Trade, the president declining to provide more details on the negotiations with china this morning, saying, quote, well see what happens Broader Markets at the moment down about 0. 6 on the s p the dow is down 192 points the low of the session for the dow 250. So we are off the loan he lows t recovering a little bit in that final hour of trade. Joining us for the full first hour of the show is bespokes paul hickey. How you doing . Good. Do you think it makes sense well start on a soft footing given the great run we saw in november we saw a big strong run to close out the month of november here and dont put too much weight into the first trading day of the month. I dont know if you recall, but last december, we were up 1 on the first trading day of december and i think we all remember what happened the rest of that month. If we can get the opposite of what happened last december, ill take it fair enough lots to discuss with paul throughout the full first hour of the show. Lets focus in on the big stories were watching today bob pisani is covering the selloff Kayla Tausche has the latest headlines. And Frank Holland is following the impact on shippers lets start with bob and the selloff weakness in the ism is the issues the ism new orders index thats any fourmonth low. And it suggests softness in Capital Spending and maybe even Earnings Growth, particularly for industrials. So what this does is it measures the number of participants who reported increased customer orders compared to the previous monitor. And at 47 or so, thats down still, europe and china pmis, generally, theyve been better than expected, particularly today. Because we have two pmis above expectations and the u. S. Is below expectations not surprisingly today, two Big Industrial names are weak. All of them weak we also have Infrastructure Companies that are out there jacobs engineering, for example. Volca Vulcan Materials also on the weak side. Weve seen weakness in the Railroad Stocks like Norfolk Southern and Union Pacific but wilf, i think the most important thing is the u. S. Consumer remains strong and thats the reason were a near new highs. Were also following a number of trade headlines surrounding china, brazil, and argentina Kayla Tausche is on top of all of those headlines for us. And they are all related. President trump was characteristical lally cryptic t the prospects for a phase i deal this year. The chinese are always negotiating. Frankly, i could be other places that i could do all by myself and be even happier. And you understand what that means. But the chinese want to make a deal well see what happens the president tightened one screw on china by signing into law a bill backing hong kong protesters and tightening another on steel and argentina, in response to slamming their, quote, massive devaluation of their currencies, which is not good for our farmers, end quote. The white house caught offguard by trumps tweet has yet to formalize that policy on raising those tariffs, guys. Kayla, quite possible to see december 15th tariffs delayed or postponed, even without a phase i deal signed . It really depends on what happens in the next few weeks. Understand thing from officials current and former and people close to these talks are that the delay or cancellation of those december 15 tariffs was built into those talks back in october and that the white house signaled that it would do that certainly, that was on the table then it is expected that it will be on the table now but of course, they always say, the caveat, the president reserves the right to change his mind all right, kayla. Thank you for that todays cyber monday shopping event is expected to bring in 9. 4 billion in online sales according to adoby and as for the rest of the holiday weekend, a number of firms all citing america a big winner lets get to Courtney Reagan in bethlehem, pennsylvania. The orders come in and theyve got to ship out the goods, courtney reporter you know it, contessa and walmart is expecting that today will be one of its biggest days of the year, maybe it will set a record we have to see, theres still an awful lot of shopping to be done theres 1. 2 million square feet in this location its just one of six campuses that fulfill those online orders for cyber monday and beyond. But today is expected to be a record day in general overall for retail, as you mentioned there. We could see the most online sales that have ever been done in a single day in the United States on this day it was 69 million americans expected to shop but things have changed as far as the timing for cyber monday over the years we used to have to wait until we could get to work and use our Desktop Computers with highspeed internet to shop. So we saw peak sales happen during the day its expected to happen tonight between the hours of 7 00 and 11 00 p. M. Pacific time. Once the kids are in bed and all the chores are done and 30 of the sales volume will happen during that period of time got some early search trends so far from captify best buy is the number one searched Retailer Online those searches up 332 from last year walmart is number two. It was number one on black fl friday costco trading fairly strongly for a searched Retailer Online today as it did on black friday. But thanksgiving through cyber monday is really sort of this big blur of shopping nowadays. Q and 30 of total holiday sales are expected to be done over that fiveday stretch. Courtney, when you are comparing what happened on black friday, what happened on cyber monday, do you get the sense that these big retailers that we just saw, who have strong presence, both in bricks and mortar, and online, that they care where the sales come in reporter absolutely not, n contes contessa they just want you to shop at their stores or online they dont care it if you did it on november 1st. They offered those early deals at the end of october. They dont care if you do it now. They just want to capture the sales. Well see wants, but thats always why its a little bit hard to use one day as a barometer for the entire season. Because things are all over the map now. And you always have those lastminute procrastinators. I only have three gifts done total. So i have a lot more shopping to do court, thank you very much for that now, the thanksgiving holiday also kicks off a big weekend for shipping companies, if those boxes flying behind courtney werent enough to remind you of that Frank Holland back at hq with that story for us. The question this Holiday Season is can amazon deliver like, literally, can it deliver. Amazons selfdelivery of ecommerce packages will increase by 121 this Holiday Season. Thats according to the forecast from shipmate rix. Com. Its also the first without fedex as a partner and the shortest window between black friday and new years eve possible only 33 days about a week less than last year shippers last faced this in 2013 when ecommerce was only about half the size it is now. Fedex and u. P. S. Are expected to see singledigit increases to their volume despite the smaller window, while the post office is forecasted to see a doubledigit decline. Shipmate rix says thats largely due to zpon stamazon stepping us partner program. Instore pickup, another trend to watch about 15 of shoppers are expected to try it out this year its forecast to grow at a 25 , one out of four shoppers in 2020 back over to you frank, thank you very much for that now, stocks as we mentioned, trading lower throughout todays session. Were off the session lows but still down over 220 points on the dow for more, lets bring in jeff sought paul hickey still with us as well jeff, starting with you. Clearly a lot of these discussion points where its consumer related, a lot of good Activity Still going on. The data we saw this morning on the manufacturing side, pretty disappointing. As long as the negative data is confined to manufacturing, do you think the market can keep going higher i do. I think youre getting an early Christmas Gift with the selloff right here on friday and today it may extend into the middle of this week, but the hold stock market saw is if santa fails to call, the bears will roam on broad and wall it didnt play last year retail sales were hurt a little bit with the 20 decline from october into we actually identified that decline in early october, as well as the bottom in late december i think youre going to get better than expected retail sales, because youre not getting the 20 decline in the equity markets paul, you think that small caps are the ones to watch here. Theyve lagged for a while here were starting to see better performance from the small caps. Just today, in prior days, when you see doubts about trade or chinarelated headlines, small caps get killed relative to large caps today, theyre underperforming by a little bit, but lately, when weve seen these trade headlines come up the last few days, small caps havent been as poorly hurt. Their relative strength has also started to show a turn here. I think if we do start to see, you know, manufacturing notwithstanding todays weak ism manufacturing, we think its going to stabilize a little bit at these current levels and be good for the small cap space in general. The russell 2000 had what they called a golden cross a few weeks ago, where the 50day crossed above the 200day. And i think the small caps stocks have a lot more to run here in terms of the broader trade headlines you both mentioned, clearly, we havent had incrementally positive headlines over the past couple of days or the last week, but provided the december 15th tariffs dont go into effect and we get confirmation that theyre going to get delayed, does it matter if phase i is signed can the market rally in december in that scenario, jeff i think it can. I think the trade talks with china have hit a stall because of the bill that was signed, the human rights bill. I live in d. C. , im still pretty connected in the d. C. Beltway and im not sure whether the trade tariffs are going to go into effect or not, but i dont think theres going to be a phase i this here. When youre talking about the small cap stocks, youre saying its important that they start discounting these trade headlines, but why would they . Throughout this entire per d period, small caps have been disproportionately negatively impacted by any day over the past 18 months why would that change now why would the market start i think youre starting to see the market sense that were at level where things arent going to get any worse maybe we will see a delay in the december 15th declines and to jeffs point earlier about a golden cross for the russell 2000 normally in most case, a golden cross, that formation doesnt have a lot of predictive ability. In the case of the small caps, a year following, its much better than average returns for small caps gains 80 of the time. Jeff, you have an early christmas present, a buying opportunity. Where would you put money to work, for the shortterm investor just looking at the rest of this year . I still Like Technology and i like financials. And my father tells me, good things tend to happen to cheap stocks the Energy Complex is only up 5 on the year. I particularly like the, believe it or not, the Midstream Master Limited Partnerships and i think the small caps are getting a january effect in december and paul, for you, are you looking for a particular stocks that might go on your tax loss bounce list . You know, i think we havent really been playing that angle, particularly much, but i think on the course of getting to a sector basis, i would agree with jeff on financials i think the financial sector, weve been seeing much better performance for these names in the internals. And the large cap financials after the big banks this earnings season really broke out of what have been like multiyear consolidation phases. They have the room to raise their dividend payments. They have better than average yields already and they have the ability and, you know, the green light so to speak from the fed to incrementally raise those dividend yields. Jeff, thanks so much for joining us a pleasure. Good to see you, as always. Were down 224 points on the dow. A little bit more selling in the last ten minutes since the show started, but still off the low, which was down 254 points. Still ahead, its a down day for stocks as just discussed, but roku has been hit particularly hard on the back of a downgrad from Morgan Stanley. Well tell you whats behind that warning and after the break, the s p 500 on pace for its worst day since early october. Mike santoli heads to the telestrator with a look at the key trend lines to watch and take a look at our data tracker. The ism Manufacturing Index missing estimates in november with a reading of 48. 1 Construction Spending also missing the mark falling 0. 48 in october following a rise of half a . Closing bell is back right after this break whether youre out here on lte. Or here on a wifi hotspot. Xfinity mobile has more coverage to keep you connected to what matters most. Thats because its the only Wireless Network that automatically connects you to millions of secure wifi hotspots and the best lte everywhere else. And now get 250 off when you buy a new Samsung Phone during Xfinity Mobile beyond black friday. Plus, you can save up to 400 a year. Click, call or visit a store today. Welcome back to closing bell. We have 43 minutes left to go until the closing bell. The dow is off 0. 75 the nasdaq has declined more than a percentage point. Lets check in on the markets. Very quickly, down 4 , as contessa just said some individual market movers. Take a look at f. A. A. N. G. Stocks in the selloff. Facebook, apple, amazon, netflix, alphabet all lower today as investors sell out of some of the stocks that have been leading the rally on the back of those weak ism and Construction Spending numbers, industrial stocks have been hit particularly hard shares of boeing, honeywell and utx all lourwer. Lets send it to mike santoli for todays market dashboard air is thinner up at these recent heights for the market. Ill take a look at the field position as we pull back a little bit the slope is steep thats the slope of decline or expected decline in earnings forecast but that might not be that big a deal for the market next year. Well see. Vision is limited, very hard to predict the stock market, but people try well take a look at the distribution of forecast for next year. And insulation is key. The insulation of a very strong wealth effect on Consumer Spending so here you go heres a oneyear chart of the s p 5 h. The oneyear chart is stem cell starting to tell a story ill try to draw some semblance of a trend line. Really just to illustrate how we really have kind of stretched to the upper end of this band a lot of folks would basically say, this is the bottom part of this channel that weve be in for a while. It wouldnt be too surprising when you look at it like this to see the market curling lower and give back some of those gains. We had basically a full month without a proper pullback. In this context, not that big a deal i wanted to take a look at the u. S. Market, again, some International Indexes as well. This is the s p 500 just today compared to the allcountry world ins index excluding the u. S. Basically everything but the United States as well as the emerging markets and we have some outperformance today by the nonu. S. Indexes. Now, of course, the data was good in china and europe u. S. Data was the one that surprised to the downside. I like to look at the same relationship, these three assets from august 11th that was the low from the late summer selloff. And what you see is the rest of the world outperformed for much of this period, but now its basically a dead heat. So you see everything up between 6 to 7 . The rest of the world has kind of come back as the u. S. Has essentially sort of caught up by not going down as much in the last few weeks a lot of people said, hey, its a global rally thats why you can believe it. Its a little bit less of a global rally right now, but i think you have to give the rest of the World Markets some room here, because they have come off very dramatically from their lows, guys another key factor to watch from here is whether or not that worsening construction and manufacturing data is just confined to those areas. If you have it spreading out to different parts of the economy, that would be more of a concern. I think part of the premise of the rebound in the cyclical sectors is that the u. S. Manufacturing picture was also supposed to be bottoming so todays numbers said, hey, thats not really happening on time but i like to look at the fact that the tech stocks have been leading the way lower. You had the nasdaq underperforming today. That suggests this is a profittaking move and not in direct response to new economic fierce coming out of thatism number now 39 minutes before the bell and the dow is off 206 points, 0. 75 . The s p is following suit, down 0. 7 after the break, analysts say theyre getting more bullish on Cigarette Companies after the crackdown on vaping. Which name they say to buy now and later, Goldman Sachs could be on the verge of a change, but some shareholders lexai disappointe d. Each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. 36 minutes until the close time now to get to the word on the street bank of america downgrading deere to underperforming with lowering its price target to 150 a share from 175 the firm cites disappointing earnings outlook and thinks the setup on agriculture into next year is very challenging and citigroup has a note on tobacco stocks, upgrading altria to buy, cutting Phillip Morris to neutral firm says the disruption in the tobacco thesis looks hard to sustainable, as vaping has seemed to stop growing in the u. S. And roku sinking, Morgan Stanley saying its all priced in Morgan Stanley says while roku continues to execute a sound strategy, revenue and growth profit could slow meaningfully in 2020. Revenue growth in particular focused and on and margins not sure about the wording there, my apologies. But this is a downgrade in ratings, but an upgrade in price target, which screams, theyre weak and being weak. Better late than never, but youve got to call them out when thats the case. They talk about an e. D. To sales margin three times that of netflixs. And the fact that i just said that gross margin and margin kind of justified that for a period, but though slow it muts it more in focus and thats the reason for their downgrade roku is pure momentum either direction. Its hard to buy or sell the stock based on a valuation call. Its overvalued, so to speak but going forward, you look at it like, when people the issue in a selloff today its like, is it at a attractive valuation . They dont have much in the way of earnings to speak of. Where does the support come in you have to look to the charts here but these kind of stocks are when they go up, they go up like crazy as roku did, but when they go down, they dont seem to have much of a bottom down 14 on the day is this a good entry point for you i think roku has an interesting product. But its not a name were involved in and i would rather stick with some of the more established players in streaming, like, say, a disney roku up 350 yeartodate weve got 34 minutes left of the session. The dow is down 241 points were slipping back towards the session slows. Coming up, polls looking at a 5g play and apple gearing up for an event next hour here in new york city focused on its favorite apps and games of 2019 well preview what to expect in todays market zone. As we head to break, heres a check on bonds treasury yields getting a boost to start the month the tenyear currently yielding about 1. 83 . Closing bell will be right back welcome back to the closing bell. Weve got 30 minutes left in the session. As you can see, quite a lot of selling, though putting in perspective we had a 3. 5 increase for the month of november down a full percent for the nasdaq as we stand here are the three things driving the action u. S. Construction spending unexpectedly fell in november, raising concerns yet again about the strength of the u. S. Economy. President trump announced surprise tariffs on steel and aluminum imports from brazil and argentina. And speaking of trade, the president declined to provide more details on the negotiations with china he says, quote, well see what happens. Time now for a cnbc news update with sue herrera. Hi, sue. Hello, wilf hello, everybody heres whats happening at this hour a developing story out of the uk British Police launching a Murder Investigation into a car crash that killed a 12yearold boy. But that car also struck children near a high school in essex northeast of london. Five other people were hurt. A noreaster is intensifying in the northeast this hour its expected to dump up to a foot snand a half of snow from pennsylvania to maine. The storm is snarling air traffic around the country flight aware now reporting about 650 flights in and out of the u. S. Have been canceled so far today. Almost 3,800 are delayed senator cory booker officially filing for south carolinas democratic president ial primary hes been trailing in the polls. The contest is on saturday, february 29th. And michigan is now the first midwestern state to permit Recreational Marijuana sales anyone 21 years and older can now buy weed you are up to date thats the news update this hour contessa, back to you. Sue, thank you for that lets send it over to mike santoli for the second installment of the market dashboard. Contessa, were tracking the slope of earnings forecast its pretty steep on a typical basis and probably will be next year as well this chart of 2020 earnings forecast for the s p 500 coming out of credit suisse, it shows you whats happened so far to the estimates for next year. Theyve come down from about 12 to around, lets say, 9 right now. Now, the rest of this chart shows that historically, if it follows the path it typically does, its going to continue going down for several months and probably settle around 4 growth now, that would be 4 growth on top of minimal growth right now. This has been the decline in the past few months of 2019 earnings forecast the question is, can the market support the current valuations, if, indeed, we do have this degradation of private expectations going into next year 4 growth, already at a relatively high forward multiple for the s p 500 would probably mean interstates would have to stay where we are. Well have to see no prospect of frustration. But it would not be out of the realm to see the stock market remain pretty well supported even small growth in profits, you might privilege the growth stocks, but this in itself doesnt mean that the market is mispriced right now for what we might expect and i should point out, nothing says were going to follow this path exactly there actually are a couple of strategists suggesting that the numbers maybe for the second half of next year might even be a little bit low but of course, that all remains to be seen mike, as recently as march of this year, people still thought we were going to have doubledigit Earnings Growth for next year. Was part of that based on the expectation that 2019 would be a bit lower than its turned out or all based on no, you can see at that point, we were thinking 2019 was going to be a little bit higher i think its a fairly standard plug factor that the sell side kind of operates under you put in roughly 10 for a forwardgoing year gdp was probably supposed to be higher than we now think it was going to be, as well i dont think its that unusual for the street to be chronically overoptimistic, the further out you look in this case, 12 down to 4 does change the equation in terms ofwhat the market is currently valued for mike, thanks very much for that Goldman Sachs could be on the verge of a major shift in the way it sets financial targets according to a report in the financial terms. The wall street firm will avoid setting strict targets opting instead for longer term through the cycle goals. The ft says part of the investor day presentation will be geared at highlighting the banks core wall street businesses, including new funds focused on capital and real estate while taking attention away from goldmans Consumer Banking initiatives which could take longer to take off i think this is a really interesting article. What is unquestionably true is the importance of their van investor day, relative to all other typical annual investor days this is a really, really big one for them theyve dla delelayed it alreadd share prices will react. Other banks recent investor days as to trying to guess ahead of the investor day exactly what theyre going to announce, im not sure how easy that is to do. But longterm, shortterm targets, theyre going to be absolutely key for this stock going forward. Obviously, its going to be an important investor meeting, because were talking about months in advance. Its been delayed a number of times. New ceo, new Management Team theyve had a lot of transition i think goldmans a stock that we like, you just mentioned before that its lagged its peers yeartodate analysts are generally negative on the stock versus positive the theres more sales and holds than there are buys, i believe. And the valuation is pretty attractive compared to its peers. The consumer side of the business, you basically have a cheaper stock than the rest of its peers. And you have almost a free call option on the potential success of apple, the apple card, or the marcus consumer unit so i think it presents a very nice opportunity i think for investors focused on the longterm and a name we do like and we do own. An interesting part of the article about wlorondering whetr theyre trying to push the focus on to its newest foray into private equity and expanding the investing and lending business, that will be quite interesting as opposed to necessarily the focus on consumer. But well see. The consumer is years down the road before thats going to impact the bottom line you want to focus on more of what the bread and butter part of the business is right now by the way, next week, tuesday and wednesday, for the next big update on all of the banks, as they go into the new year, Goldman Sachs Financial Services conference will be the exclusive Media Presence at it and hear from a big slew of ceos and executive leaders, including someone senior from Goldman Sachs. A little bit of preview ahead of their own investor day in january. We have 25 minutes left of the session. Down 0. 8 for the dow, a full percent for the nasdaq and the russell. Weve got your last chance trade coming up. Plus, well hear from someone who sees a distressing sign on wall street for investors. Ill give you more details later on in closing bell. Dont get mad. Get e trade, dawg. It is nice. His haircut is nice. This is the mostawarded minivan three years in a row. The van just talked. Sales guy, give em the employee price, then gimme your foot. Handsfree sliding doors, stow n go seats. Can your car do this . Man, yall getting a hook up and yall dont even work here. Dont act like im not doing yall a favor. Yall should be singing my praises. Pacificaaaaa with employee pricing, get 4,107 below msrp plus 1,000 bonus cash plus 0 financing for 60 months on the 2020 Pacifica Limited i wouldnt be here if i thought reverse mortgages, took advantage of any american senior, or worse, that it was some way to take your home. Learn how homeowners are strategically using a reverse Mortgage Loan to cover expenses, pay for healthcare, preserve your portfolio and so much more. A reverse Mortgage Loan isnt some kind of trick to take your home. Its a loan, like any other. Big difference is how you pay it back. Find out how reverse mortgages really work with aags free, noobligation reverse mortgage guide. 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And so, thats very thats years next years big and the years after that, once those systems come out in the field. The second on the 3d sensing is just like on your iphone, when you look at your iphone and unlocks your iphone. The next model of the iphone is potentially going to have two. So a front and forwardfacing facial recognition thats just going to double the amount of filters they put in. And viavi makes those for the iphone theres competition in the chips, but they make the filters involved and they pretty much own the space. And just not even on the phones, but in the automotive sector, in the car going down, its already starting with higherend models, the sensing of the driver, whether the driver is getting tired or so lots of other applications even in the exterior. Once 5g comes in, these technologies are going to take off and you have these autonomous driving and thats another application their involved in. Thank you for that. So we have some news on trade. Lets get to washington, d. C Kayla Tausche has more details what are you learning . Republican senator Chuck Grassley who chairs the finance committee who has trade oversight has just made some comments on the senate floor about the narrowing window to pass the new nafta this year listen if a deal cannot be reached by the end of this week, i do not see how the u. S. Mca can be ratified in the year were in. That is increasingly becoming the conventional wisdom here in washington there are just eight legislative days left this year on capitol hill and heres what has to happen for usmca to actually be passed. First, you have to have a handshake between the House Democrats and ustr then mexico and canada will have to agree to some edits that the white house makes to the deal. Then the white house will send the bill to the capitol which triggers a countdown to a vote and leader pelosi and mcconnell will have to sponsor those votes. Thats a lot to happen with government funding expiring and a government impeachment inquiry growing by the day a lot to get done and you can see why senator grassley was potentially pessimistic there with how much has to be done and how little time there is kayla, thank you very much for that update. The market not really moving off the back of it were still down 200 or so points on the dow, about 0. 7, 0. 8 nasdaq and russell down just shy of a percent here coming up, we will go inside the market zone, thinterrupted coverage of e last minutes of trading. Were back in a couple ging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. When it comes to using data, which is why Xfinity Mobile is a different kind of Wireless Network that lets you design your own data. Choose unlimited, shared data, or mix lines of each and switch any line, anytime. Giving you more choice and control compared to other top wireless carriers. And now get 250 off when you buy a new Samsung Phone during Xfinity Mobile beyond black friday. Plus, you can save up to 400 a year. Click, call or visit a store today. [maniacal laughter] gold. Gold right, uh. Thank you, for that, bob. But i think its time we go with gbtc. Its bitcoin exposure through a traditional investment account. Nice rock. Its time to drop gold. Go digital. Go grayscale. You should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. We have 13 minutes left in the trading day. Were now in the closing bell market zone, commercial free coverage of all of the action as we head into the close cnbcs senior markets commentator mike santoli is here to break down these crucial moments of the trading day and we have bespokes paul hickey with us, as well. Roku, one of the biggest percentage decliners on wall street today Julia Boorstin has those details. Julia . Well, contessa, Morgan Stanley downgrading roku to underweight from in line that sending the stock plummeting, down about 14 , though its down almost 15 . Its worth noting the stock is still up about 350 yeartodate Morgan Stanley writing, quote, we believe there are risks to growth expectations, not reflected in current valuation levels specifically, we think revenue and gross Profit Growth may slow meaningfully in 2020 but its worth noting, overall, wall street is still bullish on roku according to fact set, there are 13 buy ratings, two holds, and three sales. Guys, back to you. Julia, thank you so much for that we discussed this one a little bit earlier. If you read through the note the bit where i have read a few notes over the last year, its the sales of the hardware as opposed to the advertising growth, which is the more sexy bit, the latter part that people tend to pay up for in other bullish notes. Thats for sure the real takeaway is when you have a valuation on a stock like this thats addressing this very large fastgrowing area, its the valuation is incredibly sensitive to slight changes in the pacing on how long its going to take to get big if you say its going to slow down a little bit on this business line or that, thats the kind of reaction you get but when you look at where roku has room to grow, do you see the advertising part of this being a significant piece of the action yeah, i think down the road, thats an avenue they can really exploit here and to wilfs point. And the whole streaming. Its still such in flux now, the whole sector and i think theres a lot of uncertainty. So to even say, to model out, you know, any sort of financial targets four or five years from now, nobody knows how its going to play out at this point. Another reminder, downgraded the rating, and upgraded their price target to assign that they were late to the recent runup, as opposed to necessarily forecasting, the Largest Online shopping day of the full year is in full swing and retailers expected to rake in a recordbreaking 9. 5 billion but some investors are betting there will be some losers this Holiday Season, according to data from s3 partners. There are twice the number of short positions in the spider etf. Short sellers are targeting brick and mortar stores, waging over 7 billion against retailers like macys, kohls, and nordstrom. Again, to hear that theres a lot of short positions in some of these stocks isnt that much of a surprise. Its kind of already factored in, one would argue. I think a lot of hedge funds, a lot of traders think of them as structural shorts this is not a call about the consumer of the shopping season right now. Its really about just badly positioned companies for the longterm. It doesnt mean theyre all going to be right or that theyre not going to have massive rallies that are going to make their short positions painful for a while, but i dont think its really about a cyclically sensitive bet macau saw gaming revenues drop in november by 8. 5 , and that slightly beat expectations that were lower in part because of sluggish vip visitation, hong kong protests, crackdown on junkets and the slowing chinese economy. It is the second straight month of declines, and stifel is warning that december is likely to be the third against a top 17 comp from last year. Visa restrictions around macaus 20th anniversary are also due to kick in in december. Stifel expect the declines this month between 10 and 12 , as you can see. Wynn is down a percent on the day, Las Vegas Sands, roughly flat mgm is flat as well. Las vegas sands is the one that stifel that among others wants to watch because of their exposure to the mass market there. Where vip continues to be under pressure and in fact, consensus on the street next year calls for vip to decline 15 and mass market to grow 10 . So were seeing this big switch in Las Vegas Sands has more exposure to the mass market ther there. I was going to say, are the declines in visitation to hong kong fully factored in into the expectations what you heard from the company is that, hey, the airport stayed open, people were still coming here. But we did see the vip numbers, visitation numbers dampen somewhat and that theres been concern. If you look at frontpage story in the wall street journal about numbers in disneyland hong kong, its clear that the hong kong protests are having an impact on Leisure Travel wynn down about a percent or so today Chinese Telecom company thatway outgrowing its reliance on u. S. Tech, despite u. S. Companies receiving permission from washington to resume doing business with huawei last month. The companys latest smartphone contained no u. S. Made parts, according to an analysis known by ubs huaweis older phone models that traditionally relayed on u. S. Chipmakers to supply parts for its phones its latest model replace soms u. S. Made chips with parts from dutch chipmaker, which is down today, about 0. 6 . Clearly the debate on trade has been, how quickly can they shift their production huawei showing they can be nimble in the opposite direction. The longer this takes to play out, the longer companies on both sides will make adjustments to their manufacturing processes. So out certainly helps it may be hurting china that u. S. Manufacturers are moving capacity to other companies. But at the same time, its hurting u. S. Semicompanies where china has to make alternate plans for their chips. It works both ways and goes to show why this uncertainty puts an overall weight on things, the market and the economy overall and isnt god for anybody. U. S. Semis is a sector. What do you make of the recent price performance. Semis are involved in every aspect of technology and even nontech products that you use. And theyve led every selloff over the last several years and the semis peaked on a relative basis on november 8th, i believe. And have been lagging for the last couple of weeks now theres a lot of positives to like about the market, but this is one thing where the market is telling us the semis are laggin lagging. Thing to monitor and that would be a worry. Oil is one of the few bright spots on wall street today and frank collin has more details there. Big day for oil compared to the Broader Market wti crude up a percent and a half two factors are boosting oil prices the wall street journal reporting that saudi arabia will push to extend output cuts through mid2020. And further evidence of improving Economic Conditions in china. Factor data surprise to the upside the move lifting oil names like exxon and conocophillips all up. Still, despite these gains today, the Energy Sector is barely trading in the green for the year back over to you frank, thanks so much for that mike, i guess, nice little jump today, 1. 4 in wti. Brent itself was lower and it comes off the back of a slide last week in oil prices. It does either way, whether oil has been strong or weak, energy has remained unbelievably lackluster through the years. Its been hard to trust any rallies in the Energy Stocks you can basically say, its a maximum contrarian point theyre underowned, neglected, nobody likes them. But they dont act all that well and theres this longer term overhang, that lower Oil Intensity of the overall economy is not helping how do you see the broader Energy Sector . Its hard, every time you try to take a stand and buy names, it ends up backfiring on investors. But broader term, weaker energy is keeps inflation levels down, and for the Broader Market, that is a great thing to see. Mike, in terms of Broader Markets to date, clearly we have seen a nice move higher in the yield curves hasnt inspired much performance from the riskon sectors like financials it hasnt although in the morning, it looked like thats exactly the way it was going to go the yields are down off the highs of the day, but not much its interesting that yields have held up and it peaks to the idea that the bond market is not taking the ism number as a calling off of the recovery story for industrial growth. I think you can basically say, the backdrop is there now. We talked about goldman earlier, what about the broader space . We like financials, but the yields and stocks arent moving the way they typically do. Its a new month we had a very strong november in the broader equity positions what about market internals not all that bad considering the headline losses in the index. If you look at the advancing and declining, 800 up, 2,100 down. Clearly negative, but not so lopside lopsided earlier today, it was unusually strong in terms of the distribution and more new highs than lows part of this is, you go back 12 months and you were right in the middle of that december plunge off little bit of a tailwind to the 52week clock right there. And i want to point out the volatility index, the vix, which really had deflated below 12 by the middle of l. A. Ast week it seems like this trade deadline is going to use the demand for some Downside Protection see it coming off though lows. It starts to suggest, maybe were in for some rougher footing. I think you said last week, 1 14 i like a range. At the moment, by the way, we should mention,down to fresh session lows the dow down 260 s p just above at session lows still down 0. 8 for both of thoepz e those indices. Lets get to Rick Santelli for an update bonds. Hey, rick hi, wilf. If you look at a november 1st start to twoyear, you can see all the information important to date we are now at 160. Down a basis points on twos. Look at the right side its moving to the upside. Its now up four basis points at 182. The curve is steep in 10s to 2s. Five basis points today, despite weak ism this morning. And the dollar index, a 24hour chart pretty much shows you everything you need to know. At one point, it was down almost a full half cent, giving up last weeks rally and bertha, the ism certainly pulled the rug out of all three stock index, including in nasdaq weve seen a broad pullback amazon, among the worst of the f. A. A. N. G. Performers today. Although, Raymond James is fairly bullish, saying that according to edison trends data, amazon spend was up 49 on thursday and friday last week. Of course, walmart was up about 53 . Meantime, ulta today, shaking up a Piper Jaffrey price target cut. Ulta had really, really steep promotions including on Kylie Cosmetics of about 40 over to bob. Ism new order index implied some weakness in the industrial names, Capital Spending a little bit weaker than anticipated. Saw industrial names, particularly Aerospace Names like Northrop Grumman were on the weak side, closing on the lows steel stocks like ak steel, u. S. Steel, Cleveland Cliff cliffs, y all rallied on these renewed steel tariffs on brazil and argentina. Theres the closing bell were closing right at the lows of the day the Dow Jones Industrial average down 264 points. The s p just off the Early Morning lows, down 26. Welcome to the closing bell. Im wilfred frost. And im Contessa Brewer lets check in on where the markets go bob just mentioned session lows. At the end of the day, s p down 0. 9 dow down a little bit more than that down 260 points or so. The nasdaq and the russell were both down more than 1 in terms of sectors, Consumer Staples and energy, just eking out slight gains, whereas information, technology, industrials, and real estate was all down more than 1 . Joining us to talk about the market day, paul hickey, the cofounder of Bespoke Investment group. Still with us, along with mark lehman, the Jmp Securities president. Nice to see you today, mark. Lets start with you does this performance of the markets, this first day of december, have anything to predict here about the coming month . Well, you get a little queasy remembering last december, which was a tough time in the marketplace. But i think its a far different backdrop i think after what a big rally weve had through november and december, its not too surprising we have some tech stocks that are reporting this week, which will give you some tone. But i expect the market to shake this off and continue its accent, albeit with difficult days ahead, but more higher than lower. Mike, do we feel like theres been a significant change in positioning over the course of the last few weeks or months m. I think over the last few weeks, for sure. You go back to september, october, its pretty clear that investors, professional individuals were very underexposed to stocks, especially if they were going to be going up. There was a chase, a rebuilding of positions in stocks i think you kind of lost that along the way. Starting in the last couple of weeks, sentiment and positioning started to get more aggressive i think it became very much consensus that we certainly avoided nearterm recession. The fed was out of the way, you can tick off the list of things that were going well including an Inflection Point for the better in the global economy. And thats why todays data was just a slight challenge to that story in terms of u. S. Manufacturing, having a shortfall in november. I dont think it changes the overall picture, but it does tell you that a lot of good got priced in over the 10 run from august are we in a pretty steady period here, paul or is it going to take something more significant to move the market in either direction. Earnings season is behind us. We may have some Economic Data that comes up, was overall, its generally a quiet time of the year and the trend thats been in place usually continues to follow through, throughout the remainder of the year. As far as sentiment is concerned, mikes exactly right, investors were downright negatively, professionally and individually heading into the new highs we saw last month. But theyve come to turn around. But as far as valuations are concerne concerned, tech is trading in the 99. 6th percentile, so basically it hasnt been more expensive. So thats an area where it may be a little bit too much enthusiasm where its much more reasonable. It wouldnt seem as if coming into december, if the market continued to melt up by 3 , if the market were flat or gained back 3 , it wouldnt really change the overall story of the year all that much i think thats why its a little bit tricky youre playing off this idea that you have seasonal tail winds and valuations are rich, but not crazy. But within that 3 cone, it doesnt seem as if you would change the conclusion that it was a pretty good year it seems like the bull market continues. But we have to get it proven by some firming Economic Conditions mike, to what extent does the data we saw today stronger chinese manufacturing than expected europe sleeightly better than expected the u. S. Also below 50 to what extent is that an argument to money to Work Overseas rather than domestically i would support that idea for sure the u. S. Has been kind of the quality growth safe alternative in this world that was struggling to grow they also had the dollar down pretty appreciablytoday after that Economic Data down 0. 4 . That gave a shortterm lift. I dont know that you can really make a persuasive argument right now that the rest of the world the going to race ahead and the u. S. Is not going to also pick up speed to me, its not that clear a case of one being very much more attractive than the other. And the nasdaq underperformed the major indices, closing more than 1 lower and tech stocks dragged on the entire market pauls been looking at the f. A. A. N. G. Names, including microsoft and showing how its made up a large portion of the gains so far in the s p 3 we just talked a little bit about the valuations here. Whats your point in terms of whether next year we can have gains. These guys need to be involved again . It would certainly help theyre going to have toat least be market performers, because theyve been so strong apple and microsoft combined have a bigger market cap than the russell 2000, depending on the day. These two stocks account for a lot of the market and theyre over 8 of the market cap for the s p 500. So there are a lot to contend with but, you know, again, their valuations arent absurd were not looking at this isnt a repeat of 1999, where we had intel trading over 70 times earnings cisco trading at over 100 times earnings and and jdsu trading at who knows what i think these names, we need to see companies and sectors pick up the slack, which as i was saying earliering wing financials are an area, theyre a big sector mark, whats your take in terms of the broader tech valuations and momentum weve seen here today . I mean, clearly, the leaders of the market have been the names that you just mentioned. Im not sure thats going to play out in 2020 we have also seen elizabeth warrens numbers going down a little bit and less andle less f that pricing with news out of the democrats. United health and five biotech stocks up 100 in the last month. And the biotech index is up, were almost triple the overall market since october 1st theres a stealth bear market there too, and thats on fundamentals that could carry us into 2020. Lets not ignore that and assume that the f. A. A. N. G. Is the only component to take this market higher next year bob, what are you seeing . The weak ism numbers, and the big cap tech names that have had the biggest gains so far this year if you were looking at the five biggest stocks in the s p 500, amazon, microsoft, apple, you can throw in google and facebook, those are 15 of the market cap of the s p 500, all were down rather noticeably today between 1 and 2 when those are five down that match, the whole market will be down and you have the high beta names that will also go down on weak economic numbers not the biggest ones, but your netflix, your visas, nvidia, broadcom, semiconductor names, all big high beta names. They were all weak today the bottom line, manufacturing, a small part of the u. S. Economy, the u. S. Consumer still very strong. Back to you. Is that something that you think a trade deal could change the scenario for, paul i mean, a trade deal will change a lot of the scenarios. And i think it will improve the backdrop overall i think the overall tone is, we dont see a recession coming and the fed is on hold if not on vacation for at least the six months in that environment, when you have an economy thats growing, stocks usually go up i want to say one other thing. I want to say congratulations to the nurishell High School Football team, they won the state championships and lost hair head coach the week before they started there we go congrats indeed to them. And our thanks to paul and to mark for joining us today here in the market zone still ahead here on closing bell, apple getting set to host an event honoring this years most favorite apps and games well discuss whether apples big bet onerceis svis paying off when we return in 90 seconds. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Apple holding an event right now celebrating what it calls its favorite apps and games of 2019 it comes as the Company Shifts further into services with its recent launches of appletv and apple arkindicatedarindicated lets bring in ross gerber, apple shareholder. So what do you think here . Are you excited about a best of apps event i think forthe important thi to note is that only apple can get away with holding p ining a event in new york. Their app store is an incredible mote fincredible moat for that company. When youre looking at apps as part of apples bottom line, does it matter to you that they are continuing to celebrate them and lift them up and put them on a big platform under a global spotlight . I think they need to do this, because its a monopoly thats choosing a huge tariff to do business through apple, so they need to justify that with the App Developers and this isnt just about placating them this is very common in business. You give out lots of awards to people people love awards they can market that theyve got awards but its really just a way to try to show the developers, like, hey, were doi we arent really good at making content ourselves. Is that likely to make a difference to the developers who are forking over those big fees . No, i think theyre very unhappy with paying 30 . Its a very high price to pay and apple has monopoly and the government is looking at it. Apple is trying to reinvest in its artists by having Live Streaming events in music but also in gaming and other apps and try to show the developers, hey, heres how were spending money to help yo and by being on our ecosystem, heres the value. I get what apples doing what do you think so far of the new services the gaming app and the music streaming and youve got apple plus tv now trying to shell out a new programming, original programming. I mean, this is what people have their phones for, use apps, play games, and watch tv apple is trying to fill in all of those boxes for you you look at other app stores, particularly in games, you see those fees dropping. Themmic sto iepic store is drops fees does that matter if people are using their iphones and using their iphones to get on to these platform requests. I think it does matter. Once you have a significant investment in apps, your chances of switching to android is much, much lower their highest revenue line is inapp purchases in games. Now theyre starting to do paid developers directly for their apple arcade subscription service, which creates another Virtuous Cycle for them to make developers happy and customers happy. If we snapshot five years ago, ten years ago, the advantage that the iphone had of having the best ecosystem system that people got hooked to once they used it once, the idea being that they would never change from being on an iphone is that still a strong a pull as it used to be . I think so, but i think the strongest piece of that ecosystem is imessage. I think if you are a normal person, the stats say that normal people download zero apps a month. Once youve got your set of apps, most are free imessage is pretty basic. Its incredibly sticky in the United States, if you look at a country like china, theres actually a lot more volatility in people switching platforms. Here, you want those blue bubbles and you dont leave. Thats apples big moat. The apps are what makes the platform rich, but what keeps people on the platform is almost certainly imessage in the United States and yet you think all of these new offerings are kind of a fail i think apples offerings are a fail you know, they had basically nobody sign up for news. I think nobody signed up for arcade, appletv shows are weak so, you know, the bottom line is that apple needs these outside developers my kids are downloading apps like nba 2k from take two and playing these and neals right these inapp purchases are driving so much of their sales spop they want to keep that ecosystem robust with lots of developers and keep those developers happy, because hes right, you know, if you have a green bubble instead of a blue bubble on your phone like my friends wouldnt even talk to you. So its like, you know, that ecosystem is apples bread and butter or you just use whatsapp, which is no but whos using that . Everyone outside of america roz, to what extent does it not matter, though, that they do have these outside developers coming to them and they do take 20 to 30 of those revenues. So even if the innovation is coming from someone else, the fact that todays launch really shows, theyre still bringing the best they can still offer the best and still take a margin from it. And thats why we own apple and are not selling apple. But if you notice, theyre selling a lot of phones and a lot of headsets and thats whats driving the stock not per se services. You know, i agree with what you said about how only apple could kind of pull this off. But i wonder if theres a little bit of an Expiration Date on this in other words, yes, were in the habit of anytime apple says get together for an event, people show up because of the iphone busiezz ad the idea youll see something new. Do you think this will be something annually that people say, sure, lets go for it i think ross is correct in saying that people like awards they were not making a big deal out of this. This event leaked a little bit early and theres a lot of very happy App Developers in new york city who are going to go out and have some drinks and be happy about their experience that flywheel of the most innovative stuff happens on the iphone is something they have to keep up. Whether that has an Immediate Impact on their sales or their bottom line, i think is pretty hazy but if you dont have developers pushing the boundary of what that camera can do, if you dont have Game Developers pushing the boundary of what the hardware can do, eventually the software does commoditize we have to wait until tomorrow to find out who won hopefully theres an open bar. Hooray for the people who are there. Im sure. Right ross, thank you very much. Neil, thank you, as well were going to do some breaking news on wells fargo that came out during that interview. They have ape appoipointed thei president and ceo. Scott powell will report directly to Charlie Scharf, the new ceo who took the reins just a few weeks ago. Powell most recently was ceo of s santandere holdings usa. So Charlie Scharf is shuffling the pack a little bit underneath him. The over most highprofile appointment he made was in the government and Public Affairs department, where they appointed mr. Daly, a former member of barack obama and and it will be Public Policy and regulatory related to begin with and i guess mr. Powell coming in to run the bank in the meantime. The only other point i would add on this, not seeing the stock really move off the back of it, a bit of a blow to mary mack, who was head of consumer and seen as a potential successor when tim sloan was in place. Therefore, mary mack, you would have thought might have got this promotion. She hasnt got it. Well have to see what happens there. But she still has a significantly powerful position, nonetheless. Wells fargo stock up about 0. 1 afterhours trade. Up next, 2020 targets, wall streets s p forecasts for next year are coming in and their expectations could surprise you. Mike will explain that with the telestrator. And later, jack dorseys leaving on a jet plane the twitter and square exec is gearing up for a big move to africa well discuss what that could mean for his companies and for toto when closing bl tus. El hows this for a kickoff, the s p posted its biggest decline in nearly two months and the nasdaq and russell 2000 were off by more than a percent on the day as well. Lets get over to mike for the third installment of todays dashboard. Mike vision is always limited looking out a year in terms of whats happening with the markets. But this is the season where strategists have to put out a forecast. The wall street journt this together. These are some of the targets from various investment banks right now. You see it at the moment from the major firms topping out around 3,400 for the s p 3 i do see some other firms with maybe a 35 out there but also, you have at least one firm or a couple of firms saying essentially, were already overshot where we might be last year a lot in the middle. Just as a sentiment read this is relatively constructive. You dont see a lot of outright aggressive establibullishness o there. 3,400 is less than a 10 gain from here. So normally, i think, youre going to have some estimates coming in there that are going to be at least for a 15 gain. But i did like this kind of selection of methods from Lori Calvasina saying, if you looked at what the target would be if y we got to a normal level or typical level from various gauges of valuation, like dividend yield, 3706 basically tells you, if we were to normalize dividend yield relative to err things like bond yield. A strong gdp scenario gets you to, i think thats supposed to be 3433, not 4433. But what it basically tells you its always a mosaic of various factors. She gets to a 3350 forecast. Thats 7 or Something Like that, roughly, in the historical change i think that it makes sense to think of things as a kind of spectrum of probabilities. Lots of ways to cut it and nobody knows exactly whats going to happen, guys. Mike, this is i like the lori analysis as well. You are reminded, the most bullish dividend yield, relative to where bond yields are it brings you back to that point of, there is no alternative. If you focus on that, you can be very bullish on stocks this market has been relentlessly in search of cash flows, cash yield. If you look at buy back plus dividend yield, u. S. Stocks, big cap stocks are basically the destination. Well see if that lasts. Mike, thank well, President Trump has just sent out a tweet blaming fed chairman jay powell for the weak ism data. He tweeted, manufacturers are being held back by the strong dollar, which is being propped but up by the ridiculous policies of the Federal Reserve, which has called Interest Rates and quantitative tightening wrong from the first days of jay powell interesting appoint, of course, on the dollar. 97. 8 on the dollar index, down 0. 4 today and not at the highs of the year, mike its not been a weak period, of course, for the dollar, but still not the highs. And some comments earlier in terms of the new steel tariffs on argentina of course, their currencys a hell of a lot weaker its not intentional when it comes with all sorts of aggressive negative baggage. But its a theme weve seen of some time. And the important point wed make is whether the fed has been influenced by this type of tweeting or not. The fed has pivoted significantly . And even more recently, jay powell emphasizing the undershoot of the feds inflation target as a reason to stay more easing those are the things you would say if you were trying to build a rationale for remaining more dovish than you otherwise would or have been that being said, the idea that u. S. Exporters are very depend on the dollar price of our exports is an antiquated idea. Up next, home prices on the rise well hear from the ceo of one of the countrys bgeigst mortgage lenders about the state of the housing market, ahead on closing bell. Gold nice rock. Its time to drop gold. Go digital. Go grayscale. [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 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. Lets get a cnbc news update from sue herrera heres whats happening at this hour. Flight cancellations are climbing as Winter Weather slams into the northeast flight aware is now reporting more than 700 flights are canceled at u. S. Airports and almost 4,500 flights are delayed. Heavier bands of snow are expected to move into the new york city area right around rush hour faa chief steve dixon will testify before a House Panel Next Week on his agencys review of the grounded boeing 737 max it was involved in two fatal crashes in five months the hearing takes place on wednesday, december 11th for the first time in almost a decade, the Supreme Court is considering whether to dismiss a gun rights case. The case involves a dispute over restrictions on transporting licensed, locked, and unloaded guns outside of new york city accomplishme limits it could have major implications for gun rights nationwide. And Soccer Player Megan Rapinoe winning soccers most prestigious award today. The womans ballon dor award. She led the u. S. To a record win in france. And england internationals lucy brauns came in second. That is good to know. We didnt even come in second in the world cup. I think we came third or fourth. And she was a fantastic player sue, thanks so much you got it. Rubbing it in there no, you werent. I know, i know. Sue, thank you housing stocks taking a leg lower today with the Home Construction etf falling for the Third Straight day however, recent housing data beat expectations with october new home sales up more than 31 from one year ago and total Mortgage Application volume up 153 from a year ago joining us now, san jeep da. So good to see you talk to us about the pace of growth you guys have seen personally and where you think its coming from relative to the traditional players. Well, staggering growth in the last quarter i think q3 to q2, we grew about 70 . Just to give you a sense of the growth, about six months ago, we do about 3. 5 billion worth of mortgages a month and we are now doing 7 billion of mortgages a month. Probably will end up doing about 60 billion of mortgages a month in a year. I guess i know correlation is not the same thing as causeuation, but youre growing incredibly fast, late in the economic cycle, perhaps at a time when the traditional banks are deciding to pause. They may be making that decision for risk reasons, you might not be taking on more risk, but how do you respond to people who suggest you might be taking a lot of risk late in the cycle. Actually, it seems like what is actually driving the growth in this cycle so late in the cycle is the fall in Interest Rates. And so what the fall but nobody else is growing doubling their size like you are. Well, the nonbank lenders as a category are doing quite well. Why is that because i think that in general, the banks have been more risk averse to mortgages after sort of what happened during the housing crisis. Whereas i think the nonbanks are stepping in so there is a risk consideration to this even if youre not taking on too much risk, you think the banks are taking on too little risk. Yes, for example, the fha loan category is a category that banks have completely stepped out of because of the doj risk from many years ago, whereas we find that there are homeowners that have a 5 to 10 eligible this is not something you are unfamiliar with. You were at city during the peak years to have the financial crisis and youre credited with helping to turn around city during the time when housing and mortgages led to so much trauma for these banks. But when youre looking at the risk that youre willing to take on now to get arent you the Fastest Growing Emergency Company in the United States right now . In the top 30 if youre willing to take on what banks see as too much risk, does that mean youre willing to look at gig workers who traditionally wouldnt have the applications needed to get a mortgage thats part of it, contessa i would say that the banks probably step back a bit too much i think the pendulum swung a little bit too much on one side, and i was in those bank boards, so i understand what was the dialogue at the time nonbanks have actually stepped in and have, youre right, partially got sboten into a zon where gig workers, we are very slarn large suppliers of workers who get paid based on restrictive stock units. Banks dont lend and theres nothing wrong with that. We find that we are heavily weighted towards the purchase side of the economy. And we are probably amongst the largest lenders in the country in home purchases, as opposed to just refinance do you care whether youre doing refis or doing new mortgages . Does that matter to your bottom line it does generally speaking, refinancing tends to be extremely Interest Rate sensitive, so when rates are lower, you get a lot of refinancing. Purchase tends to be more linked to the fundamentals of the economy. And what we are seeing in the last quarter, particularly since october, is that purchases has really started picking up and purchase generally tends to have a what we call a lower complexity, in other words, it refinances much lesser and is steadier with better margins Bigger Picture question for the industry to round things off. To what extent with all the refinancing that has gone on with rates so low in the last year or so, to what extent refinancing gone on at a fixed rate versus a floating rate . If we do see rates spike again, will people feel the pressure very quickly or not . Not so the short answer to your question is that most people refinanced wilfred either to a 15year or a 30year because the 30year, its at 384 right now. Its a fantastic rate. Most people have switched to a fix. If rates spiked up, its unlikely that they will get impacted however, theres a staggering fact that the Morgan Stanley refinancing index, i dont know if youre familiar with it, but it says if rates dropped 25 basis points, theres about 56 to 60 of the people that could refinance again. Theyre in the money sanjiv, thank you so much for joining us still ahead, jack dorsey is making a big move. The twitter and square ceo is moving to africa well dig in on the big Business Impacts this could have for his companies, after the break my parents never taught me anything about managing money. The amount of Student Loan Debt i have, im embarrassed to even say. We just decided we didnt want debt any longer. I didnt realize how easy investing could be. Im Picking Companies that i believe in. I think sofi money is amazing. Thank you sofi. Sofi thank you, we love you. Jack dorsey certainly boosted the royalty for toto today, one way or another. Jack dorsey says hes planning to move to africa for a few months, but what could that mean for the company he leads kate rooney is standing by with a look at how impact square. But first, julia boor ststin wi look at how impact twitter the content of africa is responsible for a tiny fraction of both twitters revenue and user base. Twitters average user was 15. 50 well, average revenue per International User was just a fifth of that. An emarketer estimates that twitter has over 10 million active monthly users between the middle east and africa thats less than 4 of twitters total. When hes in africa, dorsey could be as much as 11 hours ahead of twitter San Francisco headquarters so more responsibilities could fall on product lead ad chief matt drella. And on regulatory issues that are sure to be heating up ahead of the election. Guys, back over to you so lets get to kate rooney with how dorseys move could affect square. Squares not operating in any african countries right now, but analysts are still excited they say its the future of payment s they see the move as forward thinking it could be an opportunity for square to respond. Theres also potential for bitcoin, which dorsey mentions in the tweet and has personally advocated for. Dorsey may need no appoint an interim ceo or ceo for the very least depending on how long hes gone but right now theres no heir apparent for square. Guys so, first of all, lets take square if you have a population this may be, if its mostly cash, how would it work that they would be using square in this way its tough to get financial expansion across borders so for square, its easier to twitter to expand. Its not as easy part of this is crypto so jack dorsey has been a big fan of those are a big opportunity. You can see Companies Like we pais and analyst s have said, because they dont use cash, its a huge opportunity. But there is definitely an uphill battle in terms of expanding and getting some of the infrastructure and some of the Payment Systems in place to be able to use a credit card, for example. To what extent is dorsey seen by investors crucial . If there was an interim ceo or a ceo that was responsible for the day to day, would that have any effect on this announcement . For years, dorsey faced criticism of being the ceo of two publicly traded companies. And then twitter shifted its focus and seemed to be doing better, so that criticism faded away doyers has focused a lot on the companys earnings calls, on the deep bench of executives theres no one person whos his number two who does everything but they have people in legal and in product and in advertising who are each handling different part of the business so what twitter would likely say, they have this sort of diversified deep bench of executives that is right below dorsey that would all be pitching if hes not immediately reachable 11 hours ahead but it will be interesting to see what more details the company gives, as a this whole plan for him to spend three to six months in africa gets closer julia, thank you very much for that kate rooney, thank you, as well. Up next, distressed debt could be flashing a warning gnsi for investors and the market well discuss, ahead orrowed bils and left a trail of bankruptcy and broken promises. He hasnt changed. I started a tiny investment business, and over 27 years, grew it successfully to 36 billion dollars. Im tom steyer and i approve this message. Im running for president because unlike other candidates, i can go head to head with donald trump on the economy, and expose him fo what he is a fraud and a failure. Well, its been a banner year for corporate debt amid a dovish Federal Reserve and a u. S. Economy that just keeps growing. According to a story in the financial times, the portion of bonds considered distressed is now the highest its been since 2016 joining us now to discuss this is chris white, the ceo of bond click. Chris, to start off, we just had the president tweeting this hour that manufacturers are being held back by the strong dollar, which is being propped up by ridiculous policies of the Federal Reserve, which is called Interest Rates and quantitative tightening wrong from the first days of jay powell in your thesis, how important is the fed and the actions the fed takes in terms of what were seeing in the bond market . Well, the fed is critical i think that as were unwrapping whats happening in this economy, it all kind of links back to the fed and fed policy in terms of how the markets reacting i think this really starts with the policy changes that were put in by the fed and other Central Banks post the financial crisis. Whats interesting about the comments from the president today is that were hearing two different stories. Were hearing that the u. S. Economy has never been better than ever before and were also hearing that we need to cut rates. Now, normally, central banking policy, weapon only cut rates and ease the money supply when we are in a recession or trying to move out of a sluggish period of economic performance. So we cant have both of these things happening at once so its a little bit confusing as to has the policy been wrong or is the economy not doing as well as whats being reported . And how do the feds actions then take effect in the Corporate Bond world sure. I think that the fed and many of the Central Banks have taken a policy that was an emergency and now made it a part of what theyve been doing for the past decade so were addicted i think it even goes beyond addiction. At this point in time, the way the current Corporate Bond market looks today, twice the way it was in 2018, with bbb bonds dominating the outstanding bond markets made up of bbb, thats being traced back to the markets put in effect by the bank of england. Its this cheap debt cycle thats allowed companies to get really, really massive so as an investor in this sort of space, do you feel like the valuations are unattractive . That the bonds have been bid up too much spreads are also pretty tight, it seems i think that the way in which the fed went about this policy probably needs some kpamexamina. The fed decided it would purchase the highest rated debt in the marketplace aaa securities and from sovereign nations. The issue is that that activity has basically pushed down spreads across the credit curve. So now for you and i and to get a reasonable return or for the investors who watch this show to get a reasonable return, you have to invest in companies that are riskier than your appetite and the worst part is youre not being compensated. You think theres a bond bubble i think its quite obviously theres a bubble the fact that theres about 15 trillion in outstanding negative Interest Rate debt and this is something that weve never seen before in the marketplace. So i think its quite clear that from an overall performance standpoint, were seeing a market that is not representing the fundament also of the Underlying Companies chris white, thanks for joining us good to see you. A pleasure. Up next, muskday s in court. A rundown of the key things to watch for, coming up flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Dont get mad get e trade and start trading [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 Investment Opportunities beyfirsthand, like biotech. Ne because your investments deserve the full story. T. Rowe price invest with confidence. Were back lets get back to mike for the final installment of dashboard installation against tougher consumer conditions, financial conditions come in the form of this wealth cushion that has built up in this economy this is real estate wealth this is net housing. And really not that far above where we were. And just barely come back. But net worth and its in blue it has exploded. In the form of public and private equities 90 of all stocks are owned by the top 20 of earners of earning households now look at the consume he spending by percentile of earnings thats right here. Theyre responsible for just about 40 of all Consumer Spending so twice as much, twice as the representation in the spending column. So therefore, the fate of that wealth of the equity wealth and just exactly how these consumers feel about it is pretty important in driving overall Consumer Spending. The rest of the economy, of course, distribution is pretty steady in terms of those people, their pace of spending they had the big down draft in the stock market it did seem to have an impact on retail spending. It shows you the wealth dependcy of some degree of consumer trends. That first chart is fascinating. Go back to it. I think if you look at that if other parts of the developed world, europe in particular, uk in particular, it wouldnt show that at all. Housing is so much more to shortage and house prices. They have exploded higher over the last three or four decades in a way that relatively speaking to stock prices doesnt show that. The other thing, whether or not it comes out a blue or orange line it is actually kind of an argument for why Capital Gains should be taxed a little bit more absolutely. They had such an imbe pact there is a tremendous pile of untaxed wealth out there i think all of the politicians can see that theyre trying to get at it. Mike, thank you up next, ice, ice baby. Yoda fans can now order a baby yoda frappuccino from the starbucks secret menu. Wait until i tell you or sing you the details unless the lawyers call and tell me to knock it off tus. Ste test when closing bell rern brakes screeching okay. So, today youre going to leave your phone with a guy named flip. ding but its more than your phone, its your business, your customer data, your sales figures. And who can forget, those happy hour selfies . Not flip. honking, gasping this isnt working. Introducing samsung Business Security solutions, with knox software. With the galaxy note10, you can remotely wipe data or lock phones, so your business is secure even when your phone isnt. Samsung business solutions. Even when your phone isnt. 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. Teslas elon musk is set to trial. Lets start with auto sales. Its a strong many in terms of auto sales the expectation is to see what the pace of sales is and thats pretty strong. And it really had become a major sales holiday sales holiday. That and its in october and november and the auto sales. As for tesla and the surrounding elon musk. And thats the stock at all. I think people are more interested in what kind of drama if anything because he is being taken to court by a british cave diver who says when elon musk tweeted he was a pedo guy, that was defamation immimplying he wa a pedophile. I think a people expected this to be settled by now the gentleman is only speaking the british cave diver, he is only seeking 75,000. Its not like hes going for huge amount of money here it will be interesting to see with jury selection tomorrow by him, thank you for that you have probably heard of baby joda, the character from disney that shows up in analyst notes, taking up more social Media Attention than president ial candidates according to data news whip. He is cute enough to eat can you devour a baby yoda frappuccino from starbucks secret menu. Know how to make the baby yoeda. Yoda. Whipped cream, caramel, and then you ghet whi you and this is with disney jumping on the craze and its gone viral on line. Very, very and we also know by the way that hasnt disney gone after the social it rags. And theyre violating copy writes if anyone has got through cycle, its seriously sweet. Life in the Nasdaq Market site this is fast money. Our trade oer our traders on the market. 10 billion worth of sales getting run off online it is kaching for all the retailers. Roku hits a roadblock. Why analysts just cut the rating on the one story stream being stock. And exxonmobil was one the most valuable company in the United States one analyst is betting on a big come back
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