Transcripts For CNBC Closing Bell 20240713

Stocks bouncing around all session along on conflicting headlines about that december 15th deadline for china tariffs. Will it sfwebe extended. And House Democrats officially announcing articles of impeachment, two of them, against President Trump. Plus, coming up only today on the closing bell, wilfred frost is live from the Goldman Sachs Financial Services conference and hes got exclusive interview with Howard Marcus ks in just aw minutes. Joining us now for the hour is steve grasso from stuart frankel. Weve got to stop meeting like this i know, i know. We talked about this last night on fast money 5. Whats going to happen if theres no trade deal . Whats going to happen if the deal is extended and whats going to happen if a deal gets done there are three scenarios. Quickly walk us through each one. If the deal gets done, the market shoots higher but its only phase i of a deal. So i think it has a lot more ammo in its ability to move the market progressively higher from there. Nobody expects a deal to get done anytime soon. Youre talking about tariffs going on or not going on or not coming back on for me, if they dont get put on, the market rips, if they do get put on, sells off and its a buying opportunity thats it. In a nutshell. You have to realize that every time this market sells off, the buyers have come in. Whos going to short the market knowing that you not only have one phase, but two phases or three phases of a blowoff top in the overall marketplace . I wouldnt be shorting it. Well, its also, how long are we going to deal with this how long have we been talking about this now going on two years now youre talking about phase ii and phase iii at some point, the trade war, even the tariffs, if they stick, they simply become the new operating normal you could almost say that the last when you just said, how long have we been talking about this you could say, this year was less productive than last year on the trade front, but look at the returns in the overall stock market so, if you think about it, a Long Short Hedge Fund is always more long than they are short. So if the market goes down, their longs underperform more than their shorts outperform longs only want the market to go higher net net, theres more people who want to push the market higher than see it sell off, and thats why it keep going higher well talk about this and a whole lot more over the next hour with steve. In the meantime, lets focus in on the key stories were watching today Kayla Tausche has todays big trade headlines. Wilfred frost is getting the pulse of the banking industry. The Goldman Sachs Financial Services conference, and mike santoli is here with his market dashboard. Kayla, first to you on trade morgan, one of the two major variables on trade getting solved earlier today with House Democrats announcing a deal with the white house on usmca and negotiators from the u. S. , mexico, and canada in mexico citi to sign and fete the revised deal the senate will not vote until after an impeachment trial with some republicans raising concerns, even as Speaker Pelosi confirms a vote in the house for next week. Were declaring victory for the American Worker in what is in this agreement. But we would never, not any one of us is important for us to hold up a trade agreement that is important for American Workers, because of any collateral benefit that might accrue to any one of us. Reporter the white house is aiming to have the usmca text to the hill by december 15th, the same day new china tariffs could go into effect top economic adviser larry kudlow declined to confirm the wall street journals reporting that tariffs would be delayed, but others have gone further the agricultural secretary, sonny perdue said at a conference yesterday, we have a deadline coming up on december 15th for another tranche of tariffs. I do not believe those will be implemented and i do see that we could see some backing away. Officials reluctance often is because the president changes his mind, which he may yet do in this case. There are bullish signs from officials, but you have to take those with a grain of salt brian and morgan kayla, thank you. The fact that usmca is finally moving forward here, kayla, how important is that to the u. S. china trade talks i ask, because if you do start to see some of these deals with American Allies and really finally begin to take effect, they cant help but think it only strengthens the u. S. hands. There are different scenarios. In the usmca, you had essentially an early draft in nafta nafta which they were trying to revise and modernize the china deal is starting from crash and its revisiting decades of transgressions that the u. S. Says cannot be an equal deal because china has gotten so much of a head start on the u. S. And has so many transgressions that need to be righted here that being said, the president has suggested as recently as a couple of months ago that hes willing to bite this off in different portions with a phase i, a phase ii, and maybe a phase iii. The question remains, what is in each one of these phases and whether china does, in fact, sign on. Because even with that announcement in october, china never said there was a deal. But it is a big one and we appreciate youre on top of those headlines. I think im the only one when kayla says, wheres usmca, i say, wheres mike d. , because it sounds like the beastie boys some of wall streets biggest names are gathering today for the Goldman Sachs Financial Services conference right here in new york city who other than wilfred frost is there with some of the early highlights and a lot more to come wilfred . Yeah, brian, indeed here at the Goldman Sachs financials conference in new york, as you said, earlier today we heard from the jpmorgan ceo, jen peepsack, her first presentation since becoming cfo earlier this year. And she spoke about her optimism about the u. S. Economy, particularly the u. S. Consumer sentiment had come off the peak, but weve now seen a rebound in consumer sentiment. And then on spending, spending very strong. Holiday spend seems very consistent holiday to date with the trends weve been seeing all year, which is up about 10 year on year. Importantly, though, if you look at black friday through cyber monday, year over year, were up nearly 20 for black friday through cyber monday very consistent with what were seeing broadly across the u. S. Consumer, which is very strong and then on the business side, i would say there are some cautionary signs but things at the margin are improving or at least have improved since the summer. And that includes ceo sentiment, i would say. The main area of caution, she said there, was commercial real estate i should mention that wells fargo and pnc were just as positive on the u. S. Consumer. Citi is presenting at the moment back to jpmorgan and the earnings specifics they reiterated guidance on Net Interest Income for next year, 58 to 60 billion, despite moves in the yield curve they also said that Investment Banking revenue for q4 should be flat previously, people had thought it would be slightly lower and that trading revenue should be meaningfully higher year over year all three of those things, slight incremental positives to where expectations were. The stock, therefore, holding on to the gains, huge gains theyve seen so far this quarter flat today, but up 14 since the start of q4. Guys wilf, its like an early Christmas Present for you. I mean, being at a banking conference, getting to really dig into the sector and these names even more aggressively today. What have some of the big trends so far it certainly is and this conference comes every year this time it is always an early Christmas Present. And its very well attended, as youve said. And tomorrow weve got a couple more interviews from the likes of brian moynihan, kusung lee and Howard Marcus aks and john d ron. Ive never seen such a different tone and thats not because corporate sentiment has worsened since, cest, the summer. If anything, its fractionally improved or stayed flat, but the u. S. Consumer sentiment has improved significantly wells fargo, pnc, jpmorgan all striking that tone and its definitely an optimistic one that despite some other challenges, maybe the yield curve or some other things, theyre able to reiterate ghirns ftheir guidancr this quarter and next year and the banks have performed very well over the next couple of months and theyre holding that ground today. We have some big interviews coming over the next two hours, as well. So wilf, well see you soon. Thank you. See you then. Lets send it over to mike santoli for todays market dashboard. Mike morgan, going to follow wilfs lead right there with our first installment here it is a bank run, but the good kind of run in bank stocks well put some numbers on that and is everybody in the pool thats a question here as we see this sort of risk on tone to the overall capital markets. Fix it yourself. Thats one company in particular showing exactly how it could essentially help its own shareholder returns by acting on its own. And then, alternate futures. A look at the Growth Outlook for 2020 by a couple of different means. A bank run take a look at this ratio of the u. S. Bank index against the s p 500. This is the bkx divided by the s p 500 over two years what a lot of folks are pointing out here is you had a pretty solid downtrend line that has broken you have this continuation higher, its not really been the Leadership Group in the last few weeks, but people are basically placing a lot of weight on the fact that this does seem to be a trend reversal if we went all the way back farther, weve had another peak, a decline. Its been long in coming that weve had perhaps a return to the fore for the bank stocks look at the valuation right here these are the universal banks or the very, very big new yorkbased banks are mostly measured here. If you look at the price earnings ratios, youve had some escape velocity in terms of forward p\e for this group a lot of people said they were cheap for years. Guess what, its true and finally they got some traction compared to the s p 500, it is below this longer term average here for 2019. Thats mostly because the overall market has become appreciably more expensive so the question is, how much higher can that relative multiple go. Back in the mid2000s, these banks were very profitable maybe thats a stretch goal. As long as the economy holds together, you have to imagine that the bank stocks can probably continue to participate and plug along mike, look forward to more of your dashboard coming up in just a bit. Interesting stuff there on the banks. Switching gears, does this remind you of anything shares of peloton backpedaling today and you need more anger in your face and it has nothing to do with the companys controversial holiday ad we will explain. And theres a lot more ahead on closing bell. Zplrns aft announcer after the break, billionaire Howard Marcus has a message for investors. I think there are reasons to have less risk Going Forward than you have had in recent years. Catch wilfred frosts full interview. Plus, an exclusive sitdown with Goldman Sachs president john waldron, ahead on closing bell. 45 minutes left to go and the major averages are hugging the flat line. Heres a check on the markets, the dow is up 11 points. The s p is just about flat and the nasdaq is up fractionally as well stitch fix is trading higher after posting a breakeven quarter with revenue coming in higher than estimates. Ceo Katrina Lakes spoke on squawk alley exclusively this morning. Heres what she said about where the company is investing we are doing a lot of big invests. We opened up the uk and kids last year. We are annualizing those investments. Those are still investment markets, so we have that were investing a lot in technology and data science. We have a lot of stop base compensation, which is how you can see the investment that were making in the team and thats really against the product. Against, how do we take shop your looks and make that fully integrated into our experience, roll it out to everybody theres a lot of investments were making at the same time, we are showing leverage were showing great gross margin leverage, showing leverage in our core business. And so, you know, our business has always been one of profitable growth. So that stock has been trading higher today its up about 6 right now we talked about it, 47 or 48 of that stock was sold short, steve. Yeah. Any sniff of good news, and youre going to light a fire on it its even erring on upwards of 50 right now so if you get a hint of anything good lululemon, when they started offering and catering towards menswear, they started doubling their audience now if you have stitchfix working out the kids angle, maybe it helps them there. International, maybe it helps them there i thought she was great earlier on the cnbc show so im looking for it to move higher, but you cant prolong that move if its just based on shorted steve, back to you in a minute heres the Big Questions of the day, where is wilfred frost and why am i sitting here right now . Its because wilfred frost is at a massive Goldman Sachs Financial Services and banking conference right here in new york and given that it is a banking conference, theres a lot of bankers there. Wilfred frost sat down with a few of them today. Wilfred . I have indeed one of the person i just sat down is oak trees Howard Marcus i began by asking him if he was fearful of a market selloff if we did see a president ia impeachmen impeachment. Well, number one, impeachment shouldnt come as a surprise number two, given that, if we assume that the market is intelligent, it shouldnt have an impact. If its a foregone conclusion today, then when its voted in a in line with expectations, it should not have a profound impact on the level of the market but conviction is something that you would be concerned about . Im not concerned about that, because i dont think it will happen you know, they need 20 republican votes to convict in the senate and they dont have one and i cant imagine whats going to change in particular, i think that all of the evidence is on the table. So how are you going to change 20 minds that said on the political front, the 2020 election, of course, is only a year or so away, but front of our minds, for sure yes whats your take on the impact that might have on markets . Well, you know, marketwise, it all depends on whether we have a president whos considered pro or antibusiness. The market took off after trumps election, because he was judged to be promarket and he has probusiness so if hes reelected, people will continue to see him as probusiness theyll breathe a sigh of relief that he was reelected and that will probably be healthy for the market in this case, its not preordained like the impeachment. I think that there is uncertainty as to the outcome. If hes not elected, then the question is, who is . Bloomberg would be judged as probusiness and the market would like that biden, moderate, probably not as strong strongly, warren, who certainly comes out as being antibusiness, antiwall street. I think hold your hat. Lee cooperman said 25 selloff in that sense does that equate to hold your hat in your mind well,look, a week before Donald Trumps election, there were two things we were sure of. Hillary would win and if trump won, the market would collapse so donald won and the market went up. And that tells me we dont know whats going to happen so i try not to make forecasts and i tend not to believe forecasts, including my own, but i do think that there would be an adverse reaction to a progressive president. When we look at your broader e indices, theres been a lot of price pressure, also more recently in the brokered price wars that weve witnessed. Do you think that kind of price pressure is coming to the credit space, to the private equity space . A lot depends on how it performs, you know, basically, people switch from active to passage management in equity funds, because active wasnt working, and it wasnt earning its high fees. Thats why the fees have come down i think were still in a rational market where things that make money for people will be compensated, things that dont make money for people will not. When we consider wework as an example of a private market company, a private market valuations, do you consider that as broadly actually representing a bubble in private market valuations, or is it more of a special situation. I think it was a special situation, because i think that that valuation of 47 billion earlier this year was made by one buyer. And if that buyer miscalculated, i dont think thats typical of a broad trend. I think its very interesting to see that, you know, the market one of the roles of the market is to serve as a vigilante and to reject or down price when it should the fact that the Public Market valuation on wework i think was a very Healthy Development and it shows that the market is value sensitive. Thats a plus. I know this is very hard to predict when the current cycle will end, but do you ever think about how big the fallout will be this time around when it does end. Do you think that the selloff, when it comes will be bigger than 08 or 09 or well, look, if youve been around 20 years, you may have been around 20 years i have not always investing. Youve seen two bubbles, tech, and subprime, and two crashes. And you may tend to think, as may your viewers, that thats it bubbles and crashes, but the truth is, we have ups and downs, we have bulls and bears. Theyre not all as profound as bubbles and crashes. I dont see were in a bubble this time. Certainly nothing comparable to 07. I dont think were going to have a market decline comparable things are evaluated, but not crazily so but where we stand today, worth taking a little bit of risk off the table well, it depends on from what the economic expansion and the bull market are old, valuations are above average, prospective returns are low, theres a lot of uncertainty in the world, and it strikes me that one should not have as much risk as one did three years ago or six years ago. Youve made a lot of money, take some off the table that is not to say its going down you know, if i thought it was going down, which i dont know how i would reach that conclusion, i would say, sell it all. But i never say that, and you its impossible to say that. But i think there are reasons to have less risk Going Forward than you have had in recent year years. So taking a little bit less risk today than in recent years. Though all things considered, relative to the last three or four investor letters he sent out, i thought he was a little more constructive than perhaps he could have been his comments on wework perhaps an indication of that, which i thought also was pretty interesting. Still to come, from that interview, his comments on the fed and Interest Rates and what that does on market multiples. Then coming up at 4 30 p. M. Eastern time, john waldron, the gulf coast k Goldman Sachs president and ceo, plenty to discuss on the goldman front from their upcoming allimportant january strategy update that theyre due to give. Maybe an update on one mdb theres been some movement on that front and the apple card, the announcement from apple about free financing from an iphone. But as well as those questions over potential gender bias, be great to get his points on that, on the record. Guys, ill send it back to you wilf, great stuff were looking forward to more of it, too, throughout the hour thank you. Steve, the comments about if President Trump wins the next election, i mean, theres been so much focus on this idea of what happens if somebody like an Elizabeth Warren wins the election i mean, i think back to 2016, when the talk was, if trump wins, the markets going to tank, and it did, for a couple hours overnight, and then everything changed again but if you think about why the market moved substantially higher, it was on tax cuts and deregulation so obviously, the antithesis of trump is warren. And the rest of the field is still going to be worst when it comes to taxes and regulation. I know weve ive got to jump in there. Ive talked to a lot of people that are worried about this trading taxidea from warren, because if you start to tax every trade, youre going to push the highspeed guys out of the market you may not care or feel sorry for the billionaire highspeed traders, nobody does but them. But they are a massive part of the underlying framework of the market skper and everybody ive talked to is worried, if that is removed or reduced, they dont know what the baseline is going to be. You have no idea where the bids, where the offers, what the substantiative Market Players will be on a daytoday basis. But i keep it simple its about taxes, its about deregulation and no matter how you slice it, if both of those get pulled off the table even incrementally, and warren, its not going to be incremental, then youre giving up a large portion of these gains and then some. Up next, netflix scoring a 34 golden globe nominations, but one firm says the company is facing a fake hurdle on the horizon and that is sending shares lower well get the word on the street on that call, next and later on, something very cool an inside look at the s. E. C. s highly secured Forensics Lab and youll also hear from s. E. C. Chairman jay clayton about the high tech tools they are using rba a t ces wee ckfterhis. Woman friction points, those obstacles that limit a companys growth. I try to find companies that turn these challenges into opportunities. But by going out in the field, and meeting management, suppliers, competitors. In the end, its these unique companies with Creative Business models that will generate value for our investors. Thats why i go beyond the numbers. That will generate value for our investors. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Welcome back to closing bell. It is time now to get to the word on the street oppenheimer raising its price target on peloton from 38 a share to 29 the firm points to pelotons search trends, website traffic, and improving Customer Satisfaction metrics meanwhile, though, scitron research out with a note on peloton saying that investors are peddling themselves into frenzy, giving the stock a 5 price target for 2020. Peloton stock is currently trading down quite a bit today another 6. 5 yeah. Around 32 and change per share. By the way, the average price target of the 20 analysts that cover peloton is 33 so youve got an extreme call, a very extreme call on the downside, and in the meantime, were sitting right in the middle all right, maybe the big call of the day is this one. Needham downgrading netflix to underperform fancy word for sell. Analyst laura martin says netflix is going to be hurting, losing as many as 4 million subscribers in 2020. Needham suggests that netflix may need to add a second lowerpriced service to compete with the likes of disney plus, apple plus, hulu and others. By the way, laura will join us later at 4 00 p. M. Great analyst made a call, originally downgraded the stock earlier this year, fantastic call another downgrade, so look forward to that. Yeah, absolutely. Go ahead. I was just going to say, steve, your reaction to either one of these names i think on the needham call, i like that lower tier Monthly Subscription i think that makes a ton of sense to get people back in, to get them moving up and full netflix subscribers. On the peloton side, theyre at risk of being just a hardware company. It reminds me of gopro you cant ride a gopro which was part of citrons argument as well yeah, but i like that traffic has been increasing at exponential pace on the website and on the digital membership. I think they have a shot here. You talk about the price targets. Still above its ipo price of 29. Thats crucial for me, that it holds that level oh, by the way, there are imitators. A Company Called echelon, the logo, the website kind of looks the same andtheyre advertisin a lower price point. So peloton may not have had enough protection on the ip side i cant understand how thats even possible, but i guess people can push stuff through Court Systems and Everything Else but the bike, yes, is too expensive, the treadmills are too expensive, but well see what happens in the long run weve got less than 30 minutes to go here here are thethree things that are driving the action first, the u. S. , mexico, and china agreed china, excuse me canada agreed to we need that deal weapon need the china deal you just broke news, Morgan Brennan. China and mexico have entered into a longterm merger. The u. S. , mexico, and canada agreed to a revised usmca trade deal stocks have bounced around all session on conflicting headlines about the december 15th deadline for chinese tariffs and House Democrats officially announced articles of impeachment against President Trump. It is time now for a cnbc news update, though, with sue herrera. Hey, sue hello, morgan hello, everyone, heres whats happening at this hour a very fluid and still developing situation one officer is dead, two others have been shot and this is all taking place amid an active shooter situation in a store in jersey city, new jersey. All the Public Schools in the city have been locked down, as multiple s. W. A. T. Teams respond. Dozens and dozens of gunshots were fired two gunman are down. We dont know their condition. Police are sending in a robot to assess that situation. The florida keys sanctuary is getting a 100 million facelift the National Oceanic and Atmospheric Administration announcing a new restoration plan designed to restore seven iconic coral reef sites off the florida keys that is the size of 52 football fields we have identified some iconic reefs here in the keys that we want to help restore these reefs have been suffering from a number of threats for years, as have reefs all around the world. And redbox is getting out of the video game business. The company saying it will focus exclusively on movies. Redbox says game rentals are no longer available from its kiosks, but customers can still buy games intuntil early next y. Well continue to follow that developing story in jersey city, new jersey in the meantime, youre up to date brian, back you. That is terrifying stuff here, just across the river. Thank you very much, sue herrera. Keep us updated. Meantime, House Democrats announcing articles of impeachment, two of them, against prmesident trump. Lets get now to ylan movie in washington the next step is for the House Judiciary Committee to debate these two articles of impeachment, abuse of power and obstruction of congress. We are expecting that a Committee Vote could happen on thursday, which would set up a vote before the full house early next week. We do not take this action lightly. But we have taken an oath to defend the constitution. And unlike President Trump, we understand that our duty first and foremost is to protect the constitution and to protect the interests of the American People that is why we must take this solemn step today. Senate Majority Leader Mitch Mcconnell said today he does not see his chamber getting to a trial until after the christmas break. And its still unclear what that trial will look like, how long it might last, and whether the senate will call its own witnesses. Mcconnell told reporters this afternoon that no decisions have been made yet, but guys, it is worth noting that the senates official calendar has left january wide open. Back over to you ylan move ylan mui, thanks fg us the latest. As we head to break, lets get a check on bonds u. S. Treasury yields getting a small bump investors are awaiting that feds decision, even though apparently every single one of them expects the fed to hold steady the benchmark tenyear at 1. 83 . Were back after this. 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. About 22 minutes left. Consider the fact that we were basically literally at one point unchanged, flatline, last few minutes, started to see some action lets send it over to Michael Santoli for the second installment of his market dashboard. Thanks very much. Asking if everyone has kind of already gotten in the pool on this rally, maybe thats why its cooling off a little bit. Take a look at the trend in the s p 500. This just goes back a year, so it kind of shows you that decline last december and then the big recovery heres what a lot of folks are focused on, which is the fact that this really kind of stalled out, basically at this top end of this particular trend if you really look at the market that is setting up these channels, its bumped up against the top and is now cooling off, sometimes these appearance, its like looking at the sky and seeing puppies and bunnies, but this seems to really this year obey this trend line well see if thats really a backing off. Risk sentiment seems okay. Look at the dollar in the last couple of months in particular, it has rolled over, it may come off. Thats consistent with kind of a, you know, sort of a reflationary story the global macro picture picking off. And the adverse of this could be copper copper prices have been breaking out in the shortterm. Not breaking out to an alltime high, around the same time the dollar faded, you started to see that rebound could be sentiment firming up on a trade deal the internals of the market still seem like theyre gaining traction in terms of a cyclical beneficial move. Looking at this chart, is this all in anticipation of trade, a trade deal with china, or is it more a signal that perhaps we have seen some sort of bottom in terms of Global Economic or moving the dollar. Or a dollar so i think the moving the dollar, i think you have to go back to the fed and when the fed starts playing around with the Balance Sheet, we saw the dollar move higher and they had stopped cutting rates. Now were starting to see qe the extension of qe. And if theyre going to expand that Balance Sheet, then we could start to see a lot of these moves get coupled with the trade headlines and i think that results with what mike is pointing out with those charts up next, weve got your last chance trade and grasso is picking a name thats there are up 150 this year. What . Find out why he says its still bu at cinupa y. Dont get mad. Get e trade, dawg. No, its not in my records. Youve got a lot on your plate. Deliveries. Billy, come in. Shift times. I just need to know if its there. Compliance. Can i get your 20 . For 100 drivers. Doug. Doug . And where is doug . He should be sleeping. So should you. Just because youre married to my sister, you could lose this job, billy this isnt working. Introducing samsung connected fleet solutions. With the galaxy tab active2, you can track driver shifts and timesheets and meet eld compliance, all from one device. Samsung business solutions. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. 16 minutes left to go. Major averages are slightly lower. Steve, what is your last chance trade . Snap. No way weve talked about this a lot. Its up 153 yeartodate. Its natural to get some sell side with the stock thats up that much going into year end. People want to lock in some profits. Maybe they have some losses to write off against it or what not. Theres filters, theres International Growth theres also the 17 ipo price that this thing is going to be a magnet to get back to in 2020. Its a 20 move. I think you chose it back in october as well. Stock is down about 3 since then so this is profit taking. Why dont we look backwards and say, when we pickedit, it traded higher from there i never said to hold it until the next time i was going to be on closing bell talking about snapchat how much did it go up from there . 15 from the time i picked it, 20 . Whatever the number is so you should have been aware of that oh, snap that was a snappy call. Steve, thanks for joining us. See you next time ill probably see you tomorrow night on fast money 5, 5 00 p. M. Eastern. Up next, uninterrupted coverage of the final minutes of trading. Well take you inside the market zone when closing bell returns. [spokesman] if youve tried college but never finished, group cheering snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu 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. Less than 12 minutes left in the trading day, both the dow and the s p are lower right now. We are now in the closing bell market zone. Commercialfree coverage of all the action going into the close. And cnbc senior markets commentator, Michael Santoli here now to break down some of the crucial moments of this trading day, and today weve also got Barbara Duran from bd8 Capital Partners is here barbara, welcome so you look at this market, and you think, all right, we might end flat Nothing Happened but inside the grease, the wheels, the gear, theyre always turning. What stuck out to you . Honestly, the market is just kind of holding its own, right below the highs, you know, apple, up a little bit today, hovering less than half a percent from its highs soy honestly think that the market is looking to wait until this known catalyst to trade is out of the way and were waiting and seeing its sort of also figuring out if last weeks little 2 to 3 pullback was enough. That remains to be seen. All right so weve got a lot to cover. Lets kick things off with what should have been a headline to move markets maybe positively. And that is trade. Because House Democrats and republicans reaching a deal to move forward with the u. S. mexico canada trade agreement. The usmca. That is a replacement of the 1994 nafta deal, the revised agreement includes tools to settle labor and environmental disputes the move comes on the heels of a wall street journal report saying the u. S. And china were planning for a possible delay in the implementation of those next round of tariffs set to go on december 15th. However, white house economic adviser larry kudlow dismissed that report at a wall street journal conference, saying tariffs were still on the table, so the paper says, we may delay. Kudlow at the papers conference says, there will be no delay Barbara Duran, all youre trying to do is make money for your clients. How do you manage this every day . I know, well, every day, you dont. Not changing any asset allocations, not change my stock picks. And youre trying to say, well, is the market really overstretched here or not . And the fact is, i think that trade is clearly driving it a little bit in the shortterm, but im beginning to think that its really about the fed cuts this year. Those three Interest Rate cuts that are really being discounted in the markets in terms of future earnings. And also multiple valuation support. So i think thats a big part of whats actually going on and yes, trades an issue. If we suddenly slap on more tariffs, than everybody is going to you know, the market will go down until it sorts out how meaningful is this so i think its really about the fed cuts all right its a key point meantime, boeing out with new delivery numbers lets get over to phil lebeau. Hey, phil. A little bit of good news for boeing in the november delivery numbers or orders numbers, i should point out because the 737 max, really, for most of the year, theyve had no substantial orders a few here, a few there, but nothing substantial well in november they had 30 planes that were the result of two firm orders. Overall for november, commercial airplanes was a net positive 11 planes for boeing, but still for the year, theyre at negative 84 check out this chart right now boeing is on pace to have its fewest deliveries since 2008 and thats when there was a machinist strike, which is the reason they didnt deliver a number 737s that year. Right now they have 345 airplanes delivered. You do not want to miss our exclusive interview tomorrow morning, steve dixon, head of the faa. Right before he goes over and testifies on capitol hill about how the faa has been handling the max. Again, guys, a lot of the questions here will center around whether or not boeings expectation of having this plane recertified and the grounding lifted by the end of the year, whether or not that will happen. Well be talking with the faa administrator about that whats your best expectation of what hes going to say, phil . I think he says, we go on our time frame, we dont go on boeings time frame. Boeing may still be hanging on to that, but hes not going to change where theyre at. Phil lebeau, well look forward to that, as well were closing, a little bit over five minutes left to go. Apple making two announcements about its apple card today what are those lets find out josh lipton is here. Josh so, brian, starting today, people who have the apple card can buy an iphone and pay for it over 24 months with zero interest so the question for investors, does this new feature, this new program now help encourage more iphone upgrades in the quarters ahead . And if so, how much . Apple also announced new holiday promotion. Apple card customers can get 6 cash back on purchases of apple products from now until the end of the year, december 31st normally, remember, apple card customers get 3 cash back and that could certainly help drive adoption of the new apple card in this critical Holiday Shopping season. Guys, back to you. Josh, thank you very much coming up, Goldman Sachs president and coo john waldron will weigh in on the apple card. Theyre their partner, after all. Hell speak exclusively to wilfred frost coming up later in the show that interview, what do we say you cannot afford to miss it cant afford to miss it meantime, mike santoli, apple, up 70 yeartodate. Far and away the best performing dow stock. Yes obviously, it checks off a lot of the boxes of what this market has wanted, not just technology, but just this kind of quality Balance Sheet, the buybacks, the longterm growth story is all in tact i do think this measure is very interesting, both to promote the adoption of the card, but also, theyve wanted to smooth up the upgrade cycle for a long time. The installment buying plan, its went some distance do you ever think we talk about boeing i know pros dont look at the dow, but it shows up on the cover of newspapers and general news if boeing had not had these problems and had just performed with the average of the other stocks, the dow could be a lot higher than it is now. Yeah it would be i mean, lets say it was 50 bucks higher or 50 bucks higher is another, you know, 350 points on the dow. So you would be handedly over 28,000 right now Ridesharing Companies uber and lyft both trading below their ipo prices as investors have become increasingly concerned with both companies paths to profitability former twitter coo adam bayne joined the Halftime Report earlier and weighed in i think the issue with uber and lyft ultimately is a bit of this, youre trading on someone elses capital for a bit uber and lyft, essentially, have massive stipends and bonuses that they pay drivers and drive the incentive wheel in that way. If they take that away, ultimately, both of those companies will be highly profitab profitable its just a question now of who moves first. You know, its incredible, barbara, because we have heard these companies and some of the others that have been growth at all costs and maybe no signs of profitability, at least in the next couple of years, come out and at least say, oh, adjusted ebitda positive, you know, 2021 or 2022, whichever company were talking about. But i think it sort of maurksrk shift in the market, particularly among public investors this year, more discerning about the metrics and what theyre looking for i think thats right. And i think what the shift has been and why youre starting to hear the managements of uber is lyft, particularly uber saying, weve got to focus more on that. Theyve talked about uber eats, theyre willing to rationalize, because its really about the investors and the stock price. So i think theyve got a couple of levers to pull. And i think that i haeyve got h plan and theyve got to move it up a little bit sooner it could be cutting down what they raise the drivers or raising prices you know, scott walker did a great show from San Francisco today. And one of the guests, i dont know who it was, said, companies are no longer going to be given a pass based on if this happens, then well be okay because the markets have stopped now with wework and uber saying, well, what if that doesnt happen you need a path thats per swai swasive to your second act and clear to whats happening now in the moment. Were not going to figure it out later once we get scale. That no longer really a welcome answer mike has more on the market internals today. Mike oh, absolutely. Its been pretty much breakeven you look at up and down stocks on the new york Stock Exchange, actually, slightly positive for most of the day, even while the index has been about flight. Its turned slightly negative. I want to highlight oil sneakily, getting up to the top of its recent range. And if you look at the chart of wti, its got a nice mini zwr uptrend. 60 is captive with that one little spike whats amazing this year, oil is up 30 . The stocks stink because of debt and socially conscience investing and oil keeps going up we wonder if theres a threshold price, maybe that changes, but remains to be seen. Weve got two minutes left to go here. Lets send oit over to Rick Santelli for a check on bonds. We had brighter news on the zoo business conference in germany. At least the expectations. But the big story was obviously trade and made everything go up early. Twoyear note yields, you see there, still up four basis points actually at the high yield of the day. October 30th, last fed meeting you see tenyear note yields there. Theyve drifted, but theyre still higher than they were at that meeting finally, six out of seven down days in the dollar index, as you see there. And bertha at the nasdaq, not a good last dollar again were just sort of fading down, but biotech continues to be the relative outperformer and among the big gainers today is bluebird bio we continue to hear strong trial data in this case for a gene therapy drug for cancer with bristolmyers. In the meantime, Norton Lifelock today, trading higher on big volume hitting a new 52week high on a wall street journal report that 1 it may be looking to do a merger with macafee. A confluence of discussions on trade dominated the floor the dow was lower by 105 at the open were currently down about 26. Take a look at industrial giant 3m at the bottom of the dow. This is one of those names that is sensitive to trade headlines. And as weve seen a sustained move in oil prices, check toout the move in transport stocks transports once again weak here we are, the dow s p lower for the day, 3132 for the s p 500 and dow jones down 30 points on the day the bell has been rung, the button has been pushed and the gavel has come down. Welcome to closing bell. Im Morgan Brennan like with mike santoli wilfred frost is at the Goldman Sachs Financial Services conference in new york hell join us in just a little bit, with an exclusive interview with goldman president and ceo john waldron in the meantime, lets take a look at how we finished the day on wall street youll look at this market and go, not a lot happened lets celebrate the small caps theyre all growns up, as vince vaughn said in swingers. Russell 2000 continuing its path higher small caps have been on the run. The dow s p and nasdaq down just a touch. We were unchanged most of the day. We got a trade deal. The market didnt respond. We got impeachment articles drafted. The market didnt respond. That alone is interesting, morgan it absolutely is. Energy, health care, and tech stocks, those are the three sectors that ended the day in the green. Joining us to talk about the market day overall is young director of Market Strategy at bny mellon investment management, and Barbara Duran, a Portfolio Manager at bd8 Capital Partners is still with us. Mike santoli, first to you, we were up, we were down, but really very narrow trading range in general narrow range for a couple of days markets just kind of idling were holding a little bit above of where we finished last thursday get the good jobs report it seems to ratify what this market has been trying to say, which is, weve probably seen the low in growth rates for a while. But i think we got up to a level and the s p hit that 3150 as a high, were craving. Investors are craving some reassurance that in fact this september 15th tariff deadline happen so lets talk about what you just talked about, mike, which is oil if Energy Stocks can i know theyre tiny, i get it, but if they can start to participant even a little, would that help it wouldnt hurt. I dont think you want to hang a lot on it. It would be part of this general kind of value reflation trade that might fit in with other things going on. But its a nice to have, its not catch up to the markets lets be honest. Its not the same without the fact that trade has been once again dominating headlines and market moves today what is priced into this market . I think that was priced into the market, which is indicative of whats happened already today, is that we were going to have a rollback of the december 15th tariffs i think the conversation moving forward, if we get an actual deal, that would be a positive for the market even though everyone is sort of expecting that v having a deal would be a positive because we havent had a deal at all. Its only been about tariffs are tariffs going on, coming off, are we raising them, lowering them . The conversation will continue to be about tariffs, but if we actually get a deal signed, sealed, delivered, then the market moves up. Were talking about the china trade deal right now theres also the usmca deal that begot some developments on today. The usmca the usmca the new nafta oh, the new nafta im so used to would that move stocks if we saw that finally signed into law . It wasnt really visible. It hasnt been a big factor in our exports. There hasnt been this continual battle of words. I think it was great theres not much talk about it but i think China Remains the focus. And i agree with liz, i think that if we got even one phase i done, i think it has ramifications beyond that, that maybe well get more it might be a phase i and done, because we might all be retired by the time this whole thing is done. All right, barclays out with an optimistic 2020 outlook for the small caps the firm giving a 17 and thats about 9 above current levels, saying that an accommodative fed or a reasonably healthy u. S. Growth environment will all help drive the growth higher. It also recommended an overweight rating in industrials, Consumer Discretionary software and sector liz, we saw a tiny move, but small caps, the only group that did well today are you a believer and a buyer in the smaller, more Domestic Companies . I am. And i like the bullish tilt. I used to be a small cap analyst, so i have a little bit of a soft spot in my heart for them but i think you have to look at, why did small caps large lag caps because there was not as much of an appetite for beta and small caps will not see as much demand next year if were having what im calling a psychology recovery. The recession that weve all been waiting for never happened. Now Market Participants are deciding, okay, maybe its not coming its time to actually take part in this. They missed a little bit this year, but if we get that back on the table next year, i think you can see that pickup in beta stocks small caps is one of beneficiaries of that. The numbers have come more into line on the small caps. I dont think its an either or trade. Its really a matter of, can small caps kind of keep pace and participate in a ongoing rally the time where its kind of small caps are all that works are in your correction bear market phase, when all of a sudden, finally gets washed out and gets value i dont think thats what people are really projecting or necessarily hoping for i dont see small caps outperforming large caps the rationale has been, yes, were over the recession fears if we have some sort of agreement with china, but its not going to be just not raising tariffs. I think we have to have a huge rollback to see it impacting small caps small caps have had a nice rally this career, but still underperformed large cap and i think that underperformance will continue but i think theyll go in line Oak Tree Capital cochairman howard marcks sitting down with wi wilfred frost earlier today and heres what he had to sate about the feds recent moves and their impacts on the market. I dont think its appropriate that every 25 basis point cut in rates should be expected to goose, you know, the market by a thousand points. But, you know, things are still continuing up. The market is still in an uptrend. And people like the low rates. Barbara, this kind of goes right back at the point you were making a few moments ago its interesting, howards remarks were, he thought, gee, you dont have a thousand points on a quarter, but at that point in time, we had the recession fears and global slowing what was that going to mean and after, i think, its been pretty well agreed that the fed tightened a little too much in 18 and we had the flag effect this year. So the fact that the fed was ready to cut rates and they made all positive noises about possibly more, the market said, this is exciting, this is time, you know, to get involved. What i would Pay Attention to is it all depends on whats priced into the market haahead f the cut. And there was a 100 chance of them cutting according to the market same thing happened in september, close thing happened in october i dont think we should expect a huge bump every time we cut rates, especially if its already baked in according to our fed survey, our Morgan Brennan told us that theres a 100 chance that the fed is going to do nothing postpartu tomorrow it was 0, now its 0. 2 , the last time i checked. Theres a good chance they wont. And the market is in tune with the feds preference to do nothing for as long as possible. I think thats what the fed prefers. Would the stock market be okay once you take away the punch bowl, mike, is that all right . The punch bowl is still there. Because credit markets have completely rushed to a point where theyre giving money away. How come no ones talking about whats going on in the repo market . Everybodys talking about it. Not us. We should thats another to my mind, a placebo that has worked, basically. The yearend question is back in the air, whether well have more stress but it will be interesting to see what powell says tomorrow. Could it be a bigger deal than were making . Youve had three Central Banks that are expanding a banks Balance Sheet that doesnt flow through directly, but it tamps down volatility and its very helpful in the economic picture. Well leave the conversation there. Its one well continue to have. Barbara duran and liz young, thank you for joining us thank you still to come, the streaming wars are heating up and needham is raising some red flags on netflix. The analyst who sent shares lower by 3 today will make her case, next plus, an exclusive interview with Goldman Sachs president and ceo john waldron hell weigh in on the firms strategy for 2020, coming up closing bell is back in 90 seconds. Well, rather quietly and all of a sudden, netflix has become a battleground stock, with analysts and investors really divided as to whether its boom has just begun or a bust could be around the corner laura martin is internet and media analyst at needham and company, shes been kind of bearish, out with a note down downgrades netflix to outperform, and stating, quote, netflix must add a second lower priced product the compete Martin Scorseses the irishman was apparently viewed by 24. 6 million accounts in the first 26 days laura, youve been right on netflix. You downgraded the stock originally months and months and months ago that was a spectacular call. Why sort of pile on . Why take the stock now to a sell because the catalyst here is disney adding 16 million new accounts we think that about half of those come from netflix, or at least evaluate the churn of netflix. And the problem with netflix is if it loses u. S. Subs, it loses its Growth Stocks credentials. While it will no longer trade at seven times earnings, it will get valued to 15 times ebitda, which is a half on the stock price. If you think its going to or it needs to create a lowerpriced second tier service to compete with apple plus or disney plus, would that keep the subscribers around that you expect to leave . Or would it sort of bastardize the existing subs who then say, ill stay on it, but im going to cut my Monthly Payment in half, because thats not the outcome that netflix would want. Right, no so i think what happens is, our data shows that they do two hours a day of viewing if they added a sixminute ad load, they could do 6 of ad revenue and convert some of those people that are stealing netflix today, 25 of survey respondents admit to steali ini somebody elses password so there are 30 Million People who have never taken netflix in any form because its too expensive and they dont want to break the law. So getting some of those people to sign into netflix and in a marketplace, you must have a response to apple and disney at 5 a month you can havent a 13 response so one of the key points youre making here and for this downgrade and lowering of the price target is the fact that if you are seeing a loss of domestic subscribers, that even as the Company Continues to expand into international, its not as lucrative youve punched those numbers, break it down for us so one of the things that people miss is that every incremental International Subis coming at a lower price and therefore a lower probability, profitability. So the profit per sub of u. S. Subs was three times higher in the Third Quarter, and thats before netflix added a 3 per month subin ind in india. A lot of their International Sub growth may come from india, but its a fraction of the 1. 90 profit per International Sub, which is a third u. S. Sub profitability. Lets talk about viewership numbers. Youve got to trust what netflix puts out, right . Yeah. However, i have a question, i dont know if you know the answer to. They came out and they said 26. 4 million accounts watched the irishman in seven days they view a watch as completing more than 70 of the movie take that for what it is if i sit down to watch threehour movie, watch an hour, get up, have dinner with my family, the next day, i come back, is that three views, or is that one view . Everyone just takes these numbers for gospel and some of them, they seem very large i think, brian, if you have 60 million u. S. Subscribers a month and half of them watch a single movie, thats great and 50 conversion is a great number, but i dont think it really speaks to whether those people pay next month. For example, the man delorean is a huge hit on disney plus its quite possible that some subset of 60 million netflix subs stops paying for netflix, watches the man delorean for three months until its over and goes back to netflix if 30 of netflixs people churn for an extra three months, they lose 4 million subs or the equivalent revenue of losing 4 million subs all year. They dont need very much churn to start losing the equivalent subs, because they start with 60 million subs in the u. S. All right, laura martin, thank you for joining us on the heels of this downgrade. Stock finished the day down 3 still ahead, we will get the outlook for the market and the m a landscape when we hear exclusively from Goldman Sachs president john waldron plus, auto zone, yep, they sell batteries and spark plugs the bestperforming stock in the s p 500 today after reporting strong earnings. Well break down the charts and show why a profit beat is not the only reason for the stock sur surge today. Stick around all right. Weve got a pair of earnings alerts right now on gamestop and alis bargain outlet rahel solomon joining us now with those numbers hi, brian two earnings and two very different stories. Lets start with gamestop, plunging after hours after a disappointing quarter. A miss on the top and bottom lines. You can see gamestop down almost 20 right now. So eps came in at a loss of 49 cents. The expectation had been a gain of 11 cents. Revenue, not much better 1. 44 billion. The street was hoping for 1. 62 billion. Comps, comps down almost a quarter, 23. 2 versus down 13. 8 , which the street was expecting. George sherman, gamestops chief executive officer saying in a press release that our Third Quarter results continue to reflect the prevailing Industry Trends most notably, the unprecedented decline in new hardware sales seen across the market, and perhaps even worse, they expect these trends to continue into next quarter looking at guidance, eps for fiscal year 19, t10 cents to 20 cents versus the adjusted 1. 20. So guamestop is down almost 20 oll ollies, revenue was 327 million versus the 323 million the street was expecting comps were down 1. 4 the expectation was 1. 2 they also named a new president and ceo who was the interim president and ceo. Morgan, back to you. Rahel, thank you. Cloudbased gaming, seeing where its showing up in the numbers with competition lets send it over to mike santoli for his third dashboard of the day mike morgan, auto zone obviously serves a lot of people who fix it themselves, but auto zone as also managed to fix it for their own shareholders heres a tenyear chart of this stock. One of the best performers youre going to find in a retailer or anywhere else. Look at this tenyear return 705 that is share price, keep in mind theyve done it not just by growing steadily in terms of cash flow and earnings, but by buying back their own shares very aggressively. Heres a breakdown of the change over the last ten years in the stock price, the market cap. So the stock is up 700 . The market cap is up only 250 even with that stock price rise. Earnings per share up 450 shares outstanding over the last decade are down by more than half this really shows the power of buybacks when the Underlying Company is also growing. Its not just about buying back stocks, because you have no growth, like gamestop has been doing for years, but when you have growth and this formula, they keep pursuing it, guys. Wow that breakdown is quite something. Mike santoli, thank you. Up next, Goldman Sachs president john waldron tells us exclusively what kind of impact the apple card is having on his s tt le. Boomin closing bell will be right back theres a lot of talk about value out there. But at fidelity, value is more than just talk. We offer commissionfree online u. S. Stock and etf trades. And, when you open a new Fidelity Brokerage account, your cash is automatically invested at a great rate thats 21 times more than schwabs. Plus, fidelitys leading price improvement on trades saved investors hundreds of millions of dollars last year. Thats why fidelity continues to lead the industry in value while our competition continues to talk. Talk fidelity. Talk apps except work. Rywhere. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. Music to live better and healthier lives. We started livongo with a vision of transforming the health and Care Experiences of People Living with chronic conditions. We believe that our unique Member Experience will soon transform the Healthcare System as we know it today. Nothing could be more meaningful than impacting the health and happiness of our members and were just getting started. All right. Welcome back lets get a cnbc news update with sue herrera heres whats happening at this hour, everyone. An update now on the situation in jersey city, new jersey. One Police Officer has been killed two other officers and a civilian were wounded at a shootout at a store in jersey city, new jersey five people are dead inside the store, including three civilians and the two gunmen heavy gunfire rang out over the course of at least an hour earlier today. Secretary of state mike pompeo holding a joint News Conference with Russian Foreign minister sergey lavrov. Lavrov was adamant that russia did not meddle in the 2016 president ial election. We have highlighted once again that all speculations about our allege d interference in domestic processes in the United States are baseless there are no facts that would support that we did not see these facts no one has given us this proof, because it simply does not exist. And pope francis made a surprise visit to an exhibit of nativity scenes that just opened in vatican city. More than 150 nativity scenes are on display at an exhibit hall next to st. Peters square. That exhibit runs until january 24th i bet he surprised a lot of those people there that is the news update, guys. Youre up to date. Ill send it back to you, morgan i bet he did. Sue herrera, thank you our wilfred frost joins us now from the Goldman Sachs y annual Financial Services conference of new york im delighted to be with the host of the conference, no less, the president and coo of Goldman Sachs, john waldron. Thank you so much for being here thank you for being here and covering our conference. Its great to be here, as it always is. End of the year, people setting out their expectations for the year what would have been the key themes for you so far from all the key banks weve heard from a lot of dulgs aboiscussion h economy and the consumer in particular the underlying strength in the consumer is showing through. Regulation and the election, and the prospects of whether there might be some shift in the regulatory environment, which obviously affects banks meaningfully and i would say an incremental conversation this year may be more pronounced before than around technology. The impact of technology, the amount of Technology Spend where are we in the disruptive phase of Financial Services more broadly. Thats become more of a prominent theme that we think about at Goldman Sachs quite a lot and a focus today with our clients. Well definitely dive into what you guys are doing on that front, coming up in terms of the macro sentiment, is the consumer Strong Enough to be offsetting perhaps less lackluster a little bit more lackluster kind of corporate momentum were pretty constructive on the overall economy. Certainly in the United States in particular. The economy feels, if anything, like it might be accelerating again from what had been more of a patchy 2019, certainly in the first half i do think that the feds easing by us has made a big impact. Our Financial Conditions Index is operating at a very relatively historic low level. Were seeing that implication of easier policy coming through to the economy. And its become much more of a stimulant for particularly consumers, but corporations, as well manufacturing weaker, no question but again, 70 of the u. S. Economy is really driven by the consumer so as goes the consumer, typically, thats where the economy runs and on the corporate side, we did see all of a sudden some m a announced last month did you guys take part in that and are you kmioptimistic that t can continue next year or a last flurry for 2019 . Consistent with an easing by us in monetary policy, it renewed Risk Appetite in the market, i think it improved sentiment in boardrooms. Were seeing more m a activity our market shares are very good in m a we did participant in the vast majority of those transactions we have more transactions that are on the docket. We feel good about where we are with our backlogs and the activity levels have definitely ef evaluated from where they would have been 30 to 60 days. And what about the ipo market, has that been damaged by the whole wework debacle no, i think the ipo market is very healthy generally speaking, theres demand for ipos anda lot of supply coming. A number of good companies, were doing an ipo today in brazil thats going very well. I think the market is doing quite well to focus more on Goldman Sachs, you guys have a very important strategy update coming in january how are you guys all preparing for that we spent the better part of the year getting ourselves organized, not just for the investor day, but for orienting the firm really for growth so when we come out in january, well talk a bunch about that. Well talk about our strategy and the direction of travel in terms of our investing and what were doing to build new businesses adjacent to our core franchises in some new businesses like consumer, which are more new builds for us from the ground up. And we will have argets, you know, around profitability and efficiency and so well talk more about that in january. But were excited about it so the ft article recently that suggested youre not going to be setting strict financial targets, i think the tone even suggested that you were going to try to duck out in that sense. Was that a false sentiment ive learned in this job, you cant believe everything you read or hear on tv but i wouldnt believe everything you read in any of the publications what i said is what you should expect to hear and do david, steven, yourself, do you see this strategy update, and of course with the investor reaction to it, do you see it as a kind of mark on your guys first year in tenure is there a sense of nerves at all coming up into this update i dont think so. Were excited, because its an opportunity for us to describe in more detailed terms what were trying to achieve with the firm over a long period of time. And i think the over a long period of time part will be important. We want to lay out a road map for what where were trying to go over a number of years. And thats something that will be a little bit different from things weve done in years past. One of the themes people have heard a little bit about is how much you want to shift towards the kind of private equity space. Youve reorganized internally to have a specific department to that in five years time, is that going to be 2 of earnings, 25 of earnings . I dont want to make a prediction on how big it will be, but i can say a couple of things we have a 30year track record as an investor in private equity classes. So we have a real business thats scaled. We havent necessarily described it as such in more unified terms, which we will do in a more detail in january we think its a secular Growth Opportunity in the world you can see how hard it is to create alpha in the Public Markets. More money is flowing into private markets. We have a long track record, so were very establish on the opportunity and we have a scaled business were going to be an active player in that arena and describe it in more detail as we get into in january. Are you nervous about the timing of that in any way, whether thats because of issues like wework showing that private market valuations in some areas, at least, might have peaked already. And on top of that, weve seen price wars in active management to public equities in t broerhe brokers as well. Were not making a market call on being in the alternative business this is a longterm bet that were making that this is a secular Growth Opportunity and we have a reason for being we have unique attributes. A very big sourcing engine in our Investment Banking business, which lots of our clients want to access, and we have our own private equity and Credit Opportunities to access that as well in partnership with our clients. We also have a unique ability to talk to our institutional clients and we can offer them products that can help them do that in a more intelligent manner we think we bring a lot of unique things to the table you mentioned the spend on tech is a theme thats come out of the conference. Weve seen that play out recently in a subsector in the brokers. Robin hood enters, leads to price war, and leads to some consolidation amongst the big players, schwab and Td Ameritrade announcing a deal do you think of it as a tech challenger or being challengech . I think we probably sit in both seats we have a lot of legacy challenges and we have some businesses that would be more disruptive i would say what were doing in the consumer arena would tend to be more disruptive were trying to build a digital storefront and bang of tk of the future in the markets businesses, were trying to be ahead of the curve, almost disrupting ourselves in many respects, to have straight through processing and other platform capability, when you move from more voice, legacy, transmission of risk intermission into more platform and technology in that case, were trying to make sure were disrupting ourselves so were not getting disrupted by others. In transaction banking, its a beginnings of the two. Were building a new platform. It will be disruptive. A great product, an improvement on whats in the market place, but were taking advantage of legacy existing relationships that are quite strong and important in a trusted advisory context, where we can offer Something Else thats a part of our tool kit that will be valuable tour clients. That brokered price war led to some suppressed prices and the schwab td deal came about partly because of that some people criticize your predecessor, the leadership that came before you and david, for not making more moves when prices were depressed after the crisis, not being inquisitive then have you sensed any opportunities at the moment, that people have tried to link Goldman Sachs to etrade, for example . We did make an acquisition, a Company Called united capital, which is a National Platform in the United States that has a very good kind of highnetworth wealth platform that were going to build upon. So when we see opportunities that allow us to accelerate our existing organic plans, were going to look hard and want to access those opportunities lets move on to the apple card. David said on the recent earnings call, that it was the most successful credit card launch ever. The numbers may say that i wonder whether you guys retract at least part of that sentiment given the scandal that came up about potential gender bias in terms of the credit issuing decisions. Was that a blow . The way i think about this is, were starting a new business its in partnership with apple its the first real credit card launch in a long time. And its going well. Weve got a lot of new customers, the usage rates are very high. Were feeling very good about how the processing is working, the tech platform works very, very well, apple is a great partner. Theres a lot to be very, very pleased about, and well talk more about that in the coming weeks and months ahead visavis, the gender question that you asked around the Credit Approval process were very comfortable. Theres no gender bias in our approval process its quite easy to go look at that you can look at it on the phone in terms of what the factors are that drive the approval process. Theres no gender or marital status theres no gender issue at all we do think we may be have an ability to go talk to the world about the fact that it might be harder for women as an example to get credit, so we may be shining a spotlight a little bit on that. Which is a good thing to be talking about in the world but we dont believe there are any biases in our processes. In terms of the card itself, apple announced today that you can buy an iphone spread over 24month installments with no interest if you use the Goldman Sachs apple card so you have to forego the interest or kaem compensates you for that i dont want to talk about our economic relationship with apple, but its another example of where were trying to be innovative and help the consumer the whole basis under which were doing this apple card, with apple as our partner is simplicity, ease of use, transparency, and trying to be sort of democratize, if you will, Financial Wellness out in the world and people is a great partner for that first of all, theyve got a lot of great customers on the phone. And were trying to mimic a lot of what apple does, which is to be very simple and easy to use and allow people to have tools at their disposal and make their life better. On the earnings call, Steven Scherer said, during the quarter, we elected to suspend our open market repurchases as weve begun discussions with certain u. S. Market authorities with respect to the resolution of the 1mdb matter since then, last week and just the week before, both the u. S. And malaysian sides have seen stories suggesting that theyre close to a settlement. And they have not come out to outright deny those stories. So i feel like theres a sense in the market that you guys are very close to a settlement is this something that will be done in q1 very hard to predict the timing of any of this. All i can say is that we are working to try to solve this as expeditiously as possible. We dont control the outcome were one party. We have a number of people to talk to. And thats really all i can say. Were working as hard as we can to try to get it resolved sensibly do you feel like its suppressing the share price if people say its been trading at or below pricetobook value do you think settlement of this is something that would see it go back above that threshold i wouldnt say were really particularly focused on the impact it has or doesnt have on our share price. We would like to get it settled and resolved and all the other good things were working on and thats where we would like to be sharing our time and energy we all know that david enjoys some downtime deejaying. Whats your number one hobby outside of work . My number one hobby is i have six children and so they are my number one hobby. I coach my sons hockey team and spend a lot of time with my daughter and her travel soccer team and that occupies most of my time. Im not spending much time doing anything else other than working at Goldman Sachs and spending time with my family. That hobby is much more important than the job, but thanks for taking the time to discuss the job. Ill send it back to you at the Stock Exchange wilfred frost and six kids, wilf six kids you heard it from the source himself. The guys the president of one of the worlds biggest and most important banks, chief operating officer, hes got six children theres got to be two of them. Theres no way its like one guy, wilfred hi your words, not mine. So, Goldman Sachs, an important company, michael pretty good articulation of how theyre trying to approach things utilizing the platform of being a vast global bank, having to make all of these technology investments, and as you said, create a digital storefront for it all the goldman name doesnt go as far in those new markets is it going to work i think its going to work. The question is just, how are you going to define success here its not going to be the majority of the business anytime soon comment s about the ipo markt still fundamentally healthy interesting. Up next, this is yeah, healthy better than Richard Marks bob pisani takes us inside the most highly secure room at the s. E. C. A lot of people have been to the s. E. C. , but almost nobody has ever fwhn here look, this is the Forensics Lab for the s. E. C. This is a gigantic copperlined room where they crack into the cell phones and the computers. Well have more with s. E. C. Aijay clayton when closing bell continues. 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. Chevron a few minutes ago, the company taking a 10 billion charge, but that sounds like a terrible headline. But if you dig in, its not that bad. Heres what theyre doing. Chevron saying its going to reorganize a bit, divest some assets, primarily appalachian gas and an lng project up in british columbia, canada theyre looking to divest those, sell those off theyll keep their Capital Spending budget the same its been the last three years at 10 billion or 20 billion but they will be taking a 10 billion charge, ostensibly, against some of these assets that theyll either try to spin off or simply write down kind of a sign, guys, tla hat ty do not expect the price of oil or gas to materially increase anytime soon by the way, the ceo of chevron will be on squawk box tomorrow morning to talk about it all right switching gears, were going inside the securities and exchange commission. Bob pisani joins us live and is taking us inside its most highly secure room. Bob . Reporter morgan, what a day ive had, hanging out with people who know how to get at information on your phone and your computer. You think youve got a phone that cant be accesses hah think again. Were inside the Forensics Laboratory, a super secure part of the s. E. C. Headquarters in washington jay clayton, the chairman of the s. E. C. Joining us. I have been on a tour of copperlined rooms where they essentially go and investigate cell phones and computers. This is Amazing Technology that youre able to put together down here yeah, and thanks for coming today, because, you know, i want people to see that we have great people, but we also have the technology to monitor our markets and keep up with our markets. Heres some examples of stuff that these are amazing. These are cell phones that have been thrown in the river, discarded, and youre now essentially reassembling youre looking at circuitry and trying to recreate the circuitry. What goes on in these kinds of places i think what youre seeing here, bob, at least some of these, people were trying to make sure that we couldnt get at that data, because they were doing things that shouldnt have been done. We have people here who can use those tools to get at that data and help us build a case its remarkable, because you would think that this stuff was irretrievable, yet it is i have seen audio conversations, a lot of this technology didnt even exist five years ago. It didnt exist five to ten years ago. Look, technology is getting sophisticated on both sides, both for the nefarious actors and for the regulators we need to keep up i think our people here are doing a good job right to keep up with that whats the most important thing. Youve been kind enough to let us into this secure room whats the most important thing that you want to get across to investors . Investors, that we care about them but especially to bad actors, that were looking for them and were going to catch them. Think about this, they can access information from phones that are thrown into rivers and retrieve it. Its Amazing Technology that they have theory remember, the s. E. C. , by the way, is a Civil Organization thats not criminal investigations tha theyre going after a lot of people and the fines are going up, 4. 3 billion in fines and discouragements last year. Guys, back to you. Very cool, bob pisani thanks for bringing us that inside look. Up next, going away. Lululemons ceo is packing his bags and heading to travel and lifestyle brand away were going to discu tt, ne xtssha we made usaa insurance for members like martin. An air force veteran made of doing whats right, not whats easy. So when a hailstorm hit, usaa reached out before he could even inspect the damage. Thats how you do it right. Usaa insurance is made just the way martins family needs it with hasslefree claims, he got paid before his neighbor even got started. Because doing right by our members, thats whats right. Usaa. What youre made of, were made for. Usaa is that pgim, we see alpha emerging in the trendsete . Driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Welcome back to closing bell. Lululemons coo stewart haselden to take the top job at away, the cult favorite luggage brand with a 1. 4 billion valuation. He will be replacing coo and cofounder steph korry after a report disclosed mismanagement at the company heres what zoe schifer, the verge reporter who broke that story told us was happening at the company. I think what employees were saying is they were really beins they were pushed to the breaking point over and over. Over and over again stef korey was berating them when they made mistakes and asked them to work harder and longer and using the Company Mission as almost a weapon. I think its worth noting, guys really quickly on that that iowa did tell the wall street journal that a ceo search has been under way since spring. But the change on the heels of the report, note worth. Slack was a Public Company by the way is not portrayed well either because everything every time you dress somebody down, anybody that slack channel can see it. You wonder if people thinking about shifting to slack will see that and go do we want it this open. She prevented people from having private channels. I know 100 you couldnt email a coworkerer what Company Wants email. A trillion dollar preview of saudi aramco ipo trading tomorrow whether the company will be leab to buck the trend of recent ipo flame outs servicenow put our workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. All right. Lets turn back to mike with the final dash board of the day, mike. Yeah, brian, alternative alternate futures are being handicapped by different forecasting tools for the economy next year. Look at this from blackrock 020 year ahead outlook yes blackrock not black president s these normally run in tune s in a leading gdp indicator using forecasting models and some data. This is financial conditions, what the financial conditions situation says about these implied Earnings Growth gdp growth Going Forward there you see financial conditions are so loose, generous markets in such firm shape they suggest gdp goes beforeo above 2 the other traditional tools are saying were diverging as you can see not always the case clear markets are trying to handicap something going on in the future the data isnt showing it. Be interesting to see how it closes blackrock says pretty good chance that growth turns out better but Financial Markets believe it already. Quickly the scene from the charts. Its obscure but its a wonderful life its a plt in four title love it up next, the key things every investor needs to watch heading to the new trading day when closing bell comes back. Do you have concerns about mild memory loss related to aging . 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. A big day on deck tomorrow, the fed decision due out at 2 00 p. M lulu lemon reporting results after the bell and saudi aramco starts the first day of trading at the local Saudi Exchange brian has a look at that one for us. So after two years numerous false starts and more media scrutiny than any ipo it begins trading tomorrow priced last week at the high end of expectations. Gives the oil giant a 19. 7 trillion valuation only selling 1. 5 to investors limiting the Stock Available last week the saudi Oil Energy Minister told us that investor demand was huge we had 5 million 5. 1 million individual subscribers. 4. 8 of them will get the full allocation they will be allocated what they requested. We had 4. 4. 65 of cover to the ipo. As big as that. Yeah, 465 oversubscribered he also added he was confident it would get to a 2 trillion valuation. The 1. 7 trillion valuation is who 0, 5 billion more than than every publicly trudied oil and gas stock in the United States right now. Just over a trillion, right. Yeah, every single stock is worth 500 billion than saudi aramco. All right well watch the trading tomorrow too. What do you think about that brennan. I think its random but interesting. A lot of debt, yeah. Yeah. Us not them. Yes, of course. All right that does it for closing bell. It says. Fast money begins right now. And it does, everybody welcome live from the Nasdaq Market site overlook new yorks time square. Im Tyler Mathisen in for melissa le trades are pete narjen guy adami. Tonight on fast we have netflix taking a tumble today. Has the streaming pioneer reached a peak pete, netflix and what will it mean for the rest of the Court Cutting world . Plus chevron announcing a charge in the fourth quarter. But one of the traders says in stock is primed to pop he will make his case ahead. And later, lulu lemo