I think thats the reason they want into it they wanted to be part of it rather than outside of it. And the regulatory scrutiny proved too much for their comes teams to handle. You can see that in a lot of the Payment Companies that bowed out, their statements were still very supportive of the libre situation and what facebook is trying to do potentially leaving the door somewhat hope for them to rejoin if there is an opportunity and if the regulatory scrutiny, perhaps, eases d, thank you very much for that guys, only other thing i would add to this, lots of the big banks were criticized at time, how archaic of the banks, theyre not taking part in this new cryptocurrency kind of thing. And this gives them a little bit more offset cover now, because clearly its fallen apart. The scrutiny coming from capitol hill is certainly playing out in this other story were seeing on facebook today president ial candidate Elizabeth Warrens fight over fake ads ylan movie joins us now from washington, d. C. With more reporter contessa, warren is trying to fight fake ads on facebook with a fake ad on facebook her ad claims that zuckerberg endorsed President Trump for reelection. The ad does admit thats not true, of course, but the it argues that zuckerberg has given trump free rein to lie zuckerberg has made very clear it will not sponsor free speech from politicians and that includes ads, but by trying to stay out of the political fray, facebook seems to have jumped right into the middle of the pile back over to you and are you getting a sense of how much pressure facebook is feeling right now not just from Elizabeth Warren, but other democratic president ial candidates, at the same time theyre getting it from the white house . Oh, yeah, absolutely. Remember this whole facebook controversy over political ads was sparked by a request from joe biden to take down what he said was a misleading attack ad from the terrarump campaign oves son. This is not just about Elizabeth Warren, but certainly, her personal attack and twitter feud with zuMark Zuckerberg has take this to the next level i think Elizabeth Warren used their platform in a genius matter to highlight how hypocritical they are. I think people on both sides were pretty disappointed about how their platform was weaponized so, you know, at the end of the d day, when you think about what percentage of their 70 billion in sales this year are political ads, they should be taking a more proactive route and not have to deal in front of it and say, were not doing political ads. Lets move on, because its really disruptive. And i think its the kind of thing, advertisers and users havent left yet if things go wrong in 2020, theyre going to leave in droves but facebook is looking at the what local news has known for a long time, those campaign ads bring in big bucks coming up, two more analysts cut their price target on netflix. The word on the street comes next and well come back to boeing and take a look at some other highprofile ceos who have lost the chairman title and what happened next to them. Closing bell back in a couple of minutes aalexa its a masterstroke of sorrow by olivia watson. Heartache, brutality and redemption. The mist crept into the pivot hole beside her. Youre late. David what did you think of the book . Its a. Masterstroke of. Heartache. Brutality. And redemption. You didnt read it, did you . I didnt. But i will. The lexus nx, modern utility for modern obstacles. Lease the 2020 nx 300 for 349 month for 36 months. Experience amazing at your lexus dealer. Itso chantix can help you quitd slow turkey. Along with support, chantix is proven to help you quit. With chantix you can keep smoking at first and ease into quitting. Chantix reduces the urge so when the day arrives, youll be more ready to kiss cigarettes goodbye. When you try to quit smoking, with or without chantix, you may have nicotine withdrawal symptoms. Stop chantix and get help right away if you have changes in behavior or thinking, aggression, hostility, depressed mood, suicidal thoughts or actions, seizures, new or worse heart or blood vessel problems, sleepwalking, or lifethreatening allergic and skin reactions. Decrease alcohol use. Use caution driving or operating machinery. Tell your doctor if youve had Mental Health problems. The most common side effect is nausea. Quit smoking slow turkey. Talk to your doctor about chantix. Welcome back to closing bell. Wells fargo initiating on beyond meat as market perform with a 125 price target. The firm saying while its bullish on plantbased food, theres not mushroom for upside. Mushroom. Not much room. Ubs downgrading tapestry to neutral. The firm points out challenging macro and industry dynamics, a slow kate spade turnaround and competition from the resale market and Morgan Stanley and Raymond James lowering their target on netflix to 400 from 450, but both firms maintain their buy ratings on the stock and Goldman Sachs and ubs also lowered their price target so when it comes to netflix, one of the things thats interesting is Raymond James says, look, this competition from streaming wars is highly overblown, because the Research Shows that people have more than one of these services yeah, i think theres a couple of things going on with netflix. This year, they raised their prices to a level that know streaming service has ever had that happened earlier in the year b, i think a lot of consumers got the sense that a lot of the content they got used to on netflix over the last few years will be leaving and going to these other services yes, the truth is, the services havent even launched yet. We dont even have zplodisney p yet. And that subscriber loss last quarter, the one that sent the stock down precipitously, is the kind of thing were probably not likely to see a repeat of that, to that degree and its great that analysts are coming out ahead of time, lowering their expectations. Because it sets up for an easier kind of bar to i would put it the other way, that these guys have essentially are now admitting, although theyre not saying it directly, that theyve been wrong in the shortterm in the last three or four months. Theyre all downgrading, but all got buys following the share price decline already. The only thing i would say to that, they may be right. The Morgan Stanley note is a really good read but their share price targets are all based on earnings forecasts based out to 2024, 2023 they could easily be wrong again. If we see a miss here or there theyre saying about profitability coming through years in advance, they might be right about that in the shortterm could be wrong again nearterm, its going back to the 2018 lows, near 235. If they miss north american subs again and dont stem the losses of free cash flow. No doubt about it, trading a little bit lower today 32 minutes left to trade dan, the stock hes going for is e ckady moving higher today, off thba of a big upgrade and well have more when we come back in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. What do you charge for online equity trades . Um ah, ill look into it. Lisa jones hey carl, what are you charging me for online equity trades . Laughs umm. And do i get my fees back if im not happy . Like a satisfaction guarantee . Ugh. Schwab oh right, im calling schwab. Thanks carl wait, lisa lisa. Are you Getting Commission free trades and a satisfaction guarantee . If not, talk to schwab. A modern approach to Wealth Management. Welcome back weve got 29 minutes left to trade and were currently down about 20 points on the dow here are the key things driving the action keep the champagne on ice. Thats what the Chinese State medias cautious response to progress on friday has suggested relating to the trade deal oil prices are dropping as well as optimism over tariff progress, as that has faded. And were looking ahead to earnings jpmorgan, goldman, citi, and wells fargo all coming up on deck time now for a news update from sue herrera at cnbc headquarters hi, sue. Hello, contessa hello, everyone. Heres whats happening at this hour european nations unanimous lly condemned turkeys military incursion into syria and joined france and germany in banning arm sales to ankara. They cited the threat of a resurgence of isis as a consequence of the offensive m. I. T. s abjit bannerjee and dufflo discuss their nobel prize award along with michael kremer. This further work on understanding and alleviating global poverty the fate of the world has tremendously improved over the last three decades people in the u. S. Are usually persuaded that poverty keeps increasing, for example, but the truth is that over the last three decades, the two groups that did relatively well in World Economy are the ultrarich and the ultrapoor new Research Suggests what you eat may wreak havoc on your skin researchers studied data from more than 6,700 people and found that those who had acne were more likely to have consumed dairysodas, pastries and other sweets youre up to date. Thats the news update this hour sue, i wish wed used videos of the burgers, the sodas and the sweets instead of or water. Sue, thank you very much. The russell 2000 underperforming all the major averages dom chu is back on hq with more on that angle. Wifflered, there has been this thesis among small caps that theyre the ones more insulated to the trade war so as we talk about one of those proxies for sentiment in the market, small caps have become it and we just wanted to show all of you viewers out there how the state of play is kind of evolving so far in 2019 and the white line, we have the ishares ruffle 2000 small cap. And in the orange, we have the s p 500 etf, the spyder, which is ticker spy. As you can see up here we have some outperformance. Quite a bit, 700 babies or so, for the largecap stocks but throughout the course of 2019, its been an interesting development. A playby play, if you will. The reason why we say that is because we do see the small caps outperforming for the better part of the first three months of the year, you can see here. And all of a sudden, it became pretty tight they were moving neck and neck with each other, just around april through the early part of the summer then all of a sudden, we saw some leadership emerge in those large caps again the orange line, outperforming and as you can see here, that gap has gotten slightly wider here, as weve progressed into the last three months. In fact, outperformance wise, it has gotten even wider in just the last three months for this particular trade so as we watch small caps and large caps, contessa, wilfred, one of the big points of interest will be for traders whether or not those global trade headlines, specifically between the u. S. And china, will kind of drive that convergence and divergence again thats one of the places well be watching it closely, contessa ill send things back over to you. All right thank you very much. Dan wh dan, what do you think i dont think thats particularly bullish when you think about the outperformance in the large caps, largely in very defensive groups, well call it Consumer Staples, utilities, and megacap tech its microsoft, its apple and these are the names because of the Balance Sheet thought to be very defensive. The fact that because small caps cant keep up, 14 from their 2018 highs tells you that at least investors in those businesses suspect that the, you know, trade wars and some of the stuff thats going on here as far as growth and concern is just a concern of theirs ic i think theres a lot of concentration in defensive names and great Balance Sheets and that can change quickly in 2018 q4 all right, dan. Up next, we have your last chance trade plus apple hitting an alltime high why one analyst is predicting they could launch a more affordable iphone next year. 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. Stand up if you are first generat crowd cheering ent. Stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. The world in which we live equally distributes talent, but it doesnt equally distribute opportunity, and paths are not always the same. Im so proud of you dad. [man] i will tell you this, Southern New Hampshire university can change the whole trajectory of your life. uplifting music all right. 22 minutes left to go until the closing bell. Dan, whats your last chance trade. Last month nike reported a blowout quarter. The stock broke out to a new alltime high. I think this is one today trading at a new alltime high has been doing that for the last week the stock trades rich to the market, to a lot of its apparel peers. But it doesnt seem to be bothered by some of the things bothering others, strong dollar, weak demand in china slowing growth in general, change in supply chain theyve done a really nice job with their omnichannel strategy. Theyve made an acquisition today. They bought Russell Wilsons startup to help out their content strategy a lot of things are going right. I suspect this stock is going to trade near 100 pretty soon and i think you can use 90 to the downside i would be picking at it as it mu moves between 90 and 95 a little bit. The trade war, which might not be easing anyway, didnt really hurt the stock price. What about the u. S. Consumer if we did see that start to slip, is that going to be something very correlated with this stock the nba and china, those are all issues that just dont seem to investors dont seem too worried right now. And i think 90 is that level in the sand where you would stop it at to the downside to the topic, dan, of last chance trade last week, josh brown was on and he gave you a shotout, because youd picked nvidia first. I love dan nathan what did he say . Im saying, he called for it, as well. He said, i like nvidia, its that good buy here, you play with the options, dont get me wrong. Shout to dan what do you give that out of ten . You could play with the options, that makes sense. If im josh from the south shore of long island, make im more of an adidas guy, but ill buy the adidas not the nike. I like it worried about josh im sure ill be taken down next it will be an easy target. I cant dodge that i cant either. There we go then. Up next uninterrupted coverage of the final trade. lta you inside the market zone. Closing bell is back right after this best. Finding out whats sg to managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Dont get mad. Get e trade, dawg. With 16 minutes left in the trading day, we are now in the closing bell market zone, commercialfree coverage of all of the action going on today, weve got dan nathan from risk vertical advisers. Also joining us is paul hickey from Bespoke Investment group. Thanks for joining us. Lets kick things off with caterpillar. One of the most followed trade proxies in the market and seema mody has more on how its trading today. Were watching the stock turn in positive territory now. News of a partial trade deal did send caterpillar stock up 4. 6 on friday. It is widely seen as a trade proxy for the market, given its global footprint and ties to china. Plus, the trade war has hurt caterpillars earnings tariffs have increased manufacturing costs, weak demand in china has cut into profits. Caterpillar currently trades at 11 times earnings, but if progress continues to be made on the trade front, Milius Research says caterpillar should trade at 14 times earnings, which does imply upside from where its trading at right now another thing to watch, honeywell on thursday, also with great exposure to that china story. Back to you. Seema, thanks very much paul, whats your takeaway from last weeks sort of semi deal, what it means for caterpillar . So i think whats important to focus on is for all the talk about what this light trade deal didnt accomplish last week, what it did accomplish was it kept things from escalating. And as caterpillar mentioned in its last call, the effects of the steel tariffs are going to start anniversarying this quarter, so as long as we dont get an escalation, were going to start to see better comps for caterpillar. And so thats something important to keep in mind. Because the sentiment now is a lot different than it was just last week at this time, when there was real heightened concern that things were going to escalate to the point of maybe no return. So i think its encouraging for caterpillar here and the Broader Market that things didnt escalate and i think thats why we got the rally and weve been able to mostly hold on to those gains so far. So are tariffs already baked in is caterpillar on an upswing here no matter what happens with trade . This is a stock down 27 from its alltime highs paul is exactly right. Sentiment is very poor but you really cant trade a stock like caterpillar based on the headline like were getting right here and i think that this is how a lot of stock should be trading, based on where we are in this trade war and how much uncertainty we still have, despite the fact that we got the dog and pony show at the end of like this first round of talks you know, to me, listen wing its a value trap right here i think you would need a very substantiative trade deal that also rolls back existing tariffs for a stock like cat to start to work again shares of apple hit an alltime high as one analyst predicts a cheaper iphone could be a driver of growth. Tf securities out with a new note announcing iphone could launch a more affordable iphone model First Quarter of next year for 399 what a crazy thing to imagine that a driver of growth for apple is a cheaper, basic model. Well, its actually genius. Weve seen this before when they introduced the se version, and it was really ge d geared towards emerging markets where we know they cannot afford a 1,000 higherend phone. And apple knows that hanorth american and europe are pretty well saturated on the higherened and if theyre competing with local competitors that have much better price points and the users are much more focused on we chat. We have been talking for a long time that it should start demanding a higher multiple if it moves to services, which has a higher margin. Were talking back to the old iphone i dont think theyll ever have the success in places like china given just how embedded Services Like wechat are but it may be great for places like india weve got 12 minutes left the nasdaq biotech etf is on pace for its fourth straight positive day meg terrell has more on the news and the names leading it higher. Biotech is helping offset moves lower in the roeest of health care today. The biotech etf is most influenced by larger names and those are indeed pulling it higher today among the bigger movers, Revance Therapeutics they announced a new ceo, mark foley, to replace dan brown, who the company said stepped down due to a misjudgment in handling an employee matter guys, back over to you were also watching financials headline net income will be flat to down year over year Net Interest Income should be roughly flat, as loan growth picks up, especially thanks to mortgage refinancing activity. Credit risks are expected to continue to be benign, while in fee income area, Capital Markets should grow year over year, thanks to easy comparisons and Wealth Management should be okay, given the markets held their ground during the quarter itself the setup for the stock price is not that easy. Banks did underperform the s p in the first months of the quarterly, largely due to falling rates, but utperformed in september and again last week with some rebalancing of portfolios into balance stocks bank of america on wednesday Morgan Stanley on thursday will be a busy week for the banks. Dan, where do you stand on these guys are they value traps or great value . A lot of investors are looking at them because of the cash return and the valuation. But the lower leverage than in past cycles is really the issue. Youll never get that kind of return on investment that they used to get. To me, i think theyre trading where they should be and you have to think about where the regional banks act here theyre down really poorly down significantly from their 2018 highs i see them kind of stuck in a range. And if you want to buy a bank, go buy jpmorgan. The investment banks, goldman and morgan act very poorly and some of the other Money Centers really underperform jpmorgan, so stick with jpmorgan paul, youre out with this report that talks about revisions heading into earnings season and how typically, it indicates an upside for the stocks, except for financials. How are you reading in the analyst revisions when it comes to banks and where were heading into with the earnings season . Yeah, so when they have positive revisions, they tend to do a little bit better, but right now weve seen in the last month of financials, negative revisions outnumber positive revisions. So sentiment is very negative on the stocks i think dan is right that theyre not going to get back to their glory days of valuations but some of these big banks like jpmorgan pay higher dividends than the market and the s p Financial Sector and they have plenty of room to increase those dividends i think if you do see weakness in the stocks following earnings tomorrow, you should get into it and just an interesting two streaks. The stock has traded up following earnings each of the last three quarters. But for the q3 report, its traded down nine octobers in a row. So one of those streaks is going to get broken tomorrow if it does decline on earnings, we would like it to buy on the weakness there, for its yield as just a stable income producer. A couple other points i would just add, three of the big six are trading below book value at the moment the group as a whole is definitely fairly cheap. And i would say, this quarter, more than most of the recent quarters weve seen, theres much bigger chance of differentiation between the individual companies, which will make it really interesting, particularly on the fee side, when you look at the Investment Banking performance, its not been as strong a quarter for m a. It will be real interesting to hear comments from the Goldman Sachs and jpmorgan management about the impact of wework will they have to write things down i think its not just going to be the whole sector beats or doesnt beat and given how cheap they are, one or two stocks have Strong Performance and give decent guidance, you could see them perform reasonably well. Ubers announcing job cuts across a variety after teams deirdre bosa has those details cuts 350 employees across its food dloelivery, marketing and selfdriving car teams a process that saw the between shed about 4 of its global workforce. In an email to employees this morning, krell Dara Khosrowshahi said this was the final round of layoffs. Days like today are tough for us all and ill do everything i can to make we wont have another day like this. And Peter Defazio in a letter is strongly urging uber and lyft ceos to reconsider their participation at a congressional hearing scheduled for this wednesday to examine the future of Transportation Network companies. Both Ridesharing Companies declined previous invitations for representatives to testify back to you. Do you have any indication why that is . Why theyve declined to go . Im not sure were looking into that right now. We dont know, but we know that uber and lyft are working with regulators around and the u. S. And around the world so im not sure why they wouldnt want to be involved in any kind of regulation thats being written. But, you know, ive reached out to the companies and will see if i can find out more. Especially when its an invitation versus a subpoena, which is always more aggressive, harder questioning to come to you from the lawmakers dan, quickly, do you think the worst of the ipotype headlines are behind us or more to come . I think wework was a really important moment and you see recent ipos like uber starting to lay off the way they have. And i would go back to, after the dotcom bubble burst in 2000 or 2001, it looked like a Nuclear Winter out there for a long time. It feels like were getting the setup for that were recovering a little bit into the close, only down Single Digits in terms of points on the dow. Lets get to General Motors and the United Auto Workers union, still trying to reach an agreement, as the strike enters its fifth week now phil lebeau has the latest hi, phil hey, wilf, we havent heard much today from the uaw or General Motors, and thats a good sign, because last week it was nothing but shots being fired back and forth at each other. On the 29th day of the strike, i can tell you from talking with people familiar with whats going on in the negotiating room, the talks are quote unquote encouraging. Does that mean theres a tentative agreement later today . No but they are making progress relative to where they were last week as you take a look at shares of General Motors, keep in mind that the inventories are getting tighter. Guys, were not to the point where you really see a big dropoff in sales. That would likely happy another week and a half to two weeks thats when you would see inventory really get crunched. Paul, whats your statake ono much this whole dispute the hurting the company and the stock price . Its just one of these labor corporate relationships, you know, im not the best person to be speaking about the stock price of gm. I dont follow it too closely. But from the perspective of the economy, the layoffs from the suppliers are already starting to show up in jobless claims yet job claims were only 210,000 last week. The fact that were seeing jobless claims come in, suggests that the economy is able to withstand the hit. And i think if we its been about a month, so if we keep seeing this go into later october, maybe then it becomes problematic for the economy. But at this point, i dont think its too big of a deal but certainly for General Motors, the analyst estimates are anywhere from 50 million to 100 million per day that the strike is costing the company. So its not insignificant for General Motors lets send it over to dom chu for a look at the market internals. Its been slow and steady overall, but no surprise for traders given the rally that we saw strongly, a threeday winning streak to close out last week and that big move on phase i trade talks with the china and the u. S. Coming. Advancers today, 1309, 117 unchanged. A fairly decent split between the advancers and the decliners. What tells us on some lighter volume given the fact that we have a holiday in many parts of the market, were seeing a limited amount of liquidity in the market well keep a close eye on the volumes. Theyre a bit anemic today that could all change, guys, as we head towards the rest of the week after a holiday back over to you dom, thanks very much for that paul, quick comment, youve been looking at technicals and individual 50day moving averages yes, the s p 500 early last week, we were within 5 of a 52week high on the s p 500, but less than a third of s p 500 stocks were above their 50day moving average that signifies weak breadth. And what normally a weak breadth situation like that is a sign of a negative divergence like you would say in the market. But when we go back to 190 and look back at every period, everybody time we saw that similar situation, within 5 of a 52week high and less than a third of stocks above their 50days, the s p performance over the six and 12 months Going Forward was better than an historical average s p 500 was up 5 over the six months and 12 over the next year, gains over 80 of the time slightly better than average return, so the negative divergence leading to weaker stock prices wasnt too bad. Weve got one minute left of trade. Lets get to bertha at the nasdaq thanks, wilf. Despite the fact that wed soon see apple fading into the close, the nasdaq 100 is on pace for a fourth straight day of gains if this hold up chips have been part of the gains in tech. Xilinx has faded here in the afternoon. Bertha, the realization that a trade truce is not a trade deal weighed on stocks all day i would note that a lot of the ipos are weak. Crowd strike was initiated at citigroup with a sell. We saw smile direct, the california governor is signing a bill there that may negatively impact their bids. You can see thats been going nowhere but down for the last several weeks. Theres the Dow Jones Industrial average, closing about 26 points, volume very light today on this columbus day holiday good afternoon welcome to the closing bell. Im wilfred frost. And im Contessa Brewer in for sara eisen today we are in the market zone. You can see todays action on the right side of your screen with the stories still coming up on the tabs at the bottom of the screen lets check in on how the market closed, down just 30 points on the dow. We were down 67 at the low, up 58 at the high of the session. Essentially, the markets, as you can see, were all just below the flat line. Bear in mind, strong rally that we saw on friday and indeed for the two days before, down just 0. 14 on the s p 500 at the close now, President Trump Just Announced sanctions on turkey. Eamon javers has the details for us what the president is announcing here is hes going to sign an executive order authorizing the imposition of sanctions against any person thats contributing to turkeys destabilizing actions in northeast syria. A couple of more economic elements to this the president saying the steel tariffs will be increased back to 50 and says the United States will also immediately stop negotiations being led by the department of commerce with respect to a 100 billion trade deal with turkey its a lengthy statement here that the president has just issued he also says the United States will aggressively use economic sanctions to target those who enable, facilitate, and finance those heinous acts in syria. I am fully prepared to swiftly destroy turkeys economy if turkish leaders continue down this dangerous and destructive path eamon, i guess the obvious two questions are, is this coming too late after what has already been a devastating week. And also whether it is a proportional response to what has been military action reporter i asked the president on wednesday of last week about his conversation with erdogan of turkey on that sunday, in which it was clear that the president made this decision i asked the president , ultimately, what did erdogan promise him . What did he promise erdogan . The president simply said that erdogan told him he wants to go in rerepeated that twice. He said, i want to go in, i want to go in i asked the president if he okayed that. Did he authorize this incursion . The president didnt directly answer my question, but he did say that erdogan has wanted to invade this area of syria for a long time. And the president at that time was clearly aware of the intense political and ethnic rivalries here he said this hatred is comparable to the sprpalestinias and the israelis this is a longstanding hatred, the president said he was fully aware of the intensity of emotion around this and was fully aware that erdogan wanted to used military force here when he spoke to him a week ago sunday so all of this would seem to have been relatively predictable by the president at the time he had that phone conversation. Now, though, were seeing this economic sanctions response, because the president is unhappy with just how far erdogan has gone here. Eamon, what about the response so far in the course of the last week, not just today, from traditional hawks in the Republican Party in the senate to otherwise, for other reasons, so far have been some of the president s loudest supporters are they starting to voice their concern. Clearly huge implications for other Upcoming Senate votes that will be needed by the president. Reporter yeah, its fascinating. Youre seeing folks like sindlie graham signaling his opposition to the president s actions here, saying hes going to mobilize whatever support he can for congressional sanctions against turkey and all of this coming against this backdrop of impeachment in which democrats in the house feel like theyre willing to push forward with articles of impeachment. Theyre not there yet, but it seems like at some point, as you say, this is going to land in the Senate Chamber and the president is going to need some votes there. The expectation is that he has all the votes that he needs, but by taking this action with turkey and syria, the president has really rankled some of his staunchest supporters in the senate who are expressing vociferous objections to this, at a time when theyre not expressing objections to the president s conduct regarding ukraine, right theyre not upset, visibly, publicly about that. They are, though, very much, about turkey eamon, thank you. Joining us to talk about the market day, dan nathan from risk reversal advisers and paul hickey from Bespoke Investment group are still here along with michael zinn, ubs financial services, senior Wealth Management vp. Michael, can you weigh in here how much of a risk is the turkey situation, in terms of these global macro issues that now we have to weigh in when were looking at investments issues of this last quarter . I think policy uncertainty is still very high and thats why you get these tremendous relief rallies like you saw on friday where you feel like, we hit a policy jackpot, where all the issues are resolved and you come back to business as usual, where in fact all of these issues, whether theyre trade or geopolitical with turkey, still are there. But i think that there are some good pieces of information to get out of the market from todays action youve got a lower vix thats a positive. And youve got a market that i think is pretty resilient. Weve been calling it the rocky balboa market, because the fundamentals arent great, but it can take a pretty good amount of licking and still get back up and not go down very much. And i think thats partly because financial conditions are just so easy, that folks still find theres not really any alternative to stocks. It would be amazing to hear right now, if i can change, you can change and we all can change dan, when you look at what this does when he says, he will decimate turkeys economy if there isnt some pullback on the part of erdogan, how do you read this into the risk to our markets . Policy uncertainty is something that were likely to see amp up and this president has shown up, when his back is up against the wall, he acts the most reratically. This last act benefited the russians and the iranians. Two others adversaries of ours and turkey is a nato ally of ours we may have a war there. And none of it makes any sense i cant tell you that it means a whole heck of a lot for the s p 500 and for stocks, but it doesnt help the whole prospect of Global Growth thats already sort of teetering right now. Lets move on to earnings season, which kicks off this week and the overall sentiment from the Analyst Community has been fairly bearish Bespoke Investment group out with a new report showing that analysts have been cutting estimates for companies twice as often as theyre raising estimates, but there hasnt been an uptick in the pace of earnings from companies themselves paul behind this note. Paul, gauge for us exactly where we are on the expectation for this quarter and where you stand on what the Market Reaction is likely to be so the expectations are very low coming to this earnings season theyve been very low for the past four quarter quarters historically, very low expectations like now the s p and the market has done well through earnings season. Thats a positive takeaway the last two earnings season, we had similarly weak sentiment and what happened was earnings season was going great in the first month and got killed with a tariff tweet it happened both in the end of may and the beginning of july. Thats something to keep in mind here we had some sort of agreement or maybe a break from the trade conflict friday, well spend a few weeks putting thoughts to paper and hopefully coming to something that they can sign down the road but i think in the early stages of earnings season, with expectations so low, when you have this low bar it, makes it easy to beat and the you know, the stocks typically react positively to those beats. Paul, wheres the disconnect between the revised guidance from the analyst and the revised guidance from the companies . Its very interesting you know, with the big pace of negative revisions weve seen in analyst forecasts, youd expect to see warnings very at a very high pace but for this time of year, theyre actually right in line with the historical average. So we havent seen like you said, contessa, there is a disconnect there and i think a lot of it is, as michael mentioned earlier, uncertainty is so high, the trade situation, theres a lot of uncertainty with respect to that, as well. It create answer environment where analysts are cutting forecasts on the companies they cover, because of this uncertainty. And one sector thats been particularly hit hard is energy. Energy revisions have just been the weakest of any sector. And thats partially because oil prices are at such a low level thats brought things in there, as well. But and materials, as well, with the strong dollar, youve seen materials estimates come in but we havent seen the big uptick in earnings warnings that we would expect, given such a dour tone on part of analysts. Lets get back to bob pisani for a look at the sector under pressure today bob . Im looking at Consumer Staples. And i think whats important is they had a big runup in the last several months as defense i have sectors to get away from the trade wars theyve started slipping in the last few days. And i want to show you a couple them conagra is down 9 this month. Look at that its up nearly 30 on the year, but slipping samecolgate. Its down 5 this month up nearly 20, 22 yeartodate same thing with kimberlyclark a lot of the biggest movers in the Consumer Staples have been weak in the last several weeks, down about 5 , also up about 20 for the month, for the year pch procter gamble, down 4 this month. Its up 30 on the year. See these charts very, very similar the one big name in consumer Still Holding up walmart, up 25 yeartodate and its just off an historic high that it hit last week guys, back to you . Bob, thank you very much. Thank you also to dan nathan, paul hickey, and michael zinn. Well leave it there up next, Stephen Roach will tell us why he thinks fridays saoiinone deal with china was dippntg. Were back in 90 seconds dont go anywhere. All right, stocks lower today after trade optimism fueled three straight sessions of gains last week Chinese State media noting that china wants another round of talks before any deal is finalized. Treasury secretary Steve Mnuchin on squawk box this morning expressed hopeful expectations for phase one. Theres a fundamental agreement in principle weve gone through these chapters many times. There are still some issues that need to be worked out in wording. But i would say we have every expectation that phase one will close. The next phase is theres deputylevel calls that will be going on this week ambassador lighthizer and myself will have a principlelevel call next week with the vice premiere my expectation is that well have the deputies meet between now and chile and my expectations are that well be meeting with the vice premiere in chile before the president s meet to finish the deal. Joining us now, Stephen Roach, senior fellow at Yale University and a former chairman at Morgan Stanley asia very good to see you again, stephen. Lots more meetings still to take place. Is that a deal no, the secretary, with all due respect, sounds like a broken record. This is exactly the same lines he gave us last march and april. He said we were 90 of the way there and everything fell apart in may and a lot of finger pointing back and forth as to who is responsible but, look, wilf, weve had 13 rounds of negotiations and we got a handshake last friday that is really sort of an empty handshake. The list of issues has been narrowed significantly the president flinched for the second time on this latest round of tariff increases. They were originally october 1, pushed them to october 15th, which is tomorrow. And then, you know, now theyre off again. And what did we get in response . We got china to say they want to buy some agricultural goods. They always want to do that. They said they wanted to reform their currency structure and theres no real need to do that, because theyve stopped manipulating the currency a long time ago and they said they want to reform and open up financial services, which is something theyve wanted to do for a long time so we gave, they didnt. And you know, its back to another round of negotiations. So would you have preferred to see the tariff hikes go into effect in october . No, im an antitariff person i would prefer to see them all removed and we get back to a more constructive framework of engagement and negotiation but thats obviously not whats going to happen. The strategythat weve had is to try to solve our Macro Economic imbalances, which has given rise to trade deficits with over 100 countries, by fixating on one, china and in the meantime, were not addressing the macro problems we have in the United States, that has given rise to this multicountry, multilateral trade deficit. Longterm, steven, might this actually help china, might it get them to address where their strengths and weaknesses are and if it doesnt come to a major deal with the u. S. Getting concessions, will this actually help china in the longterm . Look, wilf, i think chinas got a lot of problems on its plate that its addressing and the trade relationship with the United States is certainly a problem, but all sorts of issues from excess debt to reforming Stateowned Enterprises to environmental degradation to income inequality, to shifting the structure of the model to consumption, these are this is a huge gendagenda for any country. We have our agenda and my sense is that we both need to Pay Attention to what we need to do to strengthen ourselves. So when we engage the other, we engage from a position of strength, not from a position of weakness, which is unfortunately what were doing right now in the United States. As we head into earnings, a lot of People Like Us are going to be playing very close attention to how often we hear the words tariff or trade war in the earnings call. The small Business Sentiment survey from the nfib reports 30 of the Small Businesses who responded report some kind of adverse effects from tariffs are we at a point where we may just have to get used to tariffs as the new normal . Well, thats a fair point, contessa from i think we are over the next few years likely to see ongoing tariffrelated pressures. But, you know, i think the Biggest Issue here, and its been addressed repeatedly on your network and others, is just this uncertainty that comes from onagain, offagain, not just on the tariff front, but on the socalled entity list or visarelated issues. There were rumors the last few weeks about capital controls, delisting of chinese adrs. All of this has heightened uncertainty. So what do we get last friday with round 13. You know, a vague handshake with more uncertainty and promises by a treasury secretary whos lacking in any credibility that were just about there to nail another one of these deals down. So uncertainty, i think, is the biggest enemy of asset prices. And weve done very little to resolve that with this, quote, partial deal steven roach, thank you so much for your perspective. Thank you up next, Cannabis Company Canopy Growth getting crushed today after a downgrade. We break down the charts to see if this once redhot industry is in a lot of trouble. Plus, the boeing chairman and ceo just lost the chairman title. We will barrack down what has happened to other chairman and ceos that have lost the chairman title themselves were back in a couple of minutes. Welcome back lets send it over to dom chu for his second chart of the day. So wilfred, were talking about marijuana. Because over the course of the past couple of years, weve seen a meteoric rise of some of these cannabisrelated names and then weve seen a sharp dropoff. With regard to just one aspect of the market, this is the etf managers group, alternative harvest etf. The ticker there is mj youll kind of realize where the reference comes from there over the course of the past couple of years, from the highs we saw just about a year ago, this particular etf has now lost around 58 of its total value, in terms of market value in the course of those highs, down to where we are today according to some perspective, according to data from y charts, the total assets under management here, was close to around 1. 4 billion in assets. Now were closer to around 700 million at this point here also if you break down some of the big names, it has a number of them we talk about all the time Canopy Growth. Look at the course of the past couple of years or so. Some of these moves are emblematic of a huge bubbletime environment, kronos, tilray, massive moves higher and sharp downfalls here marijuana, certainly a lot of headlines going up and now were seeing them come down well see if those headlines persist as the cannabis stocks start to lose a little bit of steam. Dom, your analyst on the total assets under management in the space. So are we just saying its a broad move down with the share price or actual redemptions in that space right now the aum has come off. Net asset value fairly tracks the market value of the underlying asset it has been a market value move there. But what you can see is people redeem their assets, redeem and put sell orders in there they have to sell assets to raise money. So a lot of this has to do with the market value of declines theyre roughly about there 358 drops from these market highs and roughly about a half or so decline in market value overall. You can kind of see a little bit of that correlation playing out in the overall trade play. Still ahead, is time rung out for boeing ceo Dennis Muilenburg to fix the 737 max crisis Gordon Bethune will weigh in next plus, Mark Zuckerberg just responded on facebook, naturally, to a story he has been courting conservative commentators the author of the original reporting coming up in just a few minutes heren long ll. Ocsi t 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. This is the family who wanted to connect. To go where they could explore and experience adventure in unexpected places. Who were inspired by different cultures and found that the past can create new memories. Leading them to discover were woven together by the moments we share. For everywhere you go, expedia has everything you need, all in one place. Time for a cnbc news update with sue herrera hi, sue. Hi, wilf. Hi, everyone heres whats happening at this hour the Trump Administration is going to authorize economic sanctions including steel tariffs on turkey for its incursion into syria this as troops consolidated their positions in Northern Syria as they prepared to evacuate the country riot Police Charged protesters outside of barcelonas airport after Spains Supreme Court sentenced 12 prominent catalan separatists to lengthy prison terms. Some of the protesters were masked and hooded and pushed back at police the ft. Worth police chief says a white officer accused in the Fatal Shooting of a black woman in her home has zrind. He said, if the officer, aaron dean had not resigned, he would have been fired. Dean shot 28yearold Atatiana Jefferson through her window and an officer who was shot this morning while responding to the report of a disorderly person at a parking garage has now died officer thomas bomba died after undergoing hospital treatment. The case is being investigated now as a homicide. You are up to date thats the muse update this hour contessa, ill send it back to you. Sue, thank you for that boeing has stripped ceo Dennis Muilenburg of his chairman title, stating in a press release that plsplitting i will role will, quote, enable muilenburg to running the company fulltime as it works to return the 737 max jet to service. The move comes hours after a panel of air Safety Experts sharply criticized design, testing, and certification of the 737 max, which has been grounded since midmarch for more, lets bring in Gordon Bethune, and betsey atkins, very good afternoon to you both gordon, ill start with you. Another line from the release from boeing said this. The board has full confidence in dennis as ceo. When you were chairman and ceo of continental, if your board had stripped you of the chairman title, would you be sitting there thinking that they had full confidence in you at that moment i would say that something political is ahappening, just as it is now. And you have to do something no chairman of the board ever had a real input on the design of an airplane i worked for boeing for many, many, many years, and this is not going to change anything other than theyre dressing up the pig to look like a ballerina and its still a pig so why bother at all, then . Shuler, at this stage its for senator blumenthal and other people that want to politically use this and they have a lot of international resistance, so they have to show theyre doing something. They have a really good board and these are good people, so i dont want to criticize them for doing this, but thats the political aspect of getting the max back into the air and they did what they had to do. Betsy, you come to the table as a highly regarded expert on corporate governance, break down the timing of this decision. Why the board decided totake this action now and what message are they trying to send . Well, clearly, board had to respond and its been seven months and in many circles, shareholders and International Investors feel very much better about having a separated ceo and chairman and we see that happen when Companies Get into trouble you could see it at equifax, wells fargo, tesla thats a normal step a board would take and it frees up the ceo to focus more on the operations did they wait too long . You know, as an outsider, you never know, but i think given that its such a complex set of issues, it would seem to me, it would have been better to do it earlier and free up the ceo and have a strong second voice thats wellregarded we looked, betsy, at a couple of highprofile examples of where there had been a chairman and ceo who had lost the chairman title because of some kind of mistake that the company may have made as opposed to Just Retirement planning or anything along those lines. Here are some of them. Michael eisner, kelly killinger, ken lewis. They didnt last much longer, four, six, eight months, respectively after they lost the chairman role. Of course, other examples like muilenburg and elon musk still have ceo your take on whether this move means theres a chance or a higher chance today than last week that muilenburg will find pressure in a ceo role, as well . Well, i think when theres a catastrophic crisis, you can see that in almost every circumstance, in less than a year, the ceo is gone. And this is a pretty large catastrophic crisis. I think, also, when you see this kind of a signal, it is very hard to image whether he will make it through. I would guess within a year, once they get through the congressional hearings and earnings call, and dealing with the regulators, that theyll start looking for backup successor alternatives gordon, you disagree . No, no, i think shes right, but they have a really deep bench at boeing, so it will be an internal candidate that will be David Calhoun hes a fine man. As interim chairman or maybe permanent chairman, theyll make the right decision David Calhoun has been a director there since 2009. Betsy, ive heard you say you believe in term limits for directors. Whats your sense of whether hes in a good place timewise to take over as chairman . Actually, i think hes in a very good place. You know, hes been there since 09, so he understands the business hes got a fabulous background, a great reputation for being a steady hand in troubled times. I think theyre very fortunate in having him step in. And i think that the board is happy to have someone whos dedicated and focused to getting their input, when the ceo is busy, theyre busy operating and they only have so much time for the board. I want to go back to what you said its slightly contrary to the tone of what your first answers were you do think Dennis Muilenburgs time as ceo as well is ticking away its just the political realities of todays business place. Obviously, as betty said, no one knew he was going to last this long its actually leudicrous that he has. Its more than just boeing and the faa, its different nations who rent whats happened to them as far as their reputation goes. So its a complex issue. This is one that will mitigate and ameliorate some of the heartburn, and may have been done as a trade to some regulators, but its made to get peace and get the max back in the air. And i think it will go and help do that, but that really, physically, scientifically wont fix that problem, but it looks good and thats what were deal with is looking, not actual substantiative help on the max we will leave it there, guys. Great discussion thank you both, very much, gordon and betsey. Youre welcome. Up next, well have the latest details on how softbank may be trying to take control of wework amid the startups cash crunch and president ial candidate Elizabeth Warren taking over facebook on fake ads by intentionally running a fake ad about ceo Mark Zuckerberg. How that could impact facebooks future later on closing bell. Whether your beauty routine is 3 steps. Or 57, make natures bounty hair skin and nails step one. Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Hes a bit more brave. Oh. Look. Softbank already owns a third of wework, and now it may be tlolooking to invest billions more as plans to take the cashstrapped startup deirdre bosa has those details for us this would be the second time that softbank ceo masha yoshi son attempted to take control of wework other vision Fund Investors reportedly pushed back another option is on the table, according to our andrew ross sorkin, and that is raising billions of dollars debt with the help of jpmorgan in a statement, a wework spokesperson said the company has retained a major wall street Financial Institution to arrange a financing and there are approximately 60 sources meeting on that option over this past week and next week the question is, guys, will they have the appetite and at what valuation . Very unlikely to be that 47 billion money was last raised at either way, time is ticking for wework it could reportedly face a cash crunch by the end of this year, far earlier than analysts had expected its going to be fascinating to see how this shakes out its really interesting, as well, to see if its the equity holders or the bond holders that have to do most of the writedowns. Those softbank plan that was mooted over the weekend would mean they take most of the hit and those banks that have lended against it wouldnt see such a big writedown, because, they wouldnt be seeing a default on the debt but if jpmorgan has to give some concessions, than clearly they will have a writedown as well it will be interesting to see what commentary we get from those ceos that were involved with the ipo absolutely. And it really tells you how deep both of these institutions, facebook and jpmorgan have become entwined with the mess that is now softbank you have to think if theyre going to raise debt, especially with those Credit Rating downgrades, thats going to be at much more expensive rate. And you also wonder, as well, if adam newman, if this comes down to him, we dont really know how much control he now has over the company. He gave some of that up in that very rocky path to go public well see over the next few weeks how this all shakes out. Thanks very much. Still ahead here on closing bell, should facebook be Fact Checking political ads president ial candidate Elizabeth Warren thinks so and he just ran a fake ad on febacook to prove her point. The details coming up next ou tod through retirement. Can you help with these . Were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. Woi felt completely helpless. Hed online. 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And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. Facebook and Elizabeth Warren getting into a war of words over the weekend after warren tested facebooks political ad policy, posting a fake ad that said ceo Mark Zuckerberg endorsed President Trump. Facebook responding in a tweet, tagging senator warren directly, saying, its better to let voters, not companies, decide on whether an ad is truthful. Meanwhile, politico reporting today that facebook ceo Mark Zuckerberg has been meeting with conservative journalists at offtherecord dinners and just moments ago, zuckerberg responded to that, this time on facebook saying in part, to be clear, i have dinners with lots of people across the spectrum on lots of different issues all the time meeting new people and hearing from a wide range of viewpoints is part of learning. If you havent tried it, i suggest you do joining us now is the reporter behind the politico piece, Natasha Bertrand also with us is tony rahm from the Washington Post who has written a lot about facebook and the pressure its under on capitol hill its great to see both of you today. Natasha, first to you. Talk a little bit about what facebook is hoping to accomplish by dining and perhaps wining, as well, the people from the opposite sides of aisle. So there are two facets to this, i think. The first, obviously, is the more superficial one the idea that facebook just really wants to cultivate friends on the right in order to lesson the amount of ammunition that they have to attack facebook and argue that facebook is censoring republicans thats something that the president has, of course, accused facebook and other social media giants of doing for years now. But the other kind of, the more under the surface reason, what we hear is, Mark Zuckerberg is worried that trumps doj might take some kind of enforcement action against the company in order to break it up as weve seen, trump is very willing to ask the Justice Department to investigate his perceived political foes so this is something that Mark Zuckerberg has apparently taken very much to heart and as we note, hes not just meeting with conservative journalists, hes also, when hes on capitol hill, he has met with Democratic Senators he has had dinner with them, as well but we havent heard of the same kind of outreach to mainstream news outlets, as we have in the last couple of months with all of these influencers, like Lindsey Graham and tucker carlson, et cetera tony, to the criticism from and the back and forth with Elizabeth Warren over the weekend, do you think there is a chance that facebook could soon be defined as a publisher and have to take responsibility for the authenticity of the posts on its platform, particularly if theyre making money around the sides of them . Right well, right now, facebook is saying that its not the arbitrator of truth. Thats been the message that facebook has shared for quite some time now, even when folks were clamoring for the company to do more, to stop misinformation spreading around the elections. And so to the question of what the obligations might be on facebook really rest in the hands of regulators and folks on capitol hill where we really havent seen a whole lot of appetite in terms of turning that criticism into meaningful action but the stakes are high for facebook not only are they just facing some of these affronts from the u. S. Justice department, as natasha was talking about, but also from folks like senator Elizabeth Warren, who on the campaign trail has talked about breaking up big tech companies, has talked about breaking up facebook in particular so this feud is not just some sort of political spat between the two, its certainly something to watch well, what it means is that the pressure could be on equally, now from trumps doj, and if theres a democratic president next go around, the doj under that president could equally be focused on facebook when facebook responds on twitter, its better to loet voters, not companies decide, its almost laughable, because the voters dont have all the information like, whos paid for the add . Wheres it coming from is it a foreign ad coming in natasha, when youre seeing these kind of responses, whats your takeaway from doing the reporting about whether facebook is likely to come under more regulatory scrutiny . Absolutely. I think everyone was very surprised that facebook came out and responded to Elizabeth Warren so publicly, in a way that they really havent before. And it was also surprising that they compared their policies to a broadcast network, even though theyve argued repeatedly in the past that they are not a Media Company that should be subject to those kind of regulations that do cover broadcast networking the overall takeaway has been that facebook has been makinging itself more of a target here and this new reporting that we have about these meetings in recent months can conservative journalists and lawmakers is probably not going to make someone like Elizabeth Warren more confident in facebooks ability to be a kind of neutral arbitrator on this theres a very big fear, especially on the left, that the republicans and conservatives are trying to kind of work the refs before 2020, in order to allow more kind of republican conservative ads to be on income without proper Fact Checking because as we saw, political ads arent responsible for the kind of Fact Checking that the other content son facebook listen, thanks for the reporting, both of you Natasha Bertrand and tony rahm appreciate it. Thank you up next, we discuss on whether you should bet on underperforming bank stocks ahead of tomorrows earnings for jpmorgan, citi, and wells fargo. And tomorrow well discuss the results with john screhrewsr tomorrow at 3 00 p. M. Right here on closing bell. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Welcome back earnings season kicking off with major banks set to report Quarterly Results this week. Jpmorg jpmorgan, goldman and wells fargo all on deck tomorrow joining us is dave cannon and steve brown. Fred, ill start with you. To what extent do you feel like the lower Net Interest Margin, because of the lower yield curve, is already priced into the banks . Well, it sure seems like it is priced in if we look at the stock prices and valuation, your 15 lows at these p. E. S. It looks like this Interest Rate pressure is priced in. The real question for bank stock investors is where do we go from here on rates. Thats why we seem to be stuck in fairly low valuations at this point in time. Tom, do you feel like there are enough offsets or enough priced into the bank stocks so they can have a jump off earnings this quarter . I certainly hope so i dont know how much lower we can go if you look at the last ten quarters, the level of the Net Interest Margin in some quarters has been the driving factor and in other quarters it hasnt mattered at all. My guess is its going to matter this particular quarter but it wont matter as much as it has in some other quarters. Fred, what about the fee income, in particular Capital Markets activity do you feel like that could be fairly lumpy and stock specific and perhaps some interesting disclosures around ipos . That should be fairly interesting. Remember Third Quarter is fairly soft we have already some pretty good indications from the companies that its not going to be a great fee income quarter that said mortgage banking should hit the ball out of the park we think thats where well see some offsets to this Net Interest Margin pressure that tom was talking about. Tom, i havent had you on i havent personally had you on my show since the news wells fargo ceo was announced. What was your take on the appointment of mr. Shaw . My take is its great that the interim ceo of wells fargo, alan parker, said great ceos are made when outstanding leaders meet up with the right situation, and i know that charlie is an outstanding leader and i think this is the right situation for him. So i think wells fargo is poised to really begin a rebound. Im excited about what charlie can do fred, just to round things off of the big cap banks, which do you think are best positioned going into earnings season we kind of like citi and Goldman Sachs going into earnings season of the id even point to some of the trust banks this time. They have been laggards. And some of the actions by the fed and this Net Interest Income could look good for bank of new york we think there are some opportunities here if you get away from the big spread lenders where there will be some challenges. Thanks very much. Banks arent the only big names reporting earnings tomorrow we will round up the other earnings reports that you need to keep an eye on tomorrow morning when closing bell returns. Is the monolithic view of emerging markets obsolete . At pgim, we see alpha in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. 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If not, talk to schwab. A modern approach to Wealth Management. Welcome back a Major Airline and two dow stocks in the Health Care Sector will be reporting results tomorrow morning lets start with meg terrell and a preview of Johnson Johnson and United Health care. Hey, guys both of these stocks are facing overhangs of external pressure johnson and johnson amid a slew of legal headlines now, for United Health, Analysts Expect its optim unit to drive the quarter. But whether a Strong Quarter is enough to buck the political pressure is another question the shares are down 17 in the last three months. Ka Cantor Fitzgerald calls that a buying opportunity johnson and johnson may be offset by currency headwinds litigation issues are such that they make the quarter almost superfluous for the stock. Back over to you. Lets find out what investors are expecting from united airlines. Phil lebeau has a preview for us. United is expected to have a relatively strong Third Quarter. The estimate is for 395 a share, which would be growth of 29 year over year in terms of earnings growth. Revenue expected to grow just under 4 but lets be honest. You take a look at shares of united, the big focus tomorrow will be questions about the 737 max. Remember, united has pulled this plane from the schedule until early january. You can bet there will be plenty of questions for the ceo, oscar munoz, and other executives about this when they do their Conference Call on wednesday morning. Speaking of the max, its really driving it home to boeing right now. The ceo has just lost his chairman job is the date of this return to air, january, going to hold . Dont be surprised if it slips again. Every time we get one of these dates, increasingly what you hear back from the airlines, not just u. S. Ones but foreign carriers as well, well, we think, we think this is when well have access to this planes again but dont be surprised if this slides back even further. Some very, very Important Companies reporting tomorrow not quite as important as the banks. Just one more thing to flag on those. Clearly this is such an important gauge of the strength of the u. S. Economy which has been weighing on Broader Market sentiment over the course of the last couple of months. The calls afterwards, and weve got four of them tomorrow, well get a really good gauge of whether people can get bullish or more bearish. Especially about mortgages and whats happening in the Housing Market what the yields are doing and doing to the banks and how they factor around those. Exactly right we finish today down 29 points or so on the dow, down 30 points, just small declines of 0. 1 . Coming off the back of strong gains on friday. Were out of time here that does it for closing bell. Fast oney begins in just few seconds. Live from the Nasdaq Market site overlooking new york citys times square, this is fast money. Im melissa lee. Tonight on fast nike breaking out to new alltime highs, but is this record run about to hit the wall well debate it. Plus well tell you what sent shares of tesla into overdrive and later big changes at boeing. The ceo stripped of his chairman title. B but one insider says too little too late. We begin with moment of truth for the markets. We are hours away from earnings kicking off. So will the banks be the