Transcripts For CNBC Closing Bell 20240713

Trade impact on the economy. Lets look whats driving the action britain and the eu coming to a brexit deal although Boris Johnson still needs to win a vote back at home. U. S. And turkey agreed to a ceasefire in syria and despite ibm the overall earnings picture remains strong with beat from netflix and Morgan Stanley leading the market hire. Were happy to have stephanie link here. I know youre pretty upbeat. So far so good. There have been good reports from csx, from honeywell, from United Airlines jpmorgan, Morgan Stanley. Those have been rewarded also other earnings that have just been good enough. United rentals we talk about positioning, people are not positioned in industrials or health care those two sectors are leading the market today is that why we are where we are. People have your view earnings are good enough . Some are good enough but some are good the best earnings picture was johnson johnson. We also had a lot of health care you entitle e United Health expectations if they are just okay they are going higher feels like earnings have been fine not on fire. I mean, i think when you have earnings expectations have come down so much. Then you have some that are reporting where earnings are going up some are reporting where expectations were solo United Rentals is up 5 . Union pacific that number it opened down 3 i bought some on the open and its rallied especially on the industrial side people are thinking were seeing a trough on industrials the worst it will be on health care, politics was running the show for such a long time and now its not as bad you get these good earnings and cheap stocks good combination united rental was up as much as 8 . Short covering actually lets focus in on the other big stories. Mike sana usche has the latest turkeys ceasefire agreement with the u. S. In syria lets start with Morgan Stanley. Shares are higher after beating earnings expectations. Earlier the banks cfo discussed what the drove Profit Growth in the quarter. Our Investment Banking business did very well the back of Debt Capital Markets as well as m and a and our fixed income business continues to gain share lets get more with mike santoli on his first dashboard of the day that would be the first dashboard calling it soft bigotry. Well take a look at that. Nothing for tomorrow Consumer Discretionary stocks. A fight in the dog some of the very cheap stocks arguably starting to fight back or at least have the makings of a move like that whats right in america. Some big macro numbers weve gotten still make thing pretty well secured in term of the expansion. Lets look at the set up for banks, earnings wise this earnings season. Look at the top five big banks including Morgan Stanley this is where the earnings estimates were on june 30th at the beginning of the Third Quarter. This is where the estimate went to right before the report from Morgan Stanley from 1. 25 down to 1. 11 Morgan Stanley reports 1. 27. The 1. 27 was helped by an unusually low tax rate guess what the stocks were under pressure thats why you have a positive reaction similar dynamic. Goldman. To a lesser degree jpmorgan and citigroup held up okay and actually did beat the june 30 number and then bank of america had a big drop those are also made for some write downs. This is all according to facts we take a look at the operating metrics and valuations of these banks. Youll see a pattern i ordered them from return on equity from the Third Quarter that was earned. Jpmorgan, obviously. Market earning gets it rewarded 1. 6 times price to book value. But Morgan Stanley, Goldman Sachs and citi are trading below book value the market is saying fine the this might being your peak returns on equity. If you look at the whole set up citigroup continues to stay up perhaps looking as most cheap relative to how its been performing, guys interesting on halftime today they think its a golden age for banking stocks the issue is, okay, the numbers were good. We could say that. The stocks have moved a lot in a short period of time over the long period, no but lately, yes. So how do you deal with that its about positioning. Nobody is in these stocks. If you believe in the value to trade these are classic value stocks were also returning cash. They have dividends. They are buying back stock thats very important. So, i like them. I dont know if its the golden age at this point but they are cheap enough still and they are returning shareholder shareholder returns, i think you pick your spots. All right well netflix is one of the best performing stocks in the s p 500 today after beating earnings expectation. Julie boorstin has the details reporter netflix shrugging off lower than expected guidance and fewer subscriber focusing on their investment in new, original content. Movies especially here in the u. S. And overseas Foreign Language series. They are confident about their growth over the long run even as he acknowledged that new rivals could have a near term impact on the companys results. I was being a little playful with whole new world in the sense of drama of it coming but fundamentally its more of the same and disney is going to be a great competitor apple is just beginning but, you know, they probably will have some great shows too reporter one big question, though is pricing. Netflix doesnt have room to raise prices further when apple and Disney Services cost less. Back over to you thank you for following that. A big talker for us both after the bell yesterday and today Vice President mike pence announcing turkey has agreed to a ceasefire in syria. Kayla tausche has the details. Reporter turkey will pause military operations in northeast syria for five days to let the u. S. Withdraw its u. S. Forces to move its kurdish allies. Violence erupted in the last week as turkey quickly moved into a conflict zone where President Trump vacated American Forces helping to defend the kurds. Turkey believes the kurdish allies that helped the u. S. Are linked to terrorists militias in its own country. President trump earlier today praised turkey for the suspension and said the alternative would have been much worse. Not only sanctions and tariffs, the war itself would have been very nasty so they did things they wouldnt have done. I just put out, everybody agreed to things that three days ago they would have never agreed to. This was such a smart thing to get it done so fast. Reporter earlier this week the white house announced sanctions and trariff increases. Thank you, kayla were following all of that. Coming up next Goldman Sachs chairman and ceo, David Solomon joins us for an exclusive interview to discuss earnings and push into consumer bank, china trade concerns and much, much more. Later Mark Zuckerberg making a defense for facebook and freedom of speech on the platform well dive in after the bell see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade when i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. Gold mapp, jpmorgan, bank of america all higher so far as Bank Executives report upbeat outlooks about the economy including the consumer wilfred frost is at the sacks axe builders and innovators conference he joins us now along with david so plon for an exclusive interview. Reporter as you said im here with the chairman and ceo of Goldman Sachs David Solomon david, good afternoon. Great to be with you great to be with you. Were here your builders and innovators conference, eighth year, i believe. Eighth year tell bus the conference and how its evolved sure. This is since 2012 an event we have each year out here in Santa Barbara when we bring together entrepreneurs. O founders oren r some are newer businesses but interesting ideas. Give you and example go back to 2012 that first year two of the companies that were here as Young Companies were dropbox and uber gives you a sense of a lifecycle a little bit these are interesting businesses they are changing the world. Changing the way we do things. They are hiring people adding jobs. And i really come away from this event every year energized and really feeling good about the fact that wfrg going ith everytg on in the world, the entrepreneurial is really good for the United States. We spend some time to get to know these companies and let the entrepreneur connect well dive into some of those teams youre alluding to there first of all, we were here together a year ago. This is essentially a area since you took over as ceo do you feel the first year a year of transition for Goldman Sachs . Well, it was certainly a new job for me and i would say just thinking about fact that we sat here a year ago, certainly went quickly. Because it feels like i was sitting here with you just ten minutes ago. But i think back to october of last year, one of the thursday fixing i did, when i started as ceo last october was to take a grouch people inside firm and get them focused on how we face clients as an organization we started talking about this concept of 1 gs and weve always been a Client Organization but theres been an opportunity over the course of the last year to think about how we can improve, how we can do better and think about making sure that our clients are getting the best of Goldman Sachs so i feel weve accomplisheded a lot on that in the context of the first year i also feel good about the fact that the investments that were making that evolved the organization and move the organization forward, are really progressing nicely we got a Great Management Team its really come together on a medium and longer term plan and so i feel like for our first year that feels pretty good. The investments you talked a lot about, the Earnings Call which came out a couple of days ago, those earnings did miss expectations, revenue was down 6 and you spoke on the call about the impact on the short term earnings that some of the investments in new areas, transaction, banking are having you said 450 million worth of those investments made this year how long are you asking investors to stick with you to give you faith before those investments pay off . What were really trying to do and we have to do, i dont think we have a choice, were focused on our existing businesses and focused on making investments to evolve the organization and move it forward. We think about they investments as medium and long Term Investments and try to be transparent and clear as we build these new platforms were making progress. But these are things that will take a number of years to materialize the potential. I talked on the call a little bit about how he built an Asset Management business going back to the 1980s if you think about the Asset Management business we have across the world, i look back at our investing platforms which we started to build in 1980s. Goldman sachs is celebrating their 150th anniversary and were building businesses for the long term value of our shalds in the firm this will take some time were trying to be as clear and transparent as we can. There are milestones were excited about that we cross this year and feel well dont make progress will some of these changes in investment kos have been made sooner by your predecessor i think that he some of these started with my predecessor if you look what were doing from a Digital Banking perspective. That started with my predecessor. These things a long time to progress and come to fruition. What were focused on now is looking at our client, the different clients we have around the world, corporations and governments, institutions and individuals and saying how can we do more as Goldman Sachs for those clients and really make the investments to broaden it out. I feel good about the course were on and the progress were make a meeting that was reported by bloomberg, your deputy supposedly said that the old management was slow to make changes. Do you disagree with that . I think the new management is very focused on making changes to move us from here to be honest with everything thats going on i dont have a lot of time and debate what should of, could of. Goldman sachs has performed very well for a long time you were at an event in june and you said were getting no credit from anybody in the investing community. If we are out in silicone valley made 20 progress people would be throwing money at us. Are you angry that you havent gotten more reward for what youve done . Im not annoyed i expect and one in the context of a Large Public Company like this its going to be a proven on this. I said this on the the Earnings Call but i feel very good about it and the teams executed the incredibly over the last three years we built a digital bank with 5 billion of loans 4 to 5 million customers brandnew credit card platform launched a card with apple i feel thats pretty Good Progress over a short period of time and weve invested over a billion dollars to get that. But if you looked at all that would you invest a billion to get that absolutely you invest more. Again, were building for the long term. I feel gooded about the progress were making would i be pleased that the worldrecognized it sooner sure i know we have to deliver and the onus is on us. You said on the call the launch of the Goldman Sachs apple credit card was the most successful credit card launch ever can you qualify that for us with some numbers i said that we believe its the most successful credit card launch cobranded credit card launch ever. The first is we can look and see all the past credit card launches over the first month, six months, year what were number of carl edwards that came in and then we can look at the number of carl edwards we have and were ahead of the pace of all of those. How many . I wont give you that piece of information but i appreciate you asking. Second we can look at the credit formation and how people are using the card and what i would say all the early data indicates people really liked the card you and i were sitting here having a conversation and you were telling me how much you like the card and how it was changing your behavior but i like it. I like the card. And the next thing is we look at the credit quality thats coming in the credit quality is an aspirational card. Over time we will, obviously, give more data were only less than two months into it. All the data we see is actually doing quite well compared to the data we have available is this the tip of the iceberg in terms of your disruption of Consumer Banking or halfway through i think were in the early stages of building a digital platform for consumers that gives them more information, more tools at their disposal we were talking a little bit about the data set, you know, inside that apple cart when you look at your phone how much information you have this is version 1. 0 and regardless of Goldman Sachs or whoever is doing it, the quality of the information, the data, the ability to manipulate it, that financial consumers are have Going Forward lets talk about some macro has corporate optimism been damaged severely by the trade war . I think that i think theres no question that a combination of macro factors has had an impact on sentiment whether its trade, whether its brexit, whether its a little bit more uncertain geopolitical environment, i think theres no question that its having an impact on sentiment. On the other hand, the overall nature of Global Growth, while e had a brexit deal that could swing sentiment back quite quickly. No question when i talk to ceos they are a little bit more concerned or agitated about the noise but are trying to stay focused on the substance in terms of the fed, we saw the spike in the repo rates recently was that due to postcrisis liquidity capital rules that restricted you as banks ail built to stabilize the market . Theres no question that the regulatory construct had an impact on the available liquidity at that point in time. It was definitely a contributing factor i know the regulators are focused on that. Like a lot of things that regulators are taking a look at, this is something that deserves focus. In terms of whether or not the fed should keep cutting you said of lay it on a podcast that negative rates after failed experiment so do you hope they dont go anywhere near that level or are we already low enough . I continue to think there will be queens in the long term for negative rates i certainly hope in the u. S. Theres never a consideration of negative rate policy here in the u. S. I think its interesting to see where we are in the economic cycle, where we are from a job perspective, and just balance the policy that we have today. You know, personally im not a fed governor but personally ive been surprised still by at that point of Monetary Policy or kind of the low rate environment that we still have in this point in the cycle. I would have expected something slightly different but well have to watch and see as we run through the cycles where that goes negative rates are not something when we look back at history and write the book thats not a good chapter. You mentioned brexit. Boris johnson as a deal with temp u he needs to get it passed from parliament how much difference does it make to Goldman Sachs in london if we get an orderly brexit. Were committed to london but committed to the continent we spent a lot of time both for ourselves and for our clients really thinking about making sure under any scenario were prepared to operate seamlessly and we feel good about that. Theres an enormous amount of uncertainty along this issue for a long time. Im encouraged it sounds like theres a deal i understand the vote is unclear. I hope the vote will carry and this would be good to get this uncertainty removed. I think it will be a positive outcome. Lets talk about wework you lowered it from 150 million to 70 million over 50 write down what level of valuation does that leave wework at were not going disclose how we mark our individual position but, obviously, that was an investment we made a number of years ago at a lower valuation over time as the company was running process and setting prices for liquidity we along with a number of other investors took some liquidity in that investment but we still have an investment thats left i think our cfo said on the Earnings Call at the current mark even if it went down from here we saw profit in the remaining position but were watching that situation like everybody else and it will be interesting to see as they refocus the business how that business moves forward theres a business that underlies that how do you think about the conflict of interest that you have a direct private investment in the company and responsible for marketing or were responsible of marketing the ipo to new investors you want a high valuation on your direct investment and versus a legitimate valuation for new Public Market investors. How do you weigh that conflict of interest . Weve been an investors for years and years and years and weve got a lot of experience in manage the fact that we have a broad investment portfolio both for clients and ourselves and were in the Capital Markets in the context of this situation, this was an investment that was made at the very, very early stage of the company. Of course, we want that investment to do well but at the same point in time we have a duty to investors as an intermediary to price ipos so they work in the market. Those are two separate parkts of the business sure. I know both of those businesses have gone. But this is a highprofile example of where that broke down the s1 im not so sure it broke down why do you say it broke down the ipo went away the ipo broke down. Im sorry i thought you talked about the process. This s1 of which you were the lead underwriter on and coleader underwriter and signed off on the s1 had founders where the company was tenant, taking multiple personal loans at low rates, found charging the use of we, all male Board Directors, that many people have questioned, you i know cared a lot about Corporate Governance and yet you endorsed this s1 and a high valuation which if investors had gone for you would have approved in one sense do you think there are no conflict of interest there whatsoever and are you happy how they played out. Theres always conflict of interest for an organization of ours with respect to this particular situation, i think whats unfortunate about this and its a little bit of an adjustment broadly speaking with respect to foia process, theres been a lot of focus on growth at all costs. Ipo market is pi vogt and getting much more focused again on growth with a path to profitability. I think as theres been focus at growth at all cost theres a more lax approach and i think thats getting corrected even though this played out publicly, i do think that the process ultimately brought the company to a place where it may or may not would have been public but the process which was feedback from investors, feedback from banks including ourselves basically said this wont work unless you get it to a different valuation, different governance southeast thupg you mentioned were changed through the ipo process and would have been different if the company had gone public and the public never saw the valuation that the banks and underwriters were telling the company we thought that the valuation had to be in order to actually go public so it played out more publicly than that process you normally would like it to play out but the end of the day the market process worked so, moving forward, perhaps, the Lessons Learned from this whether it was uber which played out publicly do you think you guys across the board in the Investment Banking space should work earlier with these companies to get rid of those cooperate government question marks so they dont come up again . Look, our job is not to be the rule maker for what the Public Markets accept or dont accept in terms of government value, et cetera its our job to suggest what makes sense over time for markets broadly. Well try to play our role in that process but ultimately the market makes judgments around these things as to whats appropriate whats not if you go back 20 years ago there werent a lot of super high voting stocks and for today these companies there are. Theres been a lot of people thated aed voluntary indicated theres benefit to that. Well see over time whether or not the market changes its view. Our job in that process is to bring biers and sellers, companies and investors together in an appropriate balance process and well continue to do that i want to focus and talk about strategy changes most notably the slinging number of partners at the bank thats got quite a lot of attention in the press talk us through whats going on there. I joined Goldman Sachs in 1999 as a partner. I have 20 Years Experience watching the natural process of the Goldman Sachs partnership evolving cycle to cycle. We run two Year Partnership cycles as youre aware i naturally have watched that over time. And whats interesting is i can go back, you know, 18 years ago, i can go back 15 years ago, i can go back five years ago the process right now looks no different than any other cycle i know its getting a lot of visibility right now part of that is we had a leadership transition in the firm so time of leadership transition theres more focus but theres no change in that evolution. Part of the culture of the partnership is to constantly be getting younger people in the Partnership Opportunities to step up and have bigger jobs and that natural process is going on over the course of the last cycle. As we wrap things up were coming up to the 150 Year Anniversary of the founding of Goldman Sachs which you mentioned at the top of the interview. Are you proud to be the leader of the firm as it crosses that milestone this year has been the 150th anniversary. Weve tried with clients around the globe to celebrate and commemorate that history im humbled and proud to have the opportunity to lead firm at this moment, and the event of the 150th really reminds you that this has been a very versatile firm, been a nimble organization that over a very long period of time has found a way to add value, survive and thrive so i view my job and the Leadership Teams job all of us the partnership of the organization, our job is to continue to carry that legacy forward. Its a big responsibility. But were excited about the opportunities we see and excited about our ability to serve our clients in an ever changing world david, always a pleasure to sit down with you. Thank you for your time. Glad to be here David Solomon back to you. Thanks so much our thanks to David Solomon as well for the exclusive interview on close bell. Theres a note goldmans results werent great. Investment banking wasnt great. Theres a notion mr. Solomon because hes new gets a pass for now. Maybe for now first and foremost i think hes great. Turn around stories take a long time he said it it will take a long time they have to invest. You dont get operating lefrmg on the Positive Side and you have disappointment on earnings like you saw. Do you buy the stock today . I dont buy the stock because i dont know what earnings power is i dont know how much they will have to spend to grow. I think hes the right leader for this job and i think egreat about it does take time. Theres so many other banks that are executing well bank of america, jpmorgan, even citigroup with their ups and downs youre willing to buy that becauseits a discount what he had to say about the credit card. Hes not getting enough credit because hes not moving needle hes doing the right things. Absolutely doing the right things but doesnt move the needle and until it does, it wont pay off. This stock massively out performed Morgan Stanley thats why youre seeing the pop in Morgan Stanley. You might see that rotation because Morgan Stanleys results were good enough to actually own that name. This one is not moving much moving the needle. Barely budging lets go to sue herera hello heres whats happening at this hour the majority of Young Children in the u. S. Are getting their recommended vaccination. According to a new cdc report, nearly 95 of kindergartners received their state required vaccines last school year. Members of the los angeles fire and Police Pension board say they would like to cut ties with money manager ken fisher who is under fire for make insensitive remarks about women last week at an Investment Conference he lost about 1 billion in Investment Funds in response to those comments Senate Majority leader Mitch Mcconnell appearing on the senate floor to be and praise the life of representative Anthony Kumpen who died last night at the age of 68 over more than two decades in the house of representatives, Anthony Kumpen became a Living Legend in his native baltimore by all accounts he was a powerful and passionate voice on the National Stage and a strong advocate for his neighbors, his district and his values. You are updated thats the news update this hour courtney, back to you. Thank you. We have just over 25 minute left to go before that closing bell southern lets take a look where we are on the session with the dow higher s p 500 higher nasdaq composite sitting right there about the same russell 2000 is the out performer of the day coming up we got your last chance trade as we head to break lets get a check on bonds treasury yields are higher across the board i guess the ten year at 1. 75 the theres the two, five and ten. Yields are up. Were back after this. Will it feel like the wheend of a journey . P working, or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. 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 20 minutes or so to go before we wrap it up. Whats your last chance trade . Booking holdings. Trading at a discount. The average is close to about 20 times. Room growth nightly is growing about 6 to 8 bookings growing 3 to 4 . They have opportunities to increase margins doing a good job of cutting costs. If anything happens to stabilize europe this stock will move. Youre not wavering one bit on the consumer. No. You know that. This proves it yet again. You wont pick a stock like this if the consumer goes into the tank if you can get china to stabilize growth i think youre seeing green shoots of that happening even after the retail sales number weaker than expected doesnt bother you not at all. Smooth it out the last three months still very strong as i said we have 20 minutes to go before the bell. Lets look where we stand. The Dow Jones Industrials average right now is up about 46 points or so green across the board a little topsy turvy today outperformer is the russell with a gain of better than 1 coming up next the fia giving us a sneak peek on a new test to see if airplane seats are getting dangerously small. Phil lebeau will join us next. I am totally blind. And non24 can throw my days and nights out of sync, keeping me from the things i love to do. Talk to your doctor, and call 8442142424. [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 high protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein bars. Try lemon cake. The fia giving us a sneak peek on a new test to see if airplane seats are getting dangerously small. Phil lebeau is in Oklahoma City with the details reporter were here in the fia simulator. This is basically a mock of a fuselage they can handle up to 100 people in here and demonstrating what it would be like if you had to evacuate a plane lets say do a smoke emergency inside the cabin now eventual as this fills up with smoke, they are going to turn off the lights and at some point they are going to tell us you need to evacuate the plane the faa will be testing with real world people and how it is when they have to evacuate a plane. They filled up the plane or the fuselage here with smoke and now at some points they are telling us to evacuate so the whole idea of this test is to see how long does it take people to get out of an airplane during an emergency. In this case its a smoke event. By the way all the people youre seeing here journalist from here in oklahoma and around the country. At this test site you come outside, and once youre outside they give you a chance to give some perspective on how long it took you to get out of the fuselage the mock up here where they test how long it takes for people to evacuate again these tests will be going on for the next two months and they are testing how wide the seats are and how close together, the pitch have they become so small its tougher with people, especially larger people to evacuate a plane quickly. Guys, back to you. Interesting, phil i was reading a story, i cant remember if it was yesterday or a few days ago and maybe it was in the journal about how the airlines differ so much on the number much seats and how smaller they are getting like in the 777, the width of the seats has become so small in some Airlines Versus the other, i noticed it recently on a flight and the bottom line is this, scott. The airlines say its 17 to 18 inches and they would like to squeeze that more. The fact is all people not just americans but people around the world are getting bigger and the question becomes are the seats too small to allow people to evacuate quickly or orderly when theres an emergency good stuff. Phil thank you for that. Thats phil lebeau interesting story. Up next were going inside the market zone. Are you ready . Im ready commercial free coverage of the final minutes of trade. Welteoul ll y everything an investor needs the to know as we head into the close. Zero commissions for online u. S. Equity trades and etfs. And fidelity also offers zero account fees for brokerage accounts, plus zero minimums to open an account. And only fidelity offers four zero Expense Ratio index funds directly to investors. With all of those zeros, there are zero reasons to invest anywhere else. Fidelity. So maybe ill win saved by zero less than 12 minutes left in the trading day. Its commercial free coverage of all the action going into the close. Cnbc mike santoli here to break down these crucial moments of the trading day as well as stephanie link netflix, that stock is trading higher after beating earnings estimates after the bell results did not impress everyone they missed their subscriber numbers both in the june quarter that they reported they missed them again in the September Quarter they reported. You havent even had the competition come out yet with their products a great product doesnt mean its a great stock, especially when youre in the situation where theres pricing thats going to continue to push down the apple in this, hey you get a free tv service if you buy an iphone thats not great apple generates a top of cash flow that was dan niles. Those on the other side say we know that. Certainly the stock traded above 400. All time peek. Also, though its up 40 bucks in three weeks or so. Its up into the 290s. I would say its modest relief has not been as some thought it could be the big picture, even though we live and die by the sub numbers, the big picture is what is this companys head start worth long term and how fast can they get globally that makes the Business Model work at a very expensive cash flow multiple i dont think weve sorted that out yet. What do you make actually its okay for this competition to come together for us. Like when we moved from broadcast to cable do you buy that absolutely not. They have the to invest. They wont have pricing power. We have this competition it trades at 75 times earnings i own disney and been trimming disney on the competitive threat in general and disney is a very well run company its too much to overcome. All right ibm is the biggest loser in the dow. We have the details about the action what happened . Reporter basically its Quarterly Report last night didnt change the narrative and after the red hot acquisition its biggest ever, investors they wanted to see more progress instead this was ibms fifth straight quarter of revenue decline. Yes its cloud Revenue Growth is moving higher. 11 . But still trailing at any rate over microsoft and amazon. Hybrid cloud is ibms latest big bet to modernize the giant consumers are looking for evidence that next generation, Artificial Intelligence is making up for big blues declining business mike, what do you think about ibm . We had some growth in the high growth business. But not as much as what youre seeing the from the bigger cloud players. Without a doubt the market as a whole will not revalue the Company Based on this minority of revenue thats growing fast as ibm categorizes it, by the way i do think there was a very low tax rate in this quarter the way they got to the earnings beat of not the cleanest this very large kind of Technology Service business, thats at the core of ibm, had a bit of a short fall. Always something complaint recent ipo, smile direct club down sharp again today reporter that sharp move lower came after a tweet the firm has been short Smiledirect Club smiledirect admits in a newly file lawsuit its shops were gofrpd statewide that suit was filed against the california dental board alleging the dental board has been rating smile shops across the state the rates were not disclosed in smiledirect ipo prospective. Smiledirect club didnt respond to our request seeking climate shares are down nearly 60 from their ipo just Law Enforcement month. Thank you very much. You guys, you dont own this, right . I dont own it. I dont like the valuation or the competition and i dont like the fact its now under 10. A lot of pressure. Chipotle stocks higher after a bullish note on the stock saying the share price can nearly double to 1600 in five years. Ev evercore say opportunity for Product Innovation and digital growth will drive that stock price higher what do you think . I think the ceo is one of the best in the business i think the franchise theyve done a great job marketing and that has just started. Got great room for growth on store base theres a lot they can do internationally. Double . I dont know. I just think that the valuation, sometimes it gets in the way how much is this Company Going to grow. They will grow above average versus the industry but not, to me, you know 25 growth . Still paying like huge multiple for that i have a hard time thinking it will double. Might appreciate i mean, its 14 annualized gain in the stock to double in five years obviously people bet the market is likely to at this stage but i do think it probably implies that this current rate of Earnings Growth continues, comps dont slow down and somehow maintains this valuation a lot has to go right but its not outlandish at that lot has gone incredibly right the stock is up 90 . You sold all your mcdonalds not putting your money in this its a valuation call for me. Should the stock pull back i would love to bit. Mcdonalds is not growing like chipotle is. Stock for chipotle down half a percent. Im not sure im buying into that five minutes to go were higher across the board but off the highs of the session. Dow off 63 points. Russell is retail the outperformer of the day. Mike has to look deeper at the internals of the market. Actually more positive than not. The russell speaks to the rankandfile stocks doing better than the headline indexes. New York Stock Exchange advanced declines firmly to the one positive looking at new highs, 163. Thats not bad nasdaq continues to drag in terms of new highs thats something thats been in force for a while. Some big nasdaq growth names come in. Look at the field position two year chart of the s p 500 shows you were nudging up against those all time highs here the high ticks for the s p the last three days. 3008 today were bumping and bumping, not giving a lot of ground in the interim. Got to wonder if this is getting to another cursory breakout. 1 of an all time high i think with a decent internals market is getting the benefit of the doubt back but you still cant really maybe break out of that range until you get something substantive on trade brexit, october 31st not a huge market move will you have the market take off before you get that . Hard to say. I wonder if youll get it afterwards cyclicals are rallying today. Thats a good sign i dont want the market to rally on utilities i was just thinking, you got the russell outperforming, transports outperforming, industrials outperforming. Always telling how companies react, stocks react attorney generals. If its bad earnings and stocks go up that tells you its pretty much washed out. Thats what i was trying to get at last hour, sort of what were seeing today even if the earning arent perfect if they are down and out, expectations are low doesnt take much for them to rally. Only real punch if you will higher comes from trade. Earning are good we know that they are going to be pretty good we know the fed is there what is a rate cut from here going to do . I think if trade is just sort of side lined. Not like a scary thing hovering right on the horizon market can do its thing. The time the to start betting this was just a midcycle pause and adjustment was the time the fed stopped calling it that. So i think that right now the markets are architecting as if thats kinds of what we might be in for two minutes to go before the bell rings send it over to Rick Santelli for a check on bonds yield curves we talked a lot about them when they were negative lets look at them while they are positive hovering two and a half month wide hovering below 16 basis points ten year to three months this one moved quite bait at a five month high running at about eight basis points finally lets look at the dollar index. In the last six sessions its dropped 1. 4 open the chart to the end of sep its been an amazing drop. Isnt the only amazing move going on we all look at the big news stories of the day but at the end of the day europes yields were down at minus 33 in the wee hour of the morning even though they rose almost cut in half from where they were a month and a half going nasdaq is cooking back to a one month high thanks to small caps moving things higher today. Biotech is fairly strong also retail. I want to look at the biggest stock all and thats microsoft in terms of market cap microsoft has been a juggernaut all year its flat lined. Jim cramer has talked about putting microsoft in instead of netflix. Lately it has flat lined and today and the this week, in fact, Software Overall has been the weakest performer. Lululemon and that complex at an all time high. News of a brexit deal lifting sentiment in early trade as did a number of encouraging reports, earnings reports from industrial names like honeywell that Beat Estimates on its bottom line and united rental hitting the ball out of the park does it make more sense to rent these big machinery goods in an environment where theres one certainty of future demand you got the best performing stock on the s p 500 and seeing gains of 5 . Focus tomorrow is on cocacola and American Express theres the closing bell s p 500 closing at 2998. Dow jones industrial back up at 2730 welcome to close bell im scott wapner im courtney regan. Were also signed by mike santoli. Were in the market zone you can see the days Market Action on the right side of your screen lets take a look at how we close it up. The dow kwloesd gain of 25 point. Heres the s p up eight. A quarter of a percent the russell is the out performer today up by better than 1 the green across the board thats the big takeaway. We eked it out. Stephanie link joins us. And the directover research at iron side joins us mike, well give you the first comment as we always do. We lost some steam at least we pulled out that 27,000 on the dow couldnt get above that 3,000 mark for the s p. Weve had these down beat closes a fair bit in the last few days. Market is up 3. 5 . But in general, the market hangs in the message to me it hangs in. More stocks up than down again a little more cyclical tone a subtle shift but more cyclical type stocks getting rewarded expectations people are leaning negative towards earnings. Easy to be but they are beating them and on balance a net positive how do you feel about the market im getting increasingly bullish. I think when you were all discussing trade a few minutes ago, i think one of the elements of trade that is starting to unfold is that it looks like the conditions for a recovery in global trade are starting to get set in place the dollar weakening and the loss of the dollar shortage is critical the fed restarting qe, you can call it anything you want, its qe they will create some 600 billion in excess bank reserves. That should take pressure off the dollar there was a fascinating academic report that came out this week that described the role of a strong dollar in cutting off credit to emerging markets in those periods of a strong dollar what i think is unfolding here with the fed easing policy through the rest of the year youll start getting a lot more credit to emerging markets the market has adjusted to the tariffs in the same way it adjusted to the 25 increase from midway 2014 to midway 2016 Industrial Companies their earnings today, honeywell. I would point to dover those companies had Margin Expansion with decent organic growth those Companies Adjusted to this, you know, tariff dynamic the same way they did with the dollar i think youll see global trade pick up in the fourth quarter. Could be a big catalyst for the market getting a pretty good tail end going into the end of the year we talked earlier in the hour about health care that ended up being the top sector of the day. You like what youve seen and youre inned in going back there. I bought more today that was one of the best one so far. 5 guidance for organic growth for a company of this size is tremendous valuation is still very attractive whats interesting to me today not only did industrials and health care do well im look at consumer stams thats a function of what barry was talk about the dollar starting to soften a little bit i wonder if that translates into multinationals outperforming and maybe even commodities doing better commodities have suffered. Thats something im watching. He was speaking your language with the margin growth and everything operating leverage. Come on. Thats my gig. All right our own wilfred frost sat down with Goldman Sachs ceo David Solomon last hour at the goldman builder and innovateors summit out in california. Wolf joins us now. Thanks so much. Thanks for keeping the seat warm, by the way much appreciated we just spoke with David Solomon. I asked him what his views were about the level of corporate confidence at the moment wluhether its trade, whether its brexit, whether its more uncertain geopolitical environment its have an impact on sentiment on the other hand, overall nature of Global Growth while a little bit of decelerated is still okay, still solid and in the context of that if some of these issues if we got a trade deal, if we did make progress on brexit and there was a brexit deal here i think that could swing the sentiment back quite quickly. Theres no question when i talk to ceos they are a little bit more concerned or agitated about the noise but are trying to stay focused on the substance i guess thats very similar theme, guys, to what weve heard from all the bank ceos as they report this week corporate confidence is slipping a little bit but if we look at Goldman Sachs stock for the week as a whole, week to day so far interesting to see that its still up even if the macro environment is softening a little bit and even if you look at the one bank that probably did miss expectations this quarter, more than any others, the Bank Share Prices are still higher this week and i think that highlights that there are quite a lot of things they can do even in a softening macro environment that still supports the share bries the valuation where they are at least. To that point, will, specifically relating to Goldman Sachs, the question i asked stephanie link earlier this idea that solomon because hes still new and eputting forth this plan and trying to turn things around in certain aspects as to whether market and investors are willing to give him for lack of a better word a pass for the time being until he can get some more substantive change and things he wants to do to put his own mark on the bank. Its big question particularly with the stock trading below its tangible book value. It clearly is not getting full reward for some of the actions they are take. But what stood out to me from that interview with david is that hes vvery confident in some of those investments they are make the billion dollars he said theyve invested in markets. The sense that he feels they could get a better valuation if it was a standalone company. It will come through at the end. Also the fact that i think he suggests some of these investments could and should have been made earlier he wouldnt criticize past management directly but there was a hint towards that. You could spin it the other way hes coming in and doing the clear up could have started before and could have seen them expand their Balance Sheet in a way Morgan Stanley had done a few years earlier. Well have to see. I dont think anyone would start to judge him yet he sounded confident and at least the stock price this week despite disappointing earnings is up as well barry, im not sure if you had a chance to listen to wilfreds interview but when you think of what David Solomon has done so far what are your thoughts look, my broader thesis on the banks is that as the Regulatory Environment loosened which began with the treasury reform proposal that began in summer of 2017 these banks will draw down their cash holdings, get return on equity back above 10 a level thats the line much demarcation whether they should trade to a premium of book or not. As i listen to that discussion, prior investments were not made because the Regulatory Environment was so restrictive he came in at a perfect time the entire repo problem happened because the Regulatory Environment was so tight and banks felt just enough pressure come off to draw their cash reserves down and deploy that cash thats what boosted. I think its going to take goldman a little bit longer. I think its fascinating how th Morgan Stanley model evolved when i was in the business in the 90s you never wanted to but a retail and institutional firm together i was part of lehman when we split that apart now it looks like it works well. If they can get that reo above back 10 the stock should work we appreciate you being with us today well see you soon wilfred, thanks to you for that conversation and joining us there. We may give you your seat back see how you treat me for the rest of the show stephanie our thank as well. Coming up, Mark Zuckerberg making a defense of facebook this afternoon at Georgetown University defending his decision to not Police Political ads on his platform. Given the sensitivity around political ads ive considered whether we should stop allowing them all together. From a business perspective and the controversy certainly is not worth the very small part of our business that they make up well break it down and get a response from a representative when closing bell returns in 90 seconds make sure you stick around. Woman my reputation was trashed online. I felt completely helpless my entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. You mighyour joints. Ng for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. We have an earnings alert on e trade. Reporter e trade up more than 2 after it beat on top and bottom lines payment at 1. 08 versus estimate of 1. 01. Revenue payment at 767 million versus 743 million that the street was expected. Ceo did address this environment as of late saying that the commission changes over the past few weeks have caused a meaningful shift for the industry adding e trade will leverage our advantage to grow and take share especially as price is removed as a point of keithive that stock up now closer to 1 unchanged. Guys, back to you. Thank you. Facebook ceo Mark Zuckerberg delivering a speech today at Georgetown University. We have more on that reporter this was an unusually personal and impassioned speech zuckerberg said the internet so far as been defined by American Value but worried thats changing he said he did consider doing business in china but ultimately decided that facebook simply could not comply with its restrictions while our service like whats app are used by protesters and activists, every where due to strong encryption, mention of these same protests are censored even here in the u. S is that the internet that we want reporter at the end of his speech he was asked about the bipartisan backlash against big tech here in washington. Guys zuckerberg jokingly said hes done a very good job of making everybody angry at him. Thank you for breaking all of that down for us lets talk more about facebook and the growing scrutiny of Tech Companies in general on capitol hill and beyond. Lets talk with representative ro khanna. How much were you able to hear from zuckerberg but theres a fine line for these does walk when it comes to allowing free speech but also not preventing hate speech and violence and in some cases false information from spreading where do you stand on facebooks responsibility courtney, i agree with you that we have to stand for the First Amendment. One of the things that defines american Tech Companies and that has allowed us to lead the world in innovation is the First Amendment. So we shouldnt have companies censoring speech at the same Time Companies do have a responsibility to make sure they are removing dots from their platform, to make sure they are removing hate speech or speech that incites violence these are difficult questions. What we need are new schools of ethics like weve had schools of ethics in journalism for these new Media Companies. Its an issue that the country is dealing with and theres not a perfect answer do you think that this is something companies should do themselves or is this something that should be regulated i think we need both. If theres speech inciting violence or hate speech thats oppressing people of color or minority communities, facebook and these companies should be taking it down Congress Also needs to set those standards. For example, they need to have disclosure standards for ads they should be having to disclose who is paying for the ads. They should have the same standards as broadcast television you shouldnt be able to run an ad on social media that you cant put on television. So you need sensible regulars. But i dont think, for example, that we should be suspendeding President Trump from being on twitter. I disagree with almost everything he tweets out but we do have a fir amendment and the president of the United States should be able to express their view i believe at the end of the day you have information out there and the truth will prevail you bring up a good point sales force was saying last night at an event facebook should not be allowed to publish ads that are fake, freeze warningly. If Time Magazine did the same thing he would be in a heap of trouble. You think thats something facebook should be tougher on particularly as it pertains to political ads . Well, again, the standards for facebook should be the same as the standards for a magazine or the standards for television. The these are new Media Companies and they shouldnt be able to publish ads that are libellous or slandering or would not pass the test of what it would be to advertise on cnbc or nbc. Let me read you something that Mark Zuckerberg said today in his speech at georgetown, congressman. Ill get your reaction to it much along the lines of what youre discussing now. Given the sensitivity around political ads ive considered whether we should stop allowing them all together. From a business perspective the controversy is certainly worth the very small part of our business they make up. Do you think facebook should have any political ads on the platform at all . Absolutely they should. I think it would probably be a violation of the First Amendment for facebook to say that they are not going to allow political speech i mean they are a huge platform. Just like i have the right to protest in a community or stand outside a Shopping Center and leaflet. Facebook has to allow political discourse. The question is how are they going to allow it responsibly and how will they make sure they protect the First Amendment while not allowing hate speech or propaganda. These are tough questions and thats why we need more humanistic thinks dealing with this facebook cant absolve itself of the responsibility to deal with those hard questions do you think they can legitimately and realistically do both . It sounds like a good answer but putting it in practice is much more difficult, is it not . It is but theres Artificial Intelligence technology. Magazines and television figured it out they dont censor ads. You put on my ad or a republicans ad. If i put an ad on cnbc that was outrageous it wouldnt be allowed. Other industries can do it i dont see why social Media Companies cant do it. They need to put more effort into solving these complex issues r nbc or any other Television Network could say for whatever reason congressman were sorry were not going run your political ad why shouldnt facebook have the same power they do you suggested that they have to because its a First Amendment issue. Cnbc couldnt say were not going to run political ads nor can broadcast Television Broadcast television under the fcc is not allowed to censor speech broadcast television or cnbc started saying were only going run democratic ads or were only going to run commercial ads not political ads thats unconstitutional under the court. What im saying facebook does have to run ads but shouldnt be censoring those ads and should have the same regulatory frame work that broadcast television or a lot of cable news is governed by. Representative, before we let you go we would like to get your thoughts on where you stand on the size of these big technical companies. We know Elizabeth Warren is interested in breaking up some of these companies where do you stand there the question is not the size. The question is what is helping competition, what is helping the consumer and what is helping Small Business imd strengthen antitrust laws. I would make sure that companies on amazon, for example, amazon shouldnt be able to copy them and sell on their own platform competing with Small Businesses. Lets figure out how we strengthen antitrust allow not just talk about breaking companies up congressman, we appreciate your time very much today. Thanks for being with us thank you, scott. Up next, mike is taking a look at the rotation from growth into value why it might not be done yet closing bell back right after this what do advisors look for in an etf . I tell clients, etfs can follow an index, but which ones target your goals . Its not about quantity. Its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Wish to closing bell. Lets sends it over to make santoli. We were talk bag cycing abou cyclical turn to the market. This come out of Goldman Sachs this shows the forward valuation for the most expensive 20 of s p 500 stocks thats in blue and the least expensive 20 of those stocks what you see here, obviously, is the least expensive group has wallowed in this area around ten times forward earnings, fleeting lift around the middle of the decade whereas the most expensive group has pretty much got end to pretty close to where it was in the peak in the 2000 bull market. That shows you a massive spread in theory, a lot of room for this to close. Guess what what did it take to close here bear market. Total revaluation. Modest recession unclear fit will take this this time it shows the cheap stuff in this market is profoundly cheap relative to the anointd Growth Stocks that have been holding up the indierks well see if theres a real play and its lasting back into value. Safe to say youll believe it when you see it. Thats fair right . Youve been fooled before. To acknowledge that the makings are there but you dont know if it will end. Not you but the collective you. Didnt take it personally good stuff. Coming up goldman ceo on its investment in wework plus netflix. The stock bounced around in the after hours. Well get bob pienpps take on the rapidly shift iing landscap. Most people think of verizon as a reliable phone company. woman but to businesses, were a reliable partner. Were engineers. Cloud architects. Developers. woman data scientists. We Keep Companies ready for whats next. We do things like protect their data. woman with security built right into their business. We virtualize their operations with softwarebased network technologies. man even build ai into their customer experiences. woman we also keep them ready for the next big opportunity. Like 5g. Its gonna make things just. Incredible. Almost all the fortune 500 partner with us. Plus thousands of other companies of all sizes. woman no matter what business youre in, Digital Transformation never stops. Verizon keeps business ready. Car vending machines and buying a car 100 online. Vented now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. All right. Time now for cnbc news update with sue herera back at headquarters held jobs again hello, everyone. Two businessmen pleaded not guilty to conspiring with associates of Rudy Giuliani to make Illegal Campaign contributions. David korea and andres next court date is december 2nd number of vaping illnesses continue to rise 1479 cases have been reported in 49 states. Thats an increase of 180 from the previous week. And at least 33 deaths have been reported in 24 states. The ceo of juul announcing that the company will discontinue the sale of their nontobacco nonmenthol based police officers. Manning jobs cream, fruit and cucumber will be suspended from sale in the u. S. Pending an fda review and a somber atmosphere in the house of representatives as they honored one of their own, Anthony Kumpen members held a moment of silence in remembrance ever Anthony Kumpen who passed away early this morning from complications from long Running Health problems he was 68 years old. You are up to date thats the news update at this hour courtney, back to you. The uaw gathering today in detroit over its battle with General Motors jane wells has more on that one for us hi, jane reporter we got a lot going on right now they have been meeting for over six hours. The leadership and the heads of locals and we were hearing that the vote of going to be delayed because there is a second strike going on between gm and its janitors, and the uaw works even if they ratified this new proposed contract wouldnt want to cross that picket line of the jan towards. Now reuters is reporting gm has reached a tentative agreement with the 800 striking janitors maybe thing will start the to ramp up and well get somewhere later today in detroit what we do know thats new that we didnt know before about the proposed agreement between the two is that theres a record ratification bonus of 11,000 per employee if they ratify this new four Year Contract and also very important temporary workers, fulltime temporary workers can transition to permanent workers beginning in january. But we also have learned and confirmed uaw has confirmed three plants will close. That could be a deal breaker for some supporters of the lordstown, ohio plant. This morning as negotiators from the ua warch were walking in lordstown supporters were shouting at them gm is saying that plant will be sold to an electric struck saturday up. That will save some jobs but they wont be union jobs build a battery plant and save some more jobs but those jobs wont be under this contract whats interesting about this that weve learned today, we have been reporting that gm has offered to spend potentially 9 billion to save or retain 9,000 jobs in this contract. Uaw in its summary release of the contract didnt mention it you would think they would again were still waiting to see if they will come out. Now that the janitors have reached a tentative agreement, maybe they will. Guys jane, thank you mike santoli, a stock hasnt done that. Down 7 in the last three months well see what happens the market is obviously not pleased but looking through most effects right here most of these, just where we are in the cycle been about a month long this strike has been going on for some time. Going to play with the macro numbers. Also going get a little bit of an adjustment factor going into the macro. Still ahead behind the business of doral. The 2020 g7 summit to be held at President Trumps resort in miami. Well dig in on that storyand the controversy when the colleague bell comes back. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. phone ringing a phones offers big button,ecialized phones. And volumeenhanced phones. , get details on this state program. Call or visit and accessoriesphones for your mobile phone. Like this device to increase volume on your cell phone. phone ringing get details on this state program call or visit welcome back. Wilfred frost sat down with David Solomon and asked him about wework the is there a conflict of interest that goldman has an investment in a company that they are trying to market to new investors . Weve been an investor for years and years and we have experience in manage fact we have a broad foifrl for our clients and ourselves. Were in the Capital Markets in the context of this situation, this was an investments that was made the at the very, very early stage of the company. Of course, we want that investment to do well but at the same point in time we have a duty to investors as an intermediary to price ipos so they work in the market and authors two separate parts of the business and we always operated successfully. Sure. I guess this is a very highprofile example of where that all broke down. The s1 im not sure it broke down. Why do you say it broke down well the ipo went away. Oh, the ipo broke down. Im sorry i thought your talking about the process. Let me put it this way. This s1 in which you were the lead underwriter, coleader, the founder took multiple personal loans at low rates all male Board Directors many people have questioned. You, i know, care a lot about Corporate Governance and yet you endorsed this s1 and high valuation which if investors had gone for you would have sort of approved in one sense. Do you think there are no conflict of interest there whatsoever and are you happy it played out theres always conflict of interest for an organization like ours and we do our best to make sure were transparent where those conflicts exist. With respect to this television situation whats unfortunate and its a little bit of an adjustment broadly speak with respect to the ipo process theres a lot of focus on growth at all costs the ipo market is pivoting and getting much more focused again on growth with a path to profitability. I think as theres been focus on growth at all cost theres been more lax approach than i personally think is appropriate around governance and thats getting corrected a little bit even though this played out publicly, i do think that the process ultimately brought the company to a place where it may or may not have gone public. The feedback from investors and banks and including ourselves basically said this wont work unless you get it to a different valuation, different governance. All right lets bring back in wilfred frost. We heard the sound from David Solomon. More lax approach to governance than i would like is what David Solomon said and you asked very pointed questions about whatever role they might have had in signing off on that questionable governance what he said there is theres always conflict of interest. Thats true. The difference typically is that then the shares rise over the following couple of years, so that everyone comes away with gains and theres no one thats hurt by the process. The issue of late has been highprofile once where theyve fallen afterwards or pulled together and the question is who has gained and who has lost. I think what stood out to me is the way he said tissue, the difference is that it played out in public. I get the feeling from that interview and the earlier interview is they tried to tell adam neumann this wont work but if you insist we can file the s1 and Public Markets came back and said it wont work and repercussions were much worse because the ipo fell away all together and he lost control of the company. The other thing i think is interesting is the write down in goldmans private stake in the company. We knew from the Quarterly Earnings a few days ago it went from 150 million down 17 million. Their direct staying it. Just over 50 hair cut i get the feeling again from they couple of interviews that goldman never carried that first 150 million valuation at the reported 47 billion that have out there, that it was some way lower than that. Were talking about quite a big cut in Goldman Sachs implied valuation from that 47 to where they value it overall but we dont know the numbers precisely. But i think thats where we stan he did say, of course, they are still above water based on their day one valuation. Still profitable on the wework what do you make of solomons answer and if there was anything that could have been done better the implicit message is you dont know exactly what the market will bear until you go past that point. The market says we dont want this obviously you could have made a judgment before that the implicit conflict is not even necessarily that Goldman Sachs privately owned a stake in this company its that its clients are the buyer of the stock and its client is the issuer of the stock so theres no magical clearing price you can know in advance to make everybody happy and be fair. In extreme example of the inherent inefficiencies or pitfalls in the ipo process. The other, i guess the other thing that stands out to me now this conversation, you alluded to it in the comments that you just made is underwriter investor versus founder. That it was your opinion that they tried, goldman tried to tell adam neumann this isnt going. The there are issues with the s1 with this, that or the other thing. Yet the founder may not have listened to the seasoned Investment Bankers at a firm like Goldman Sachs if they dont listen to them who are founders ever going to listen, to however, maybe that conversation now shifts as a result of what happened here i agree i think this was as it seems like, a perfect storm of issues, which isthat it came at the late stage of the cycle, one of the last companies, perhaps, to be able to try to market itself with this class share structure, with significant losses and falling top line Revenue Growth rates. On top of that a leader by all accounts who had quite strong views of his own and didnt want to listen to even the slightest pull back in his wildest hopes that his companys valuations and therefore you asked the question who would he listen to. It got to the point he could only listen to the Public Markets response i would imagine, im just upon at the if pontificating, lets lower it a bit but the reaction was the ipo went away all together and hes had to give up some of his power, his control and his leadership and we dont yet know exactly the details of any refinancing package but no doubt will see a further ceding of control of power whether it was all his fault or partly his fault the fallout for adam neumann is severe President Trump set to host the next g7 summit approximately well dig anyone to that and the business behind that miami resort thats coming up on the close bell through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. 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. What do advisors look for dont just track an index, help me meet a clients need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. Give me a quality fund that helps me get clients closer to their goals. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Some softness right now but no i think the domestic economy is in very good shape. I think the worst of the fed tightening is coming to an end im kind of optimistic the year end quarter should be pretty good that was white house economic adviser larry kudlow giving his take on the economy. Now lets sends it over to mike santoli for a look at what some indicators are saying about the u. S. Economy as a matter of fact some data we got today confirmed domestic economy in some key sectors does look pretty solid is that very long term 40 year chart of weekly unemployment claims four week average. The shaded areas are recession a recession right there. Sustained upturn in claims before you got the recession low in claims. Theres the crease in advance several months usually of a recession at minimum right here clearly were near historic loss. Tiny little bottom there that you had a low and come off that. But sustained at very low levels nothing this looks like this will lift. We can talk about demographics this is Single Family housing permits. Whats interesting about this is obviously very sustained upfriend, in fact another leg higher back to 2018 levels. This is really not that unusual for the long term 1. 3 million. What it says is we have a depletion of Housing Stock and were rebuilding it. This is a part of the domestic economy thats almost running on its own cycle because it hit such a bust after the boom that arguably it can continue to pick up for a while and be a source of growth. Thats an interesting point many of the Home Improvement retailers are seeing similar things meantime the g7 summit will be held at President Trumps doral resort in florida. Robert frank has more on the business of doral. Reporter doral is the biggest money maker of all trumps properties, the revenues have fallen by a third since he became president he bought the 650 acre property near the miami arraignment out of bankruptcy in 2012 for 150 million. Has 643 rooms and a golf course nicknamed the blue monmont used to hold the pga tournament until it was pulled in 2016. Report in Washington Post said a tax consultant working to lower dorals local tax bill told miami officials the resorts operating income had fallen by 69 since 2015 it was now missing its business targets. Now occupancy rates were 53 in 2017 compared to 77 for similar resorts in the area. No comment yet from the Trump Organization on dorals current financials back to you. It was an announcement that raiseded a lot of eyebrows even though the president said hell do it at cost. The changing media landscape. I heart ceo gives his take on the streaming wars content battle his words are straight ahead on the closing bell a Top White House cabinet member stepping down eamon javers has the details for us from the white house. Eeme thats according to two Administration Officials familiar with the matter talking to reporters traveling with the president for you. Rick perry the secretary of energy will be stepping down perry face add deadline of tomorrow as to whether or not he would comply with a subpoena from congress in terms of documents related to his involvement in this ongoing ukraine matter not clear how his decision to step down will impact the decision to cooperate or not cooperate with congress. But the Trump Administration has asked officials who are currently serving not to cooperate with that endeavor former officials however have been morolake to cooperate with investigators. Still remains to be seen whether perry will turn over the documents tomorrow or not as subpoenaed by congress scott. Okay. Eamon, our thanks to you for that eamon javers north lawn of the white house with the news for us. Up next, the wall street look ahead, the key things every investor needso tc twah heading to the final trading day new look at the week heyde when we come back were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. [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 or trips to mars. No commission. Delivery drones, or the latest phones. No commission. No matter what you trade, at fidelity youll pay no commission for online u. S. Equity trades. At fidelity youll pay no commission 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. Well ultimately netflix closed the day up just 2. 5 after some debate on wall street over the strength of the company results. It was a big topic of conversation at the goemd builders and innovators conference where wilfred frost sat down with ceo bot pitman. We discussed netflix valuation but i began by asking him to what extent traditional broadcast radio had been disrupted compared to traditional broadcast television i dont think its been disrupted at all we built out were now on 250 platforms in addition to the radio device as a result we have seen it be helpful to us in terms of keeping that reach high. Radio has been basically unchanged in reach whereas tv the audience here for movies and big dramas moved to subscription. We havent seen that in radio. I think the new forms like podcasting have supercharged radio again because its an extension of the radio experience. Well come to the new area of subscription over the top radio. But why is the traditional area not declined. Well i think its because radio is really about companionship. Were your friend riding in that empty seat next to you in the car. Chatting with you while cooking while brushing your teeth, doing some work you want to get your mind off a little bit or while youre walking or doing whatever i think companionship is more valuable today than ever. Do you sometimes look across at netflixs valuation multiple and absolute size and just wonder why dont we get this type of attention and valuation multiple. You know, i hope we do. Its interesting, bus netflix to me is sort of it was an important part of our podcast strategy because we looked at it and said netflix sort of belongs with the tv networks. Its an extension of them. Sort of tv on demand and other stuff looking like tv. But instead of owning it the tv networks rnsed stuff to it thats why it was so important to own podcasting because to us its an extension of it. And youre right if we were if our podcasting were a separate business would people value it more i dont know but the netflix argument tells you maybe. But i think for us in terms of operating the business be its so important that its all one seamless operation and guys, the full interview with bob pitman online on cnbc. Com including comments on Smart Speaker he is buy opportunity not a threat to business and comments on apple and spotify. Interesting there the pinpoint about podcasts and not getting the value for his new growth part of the business in the multiple because they have a legacy business not totally dissimilar from David Solomon with Goldman Sachs. You brought it full circle, which will of. Well done. Did my best did my best. All right, which will of, thanks man see you back near. Cocacola set to report results. We have a report. We have a an important report for investors. One thing to watch when coke reports before the bell is organic revenue. The befrpg giant last quarter saw 6 growth and raised full year guidance did the growth continue with Core Products by coke zero . They also expanded in coffee sparkling water even energy drink. Coke up 14 on the year but trails rival pepsi could up 14 . Guys back to you. Thank you very much appreciate that. Its funny i was thinking about looking at the market and tentative comes to mind. Yes. The way we trade we have tentative deals on trade, brexit maybe even uaw feels like the word to sum it up. Its low conviction the market is hanging in there seems like a twoway restrictive. People are itchy to think if a rally takes hold they may not catch it to set the scene 3 00 last friday before we got the deal announcement for the trade agreement, 29. 93 where was the s p peaked we closed at 2997. Spent four days hanging in there regaining the last hour selloff. I think its interesting that weve been able able to hold together but not punch through that leads to the tentative sentiment out there. Well have to see what happens as he wet ewe get into the heart of earnings zbloonz right. The most Important Companies are going to come and report. See, the global rice in realized and emerging markets also get traction that would feed sentiment. The belief a traud and things get better from here good stuff thank you that does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new york citys times square fast money. Traders on the desk with tim seymour dan nathan guy adami and chris ver own head of Technical Analysis at stra teige as research partners. Tonight shady trump trades or pure luck . A new bombshell report raises the red flag on Big Money Moves in the futures pits. Traders front running the next big move the man writing the explosive story William Conan ahead. Why the stock struggled to hold the crown, netflix. Following the report what soda pop what y