Concerns over software and tech stocks lower weve been up, down, all around for the markets today. As we stand, though, with 59 minutes, were higher on the dow, lower on the s p. Joining us for the full hour, from capital usa, keith, good afternoon to you. Thank you, wilf. Earnings been Strong Enough so far or have they been resoundingly strong this week . Theyve been strong so far. I think the markets have been less than vigorous, shall we say, the last couple of months i think well enter a period less vigorous than it was before thats going to be a key component for how we evaluate the economy and market Going Forward. Lets check in on the markets. S p 500 down by about 0. 1 and the dow higher by four points so far. Retail sales, and eamon javers has the latest on trade lets start with wilf on the banks. Bank of america reported this morning. They continue to feed from yesterday, the impact of low rates, while negative, has been less bad than feared that interest margin was down only four basis points from the previous quarter to 2. 41 , offset by strong loan growth, which meant the Net Interest Income actually grew 1 year over year to 12. 3 billion, ahead of forecast. There was also no need to lower the Net Interest Income forecast moving forward elsewhere, fee income for bank of america, the positive surprise was 27 year in Investment Banking revenues. Cost control and buy backs continue to be a huge factor in delivering eps growth which is fine unless you think it can continue worth noting top line Revenue Growth was flat year over year like citi and wells fargo. Goldman sachs now lower, feels like the outliers. Brian moynihan and the others are still upbeat, including the consumer in particular. Consumer payments year to date are up 6 compared to the same period in 2018 through nine months these are tangible examples that the u. S. Economy is still in solid shape despite the worries and concerns about trade wars, Capital Investment slowdowns or other global macro conditions. The consumers in fine shape. I would describe that as more of a catchup to where many of us have been than necessarily any new information. Surms continue to show resilience and remain a meaningful source of strength. The u. S. Consumer is incredibly strong. Consumer spending is strong. Sentiment is strong for the Consumer Credit is good. Tomorrow, by the way, dont miss my exclusive sitdown with Goldman Sachs chairman and ceo David Solomon right here in the 3 00 p. M. Hour on closing bell. Keith, back to the earnings, though, theres also been some stockspecific differences this quarter as opposed to all banks look attractive. Bank of america week to date, citi is just in the red week to date i think perhaps thats being missed in terms of this general sentiment of saying the banks beat expectations. Like everything we analyze here in the markets you have to get underneath the headline. Theres certainly a theme there. The consumer is strong, the consumer is strong, the consumer is strong. All these banks have other big core franchises like corporate lending, like trading. Those Capital Markets activities if those dont start pulling their weight, if the consumer weakens a little bit, ill be concerned about their longterm prospects. Are the banks a place you feel comfortable putting something to work here the certainly Warren Buffett feels confident. And i hesitate to actually go against mr. Buffett. However, i do think they may have gotten overstretched here there are three things, have we hit the trough on the Net Interest Margin story . What are they going to look like in large corporate theyve really been putting allowances for that. Will the consumer stay strong . University of michigan readouts next week and Conference BoardConsumer Confidence numbers. If those start to weaken i would start to lighten up on my exposure to banks. As it relates to Warren Buffett, i think that story has helped the share. Absolutely. Although i dont think it should have done they have to apply to the fed to notify theyve gone above 10 . That was more because of share buybacks and not quite staying on top of exactly where that positioning was as opposed to necessarily a new stake or new buying from Warren Buffett jp morgan, u. S. Bank, wells fargo are sizeable positions for him. I dont think its an incremental new position. I agree with you 100 he thinks bank of america suddenly will be trading at 18 or 19 times earnings today it is a statement about what he thinks about u. S. Financial services probably in the broader Global Economy. Were not done with this conversation yet bob pisani has a look at regional banks and how theyre trading today. Hi, bob. Hi, courtney. Good news overall, you heard from bank of america, u. S. Bank corp, generally beaten expectations and the consumer appears healthy even with regional banks commentary. Its been very good. For example, pnc said long growth had been strong for both the commercial and the Consumer Loan sectors, u. S. Bancorp said it was solid and particularly talked about mortgage revenues as robust. A common complaint has been overall long growth was anemic last year. Its been much better this year and this quarter four banks saw long growth anywhere from 4 to 6 , north of 6 in the case of pnc. Last year, for example, 2 to 3 average long growth was typical. Wilf not just jp morgan, money center but the regional banks are talking about a strong consumer wilf absolutely, bob and all of them very cheap coming into this earnings season, another factor why weve got the banks up week to date for the most part. Bob pisani, thank you. American shoppers pulled back their shopping in september. Steve liesman is in washington with more on the retail data steve . Just slight to modest growth throughout the country that was the september to early october period thats a bit of a downgrade from the last survey. From the feds 12 district banks down, slower Global Growth weighing on the u. S. Economy reducing outlook for growth six to 12 months manufacturers lowered their head count, overall employment saw slight gains tempered by worker shortages in many places and industries, as fed officials weigh whether to cut Interest Rates again at its meeting. Third quarter point rate cut fed officials seem more divided. More ammunition today. September retails report, big disappointment sales fell. 3 as a result . Economists think the Third Quarter grew at 1. 5 , half the pace the question was whether it would be more slowing from here. Steve, you know, the government, Commerce Department did, also, though, upgrade retail sales from august those ended up being stronger than expected. Is it possible consumers pull forward some spending, making september less bad thats one theory thats out there. Theres a lot of division on that question, courtney. One idea is that perhaps because of fear of tariffs and theres a debate as to whether or not the consumers even knew about the tariffs, but that they would pull forward their sales into august and weaken it in september. In any event, can you imagine because theres a lot of volatility and a lot of revisions to this data, that you had a strong august followed by a weaker september i think the issue, though, courtney, is the consumer has been whats been holding up this economy. And people are kind of on the edge of their seat, waiting to see or wondering if the consumer is really going to get weaker from here. And that bank stuff you were talking about earlier, thats good news, kind of offsetting the retail sales. I think its a point were going to follow to thread through in many of our conversations. Steve, thank you so much. Sure. Eamon javers has the latest on trade hi, eamon. Courtney, we saw the president of the United States, president of italy in the east room here. Couple of economic headlines out of that appearance one is that the president says the United States cant lose when it comes to a tariff war with the eu. Standing next to the president of italy, who just said that he believes that the u. S. Put tariffs on the eu that all sides will suffer the economic consequences the president of the United States, though, saying no, the United States simply cant lose because of the trade imbalance between the u. S. And eu. On china trade, the president said that deal is being papered. Theyre writing the specifics of it right now he doesnt expect a final deal ultimately until he has the opportunity to sit down with xi jinping, expected in midnovember at another summit thats coming up finally on the digital tax, the president saying Something Interesting there. He doesnt like the idea of european tax on american digital companies. He said if anybody is going to tax these digital giants, its us, the United States. Its going to be interesting, that, eamon, particularly if it comes through the oedc, and its a unified approach as opposed to single countries trying to do it well see how it, of course, materializes also interesting that the president of italy is just the head of state, not the head of government its not his decision about any of these tariffs or policies but there we go. Eamon, thank you. Interesting he was clearly there to deliver a message, though. And he did, wilf. Eamon javers for us in washington. Still to come, what will be the big story of the afternoon netflix earnings, most likely. A lot on the line for the company. Expectations or shows signs of slowing growth well be all over that, including an interview with netflix cofounder Marc Randolph thats coming up later next hour. What would a warren presidency do for stocks leon cooperman said erthe would be a haircut day one well as ted goin on a trip, huh . Takin it off road station wagon, eh . You know its an suv your family is duckin and rollin. While we stowin and goin but thats cool, i know for a fact your suv does not suck. And why is that . It aint got that vacuum in the back, whoo sucking stuff up what else are we gonna find . We got to go. Vacuum in the back, hallelujah get 0 financing for 60 months plus 2,250 total bonus cash on the 2019 chrysler pacifica. Just about 45 minutes left to go in trade today lets get a check on some individual Market Movers united airlines, earnings beat after the bell outlook due to surge in passenger bookings revenue is in line with analyst estimates, that stock is higher by 2. 5 . Over to mike santoli for todays market dashboard hello, mike. Hello, wilf ahead first, oceans away, overseas sectors are starting to look brighter after long time in the shadows, then title shifts, more signs that this market, perhaps, is looking to move away from a more defensive character in todays action. Riding the stream, as netflix reports, a look at whether its a bellwether for the rest of fang or tech still buoyant, disappointing retail sales in the next hour. Oceans away, though, lot of eyes on the fact that emerging markets have perked up relative to u. S. Markets. Of course, its been a pretty long downturn. This is the absolute price of the ishares etf, the big one here some people are not, obviously, a pro at this. But there is a trend line connecting a lot of these peaks and theres obviously a signal that its perking just above that this is something that a lot of traders say maybe this is more than a mere bounce in a very similar fashion at the european financials etf. You want to talk about kind of sector of the World Markets that have been on the outs for a long time its a similarlooking chart people are pointing to a kind of similar dynamic here where its just peaking above this relatively longterm downturn. This is a twoyear chart does that mean theres some kind of major flow out of u. S. Markets into these sectors no it does show you perhaps as yields lift around the world a lot of these areas around the world that are depressed on a cyclical or longterm basis are starting to get long delayed interest or having sellers out there. Its a bullish outlook if these trends continue t may not mean u. S. Outperformance anymore but better economic outlook. Thats whats implied by the market here. European yields have perked up this week, on brexit hopes. European banks will welcome it for sure very good afternoon to you, mark thanks for joining us. Thank you. What about that point that mike just made that this could be a turning point for em equities more broadly . Do you agree i agree simply because of Interest Rates. You see these Interest Rates globally tanking into very low levels negative rates in many, many places so thats great for emerging markets. Those emerging markets particularly that have been in trouble previously even argentina, a number of people are beginning to look, despite all the losses that people have suffered there, now beginning to look at argentina again. Theyre probably going to be able to refund and get money into the country youre seeing that all over the emerging markets world. Mark, what do you think about china . There are so many cross currents going on when were talking about china, or even the msci. You have these blacklisted companies that are part of that. Is that an area you would want to look to invest at this point, or do you need to wait for these trade war headlines to settle down i think the impact on china probably has been overestimated. I think the trade war is not going to hurt china as much as people believe psychologically, of course, its not good but the growth in china is still going to be good, 5, 6 . You must remember, china is moving away from a tradeoriented economy to a service economy. If you look at asia in general, theyre doing very compared to other emerging markets not just because of china, but india, beginning to take up the slack from china so its a very Interesting Development were seeing in asia. How much is turkey going to be hurt by the latest sanctions . I think its going to be hurt no question about that the question now is how fast theyll be able to change their orientation towards the situation in syria right now, it will probably hurt again, its very psychological the economy generally, we were forecasting good results for the turkish economy this year. With these sanctions, the psychological impact will definitely be there. And theyll be slowing own. Marc, early this morning on squawk box, leon cooperman was commenting on the 2020 election results. Lets have a listen. If the president resorts to putting on another round of tariffs, it probably will increase the probability of recession. If we have a recession, the market drops at least 25 . If Elizabeth Warren is elected president , in my opinion, market drops 25 . Bernie sanders, same thing you know, in my view. Whats your take on that, 25 drop was his view, marc, if either we have a recession in the u. S. Or warren or sanders presidency do you agree i have to go along with that. Ive said that if trump is not reelected, the market will go down i dont know how much but 20 , 25 is probably possible but if you look at the other side of the coin, you must remember that were in a situation now where the trade war is having a global impact. So, theres definitely a slowdown in the Global Economy even though emerging markets are double the growth rate of the developed countries. So the trade war is having an impact hope f hopefully, china and the u. S. Will come to some agreement soon. Marc, previously in september, you had called out hong kong as being very, very important. What do you think is the impact currently between the differences with with hong kong and china and also u. S. Companies trying to do business in both places right now, the hong kong situation is very, very key. And its not because of the Economic Impact but the political impact as you know, the u. S. Congress is watching this very carefully. They want to pass a bill that will censure the country, the trade agreement they have with hong kong. If things get worse, in other words if china imposes more controls so i think its a very, very important situation we have in hong kong. Remember china now is not as dependent on hong kong as it was 10, 15 years ago so even if they dont reach some kind of stalemate or Peace Agreement in hong kong, china will continue to grow. Marc, thanks for joining us great to see you. Thank you. Keith, whats your take on that leon cooperman, 25 , Elizabeth Warren figure . Its an easy number to throw out. I think we need to understand why the market went up and that may be instructive of why he thinks the market may go down. Lower tax rate, reducing regulation these are all factors that went into why the stock market went up if you believe Bernie Sanders getting elected or Elizabeth Warren gets elected takes those things away, rolling back the deregulation that occurred, putting on my regulation, it will have impact on the market logic would tell you that. Whether it gets to 25 or not, im like Warren Buffett, never bet against the u. S. Economy, no matter who is in the white house. Coming up, a vote of no confidence three analysts cutting their price target after workdays analyst meeting. Thats the word on the street coming up next. Ibm earnings after the close. Well break down those earnings wi tthhe cfo Jim Kavanaugh were back in a few minutes. 300 miles an hour, thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. When you retire will you or will you just be you, without the constraints of a full time job . 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S. Out with a note on facebook, looking at instagrams shopping feature checkout. Saying it could contribute 5 billion in revenue by 2023 in just the u. S. Alone. Sales force ceo sounding off on facebook earlier today on squ k squawk on the street. Facebook is the new cigarettes its addictive, bad for you. Theyre after your kids. People can change. Look at the political ads going on theres not a commitment to trust and truth. And now theyre comingling the data of all their acquisitions facebook should be broken up because theyre using these assets in a way to further manipulate even more people. Theres a lot to chew on there, keith. Yeah. What do you think about facebook as a company . Is there value in breaking it up should it Stay Together . Would you own it either way . I would still own it, for sure listen, i cant opine on whether breaking it up is better for society as well as the shareholders themselves. However, i will say if you go back to what you were reading about instagram and what its do done, that is continually looking like the smartest acquisition, from 1 billion in 2012, theyre now going to produce close to 18 billion in revenue this year alone. And then the instagram checkout is just going to be a bonanza for them facebook is executing very well. A billion monthly active users in there sell lots of things to them, advertise lots of things to them that is the one risk to their business. It is highly significant to see someone like mark benioff, Silicon Valley entrepreneur himself, procapitalism, protech hes not a rival hes not saying this because he runs snapchat and wants them to be an easier competitor. Thats significant and it definitely puts more wind in the sails toward the breakup kind of momentum in d. C. Listen, i think there are questions that need to be asked about the impact of facebook and the other social platforms on society. They knew what they were doing when they created it all they needed to do was give people a dopamine hit and knew they would keep coming back and could sell things to them. Being really clean with the data being put out to the end consumer, is it fake news, is it really something that is a propaganda is it something thats steering people the wrong way we do have free speech that we need to be concerned about so thats a very thin line youre crossing back and forth i think thats the one issue people are upset with the way that the average consumer seems to be manipulated inside of their platforms. Thats been the retail story since the beginning of man you manipulate people to come into your stores to buy stuff. Now we do it across digital platforms. Its an interesting conversation well continue to have we have just about 30 minutes left to go top three things driving the action, big miss on retail sales put a damper on sales. Better than expected housing data strong results from bank of america continue an upbeat earnings trend and concerns over workday, as we just mentioned, sending software and tech stocks lower in the action today. Time for a cnbc update and sue herera has it for us. Hello, wilf hello, everybody at a joint News Conference with the italian president , President Trump said, quote, things are very nicely under control in northern syria, end quote, where Turkish Forces are fighting syrian kurds the kurds were aligned with the u. S. Against isis. The ph is part of the kurds, as you know, is probably worse at terror and more of a terrorist threat, in many ways than isis. So its a very semi complicated, not too complicated if youre smart but its a semi complicated problem. And i think its a problem that we have very nicely under control. The death toll from the japanese typhoon has risen to 67 with 16 others unaccounted for the storm tore through japan, causing widespread flooding and land slides. About 75,000 households have no running water. A layer of smog over new delhi as air quality plunged to poor a day after the government initiated stricter measures to fight air pollution, including discouraging private vehicles on roads, increasing bus and Metro Services and stopping the use of diesel generators. Youre uptodate. Thats the news update this hour courtney, back to you. That timing, i guess, makes that pronouncement timely, doesnt it it does, yes. My gosh that video could have been anywhere you could hardly see what was going on there in new delhi. Lets send it over to mike santoli with a second dashboard of the day hi, mike. Hi, courtney. Whether were seeing a tidal shift within the stock market amongst styles russell 1000, outperforming the growth index by onethird of one percentage point longer trend, though, two years of value compared to growth. But is it picking up this is what folks will be looking at, this possibility that its trying to fight its way toward forming some kind of a base here. Obviously, we had a big move several weeks ago in this direction. It cooled off. It did not make a new low on a relative basis i dont know that we could say it would be an either or type Market Growth can stop pitching a shutout. And focus in more tightly on specific groups that represent this whole banks against software all in the news. Talk about the downgrade to software stocks. This is more dramatic. You have a pretty sharp upturn there. Higher base. I think that the market is attempting to say maybe this is time for cyclical stocks to get some traction, cheaper stuff as opposed to more defensive secular growth names obviously you kind of have to see if, in fact, this has any follow or is a head fake. Weve had a few head fakes the last couple of years if you go back to value versus growth, if you did super long term yeah . How long does value typically outperform growth for . Is it only short moments in very defensive risk off short periods . In the crucible of a bear market so if i were to go all the way back, lets say, to the early 2000s, growth had done well into the top at 2000 and value really worked for several years after that so its not as fleeting as it might seem here. And then, you know, even 2016, when we had markets come back, a lot of defensive stocks sold off and you had that move in cyclicals after the election it can last months to years. Its not always something thats a flip of the switch its a more subtle give and take over time if, in fact, you dont have a major market top or bottom. Mike, thank you well see you later. Last chance trade 26 minutes left of the session. Plus, here is what happened to shares of netflix over the last quarter, dropped 10 after july will it go to the upside or disappoint again well get the answer after the bell here is a check in on bonds, two and fiveyear sitting around 1. 5 today closing bell will be right back filmgate is growing really staffing a small bquickly and. Is challenging. I needed to fill a production coordinator role. I was looking for someone with specific skills. So i posted a job on linkedin. Maribel had all the skills i was looking for. And looking at her profile. I saw shared connections. That was a plus. But the most important thing. Is the ability to connect to people and she had it. And i knew. She was the one. Post a job today at linkedin. Com grow welcome back General Motors and United Auto Workers have reach aid tentative deal phil lebeau has the details for us. Its not even a tentative deal but a proposed tentative deal what difference does it make a whole lot. 200 local leaders in locations of the uaw around the country still need to meet tomorrow. Theyll review and then vote on the agreement. If they approve it, then they will say, okay, its on to the rank and file. By the way, the rank and file, they remain on strike. Theyll get some details tomorrow in terms of whether or not theyre going back to work or whether or not they continue to strike while they vote on a final agreement. So, what did the uaw get out of this did they move the needle at all for the union . They did get gm to committee to 9,000 jobs being crow ated or retained and temp workers, long point of contention, a path to permanent jobs at General Motors and no major change in their health care. What did gm get out of this agreement . General motors is not moving product out of mexico. Remember, this is something you heard from the rank and file, you heard it from the leadership they said we want product brought back from mexico vehicles built there should be built in the United States thats not changing. General motors is not changing its footprint in mexico. Ford and Fiat Chrysler also moved up, along with General Motors we will find out who is next to get their contract negotiated once the gm deal is finalized. And, again, were a ways from that happening but were starting to see the steps come together towards a final contract. Phil, youre talking to a brit who covers brexit i know all about proposed tentative deals. No need to explain. You love that word proposed, dont you . We will believe it when we see it i think both of us in the same camp. Yeah. My agony has been three years. Yours has only been a month on this particular one. Thats true. Thats a very short time. Phil, thank you. 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[spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu just under 18 minutes left to go keith, what is your lastchance trade for us today xlv, spyder health care etf that has been vastly under d underperforming the rest of the market this year, for a couple of reasons the crisis has hit a lot of health care and Health Care Stock stocks you got a bad political environment under drug prices and the trend or the drumbeat toward governmentrun health care in the United States. So the xlv is still lagging very much the Broader Market from 19 to 22 , depending on the index, and is the worst performer of all the spyder etfs. Youve got some really good, strong franchises like pfizer, United Health care and merck most of those companies have high dividend yields, 2. 1 in the etf. A lot of that is because the stock prices have come back. Dividends are pretty secure. So whether its facebook, coopermans 25 down on warren or sanders, health care is laughing in the political space . Yes theres a lot of talk in front of the accuracy and it all seems to go away and theyre were fine aging global population and good, strong franchises like the ones that i manage, cashflowing businesses as long as theres not a complete government takeover, i think you jump in and get that, especially if youre looking for yield and good longterm play. The xlv is that for me. Last chance trade come i coming up next, were going inside the market zone commercialfree coverage of the final minutes of trade where well tell you everything you need to know as an investor and bring you rneaings from netflix. Stick around were back after this break. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. 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Alongside our cnbc commentator mike santoli to count countdown the crucial trading moments of the day the markets, as we stand, are down 16 points on the dow, s p 500 a little negative as well,. 2 . Bank of america is higher. Posting a beat on the top and bottom line. It comes after citi, jp morgan and Goldman Sachs reported yesterday and wells fargo yesterday as well. Tomorrow well hear from Morgan Stanley. Mike, interesting undertones here, which is that the Interest Income parts of the reports havent been as negative as some feared but the top line Revenue Growth, if you take out jp morgan, is not positive that reminds you the stage in the cycle were at. Stage in the cycle. Third quarter. Slow in the Capital Markets areas and various ways i do think, though, the response is net positive. B of a up 2 on the back of other bank earnings, up another 3 today doesnt seem theres a broader tailwind, it just seems as if people are saying the operating results are good enough relative to expectations. The stock has been here three, four times before. Well see if it breaks through. That being said, jp morgan is slightly lower today it is the one that is testing and often passingity alltime highs. Thats right. Thats with the broader s p 500, too, can we break out the way we havent been able to the last 15 months absolutely. These stocks, for almost two years, have been in this mode. Also reflective of the Broader Market, jp morgan is at an absolute high, the rest are still struggling in this range. We talk about the consumer as well despite retail was lower than expected, its higher for this session as is s p rls. Department sales fell 4. 1 in september from august. Nordstroms trading lower macys was plug pluging a bit higher in the session. Accessory stores gained 1. 3 since august and most of that group is trading higher today. Sales of nonstore retailers, largely online players, that fell 0. 3 in september from the month before, shares of amazon, though, are up. 75 . I found it interesting, keith, that the markets didnt move so much on this weakening retail sales number, even though we all think the consumer is whats holding up this economy. The consumer is holding up the economy. That story doesnt go away i dont get concerned in the blip from one month to the next. You think about the outlets that consumers have to go by things, we used to focus on a lot more 20 years ago when we would go to macys, nordstrom and buy your clothes. We have Access Points all over the world right now. We dont need to be buying stuff every month. We can buy a lot of stuff one month and it slips for a month i dont get too concerned about that Consumer Sentiment and confidence numbers are more important to the consumer story than retail sales. That shows t s the monthtoh trend. Because i look year over year, they were up 1 in september. The trend is on track from that gauge i do think thats probably the lesson here. Plus the market feels as if it got a little bit of a fakeout in the prior months with a very weak sales number, too it didnt necessarily tell you whats to come. All three major indices are lower, 8 or so left to trade. Tether meg tirrell. One of five companies to pay 22 billion in cash and 15 billion in drugs and services in cases filed against them by states and cities. Here is the breakdown. Contributing 18 billion cash for people familiar with the talks, j j would contribute 4 billion in cash and teva would contribute 15 billion in drugs to reverse opioid overdose theres push for teva to contribute some cash, too. That hasnt been agreed upon discussions were fust reported by the wall street journal and bloomberg, that payments would be made in increments of 1 billion a year as jury selection was set to get under way today ahead of the start of the First Federal trial, the first of thousands that have been consolidated in cleveland. These specific talks, guys, also do not include other defendants in those cases like endo pharma. What is expected monday from that case . Both sides have filed motions to try to delay the start of that trial, according to the washington post. States attorneys general were denied their motion. Filed under seal, we dont know what will happen there both sides, sounds like, wants this to be pushed back the judge, however, does not want that. There are still defendants, pharmaciys, namely, left there not in these settlement talks. Keep watching it for us, meg. Thank you very much. Less than seven minutes to go after the bell well get earnings from csx. Frank holland has the met rirics for us to watch. Decline 3 year over year intermodal, that will be the number to watch in earnings after the bell csx gets 15 of its revenue from intermodal they were down double digits, factor that led ceo james foote to call the current Economic Situation puzzling csx shares down 12 since then but still up 10 on the year wilf thank you very much for that, frank. Ibm will report after the close as well. Hi, dee. Redhot deal closed is that enough to revive ibm if revenue comes in within expectations at 18. 2 billion, that would be the fifth straight quarter of quarterly revenue declines, brief respite in 2016. Before then it was 22 quarters year over year and looking for a turn around and shares are underperforming the Broader Markets over the last year. Back to you. Thank you very much, deirdre. Quarterly results from Netflix Julia boorstin has more on what to expect there. Hi, julia. The big question is whether netflix can show subscriber growth after a disappointing quarter. 7 Million Subscriber additions are expected in the Third Quarter and rejecting netflix will guide the addition of 9. 5 Million Subscribers in the Fourth QuarterEarnings Growth 17 , revenue by 1 and theyll be listening for any comment from ceo hastings on the growing competition. Guys julia, thank you so much. Were looking forward to those numbers. If subscribers miss again, particularly the u. S. Numbers, seeing a decline like they did last time, whats the drop in the stock price in terms of that scenario i cant tell the percentage i think people will be running for the doors at that point in time weve started to see the cracks. You have a lot of competition for ott Services Priced much cheaper than netflix people are starting to cut over. I have three of those, hulu, amazon prime and netflix because netflix is raising prices on me seemingly every three months, im considering dropping it. Im not sure its an economic play but Household Budget and were paying too much for too many things. The street estimate of net ads right now below the guidance of netflix i do think that the street is braced for potential downside in which case im not sure it will be an outright blowback. In general projections of what netflix can do, i dont think theres a long leash on the stock right now. Its kind of near enough to the recent lows that i dont think youve got people positioned for great things. Caught by surprise last quarter. Weve seen a lot of sort of copout price target cuts. Exactly. Thats been more to come down where we are rather than go beyond that. Its not a radical adjustment the price target isstill in th high 300s. Theres still a lot of implied upside i agree with you its not as if people are bearish in their onpaper stance i also dont think people are complacent about what these numbers are going to say. Three minutes after trade s p, dow, nasdaq slightly lower. Outperformer today fractionally higher market internals mike flattish indexes and a lot of basically give and take about even breath underneath i want to take a look at new highs and new lows on the new york stock exchange, relatively healthy at least youre still in the three digits, s p 500 over a percent alltime high. Nasdaq has been a laggard for quite some time. Nasdaq does seem like theres an undertow beneath the index, and thats reflected in the new lows versus high. Do you keep an eye on that type of aspect always. Its encouraging to you at the moment always. You want to take a look at that and look for the nuanced trends. Thats where well gauge money flows coming in, new highs outpacing new lows, gives us the reason to believe well continue running for some time. Weve not reached those overbought peaks you see in the markets and then you get those pullbacks. That is very important in the way we analyze the market Going Forward. Thank you very much stick with us, mike. Of course, two minutes left to go lets send it over to Rick Santelli for a check on bonds. Hi, rick. Hi. Indeed stock market, treasury market was pretty much the same tenyear note yields slipping from fourweek highs, looking at a chart beginning in september were Still Holding most of the gains. Europe is just outpacing us to the upside in rates. Foreign exchange, dollar index, sevenweek lows. Its doing much better against the yen than the pound you see the pound, worse levels since may. You see the yen, best levels since may. Bertha, just like treasuries, slip from fourweek highs and youre the leader at the nasdaq today. Tech driven, particularly third worst daily decline ever following analyst day. Less concerned about the slower cycle to close on some of its accounts meantime, shifts also retreat from their alltime highs yesterday. As l was one of those yesterday. Earnings mixed, little shy on the top line nonetheless not as big a drop. Meantime j. B. Hunt is the earnings winner, despite the fact that it, too, had mixed results but did point out that it does see some potential upside Going Forward when it comes to its rail modalities over to bob at the big board. Retail sales may have been big. Twoyear highs there weve hit new highs in a number of big Home Building spots we see d. R. Horton hitting new highs. Great month for them big Construction Companies like louisiana pacific, also having a good day all trading to the upside. Closing bell Dow Jones Industrial moving at a very narrow rate today about 100 points, closing down 22. Just joining us, welcome to the closing bell im wilfred frost. And im Courtney Reagan in for sara eisen along with mike santoli. We are in the market zone. Days Market Action on the right side of your screen. The stories still coming up on the tabs on the bottom of your screen. Trading day saw the dow, s p and nasdaq all lower, albeit slightly,. 2 for the s p, Consumer Discretionary materials, energy and out technology. Plus it will be a very busy hour of earnings with netflix set to report any minute well hear from csx and ibm. Well break the numbers and get instant reaction, coming up. Joining us to talk about the market day, keith bliss, who is still with us from iq capital usa and george perks, analyst at the spoke Investment Group mike, at the end of the day, we ended up selling off just a touch. At least on both sides of the flat line today. Idling, just below the highs. Stock market is up it got overbought. No leadership from yields. I think were waiting the heavier rush of earnings to give it an idea of whether expectations were beaten low enough, as they seem to have been. Positive earnings eports, s p 500 is only up twothirds of 1 for the week so far does that tally with you in terms of how strong earnings have been so far i think thats about right. Weve only seen seven, maybe eight Major Companies report earnings so far this week. Five Major Money Center Banks come in above on ips that generally will lead to, on average, earning season outperformance over the rest of the earnings performance to come for beat rates but nothing too dramatic with banks beating eps, with good prints from health care, were happy about where things have been. Its early still thousands of Companies Need to report over the next few weeks before well know where Corporate America is at after q3. Keith, we talked earlier about how it seems youre fairly bullish in the long term, had uncertainty about politics mike showed us a chart looking at growth versus value as we wait for these big growth starts to report, where are you when it comes to growth versus Value Investing . Whats been interesting, you see these growth names, growth sectors start to pull back where they look like value names outperformers in the last three months be in the form ofutilit i s, believe it or not theyre scrambling, looking for stable assets, little liquidity in the etfs and some sort of return back to your broader question, i would still be very bullsh on growth names, big believer, regardless of the political environment, regardless of where we are in the economy. Im a big believer when you look at all the fundamental underpinnings, there will be broad trade deals worked out and that will rip the growth names higher still. After earnings just hitting well have the details for you in a moment. Mike, to the Broader Markets, yield is less of an impact today and earlier this week . Because they kind of sat there. The tenyear holding, 174, Something Like that, thats probably still in that positive. You can look at that chart and say were up from 150. Not that long ago. And it tells you that perhaps theres a little bit of a kind of a move toward a higher metabolism right now, not an issue for today. I think still a positive trend for stocks. George, where do you stand on the data weve seen as of late and today . In fact, hold on, george were going to go straight to julia, who has dived into all the netflix numbers. Julia . Hi, thats right, wilf. Netflix, beating earnings on the bottom line, earnings per share at 1. 40, estimates 1. 04. Hairline of expectations, pretty much in line 5. 244 versus estimates of 5. 248 when it comes to these allimportant subscriber additions, 6. 8 Million Subscribers in the quarter, a hair light of the 7 million the company itself guided to the shortfall is from the u. S. The company added half a Million Subscribers in the u. S. , in the quarter. They forecast the addition of 4. 8 million. That is a bit lighter than expected whereas the International Net additions are just a hair above expectations, 6. 3 million. If you look at the companys guidance for the Fourth Quarter for subscribers, it says it expects to add 7. 6 million streaming paid net additions wall street analysts had been looking for more like 9. 5 million additions in the Fourth Quarter. So, thats the guidance. The company does say in q3 the guidance forecast is the most accurate in recent history and they talk about the forecast of 7. 6 million with. 6 million in the u. S. And 7 million for the international segment, saying this implies full year net additions of 26. 7 million. It would be for the full year, fewer additions than last year interesting to see the slowing growth there well continue to dig through this report and get back to you with more, but you see right now shares are up nearly 2 , likely on that better than expected earnings number. Back over to you. Julia, thanks very much for that lets bring in our panel for reaction ed lee from the New York Times is joining us. Alan gould joins us on the phone, buy rating on the stock mike, i want to come to you first on this. The stock kind of holding up. Yes. Despite a headline miss on the key subscriber ads on the u. S. Side they had fallen last quarter, this quarter adding less than analysts wanted to see. Exactly sort of confirms the idea that i think peoples sights had been lowered well beneath where guidance was sitting for the company. Pretty much on target because of what the street was looking at holding up in the way, the fact theyre guiding down versus street expectations for q4, it tells you stock has taken some punishment maybe its a conservative guide as opposed to an ambitious one earnings outperformance, its funny. I dont think the stock typically trades on that have you to see with r that came from, marketing or somewhere else. 43 cent beat on earnings, something we focus on. On a revenue match. Right exactly. And i know you have been digging through these numbers. What do you see here that you like or dont like as we watch the stock reaction bounce around after hours . I was looking more closely at the q4 forecast. Were going to get disney plus, apple plus in two weeks and a week after that, disney plus theyre anticipating that competition. You know, i actually think their forecasting is getting better. Even though it missed the estimates in terms of what analysts were looking for on that, its still positive for them, right . Thats still a positive narrative. Even in the face of this competition, theyre projecting 7 million plus new ads for this quarter. Alan, are you surprised to see plus 5 after hours moves, given there was a bit of disappointment both this quarter and the guide . Yes, wilfred, a little bit. This is the first time that the consensus estimate was less than their guidance so the street was set up, stock was set up to be able to handle an earnings miss i am a little bit surprised that the q4 guide is 7. 6 million versus 9. 5 million consensus, which implies this will be the first year that net ads dont grow quicker on the prior year they do like the stock, its come down 22 since last quarter. You can go out to 2021, 2022. At this stage, the subs and the Free Cash Flow by the way, Free Cash Flow was a bit better than expected, about minus 550. The street was expecting close to minus a billion not sure what the guide is for the Fourth Quarter yet most important thing is you can look out and project reasonable earnings going out two, three years. That allows you to value this as multiple earnings. Back to julia, digging through the release. Julia . Wilf, talking about competition in the launch of all these new services, disney plus apple tv plus. The lauvennch of these new serve will be noisy. We tried to factor that into our guidance saying in the long term we expect to grow nicely, given the strength of our service and large Market Opportunity he also talks about the success of the lower price mobile plan in india and how theyre sxermting and continuing to test mobile only plans in other markets. Also how theyre working on the partner based bundle offerings and others, trying to make sure its sort of baked into those cable bundles and one thing about operating margins. Fullyear 201913 and that next year theyll be targeting another 300 basis points in operating Margin Expansion it really is seen with the stock up over 5 , investors are seeing that the company is baking in concerns about all those new competitor services into its guidance for q4 and beyond back over to you. Julia, thank you very much. Going back to you from Reed Hastings saying modest headwinds, to nearterm growth do you think it will be more than a modest headwind keep in mind disney plus is only launching in five markets in november. Clearly, the u. S. , which is the largest market and thats probably why the company has very modest subgrowth of only 0. 6 million projected despite a very strong content slate for the Fourth Quarter. And apple tv only had, i beli e believe, nine shows on launch. It will be messy but we continue to believe that most people have tlae or four streaming services and disney and netflix will be the two most dominant streaming services most people have. Keith, very quickly, your take on this in the share price . Its really stunning to watch as weretalking about all the metrics and everything going on here one of the things that is caught in the analysis of the pressure release is how theyre going to have less fewer subs than projected. Theyre still growing. Theyre subscription based their operating margins will continue to expand i think thats an important thing. Alan pointed out something that when you look at tech companies, especially early in their development, even when they have large revenues like netflix, it is about operating Free Cash Flow if they continue to show a trend improvement there, the stock price will be rewarded as a result, regardless of subscribers coming in, regardless of the bottom line. Up 7 in afterhours trade. Deirdre bowsa has numbers for us. Ibm shares down likely on that revenue miss. It was a beat on the bottom line, miss on the top. Eps was at 2. 68 revenue came up short 18 billion versus 18. 2 billion that the street was expecting that, guys, is a year over year decline and fifth straight quarter of shrinking revenue First Quarter since its red hat deal closed. Ibms biggest acquisition ever. Red hat broke out, posted a 20 rise in revenue, which is better than red hats last quarter as a separate company question is, will it be enough to make up for ibms legacy struggling business . 14 growth in cloud revenue. That is the best weve seen this year but it is still trailing, far trailing cloud growth at amazon and microsoft. Stock is holding steady, just down 2 in the after hours guys what do you think about that, 4. 2 in cloud growth revenue good for them. It is but in a complex mixture of fast growth the street is still trying to sort out in the Technology Services business. Its very big for ibm. They did have a decline in revenue. I do think its a little bit of a push pull story. The stock has been on the defensive for quite a while just because market is unwilling to give it this generous offer. And the currency didnt help them in the quarter, nonetheless, as did a year on year decline in dollar terms for revenue, stocks down 3 . Dont miss our exclusive interview with James Kavanaugh thats coming up in a few minutes. Csx earnings hitting the tape. Frank holland has it for us. Pretty much flat right now. They rose after the Earnings Release was announced, coming back down to flat after reporting a beat on the top and bottom line. Eps 7 cents above estimates. Most profitable segment is merchandise, shipment of automotives and chemicals. Csx has growth in that segment, intermodal container shipment and coal shipments coal business has been hurt by decline as natural gas has become cheaper the company reporting a natural efficiency metric, operating ratio. Csx shares flat now after rising immediately after their Earnings Release. Back over to you. Frank, thanks very much george, what do you make of all these Earnings Reports with regards to csx, its impressive that the company is able to continue squeezing more earnings, more efficiency out of their operations even though were in a rough environment right now. Not really rough but challenging environment for railroads and freight in general weve seen a 5 year over decline, total intermodal volume for the railroad industry. If youre still manage to squeeze more efficiency out of yore operations that speaks highly with what management is able to do natural gas, Green Energy Solar or wind on the coal industry is only going to get worse. Its not going to let up any time soon. The fact that csx is able to deliver that and deliver a beat speaks to the fact that theyre able to navigate trbled waters here. Ed lee, final comment from you on netflix one line that comes out says likely outcome of the launch of these new services will be to shift from linear tv to on demand. Right. Do you buy that case, that a rising tide floats all boats absolutely. I think thats been their operating thesis, really, from the beginning when they started streaming 10, 12 years ago i think where everyone else is coming into play now, right . Disney is sshlly pulling back from the pay tv model and going directly to streaming, directly to consumers their point is as more people adopt the idea of paying for streaming services we will also continue to rise its slowing down. I think theyre still anticipating between 60 to 90 million total users in the u. S. For them theyve got a bit of ways to go but it will just take that much longer. Up 8 at this point ed lee, thank you for joining us to break that all down. Netflix cofounder Marc Randolph will break down the companys Earnings Report with us well get his take on the reincoetion coming up. Closing bell back in 90 seconds. You can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. Welcome back Facebook Ceo Mark Zuckerberg leaving meetings with lawmakers on capitol hill. Reporter he met with Maxine Waters more than an hour and a ranking republican on that committee, Patrick Mchenry that meeting lasted 20, 30 minutes. The goal was for zuckerberg to dispel tension and spread goodwill before his committee next week. That hearing will be focused on libre. As he was leaving i asked if he was afraid that it was falling apart. He didnt answer me. I have a feeling lawmakers will ask the same question next week and he will have to answer then. Thank you ylan. Netflix is higher by about 8 gerber kawasaki ceo. Reporter at recode ross, ill start with you. What do you think, time to buy more or do you like where you are right now . We like where we are right now. Its a hold in our firm. Decent amount of netflix were excited to see the markets shifting from only focus on subgrowth to actual earnings, which were excellent in netflix, well above expectation thats why the stock is moving higher as netflix moves into this new phase of competition, subgrowth is still important but what really matters is, is the plt form able to leverage that subgrowth into higher profits . Thats what they proved this quarter, that they can do that thats bullish for netflix long term we think the valuation is a little high. With much higher earnings, that makes that valuation look a little more reasonable. What was your take on the subnumbers i mean, theyre doing great internationally. Thats what they said they wanted to do last quarter. So im like, okay. Keep going, guys. Not concerned about the slight miss on the u. S. Subs its not great. Obviously you dont want to miss things they still grew. Its interesting to keep an eye on the International Market and where theyre going with content creation and the budgets they have for the shows more than anything. Ronnie, what do you want to hear more from when it comes to competition and all these streaming services that are coming i want to focus on netflixs content. Subscribers were a bit soft but it wasnt as bad as you said, the growth was pretty good. Theyre deciding sort of whether Netflix Original content is good enough for them shall whether its attractive enough for them and whats still left on netflix after other larger media providers pull off popular shows like the office and friends whether its still a good enough deal for them. Ross, whats your take on the debate as to whether more over the top services coming online speeds up people from Subscription Services and increases the tide for all the overthetop services . I look at the avid of disney plus and apple tv as the end of cable completely its had a few years to make adjustments and maybe get their act together like taxi cabs have had with uber. They still have no taxi app and cable still has no cable app thats great this will put the nail in the coffin for Cable Companies netflix is in a great position next couple of years my friends at hollywood are super bullish the next couple of years. The real question is after you get through the next couple of years, where does netflix go from there for us we see them moving into putting movies into theaters like the irishmen not getting in the thirties is a huge miss for netflix. Theyre making great movies. They can monetize that i still think netflix can monetize a lot through advertising or having an advertising tier where they can start to take ad dollars they aggregate so many eye balls around the world netflix has a couple of other levers to pull were still very bullish on netflix. People arent getting rid of it, lets be real. Its the best service out there and probably will be for some time. Ashley, do you think its possible that netflix could or has picked up anyone that has gotten rid of hbo now that game of thrones is over . Thats what im interested Going Forward as these streaming services launch. Will we see people switching based off shows . Will i get netflix for stranger things, then after its over, cancel it, then move over to disney that will be interesting behavior to watch. I dont know that thats a subscriber they want i imagine they want someone long term. Key focus on the call for you, rani . On what key focus on the call . Future competition as you mentioned all the new streaming services about to launch two are coming up next month, two in the spring. That will put more pressure on netflix. Absolutely. Thank you all for joining us to talk about netflix shares were higher about 9. 5 , rani, ashley and ross. Had much more on netflix results and whether investors should be concerned about all that increasing competition when we speak exclusively to Marc Randolph. As we head to break, we will then come back and well discuss ibms eniarngs in an exclusive interview with cfo James Kavanaugh. Im happy to give you the tour, i love doing it. Hey jay. Jay . Charlotte oh hi. He helped me set up my watch lists. Oh, hes terrific. Excellent tennis player. Byebye. I recognize that voice. Annie . Yeah she helped me find the right bonds for my income strategy. Youre very popular around here. Theres a birthday going on. Karl he took care of my 401k rollover. Wow, you call a lot. Yeah, well its my money were talking about here. Joining us for karaoke later . Ah, id love to, but people get really emotional when i sing. Help from a team that will exceed your expectations. Was in an accident. When i called usaa, it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family and we plan to be with usaa for life. See how much you can save with usaa insurance. If youre just joining us, its been a very busy afterhours earning sessions, beating earnings estimates shares of ibm under pressure on a revenue miss and Railroad Operator csx reporting better than expected profit. Lets get more on ibms results joining us now in an exclusive interview. Cfo James Kavanaugh also a member of the cfo. Thanks so much for joining us. Thank you for having me, wilfred, i appreciate it. Let dive into the headline number, which did see a year on year top line decline and fifth quarter in a row of decline in that area. Whats driving that . Is there a noticeably worse macro environment for corporates, whether thats driven by trade or other factors . No. Lets talk a little bit about the top line overall obviously its been a focus for everyone you know, we realize we delivered a little over 18 billion of revenue in the quarter. Key for us is that we continue to drive the fundamentals of our Business Model and you see that play out and where were actually growing revenue. Were growing re ining revenue y high value areas around cloud, digital and around security. In fact, when you look at our business profile overall, we had strong growth in our gbs consulting business, continued momentum as we leverage our clients journey to the cloud and digital reinvention and great acceleration in our overall Cloud Business that is now at 14 growth overall. And i heard pre coming on, we had a very strong and were very pleased with the first 90 days of red hat red hat grew 20 on a normalized basis year over year so, were still dealing with the headwind of our global Technology Services outsourcing business thats whats dragging down our revenue. Our revenue had 18 billion overall. But were driving the growth in those key value areas that is enabling us to drive the right operating leverage and, most importantly, the strength of our balance sheet, strong Free Cash Flow generation, trailing 12 months, 12. 3 billion of Free Cash Flow and we paid down 7 billion of debt in 90 days since we executed the red hat transaction. And that led to 2. 68, which was at the high end of our guidance 90 days ago. Sure. We feel pretty good with the solid quarter. Were getting the right growth. Sure. And the stock is slipping, i guess, a little bit. Jim, to your point about the what is growing, cloud growing 14 , but that is still 5 billion relative to the sort of 18 billion of total revenue so how many more quarters do you think you might see in terms of shrinking revenue whilst the fastgrowing part is still picking up the slack put our business profile into perspective. When you look at our Cloud Business overall, yes, 5 billion in the quarter, growing 14 . I will tell you, thats an acceleration Second Quarter growing 5 . Third quarter now growing 14 . Now we have, on an annualized basis over a 20 billion book it business in cloud. We are making very Good Progress youre right at the heart of the question around our strategic, bold move, bringing ibm and red hat together, because we believe that the next chapter two of where cloud is going is going to be centered around hybrid cloud. And hybrid cloud is going to force you to have the right Offering Technology and platform Going Forward. Get to the core of your question, wilfred, we talked about at our investor day, which was just, what, 60 days ago, we laid out the value of bringing ibm and red hat together and why its better for our clients and for our shareholders and with that, i took our investors through a midterm model of 2020 and 2021, and we stated that we are going to be on a sustainable Revenue Growth profile starting in 2020. James, thank you for coming on im afraid were out of time as ibm puts up earnings at beat by one percent. An earnings alert on alcoa. Up 7 in after hours. Lets go through the numbers reported a loss of 44 cents versus the 33 cents eps expected revenue was basically in line with what the street had been expecting at 2. 57 billion versus 2. 59 billion company in its outlook also lowering global aluminum demand for full year. Theyre also saying theres a deficit. Because of that, thats why were seeing that nice bump over 7 in afterhours they are lowering that demand. They say the change is driven by weakening macro conditions, trade tensions between the u. S. And china and decreasing activity back to you. Thank you so much alcoa up 7 after hours. Llth fr netflix earnings are a beweeror the rest of the fang stocks. Were back in a couple of minutes. nervously ready . Ok, ready sweetie . Nice, you ready to go again . Are you ready, dad . Im ready. Imagine if your Life Insurance could help you live for today and safeguard tomorrow, so youre ready for anything. Life insurance designed to protect generations of families. Thats the power of pacific. Ask a financial professional about pacific life. The Trump Administration says it will require chinese officials in the u. S. To notify the state department of any contacts they plan to have with american educators, researchers, local and state governments. Officials say the change reciprocates u. S. Diplomats in china. Nasa executives tried to make their case to move up the trip to the moon, precursor to a mars landing but the Committee Chair was not swayed. You were very clear that you dont want to take money from other nasa programs because you dont want to hurt those programs i dont want to go to the moon by taking money from people who cant afford to survive in this society to the level that they should survive in this society and so that is a big problem that we have to get over tonights game four of the American League championship series between the yankees and astros has been postponed due to really bad weather the game will be played tomorrow night at yankee stadium. Houston leads