Transcripts For CNBC Closing Bell 20240713

The nasdaq is the leading indices and oil hitting a threemonth highly after military strikes in the middle east energy is the bestperforming sector today joining us for the hour is josh brown, ceo of Ritholtz Wealth Management josh, obviously seeing a little profit taking here is this a tax situation scenario or is there more to read into about losing steam and sentiment . If you see profit taking on the what penultimate the penultimate is that not an american word as well . It is, we just dont use it as much. And it doesnt sound as good when i say it. It doesnt, sorry when youre seeing profit taking on the second to last day of the year, thats not tax related, but it could be front running what others suspect might be fax related, meaning look at a typical investment portfolio this year, if they own sector etfs, for example, they have a ton of Technology Large cap tech has done unbelievably well this year. Or if they own individual names. If you own apple, youre up almost double. Now youre saying, i dont want to pay the taxes in april, so you roll that selling into january. Its a very common thing so if youre seeing selling in those big cap tech names today, not apple, but elsewhere, where youre probably saying is people saying, let me get ahead of the tax selling that other people will be doing. So its sort of like the game, whos going to drink the poison out of the cup in Princess Bride. But i wouldnt worry too much about that, because whether or not that happens about Princess Bride . That either i think whats most interesting is you take a look at the names that are up today, up last week, they tend to be the names that were the most hard hit for tax loss selling throughout november and most of december we pointed out oil as a group. Lets look at oil services this is the bestperforming Industry Group today up almost 3 on the day. This isnt really much of an Industry Group its really dominated by two names. Schlumberger is about 20 of the index, halliburton is 10 they both have an identical chart. They both look outstanding breaking out above their summer resistance levels. I think you got a really big yield in schlumberger. These are two names that are really interesting to me because you think about, we know what didnt work last year oil services was down 3 in a year the s p was up 30 . We already know what the losers are. The question becomes, if were out of tax loss selling, whats going to work next year . These are the types of large cap names with good dividend yields that are worth a look. Those Services Names had kept the Broader Energy sector in the green for most of the session, but now all 11 sectors are lower. Were down about 0. 6 on the s p. We have full Team Coverage of todays market pullback. Bob pisani on the floor of the exchange Kayla Tausche has the latest on china trade headlines. And mike santoli has his market dashboard. Lets kick things off with bob here at the exchange hello, wilf happy new year, everybody. A down day, but not much of a down day take a look. We were at our lows right after the open around 10 00 a. M. Eastern time and met with some buying interests still down on the day. But i think josh is right. Dont worry about the tax loss selling, we have simple oversold conditions that are being worked off, thats good for the market. Look at the stocks, the dow, for example, have had great gains this quarter theyre the weaker ones. Procter has been great jpmorgan has been great. Caterpillar has been great Johnson Johnson has had a pretty decent run. Theyre all down about 1 or a little bit less than that. Tax loss selling, maybe in some of the energy stocks, but look at some of the big drilling names, theyre absolutely right, all up on the day. Back to you. Thank you, bob. The nasdaq is on pace for its second straight session in the red after notching 11 wins in a row. Frank holland has more on todays action wilf mentioned the record closes last week the nasdaq is now down back below 9,000, on pace for its second consecutive down day. Tesla taking the sharpest fall after a cowen underperform and some concerns about its ability to meet delivery estimates when it comes to f. A. A. N. G. Stocks, apple is the on one in the green. The other f. A. A. N. G. Stocks is whats bringing this index down. Amazon down more than a percent. And today its those retail names that are moving the index higher were seeing ross up more than a percent. Also, dollar tree and costco moving higher along with baidu, the chinese Ecommerce Firm back to you. Frank, thanks very much for that meantime, new headlines crossing topd Kayla Tausche has those details for us in washington the China Morning post says that vice premiere may visit washington this week to sign a deal two sources briefed on talks say the preference of the white house is to hold the signing once Congress Returns on january 7th to provide a contrast to the impeachment standoff there there are then two weeks before the Davos World Economic Forum and the chinese new year, so certainly something would have to happen before then. The Trump Administration has suggested since the deal was agreed two weeks ago that a signing was under discussion for early january with the ministers, not the leaders, signing off. Court . Just seems like we get so close and then we still actually have to get that paper through, translated, and signed thank you, kayla well send it over to mike santoli. He has todays market dashboard. Hi, mike hi, court were going to start off by asking whether the market is telling investors to maybe wipe that smile off their face, at least in the shortterm. Part of the setup coming into this week is that Investor Sentiment had got ton a level that looked like it was getting towards excess optimism. Theres a lot of ways to measure this also, technically, the indexes were stretched to the upside theres tremendous amount of readings that tell you about investor attitudes this is a chart that shows you what percentage of the sentiment readings they watch are in excessive optimism territory and right now its about 55 and thats about a 15year high. Obviously, weve been comparably high i want to point out a couple of these. Early 2017, pretty much right here that was not a warning that the market was going to fall apart the rally slowed down, but similarly at that point, we had just broken out to a new high after a very long sideways trading. And a ilittle bit less helpful, early january 2018 what was the occasion for a pretty sharp correction there was a lot else going on, chipg was about which i think was a 7 rush higher that really made the rally a little bit more unstable and less orderly than it is right now. This is the kind of thing that acts a little bit of a headwind, where we can no longer say people are way too pessimistic, as we could say, by the way, back there in the summer, which was the basis in part for this rally that we had thats now about 14 of the upside for the s p since early august, kbis its josh thats such a good reminder for the viewers about the impact that sentiment can make on investable assets. Because very little changed between labor day and halloween. But within that roughly threemonth stretch, i was joking this morning, we experienced the equivalent of an entire fear and greed cycle. You saw koufg the summer, you had the inversion of 10ss and to 2s and by halloween, it was as though that never happened we came all the way back to where we were on spreads and bank stocks decided to go up 25 on the heels of that recovery in the 2s and 10s and what changed on main street the you were watching around pretty much nothing. Thats how powerful that sentiment check is and i think arguably, these things have definitely become a little bit more jumpy, at least within a band of a few in market returns it does whip things in around a band if you think about it, i know youve pointed this out, the deepest pull back this year from a high was 6 or 6. 5 its not as if the market itself was really doing anything all that dramatic, but sentiment really did get pretty whippy thanks so much for that one quick followup question from kaylas report. Does that sort of suggest to us now that any potential positive moves from the market are on trade news are already done . Good news today, were pulling back i really dont think the trade war had as big an impact on stock prices in 2019 as it did in 2018. We had one very scary day over the late summer, where the tariffs all of a sudden came back out of nowhere and now theyre going to be bigger and there was an impact in the s p, but other than that, if you had to name the one stock that was right in the crosshairs of every nasty potential outcome for the trade war that you could possibly see, its apple and the stock went up theyre doing business in china, they need china to manufacture, as well, et cetera, et cetera the stock went up 80 . Its up today on a big upgrade from citi talking about wearables and watches and the air pods were sold out and they had order delays they didnt say a word about the trade war, because it really has not been that big of a factor on apple share price. Keep in mind between apple and microsoft, thats 9 of the s p right there. And these are two of the biggest winners of the megatrends going into next year so i dont think the trade headlines had the ability to move the market as much this year as they had the prior joining the market conversation now is courtney gibson, who is president of look capital markets. Courtney, good afternoon to you. Thanks for joining us. Whats your take on this selloff were seeing today. What are your clients doing this in terms of using this as an opportunity or are they selling as well . At loop capital, we only cover constitutional invest nin and weve seen a tremendous, tremendous rally and many have to balance their portfolio against various industries, they have to be balanced across sectors and have exposure weve been seeing about a threetoone selling today and interestingly enough, it has not been on weak volume, which is what i would have assumed volumes today are pretty healthy, relative to what you would be expecting this week between christmas and new years so we are seeing a bit of selling, but its not kind of fear selling, its not tax lg, profit taking and a little bit of reweighting of portfolios and taking some profits from some of those names that have run up josh was talking about apple being up 80 yeartodate thats tremendous. And then reallocating to some of the other tech names that havent done as well, but they expect to continue to rally into 2020 courtney, what do you think about a selloff on a day like today, where maybe its for tax reasons or otherwise, but not fear driven. Does it feel like something thats actually a bit healthy . Something that you want to see every and now then, as opposed to this constant melt up you know, a melt up is not a bad thing. And as weve talked about in 2019, although it felt as though every time you turned around, there was fear in the market and it was scary, it was this, it was that, i think the vix was really only at about 13. 9 on average this year, which was 7 lower than last year so that fear factor really wasnt necessarily in the market in the numbers, per se, itself but by the same token, i think we saw and were seeing here today people making decisive decisions on where they want their portfolios to be and so, yeah, i think it is healthy. We didnt even really see a major correction in 2019 we just talked about 6. 5 to 7 thats not even correction territory. So i think were in a market right now where fundamentallies are actually driving things. Were seeing earnings. You know, whether theyre flat or not, i think management teams are getting a lot more attuned to the fact that they have to underpr underpromise and overdeliver and were seeing other things fall into play, whether its the fed or the trade fears or calming, josh, i disagree i think people have jumped up and down about trade fears and tariffs, not on specific names, but just the market more broadly, because we havent seen volatility this year so i think were seeing a lot of things kind of just fall into place. And youre going to probably continue to see that meltup in 2020 courtney, thanks for joining us thank you the vix averaged 13. 9 this year so not really any big reaction on trade all year. Nothing but itjustnything kind of that s goingen, it gave people a reason to move a little bit courtney, happy new year. Happy new year, josh happy new year, court and wilfred. Courtney of loop ventures tesla hitting the brakes after its recent run to new highs. Well discuss with one analyst who missed out on the rally but says 2020 could be another big year for the company and we first told you about Maxar Technologies and today the stock is getting a big boost well tell you whats behind that move coming up next and as we head to break, heres a check on our data tracker. Pending home sales topping estimates. And a Chicago Purchasing Managers index also beating estimates with a reading of 48. 9 for december closing bell will be right back its tough to quit smoking cold turkey. So chantix can help you quit slow turkey. Along with support, chantix is proven to help you quit. With chantix you can keep smoking at first and ease into quitting. Chantix reduces the urge so when the day arrives, youll be more ready to kiss cigarettes goodbye. When you try to quit smoking, with or without chantix, you may have nicotine withdrawal symptoms. Stop chantix and get help right away if you have changes in behavior or thinking, aggression, hostility, depressed mood, suicidal thoughts or actions, seizures, new or worse heart or blood vessel problems, sleepwalking, or lifethreatening allergic and skin reactions. Decrease alcohol use. Use caution driving or operating machinery. Tell your doctor if youve had Mental Health problems. The most common side effect is nausea. Quit smoking slow turkey. Talk to your doctor about chantix. Just about 43 minutes left to go until the closing bell sounds shares of Maxar Technology soaring on news its selling its sports robotics business to a Consortium Led by northern private capital in canada. Last month, we spoke to the cfo of the company about who is leading in the race to space the u. S. Still retains a technological edge in space. Its been investing in space for many, many decades and i expect that as long as that investment continues, that leadership will persist. And as the race heats up, the stock for Maxar Technologies up 14 here today well, tesla shares, on the other hand, are sinking after cowen said the company will miss its delivery forecast. Shares are down now around 4 here, just shy of that this after the company delivered its first cars produced at its new plant near shanghai, china joining us is dan ives, Wedbush Securities director and recently raed his price target by a hundred bucks to 370, but still holds a neutral rating on tesla. What do you make of this call, if youre still neutral. Do you feel like what youve learned leads you one way or the other, positive or negative . Weve talked about a lot, although we were wrong the last six months being more negative or cautious. What ive seen out of europe makes us more bullish. Thats why we raised the price target right now, its a bit wait and see, but nonetheless, in terms of where its tipping right now, its bullish in terms of specifically europe and china. Its really been on a tear the final half of the year what drove that . Was it change in actual estimates from analysts like yourself, or a pure sentiment shift and a multiple shift it was the p word, profitability. That was the key if you really think about it, demand definitely rebounded. U. S. Pretty impressed, but europe was the star of the show. That took the doomsday off the scenario in terms of that and go go into 2020, if they can stay profitable, the valuation changes for tesla, now that china is front and center. Thats fundamentals that youre talking about what about short koring in a name like tesla, any of that responsible . I think especially over the past four to six weeks, theres been a lot of Short Covering look at what you believe theres going to be a q4 you have profitability coming through in the nearterm you have china ahead of expectations so its hard to have anything to sort of put your hands around here, in order to stay bearish, at least in the nearterm. Lets pivot and Start Talking about your 2020 picks. Apple is on the list once again, even though its up 80 this year how much more upside and whats the key theme that sports apple for the year ahead we sit here a year ago, its a twopart theme i fundamentally view it as a third of the install base, 350 million are in an upgrade possibility. T the. Even though many will say, its hyped, it all comes down to the math a third have not upgrade i put together 490 units a lot of tech lash still exists out there. Although we havent been speaking about it as much, but looking into to 2020, i think that President Trump will stay in the election. Cha what do you think happens from a regulatory standpoint from some of those big f. A. A. N. G. Names when so many are still looking to look at them in their anticompetitive practices. In some exste, you see them m the defense to offense no doubt, theres going to be a lot of noise, especially going into some of these hearings. Thats why youve seen google and some others getting more into health care and financials. Facebook will continue to expand i think these companies, its really, anytime these stocks are off on the regulatory, were buyers of it, in terms of our view of its more fins rather than Business Model changes. Are you nervous that 9 of the index is microsoft, apple, throw in another a couple of massive companies, facebook and google, that we cant have the same type of leadership again for another year and that the Broader Market suffers because of it . You could have new leaders. You could have other stocks you could have amazon overtake the weighting and the index of microsoft. Anything can happen. I guess my question for you would be, what are the recurring themes we heard throughout the first half of this year is that regulation was going to come down and all of the earnings expectations for the facebooks, apple to a lesser extent, google, would suffer now we know that the consumer didnt really care that much everyone screams they want privacy, they want new rules, they want a police force over the internet, but they didnt change their behavior at all is that the big takeaway for investors going forward, you think. That there might be some minor regulatory differences, but as long as the consumer keeps coming back to these platforms, it will be business as usual and i think you have your pulse on it. 2. 5 billion reasons why that stock continues to go higher and i think it comes down to, the monetization the key not just from facebook, but what you see, even when you look at gdpr in europe and some of the impacts there. Thats why to us, i continue to think f. A. A. N. G. Leads us higher our top f. A. A. N. G. Name is apple because of the 5g supercycle, but really bullish across the board on overall tech. Josh will like this one dan, you like slack at this level . I mean, my opinion, slack is more of a winners coming situation, in terms of that name im more negative on slack, because of how i view microsoft, in terms of how theyre positioned towards slack on teams. Our fundamental research on slack continues to view that we have a sell rating on slack and i still think thats a name that goes lower as they try to go up against redmond on these teams deals. I misread that. You wouldnt like that one, josh oh, i dont mind. Ill take the other side dan, thanks for joining us. Thank you after the break, running the risks. Stocks have outpaced lessrisky names in the final month of the year mike santoli breaks down that trend of the telestrator and later, lyft limping into the new year as that stock sits about 40 below its ipo price. Well tell you whats behind the latest selloff in todays market zone. Welcome back 34 minutes left in the session lets get over to mike for the second sblaumt of the dashboard. Watching as the market narrows the gap further between some of the more aggressive stocks and defensive stocks in the s p 500. Take a look at this chart. A couple of etfs we track pretty frequently the s p high beta against the s p low volatility kind of opposite ends of the poll here. A couple of bser invitations one, obviously, high beta, a lot of semiconductors and the like fastermoving stocks have really opened up the lead as weve gone risk on. People want more cyclical stocks, less defensive ones. We had this before, early part of the year. Then they came back. But my other observation is look at how low volatility stocks have been low volatility its been a smoother ride and they really have not given back much as a group, even as the more aggressive stocks have gone higher so watching this relationship it doesnt necessarily have to be a zero sum game in terms of what style or flavor of stocks will work next year. Mike, thank you very much for that after the break, biotech has made a strong run into year end, but will the 2020 election throw the entire Health Care Sector off track. And as we head to break, heres a check on bonds. Treasury yields getting a boost to start this shortened trading holiday week the tenyear currently yielding at just under 1. 9 at 1. 895. Closing bell will be back after this welcome back just under half an hour left of the session. Here are the key things driving the action Chinese Media and the white house suggest the phase i trade deal will be signed within the next week. But were seeing investors lock in gains for the year with the dow, s p, and nasdaq all slipping and oil hitting a threemonth high after military strikes in the middle east. Time for a cnbc news update with sue herrera. Hello, wilf hello, everyone. Heres whats happening at this hour democratic president ial candidate Bernie Sanders had a stress test after his heart attack in a statement, his doctor reports the vermont senator is in good health and would be able to assume the duties of the presidency if he is elected in 2020 protesters gathering outside of Lebanons Central Bank building in beirut, chanting slogans against its governor and what they said were financial policies that led lebanon to its current economic crisis and they accused the government of being a police state that protects chivases temperatures soaring in the australian state of tasmania, the countrys closest point to the south pole reaching more than double the summer average the bureau of meteorology says that the mercury hit 105 degrees, which would make it the hottest december day on record and children who drink whole milk may be less likely to have weight issues. Canadian researchers looked at 28 studies involving nearly 21,000 kids. They found that those who drank whole milk were 40 less likely to be overweight compared to those who drank reduced fat milk they dont really know the reason why, but it was a big study, so its an interesting conclusion you are up to date thats the news update thi hour court, ill send it down to you. Yeah, that was interesting, as you were going through that i thought, well, why but i guess we dont know. I degree three gallons of whole milk a day. You are one slim kid, then. I can tell you, thats not the case well, okay, to each his own, josh but i appreciate that you do that, for your health or otherwise. Well, health care has been one of the lagging sectors this year with biotech up only around 24 . While technology the best performing sectors are up around 48 yeartodate meg terrell has more on what to watch for in the year to come. Concerns around politics and drug pricing depressed drug stocks for much of this year, although biotech has accelerated into year end. Next year brings some major events to keep an eye on the drug industry is one politicians love to hate heres what to watch in 2020 its one of only things that both sides of the aisle appear to agree on. Drug prices are too high if history is any guide, dont count on any major legislative changes in 2020. What you can expect, the industry will come under siege for its pricing from politicians on the campaign trail. And that alone can be enough to rattle stocks. Second, an opioid reckoning. Thousands of lawsuits against dozens of Drug Companies are still pending in state and federal courts and theyll heat up in 2020 that is unless all sides can come together on a major settlement, that some estimate may top 100 billion and lastly, a focus on alzheimerss disease. With almost 6 million americans diagnosed with alzheimers and no drugs approved to slow its course, the urgency is as high as ever to find the treatment. Biogen may be the first. It will bring its medication what could be the first medicine approved to slow the memory loss that comes with alzheimers. Setting up 2020 to see a major debate over the drugs approval and more broadly the direction of the fda and guys, we should see that application soon, as biogen says it plans to submit it in early 2020, starting the clock on what could be an historic drug review wilf meg, thank you very much for that preview and jefferies has come out with their top biotech road map for 2020, as well. The firm seeing less politics, more m a, and improving fundament also for the sector. Joining us is the analyst behind that note, michael ye. Michael, a very good afternoon to you thanks for joining us. Less politics. What do you mean by that in an Election Year . Yeah, well, i think the setup is over the last year or two, youve had a constant bantering like what you said on both sides of the aisle, talking about drug prices too high, talking about going after these pharmaceutical companies and a lot of that has been priced in as you get into 2020, i think theres going to be less urgency to get legislation passed. A lot more focus on just trying to win the election. And a lot of this has been priced into the stock. We mean a lot less priced in and a lot less expectation for this to happen. What about the influence the election will have on stocks, regardless is it only if we get the winner in november, or just getting the democratic nominee will that have an impact on biotech stocks our call is that we get through the primaries in the spring, our call is that if joe biden is the democratic nominee, we predict that biotech stocks are probably going to rally through to the spring to the summer and an expectation that the worst case of medicare for all is off the table, therefore investors can go back to investing on fundamentals, rather than this worstcase scenario that a medicare for all scenario could happen . M a seems like its a big deal what more can you tell us about how youre reading through those tea leaves and what you you might be expecting here . Its been pretty insane weve had five biotech of biotes have been acquired, just the last couple of months and i expect that to continue into 2020 the reason is very simple. You have all of these large pharma and Biotech Companies with tons of cash. They need to put that to work and you have 250 small Biotech Companies, many of which have gone public in the last few years. They have great, exciting new drugs. You have Big Companies that need that technology and i see that continuing through 2020. Josh, do you like biotech space . I do. And they had a furious rally recently health care had been lagging all year we seem to go through this every two or four years with the political retribution thats coming down the pike, if this or that democrat happens to win off. Even trump made noises about high drug prices throughout the 2014 campaign. Of course, we knew those were just noises, even before the election happened. But bill clinton was running on lowering drug prices in 1992 we all know its Health Services are way more spe perspective than just the drug themselves. We also probably know its probably going to be a market solution, not a political solution so if you do get opportunities in these names, because such and such candidate is pulling ahead in this state or that state, i would be looking for the names i like and buying them before i would be selling them. What do you make of what meg had to say about this new drug potentially coming to the market is that an opportunity for you i think theres two one is that megasaid absolutely correct that biogens alzheimers fda decision later in 2020 is probably the biggest single biotech event in 2020 major implications, not just for biogen, biut i think for the Market Sentiment about where the pendulum is, is very, very mixed data and comes on the heels of sarepta just getting the surprise approval as well. And the other thing that meg said is the politics and how we expect that to probably die down and we all know thats a buying opportunity if that comes up during the primaries michael, i want to get two stocks out of you, if we can one thats relatively midor big cap and something thats under the radar. What are your top pix for the next year . One is vertext. We think theyre going to have a Financial Year in 2020 earnings are tripling. I think that stock looks good. And secondly, its about 1 billion to 1. 5 billion. I think that gets through and looks good as well weve got just 21 minutes left of the session. Were down 165 points on the dow. Down about 0. 6 of each of the major indices on this, the men ultimate day of trade for the decade up next, weve got your last chance trade plus, disney having a magical year at the box office well break down its dominance coming up on closing bell. You should be mad that this is your daily commute. You should be mad at people who forget theyre in public. And you should be mad at simple things that are unnecessarily complicated. But youre not mad, because youre trading with e trade, which isnt complicated. Their app makes trading quick and simple so you can strike when the time is right. Dont get mad, get e trade and start trading today. Actions speak louder than words. She was a school teacher. My dad joined the navy and helped prosecute the nazis in nuremberg. Their values are why i walked away from my business, took the giving pledge to give my money to good causes, and why i spent the last ten years fighting corporate insiders who put profits over people. Im tom steyer, and i approve this message. Because, right now, America Needs more than words. We need action. Welcome back 17 1 2 minutes left of the session. Heres a check on the closing bell big board. As you can see in the red today, dow, s p, nasdaq, all down 0. 6 . At the bottom, weve got ibm, procter gamble, and disney and outperformers apple once again having a strong session, up about 80 yeartodate and outperforming once again toda today. We have just about 18 minutes left to go, so josh, lets get it in on the penultimate day of the trading year and the decade. Whats your last chance trade . My last chance trade today is Goldman Sachs, Ticker Symbol gs on the New York Stock Exchange the stock just finally broke out in early december. Was but its just getting started. 219, 220, thats the area you want to trade against if you are a trader, shortterm in nature you want tt stop i would have it right there. If youre more of an investor, you have a little bit more of a risk tolerance for volatility. I would sake like 200. That would be the area wrild hei would say, okay, this trade no longer works and eevaluarelative its under ten times earnings. This is a company thats completely remade itself from the bottom up. It is now a Technology Company operating in finance versus a Financial Company trying to figure out technology. You can credit a lot of that to the tremendouslytively new ceo i like the name and heres the best part. I think you have a berkshire put. In the summer of 2018, stock had a couple of vicious selloffs. Berkshire went in and bought more stock twice in two consecutive quarters i dont think the stock has that long of a leash before buffet comes back in and buys it. To the downside, if they disappoint on any given quarter going forward. I think you can limit your isk get a nice yield, buy a lowpriced stock that is now heading up into the right. I like this trade on several fronts you have a couple of key moments coming early next year the strategy day late january, which is a lot of focus on that and i think there was a sense at the start of this quarter that they were going to underwhelm and i think the market has come around to accept that might not be the case. I think theyre very well prepared for that. And of course, the 1mbd question mark that hangs over them. And according to sources, i get the feel that theyre close to a resolution and the number doesnt even really matter. The number never matters. Its the uncertainty of that and and when that goes away, that could be positive catalysts, the stock has 0. 0 return over the last three years so, yes, it broke out in december its been running, but i think theres a lot of room given how long its underperformed and done very little trading at or just below book value still, as well weve got two market zones left for the year in next, well bring you unterrupted coverage of the final minutes of trade were back after this. Ted by ap, so its simple and transparent with a new level of privacy and security. It lives here and here. And it will save you 6 on products at apple; like iphone, apple watch, airpods pro and so much more. 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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. Just about 1 minutes left in the trading day. We are now in the closing bell market zone. Its commercialfree coverage of all the action going into the close. Cnbc senior markets commentator mike santoli is here to break down and josh brown from here as well lets kick things out of with the Broader Market stocks selling off, following record closes on friday. The dow is on pace for its worst day if three weeks the s p down 0. 6 . Nasdaq also down around 0. 6 , all of these sectors are lower in the s p 500 mi mike, some odd factors at play, weve seen yields hold up. Its definitely not macro, its very much repositioning we were saying late last week that thursday and friday seemed like the day that everyone emptied the tank and topped up their equity allocations and now its just a matter of kind of sell the winners and maybe buy some of the losers dynamic typical januarytype behavior. But the winners are a whole lot bigger than the losers have been josh, nothing really changes as far as fundamentally when we turn into january 1st. But its a new year and feels new. Would wow want to take new positions because of that . What does change fundamentally is i pull up in front of the gym and sometimes i even go in hey, sometimes. But youre right, its somewhat ash trasarbitrary. But there are some things that change when you go from one quarter to the next. A lot of that has to do with the ubiquity of Algorithmic Trading and software not just in the realm of hedge funds, but Wealth Management talk to firms about how theyre automatically making rebalancing moves in their accounts. And firms of favarious sizes ar doing it differently on any given day, one firm could be selling to another and none of these firms have any fundamental change in their view theyre strictly trying to reconstitute a given portfolio i do think youll see some element of that this january given how big the disparity is between u. S. Large cap stocks and u. S. Small cap ewe see these huge disparities in Price Performance and you know that there are firms that are trying to get back to some sort of a core asset allocation. And i think the important thing to do in that moment is not to extrapolate that into some big macro change thats come down the pike, but to recognize, hey, you know what . Firms are doing these things automatically. Not manually theres not always a thought or deep opinion behind every days trade. And once you come to accept that here on the New York Stock Exchange, where we are right now, 80 of what goes on is machines talking to machines, i think you stop trying to swing that big macro bat at everything you see happening. Youll have to keep reminding us of that on those days where it doesnt seem like things are making sense a year ago, everyone was in liquidation mode, when you got to the new year and all of a sudden everyones got a zero for their yeartodate performance, they have a higher risk budget that they can spend, it shouldnt work that way, but it kind of does makes sense disney dominating the Film Industry this year, accounting for nearly 40 of all u. S. Box office sales in 2019 disney that has already had six movies rake in more than 1 billion each with the rise of skywalker likely to be number seven after topping the box office for another weekend not all of this was expected, i dont think, josh. What do you make of the disney run . When you buy up every single intellectual property from the last 40 years that anyone cares about and make really highquality movies with big movie stars, i guess we shouldnt be totally shocked for me, i was surprised at how bad cats was received, so maybe that helped disney a little bit maybe thats a huh hundred million bucks that didnt go away from them but towards them. I think a year ago, the case on disney was they have a slam dunk with the Box Office Slate what surprised me is the way the stock got violently repriced higher when they simply detailed their streaming strategy baby yoda was big and that price. I dont think we would be talking about disney plus the way were talking about it as a cultural phenomenon if not for mandelorian, because other than that, its movies youve already seen i think that was really, really big. We are slipping down into the close, shares of lyft falling today as investors start to get nervous over new contractor rules. Deirdre bosa has that story for us thats right. A new law goes into effect on january 1st that could up end the entire ride sharing Business Model in california. It could require lyft and uber and other companies in the gig economy to treat their independent contractors as employees. Lyft particularly hit hard by that today both lyft and uber has said that the law doesnt apply to them because theyre platforms and drivers are not a part of their core business. But that likely to receive some pushback in the form of lots of litigation remember, too, that investors are already having a hard time buying into uber and lyfts explanation of their paths to profitability. So whether they ultimately have to reclassify their drivers as employees or whether they have to spend a Million Dollars on a Ballot Initiative to counter ab5, its going to cost more money at a time when investors really dont want to see that burn continue. D, thanks very much for that. Josh, where do you stand last week, i actually bought uber i didnt buy a lot its a trade, its not an investment but i actually think the outcome of this litigation is years in the future this will just go on forever and not just in california, but around the world and i think the investor bas the legislative things is going to sink the company i think a lot of it is already in the stock these things have been absolutely horrible since the minute they were spat out of the ipo gate i dont think theres anyone that owns the stock right now that is unaware of that risk and i think to some extent, you might get some relief as some of these things fall in the companys favor and not automatically against it im long the stock i think that risk is in here its not a huge commitment of mine and i reserve the right to change my opinion if some of this stuff goes worse than expected but i think at 30, its okay uber is down more than 35 this year. The Holiday Season is shaping up to one of the most promotional since the recession, according to new note from mkm partners, shifting Consumer Preferences and overabundance of inventory in the Department Stores and a shortened Holiday Season are some of the reasons for the excess promotion mkm highlights Urban Outfitters and Capri Holdings and l brands as possibly a risk for those softer sales and points to aluminum as the standout winner this Holiday Season. Josh, Consumer Discretionary one of the names selling off today, but names like amazon selling off, under armour selling off, tapestry, as well, which has been under pressure for the year look at the Holiday Season anything there that gets you excited about buying the sector . I try to not do seasonal christmas trades and stuff heroic that. Im sure somebodys good at it im not. I think one of the biggest stories of this year, and im sure you would agree having kof covered the sector, you got a huge 90 return in target. 70someodd percent in walmart amazon underperformed the s p. I dont know if a lot of people are aware of that. It did 16 to 17 this year as the index gave you 30. Huge performance out of best buy, companies that were supposed to be dead. And this year there was a huge shift in that narrative. It turns out u. S. Consumers might buy things from someone other than amazon every once in a while and there are Certain Companies that have figured it out. Not all, but certainly lulu and some of the other names you have on the screen. The fda is granting astrazeneca approval for its pancreatic cancer drug meg terrell has those details. The drug is already on the market for certain kinds of ovarian and breast cancers astrazeneca has partnered with merck to sell the drug and it was approved today for pancreatic Cancer Patients with a specific cancer mutation astrazeneca stock had been up as much as 1 premarket, but its now lower. Pancreatic cancer is a disease that drastically needs new Treatment Options and also earlier detection. And we were reminded of that today as congressman john lewis announced hes been diagnosed with stage iv pancreatic cancer and says hes never faced a fight quite like the one he has now. Guys meg, thank you for that our best wishes with him now just over one minute left to go of the session. About a minute and a half. Lets get over to frank for all the movers at the nasdaq frank . Hey, there, wilf, the nasdaq on pace for its second consecutive down day following three quarters of a percent. Really the retail names, thats whats been pushing it higher. Ross stores with, the biggest gainers on the nasdaq 100. Apple is the only f. A. A. N. G. Name in the green. The others at microsoft pretty much responsible for pushing the index into the red amazon down around a percent or more also a down day for chips. Other tech names under pressure, all day weve been talking about tesla, down about 3. 5 on concerns about its ability to meet delivery estimates. Mercado libre following about a percent as we reach the close. Now over to bob pisani at the New York Stock Exchange. Frank, this is very healthy today. Were working off some overbought conditions in the market its about time. Weve had a great move up in the month of december. We have some new highspmorgan o. Thats a new high. Pnc also hit intraday highs. Down on the day. One thing to the last day of the year, i would take a look at the russell 2000 thats had a very nice little move this month. Its playing a little bit of p catchup with the s p 500. Its been down the last couple of days. Thats a nice comeback for a group that was under pressure in the middle part of the year. Theres the closing bell. We are not far from the lows of the day, just off the Dow Jones Industrial average, 3221 welcome to the closing bell. Im courtney reagan. And im wilfred frost lets check in on where the markets finished today down around 0. 6 for all of the major arches, in points term, down 180 for the dow the low was down 216 we were off the lows all 11 sectors on the s p 500 were lower, led lower by some of the biggest winners of the year, like tech and communication services, down a full percent. Energy, which had been green for a lot of the session also in the red by the close joining us to talk about the market day, david ellison, Portfolio Manager at hennessey funds. And still with us, josh brown. Hes ceo at Ritholtz Wealth Management mike, ill give you the first comment here you know, it seems like when we saw the selloff in the beginning, i was thinking, what are we going to have another december sell like last year but thats not like that its not like what we had last year. The market for a while now has been slow. Just to put it in perspective, i think you certainly in the new year have to contend with the fact that we have relatively full valuations. You know, bond yields are lower than you would otherwise think they should be and obviously, sentiment and technicals seem like theyre getting a little stretched but its nothing that really changes the story from what weve had thats supported this rally for a while. Great Credit Conditions not least. Its been a particularly Strong Quarter does that make the setup for january harder than normal i think it does i think the question now is what are we getting from a macro point of view. Pep we have the trade stuff. The impeachment thing seems to be over. We have some big ipo misses that havent hurt the market. I think the market is due for a little bit of a rest here. And im not, you know, thinking it wont rest. I think rates have moved up. Especially on the long end its helped the banks, but remember, last time we were in this situation, rates were going up and the market went down a lot. So i thinktheres a few things to have to work through here in january and february dave, its funny when you bring up all of those big macro headlines that we sort of hung on to, pretty heavily throughout most of the year in a way, it doesnt really feel to me like a year that we saw the s p gain 30 remember, it started the year on a pretty low bar. So you know, i think it went down a lot i was on last year on Christmas Eve when it made the low, so i guess im here near the high so i feel a little better, like ive been redeemed or something. But i think we had this whipsaw. What is the market up 5 or 6 from that high i dont know, i dont have the numbers. I think its Something Like that its not like were up, were making new highs and were 30 above the old high so i think the to me, the issue this year was the fed took care of us they lowered rates three times, they fixed their repo thing, they grew the balance sheet, they talked about being accommodative, and thats why the market went up and i think if the fed stops that, next year, the market is going to have a more difficult time i think fundamentals are great the companies are doing fine the question now is valuation, what are these things worth . The question is how much are they going to help us next year . S p financials closing lower today, but a strong year for the sector, up 29 so far in 2019. Sy grocitigroup, bank of america some of this years best performers are you positive on any other banks and sectors as a whole ive owned jpmorgan forever its a huge gain this year, no plans of getting rid of it. I try not to look at any one year, i try to not look at calendar year. Looking longterm, jpmorgan has a lot of lost ground to make up. If you believe that, the u. S. Economy will be relatively more or less what it has been fy be a part of virtually every type of commerce within that economy and for that reason, i really like the stock and i have forever. Even in years where its done nothing. For me, the big takeaway, and i already knew this, and sometimes i forget it and i have to relearn it so i can share it with other people. Youve got 23 fa earnings grow in 2018. The stock market dropped 5 . This year you have zero Earnings Growth the stock market went up 30 so if youre one of these people that listens to earnings are the mothers milk of the stock market or thinks theres some linear relationship from one quarter or one year to the next between Earnings Growth and the stock market, im telling you again, and i had to tell myself, it does not exist. There are so many other factos,s we talked about sentiment earlier with michael santoli, sent l being oiment being one a being another, its important not to take that one data point that you obsessively follow and not remember there are so many other exogenous factors. And as it relates to the banks, the yield curve, of course, is a crucial factor to how they trade and its hard to see that affect them in the same negative way in 2020 as it did for much of 2019. Its shaping up to be at least better it is, for sure i also think when the market becomes convinced that the expansion is not in danger of ending very soon, banks are obvious beneficiaries. That was really the only thing that changed the story if you didnt see evidence of Financial Systems stress, which we dont see, the only thing thats really going to foul up the earnings picture is basically rising credit expenses the consumer is contributing 80 of the economy, it was 75 years ago. The consumer the in great shape. Should i think the question, and very longterm, is that they sometimes get thrown into that bucket of, look, these guys are kind of dinosaurs, theyre being outmaneuvered by fintech and maybe they just are kind of left with being overcapitalized players in the least interesting parts of the Financial Services business i think thats a caricature point. But i just wonder if that just caps out what their valuations ultimately may get to. Dave, whats your take on that is tech a big threat to these guys or an opportunity to lower their costs . I think theres two boogiemen here for this industry thats been going on for a number of years. One is a return to a 2008 credit environment. And secondly, negative interest rates. And those two things have kept the valuations low the earnings have been fine, but those two things have scared nfrs and kepted new money out of it the question is, will people be convinced that the fed is not going to do negative rates and were not going to have a credit cycle. And the other thing i think josh in a couple of segments ago i was watching, he talked about Goldman Sachs and how theyre changing the company this is the future of the industry they have to reduce their balance sheets, become more fee dependent, look at all of their businesses, decide which ones theyll cut and which ones theyll reduce head counts and salaries and bonuses theres a tremendous opportunity here this is really a tenyear opportunity to remake these companies and the people that do that are going to get much higher valuations. Well turn now to tesla getting hit by a new note from cowen. Lets get over to frank holland. Tesla shares closing down more than 3. 5 after cowen maintained its underperformed and raised its price target for the electric car maker cowen has doubts about teslas ability to ramp up production of its bestselling model 3 while also lowering costs. Analyst writing, we can see a lot more than can go wrong than go right margins will continue to be under pressure and we dont see sustainable profitability in the near to midterm. Cowen estimates tesla will deliver 356,000 vehicles this year, 11 lower than the top end of company guidance. Back over to you frank, thanks very much for that mike, i guess were getting a glimpse today of, yeah, its had a big run, but still big moves, in the year ahead, based on relatively minor new information. Thats been the story for quite a while. And its funny, if the markets focus is on, whats the next quarter going to be and can you actually substantiate the evaluation based on current production, well, of course not. But as much as the story becomes about, you know, the eternal remaking of the future and we only sold 15 cars into china and sold tens of millions, that can keep the stock going for a while. I have no way to handicap which way the mood is going to swing on that, except to say right now, the stock looks like its way up there on a limb going into a new year. Be profitable, but not too profitable yeah. Were profitable, so stop worrying about the spleet, but were not so profitable that you want to apply a traditional multiple as though were General Motors you dont want to be so profitable youre boring thank you, dave ellison for joining us and josh brown, thanks for sticking around with us through the mark zone up next, well discuss what next year could bring for the vc market, as Silicon Valley insider brings out great ideas thats when closing bell returns in 90 seconds. Welcome back when it comes to Venture Capital, next year our guest says its all up in the cloud. Joining us now with his t rober. A very good afternoon to you thanks for joining us. E getting specific subsectors like the cloud, if the last decade or perhaps the latter this decade in Venture Capital investing has been all about growing the top line, what will it be about in terms of those financial metrics for the next decade still the same or is that as a metric cooled off in terms of preference for investors sure. I think, you know, going ahead, theres going to be a renewed interest and focus on capital efficiency about two months ago, bessemers growth team published some really Interesting Research on a metric we call the cash conversion score this metric directly correlated the companys capital efficiency to the internal rate of return that it delivers to its Investor Base and Shareholder Group so, you know, where in the past, Venture Capital and our Portfolio Companies were totally focused on topline growth, what weve seen in the most recent ipo class of 2019 is that the companies that have really performed well have really good underpinning metrics when it comes to capital efficiency and an ability to have a pathway to cash flow profitability. So i think going forward, metrics like cash conversion are really going to influence the way that i think new Venture Capital investments and even later stage investments think about those Software Startups going forward. When youre looking at other investments, what about things like corporate governance. Wework was in the crosshairs and focus of that this year. But so two have other companies been recently when it comes to how the ceos are shaping a culture at a really hot company with meteoric growth yeah, sure. This is a really personal topic for me my twitter handle is actually thevaluesvc. And i think were going to see a comeback to valuebased management, corporate governance, a renewed focus there. And really think about, how do we implement culture to build companies for the longterm. Not just going back to your first comment, how do we build a comment that drives shortterm growth, but really thinks about, you know, developing cultures for Enduring Companies over the next decade. One of the themes youre particularly positive on is cloudbased companies over the next decade . Thats exactly right. Three of the top four market cap companies, their primary driver of growth is driven by cloud computing. So looking forward, i fully expect that Cloud Software companies are going to drive the majority of the Venture Capital situation. When i look at the Home Services space or toast in the restaurant space, all of these companies are delivering increment tal value. And to drive new Revenue Streams. Conversely, some of the horizontal Cloud Companies like canva for designers or even big idea i. D. For data privacy, theyre going to see continued market share growth. But the real takeaway is Cloud Software companies that are delivering Mission Critical solutions to their client base are going to see a disproportionate amount of interest from Venture Capitalists like me. Tell us about toast great name im a big fan. What does toast the company do you know, if youre Walking Around wall street or the new york city area and you walk into many of the coffee shops, youre going to see a toast logo on the payment terminal the Customer Service professional youre interacting with, theyre using a toast platform for the front end and the data that the company captures in its Software Platform on the back end to make smarter decisions and better manage the value chain one of the most exciting companies were seeing in the Cloud Software space today there was a lot of disappointing ipos in 2019, names that got a lot of press. We talked about them a lot performance really kind of lagged and didnt live up to these big expectations have any of the conversations with some of the companies that youre investing in changed with the perspective that 2019 has brought . Yeah, i think so. If we look back at some of the companies, as i mentioned before that kind of stumbled out of the gates, it really was around cash efficiency, that pathway to cash flow breakeven, and the ability to actually turn a profit, which is something that i think we may have lost a little bit of focus on in the last decade. So the conversation is changing in the board room with that renewed focus on, what is the pathway to profitability and how do we build a scaleable, sustainable Business Model that can generate Free Cash Flow in the future eliot, thanks for joining us. Happy new year thank you guys so much. Up next, we will break down the charts to find out why history says the recent run to record highs may result in a january pullback and later, we will discuss whether market valuation concerns could derail deal making next year beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome back weve got a news alert on the former ceo carlos ghosn. Meg terrell has the details. For that former nissan chairman carlos ghosn had been under house arrest in japan after being arrested on charges of financial misconduct. Several reports now saying that ghosn is no longer under house arrest hes landed in lebanon multiple reports saying Different Things its not clear if he was released from house arrest or if some kind of deal was struck or if he escaped house arrest the dow jones is reporting, according to a source, that, quote, he was tired of being an industrial political hostage and that he doesnt think hell get a fair trial in japan. Theyre also reporting that he plans to hold a press conference in coming days now, the ft says its really not clear the conditions under which he left japan. But guys, he has left house arrest there, and he has landed in lebanon, according to two reports. Guys, back to you. Thank, meg. And of course the relevance of lebanon being that he has lebanese citizenship along with brazilian and french citizenship. But big question over that being released or an escape. The reports suggest hes now in lebanon and not in japan lets send it every to mike santoli for his third dashboard of the day hi, mike, what have you got . On the 364th day of the year, its time to heed the calendar citigroup points out after a strong december or after a strong Fourth Quarter, usually you continue with gains. But this chart shows a seasonal pattern from Tom Mcclellan over at the mcclellan market letter which shows this is the current path of the dow. Thats an orange that weve seen since about may. Thats somewhat, in terms of the shape, not the magnitude, conforming to this general pattern which is a combination of all years from 1997 until today. It sort of says, this is your basic average tendency in terms of the seasonal patterns what it does show is perhaps theres a risk of some kind of a shake out or pullback in january. So more recently, january has been less generally positive than it had been further in the distant past now, i want to point out the magnitudes here. This is essentially an up 9 , this is up 7 from this starting point. What were really talking about is on average, a couple percent pullback, which would surprise nobody but i do think it keeps something in perspective here about how we generally conformed to what the seasonal patterns have suggested since 97 and maybe shouldnt be too surprising, if at least theres a slight attempt at a giveback in january the average of the top saying 97 to 17 any reason why it left out 18, 19 thats a very good point. Because, obviously, 18 would not vp helped this pattern keep hold so 18, you had a very, very unusual Fourth Quarter drop. And now, i dont know that it would have necessarily invalidated the overall point, but it shows you for a 20year span, this is what things have suggested. Okay, mike, thank you, as always well, 2019 did turn out to be the best the fourth best year ever for m a activity up next, well discuss whether the urge to merge will be able to carry over into 2020. And which sectors could lead the m a action and later, we will discuss how e sports and new competitors are trying to deliver a knockout blow to the traditional sport industry when we speak with the cofounder of the professional Fighters League were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [woman] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. 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Ill get your taxes in an ok place. What . Just as soon as my audits over, this gets my undivided attention. You take a lot of trips to the caymans, phil . Pretty great, right . Oh phils legally dead. Fell off a boat. Going by denis now. Celery. Long story. What do we got here. Oh. Not going to want to see this. I dont think this is going to work. Just ok is not ok. At t has americas best network, now with our best plans, at our best prices, starting at 35 a line for 4 lines. New from at t lets take a look at how we ended the day with the closing bell big board on the top, here you see the major averages closing near the session lows all 11 s p sectors were lower today. Communication services, Consumer Discretionary, and health care are the biggest laggards there the major averages down just about 0. 6 time now for a cnbc news update with sue herrera. Hi, sue. Hello, wilf hello, everyone. Heres whats happening at this hour black, religious, and Civic Leaders say theyre standing with their jewish allies in a united fight against hate. A group gathered this morning in new york city to denounce antismant antisemitism after a machete attack at a celebration that injured five thhasidic jews our fight for freedom will not be a segregated fight. We dont fight for blacks only we dont want blacks put out, but were not going to put others out investigators have now identified the man who shot two people at a texas church before he was killed by Church Security police say the shooter was 43yearold Keith Thomas Kinnunen he had a criminal record including charges of aggravated assault with a Deadly Weapon and the Cleveland Browns have fired head coach Freddie Kitchens he exposed the longest postseason drought to 18 years. They were expected to be a playoff team this year it was not to be that is the news update this hour back downtown to you every year, sue, theres so much hope around the cleveland area, and every year the browns let us down. Hope springs eternal, as they say. Theres always next year. Thank you, sue well, this year we saw 3. 8 trillion worth of deals globally, making it the fourth best year on record and down 4 from 2018. Some of the biggest u. S. Deals included se d celgene and Bristolmyers Squibb and raytheon what will the m a landscape look like in the year ahead joining us now from los angeles is michael nimeroff. I understand you think 2020 may be a pretty good year for deals, but maybe not the best year. What do you think of the setup here we think that 2020 is going to lag 2019 for a couple of reasons. One, youve been talking about it all day the high market valuation coupled with slow Earnings Growth is not really a juicy environment for big deal m a and you have some unusual features in the u. S. Economy, political risk, if a progressive wins the presidency or congress, that might change the viewpoint of corporations across america in terms of growth and m a, and you have some regulatory uncertainty on the antitrust side, all of which backs up on largedeal m a just pausing and reviewing 2019, what was the key factors behind some of the big deals even if they were across different sectors, what do you think triggered a lot of the big deals . Well, number one, you had great reasons for corporations to buy growth. Earnings growth is slow to come by, so large deal m a helps with growth quite a bit and with stock prices high, stock is a very attractive currency to use for deals. Thats definitely number one on the large second thing is p\e f have hoards of catch theres more cash in american p\e funds than ever before and that offers valuable currency and the third piece is the constant drumbeat of activist investors who are causing m a through their activity, by pushing companies to either divest of big businesses or sell themselves generally i guess most of those factors still apply. I mean, diving into the p\e and activist investor point, do you expect that to continue . And does it start to suggest that some of the deals those type of Investment Companies might be doing are not as attractive as they were a couple of years ago well, certainly, with the high prices, that makes p\e investments a little harder to come by in the brick space you have to pay more for the companies, the leverage has sbroo increased, the credit markets arent quite as open as they used to be certainly, thats a factor thats not going to change theres still plenty of cash available with the higher valuations, that should slow down deal activity a little bit. We still think 2020 will be robust, but not quite as robust as 2019 or 2018. When you look at the different sectors, is there one that stands out to you as potentially needing to look at deal making for growth maybe its an old name that sort of needs the pizazz of a Younger Company that just doesnt have the expertise to get it there. Any combinations there in sectors in particular youre looking for . We think that youll continue to see technology being needed by all Nine Companies to stay more relevant. So a petsmart buying a chewie is a good example mcdonalds acquiring Voice Recognition technology around it drivethroughs the large motor Companies Like ford buying auto pilot sort of technologies to compete with tesla and companies with auto pilots sort of ability to selfdrive all will continue in a major way, we think, in 2020, as a business necessity, regardless of the other factors weve been talking about, like valuations and things of that nature. Mike, i wonder if you also think that the current generation of leadership at Big Companies is more hesitant than previous generations to do sidesabside sizable deals. It seems as if theyve been rewarded for buying back stock this idea that most mergers dont necessarily create value has been more absorbed i look at the overall volumes of m a and it certainly lags where we have been in prior cycles i think its a great point. I think ceos have not been rewarded by and large with stock market applause when they announce a large deal. And as you know, ceos have like the average life of an nfl running back in Corporate America today. So they are being more careful to do things that please large Investor Bases and m a doesnt ring the bell. Whats your view of m a for the year ahead do we see growth picking up in europe and china helping m a, the fact that it might see some currencies recover make it a bit less likely . I think its going to b headwinds in europe, for example, with brexits continued uncertainty, with the slowdown in germany, and with their wild little overactive regulatory environment, where, you know, if youre a u. S. Company and you do something that the eu regulators find even a little bit problematic, you get a giant fine so i think that europe is definitely going to be an area where i dont see a lot of growth this year for both their reasons zprt reasons of u. S. Companies going into europe on a crossborder basis arent always rewarded and on the asian side, china in particular, the Chinese Government has been trying to tamp down on House Investment from Chinese Companies torre pla t other places and the general climate with the u. S. china trade dispute going on, i think, will also impact asian and particularly china m a on a crossborder basis. Thank you so much for joining us good to see you. Thank you still ahead, youtube cracking down on the amount of Data Collected from hildrens videos up next, how that could potentially impact Parent Company googles bottom line plus, wework came under fire over former ceo adam newmans massive golden parachute and now the companys new coceos stand to get payouts ith af eyre removed from their roll. Details later on the closing bell. Welcome back stocks selling off on the penultimate day of 2019. The dow and s p snapping a twoday win streak and the nasdaq recording its second straight decline lets get a check in on some of todays big movers lyft shares under pressure over a New California law that will require the company and rival uber to treat drivers as employees. Chinese electric vehicle maker nio soaring on stronger than expected revenue and a big increase in Third Quarter deliveries that is, of course, nio, not nye. Well, youtube will soon start limiting the data it collects on videos designed for kids josh lipton is more with more. Hi, josh so courtly, back to september, google agreed to pay 170 million to settle allegations by the ftc that youtube illegally collected personal information from children without their parents consent. As part of that settlement, google will also limit the data it collects on videos for kids starting in january, the journal is reporting that a creator will have to designate whether that video is for kids, and if it is, there cant be comments or personalized ads analysts estimate youtube could generate north of 25 billion in gross revenue. And thats this year i talked to one financial analyst this morning who covers the company. He isnt too worried about what this means for the companys overall finances in part, thats just because there are so many channels to choose from, though he does acknowledge that it does mean creators could lose out on some important revenue. Gu guys, back to you. Thank you very much, josh this strikes me every time enjoy back home and im around a bunch of kids. All the ipad are out and everybodys watching youtube its unbelievable the amount of content some of these young kids are consuming and youre like, what are they even watching over there . Its very passive and kind of mesmerizing, so the algorithm will just tee up the next one. Thats the question right now, in what direction does it point younger users. And the Data Collection is another piece of it. And obviously, its the kind of thing that alphabet without being forced to do Something Like that, its kind of good it sort of shows best practices, of course, being attempted in this area. Unclear whether the stock down on this story today, or just the broader profit taking the stock has had a great run. Up next, disrupting the sports world e sports and upstart leagues are disrupting the traditional Sports League in a major way well discuss, coming up next. Ee ee how well i can eat and still enjoy myself all day long. I wake up every morning to see how much weight ive lost and how much better i look. Myww join for free lose 10 lbs. On us. We believe in education built for all people. , [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Welcome back its been a decade of disruption for traditional sports, as evidenced by the popularization of streaming, e sports, fancy leagues, and legalized gambling. And the businesses involved have changed as well. Pwcs annual sports survey just named e sports as the second year a global e Sports Companies with athletes in 14 different video games and partner of revolution growth, chairman also of the professional Fighters League and m a and ma bracket competition. Good afternoon to you, thanks for joining us great to be here. My quirst we, before we get on, is how much longer does this stay as just a sort of more niche following on cable and online as opposed to actually being on traditional broadcast tv great question. Theres 300 million mma fans around the world its the Third Largest fan base other than basketball and soccer so it is really a broadbased support. In the United States, only 20 of that audience, 80 is international. So this is going from niche to mass its just, the United States is not well aware of it espn now carrying the ufc and carrying all of those fights around the world is really that tipping point, where the business is now going to start to explode its almost like the internet in 1999 or 2000, we had an email address. I think the fan base is there. Youll see more products, more fights, and more business evolution of mma as someone who is not a fan of that, but i watch more traditional sports really, theres three things going on first of all, mma is made up of six disciplines. Five are in the olympics mma itself will probably be in the olympics in 2028 whether youre into judo, wrestling, boxing, jiujitsu, those are the disciplines that make up mma. This generation, they love high action the average mma fight, ten minutes. Mma is a global sport, seen in 150 countries. So when were talking about disruption of sport, high action for short attention span, global, easy to understand rules, mma is square on those big trends so youll see more offerings, more different kind of product theres only been one kind of product, where a promoter decides whos going to fight those are the evolutions youll see. What about things like corporate sponsorship . What is the ultimately, i guess, the whole range of revenue stream in the professional Fighters League, were a Sports League like the nba or nfl. And most Sports League have about eight Revenue Streams with sponsorship being one of them. Sponsorship will typically be one of the last to come. Everybody needs to know the waters warm this is an area thats very safe just like internet had 20 of usage, but 1 of spending. It took a long time for people to move their spending online. The audience and fans are in mma, but the spending is not but once everybody now starts to see, espn has bracembraced this, these are the greatest athletes in the world, this will be in the olympics, the spending will come switching focus to e sports, do you feel thats still niche as well, in the same way that mm is a demographic nicheness e sports is interesting in that anyone our age doesnt even know what it is and we dont know what the sports are league of legends is like football overwatch is kind of like hockey we dont even know what those are. The growth is 15 a year e sports will double in five years and nobody even knows. That tells you how big its possible because its very, very young. People 18 to 25 play it. Does it stay young . Its already getting older, because of easytoplay games. The first games hard to play. So nobody whos older could play them so its going to be a little bit older and its also going get more female, as games become more female attractiveness and as games get more easy to play and an older demographic the issue with e sports is where do you invest . Unlike real sports, where is the money in real sports a team or a league well, the real money in e sports is the publisher owns the game well, nobody owns the game of football nobody owns the game of mma. Where do you invest if you want to invest in e sports when the publisher owns the intellectual property the leagues and teams really dont have as much value in e sports as they do in traditional sports an interesting, complete dichotomy from what we know. Where it comes to where you could watch some of these sports when youre talking about the mma type leagues and the professional Fighters Leagues streaming, traditional cable you mentioned espn but where you want to be viewed . The big trend is streaming. Because the digital platforms have more Free Cash Flow than all the Media Companies combined if you look at ten years, live sports will be streamed more than theyll be broadcast. All of these other sports will be streamed, whether its new companies or traditional people that are doing espn plus type platforms. The streaming needs more live sports thats the opportunity for new offerings. Its like when cable went to 500 channels, they needed a lot more content. Now you have all of these streaming services, they need live sport to offer it to all of their people and they need all kinds of interesting things for though demographic audiences. Thats the opportunity for whether its professional Fighters League or other type of sports. Is gambling a big opportunity in e sports like it is in regular sports or are there going to be too many question marks over rigging and so on and so forth gambling will be a big opportunity in all sports. Tomorrow at Madison Square garden, its on display the smart cage were the first in mma to wire the cage theres chips in the fighters dploe gloves and a film under the mat. The hardest punch tomorrow night will be 31 to 32 miles per hour. Youll see that immediately on the screen and you can place a bet on that starting in 2020 with our partners, youll place a realtime mobile bet on that. Distance traveled, heart rate. Tomorrow night at the pfl, the top heart rate will exceed lebron james in the Third Quarter. All of us who arent mma fans go, pretty interesting the engagement goes up, gambling revenue goes up, and media revenue goes up when you start to allow people to understand whats really going on with that context. Don, thanks for joining us. Great discussion very interesting. Coming up next, a bright spot for the bulls Mike Santelli heads back to the telestate of the art with a check on Corporate Bonds and later a golden exit package . A new report detailing the massive payout awaiting weworks top execs if they re er weveto get fired. Well discuss when we return looking to get your business off to a fast start in the new year . Its go time switch to comcast business and get fast internet on the nations largest gigspeed network. Plus, complete reliability with 4g lte backup. And, cloudbased security to help protect the devices on your network. Greenlight your business in 2020 with fast internet and voice for 64. 90 per month. Switch now and get a 100 prepaid card when you add comcast business securityedge. Call today. Comcast business. Beyond fast. Welcome back to the closing bell lets accepted it over to mike santoli. Final dashboard of the day hi, mike. We have to hold the bonds, specifically Corporate Bonds i like to spotlight just the strength in the Corporate Credit market as an underpinning of whats going on in equities. Bbb Corporate Bonds, the lowest amount before they get to junk bonds. Yields were popping up towards 5 really sold off hard people thought it was perhaps the next disaster in the making if you got a lot of downgrades in the credit ratings. Look where we are. Somewhere around 3. 2 . The u. S. Government about two years ago was borrowing at 3 . Right now you have low Investment Grade borrowing at that level whatever else you want to say about equity values, this is underwriting the valuations at these levels because its part of the corporate security spectrum this is showing both the fed on hold and people not thinking that were necessarily close to a recession. If that changes, obviously it will up end the valuation story. That could change in part by the corporate yields spreads going up but right now its very hard to be too conservative. Were going to see another wave of heavy debt corporate issuance see how the market absorbs that. You cant blame corporate for doing that. So spreads over treasuries, not too significant. 1, 1. 5 . Yeah. How far, mike, do you need to go down the risk spectrum of corporate debt before it really legs up and what portion of overall debt issuance is that . If you went way, way down the chain, thats ccc which is very speculative and risky. Basically the market is saying those arent going to be money good i do think youre going to get up to 6 5 , 6 core junk bonds thats very modest yield levels. Mike, thank you as always, up next wall street buzz the top things investors talking about today coming up. Coming up on fast money, wells fargos mike mayo says were about to enter the golden decade for the banks thats at the top of the hour. Lets take a look at how we finished the day on wall street. The major averages finished down the dow shed 183 points. The s p 500 down about 19 points and the nasdaq composite, the worst of the three majors down about 61 points there. Time for the buzz on wall street toms shoes creditors taking the footwear maker in exchange for restructuring the debt they warned that toms which is known for its Charitable Giving would not have been able to repay a 300 million loan due next year. The Financial Times saying wework has to pay 70 million to replace the executives they gained the titles coceos after adam neumann stepped down. They will receive 8. 3 million each if they are fired or leave the company under certain circumstances. Netflix says, surprise, its own original shows were the most popular. New material says murder mystery topped the most popular with the third season of Stranger Things coming in second looking through the details of that, mike, its if you viewed it for a moment it counts as opposed to if you watched the whole way through. Some of those perhaps didnt catch peoples attention as much as other older seasons. One of the advantages as we all know that netflix enjoys is they will put their originals in front of you constantly. Absolutely. Almost make it a default to at least try it for a while. I wonder whether when you hover over one of them, its as if you expect a movie trailer to start, but its the show, if that counts . Yeah. I wonder how long you have to actually keep it active . I should find that. The number on the streaming thing is annoying how hard it is to find the trailer as opposed to the start of the actual show. Anyway, we should pivot back to the markets. Clearly one day of trade left. Either way, we have an amazing quarter and an amazing year on the books. A little bit of slippage. It seems as if there was some pent up profit taking. There has been almost no pull backs to speak of in december so, therefore, were here kind of wobbling a little bit in the last couple of days. As you say, it doesnt change the overall story of how the year has gone or where we are in this whole trajectory having broken highs of a year and a half of contending with those levels. And in terms of other things to focus on today, we did see decent sort of performance dollars slipping dollars slipping. Macro is fine it was just a bit of profit taking. Thats right. Were out of time on closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new yorks time square this is fast money. Im scott wapner in for melissa lee. Traders are steve grasso, dan nathan and gia dam uy adami tonight on fast shares of tesla hitting the skids despite the company marking a major milestone in china well have full details ahead. Plus, well, wells fargos mike mayo says were entering, quote, a golden decade for banks. Why he says the sector is in for its own roaring 20s check out this mystery chart on pace for 10