Transcripts For CNBC Closing Bell 20240712

That broadly speaking if we dont get that, there would certainly be Downside Risks certainly through the channel i mentioned. Thank you cnn. Thanks for taking my question chairman powell, give us an update to the policy framework and repeated calls for this and this event, is the fed open to other parts of the economy such as income inequality and Affordable Housing we monitor everything we think is important in the u. S. Economy. In a broad sense, all of it goes into thinking about Monetary Policy you mentioned inequality so disparities in income and Financial Wellbeing demographic and racial categories, something we monitor carefully, inequality, which i would point to its a multifaceted thing, stagnation of nat the lower end of the income and lower mobility those are things that hold back our economy. They are the thing is we dont really have the tools to address those. We have Interest Rates and Bank Supervision and Financial Stability policy and things like that, but we cant get at those things through our tools when we lower the federal funds rate that supports economy across broad range of people and activities but we dont have the ability to target particular groups notwithstanding that, we do talk about it because these are important features of our economy. You know, i think those distributional issues are issues that are really for our elected officials. I would say i take them seriously as holding back the economy. The capacity of the economy is limited when not everyone has the opportunity, has the educational background and the health care and all the things that you need to be an active participant in our workforce so i think we can if we want to have the highest potential output for our economy, we need that prosperity to be very broadly spread in the longer run. Again, i would just say the fed, we can talk about those things a lot. When we think about maximum employment, in particular, we do look at individual groups. High unemployment in a particular racial group like africanamericans, we would look at that whether were at maximum employment we would look at that with a lot of other data. The answer is we do look at all those things and do what we can with our taools ultimately these are issues for elected representatives. Thank you edward lawrence. Thank you, chairman powell, for the question i wanted some clarity here at what point do you think its prudent to shift the bond purchases from market stability, as you had said from shorter term maturities, to longer term, more stimulus related . So you know, we think that our asset purchases are doing both those things today. We think clearly theres been great progress in terms of market function. If you remember early in the spring when the acute phase hit, market function is very low. Its improved rapidly and in many respect is perfect. Asset purchases which total 120 billion a month, much larger than last Asset Purchase Program during Global Financial crisis and recovery there from, we think thats accommodative financial conditions and growth and we think thats fine were also aware there are ways we can adjust that, you know, to do various things, make it smaller and larger and target different sectors of the curve were going to continue to monitor developments and prepared to adjust our plans as appropria appropriate. Thank you victoria victim guida. Hi. Thank you for taking my question i wanted to ask a couple of things first of all, if we dont get a vaccine until well into next year, what does that mean for the economy . Somewhat related, i was wondering if you could provide more detail about stress scenarios youre going to release for big banks an whether that is going to be another full blown stress test, whether were going to publicly see results and what it might mean for bank payouts. Great so on the first one, whats happening is basically were learning to live with right now were learning to live with covid which still spreads. Were learning to engage in Economic Activity. All of this recovery weve seen is in a context where, you know, people are still at risk of catching it and yet were able to resume lots and lots of economic activities. And that involves, as i mentioned, the more social distancing we can preserve as we go back into the workforce wearing masks, keeping our distance, that kind of thing, the better well be able to get Economic Activity back up close to where it was. I do think, though, there are areas of the economy that are going to really struggle until we have a vaccine thats in wide usage and widely trusted those are the ones really close together i also think testing to the extent you have cheap and rapid testing, you can do a lot with that in the workforce. You can build confidence in the workforce if you have regular very regular testing, doesnt cost very much and you get the results really quickly if you do that, youll be able to open a lot of work forces particularly in cities where the overall case numbers are quite l low. That will help a lot were going to find lots of ways to get out towards where we can. Theres always going to be that for some time certain activities that will be hard to resume so i think thats the only way i can say it trying to we all when we make a forecast, we make assessments about that its really hard to say. Theres no template here theres no experience with this. So frankly for the last 60 days or so, the economy has recovered faster than expected that may continue or not we just dont know i think we should do those things that we control to make sure we can recover as quickly as possible. The main thing again is wearing a mask and keeping your distance while youre in the workforce. Thats something we can all do that will limit the spread and let people go back to work, avoid major outbreaks and things like that. In terms of the stress test, so, i really dont have were getting ready quite soon to be making announcements and saying things publicly. Theres not much i can say with you nothing, really, i can say thats on that today i dont have anything for you. Thank you chris. Thank you, michelle good afternoon, chairman powell. You have emphasized many times, including today, that the fed can only lend and not spend and sometimes the latter is whats needed to the extent that a 600 billion Lending Program for small and Midsized Companies could help, what exactly is wrong with the design or function of the main street Lending Program, purchased 1. 4 billion in loans so far. Eric from the boston globe said recently congress should clarify how much risk it wants the program to take. But congress has already appropriated substantial funds for the 13 3 programs. These are plans specifically designed to absorb losses. Meanwhile my colleagues who cover Banking Sector say they are told that the Treasury Department is advising them to target zero losses, zero losses in main Street Program loans so if i may, why is it that the Federal Reserve, the congress, and the treasury apparently cannot agree on a loss tolerance that should be applied to the main street Lending Program in a way that would allow padly needed credit to reach these companies. Thank you. Sure a couple things about main street. It reaches the whole nation. Its got more than half of Banking Industry assets lined up close to 2 billion now. The numbers are going up banks are joining and borrowers are coming and its significant its relatively small now. It can scale up in response to Economic Conditions should that be appropriate if you look out in the lending world, surveys generally find that firms are not citing credit constraints as a top problem thats a lot of ppp, Bank Credit Lines and syndicated loans theres a lot of credit being let out there. Youre right we are looking at things some lenders are concerned about underwriting expectations. So banks are going to their approach is likely to be underwrite the loan roughly the same as any loan they are keeping part of it. What we want to do is make sure we know they should take payment deferrals and other things in place and also that its really a facility for companies or borrowers that dont have access, otherwise why do we need main street. Thats what were working on well be making some changes in that respect i saw what president roczsaid if you look at the law under 13 3, its clear make loans only to solvent borrowers and c. A. R. E. S. Act quite specific in keeping all the terms of section infect including the borrower is solvent. This law amended in dodd frank the idea is make it challenging and put hurdles in place thinking at the time two banks now were using that same law for smaller business borrowers and it doesnt its not a perfect fit. I would say for many borrowers they are in a situation where their business is relatively shut down. They wont be able to service a loan and they may need more fiscal support having said that, were continuing to work on that to make it more broadly available, pretty much to any company that needs it and they can service a loan. Very briefly address the reports that the treasury is advising banks to target zero losses, is that appropriate . I cant say i dont know about that. I havent heard those reports. You know, again, if you think about it, we are going to have to go through the Banking System to do this were not going to have 100,000 Loan Officers working through the fed and treasury, were going through the Banking Systems. Banks like to make good loans. Thats what they do. They are trained to make good loans. We expect they will do some underwriting we also want them to take some risk, obviously, because that was the point of it. The question is how do you dial that in . Its not an easy thing to do were getting loans made and were hopeful well clarify it and that credit will continue to flow thank you chr chris. Hi, thanks for taking my question chair powell, youve talked a couple times about parts of the economy that may not recover as fast as weve seen so far. Presumably referring to airlines, hotels, other parts of the economy that rely on close contact. How are you thinking about that in terms of this overall impact. Is that sector large enough to, say, keep unemployment above far above your maximum goals are you expecting that to come back with a vaccine or are a lot of those folks going to have to find new jobs and new industries and should we expect the fed will keep rates at zero until all that allocation is done. We cant be really sure we know the answers to those questions. But i would say the likely path is that the expansion will continue as i said, its well along it will move most easily through parts of the economy it will still take some time the parts that werent directly affected, didnt involve getting people in large groups together to feed them, fly them around, put them in hotels, to entertainment, like that, those are the places that are very challenging. So they will be the places affected and thats challenging. It is. We dont know how long thats going to be. Its millions of people. As i mentioned we had Something Like 11 Million People in the Payroll Survey have gone back to work out of 22 million who lost their jobs in march and april, so thats half of them 11 million, particularly the pace of returning to work slows down, its going to leave a large group of people. It will be very meaningful from a macroeconomic standpoint our commitment is not to forget those people as i mentioned, we want the sense of our Forward Guidance is that policy will remain, as i said, highly accommodative until the expansion is well along, really close to our goals. Even after if we do lift off, we will keep policy accommodative until we actually have a moderate overshoot of inflation for some time. So those are powerful commitments we think will support the full recovery including those people as long as it takes. Thank you mike mckee. Mr. Chairman, Michael Mckee from bloom beberg radio and television keeping accommodative into the recovery, as far out as three years in your latest projections, is that basically it for the fed since Interest Rates are your main tool, the things can you do could push down on Interest Rates, but is it the case now that the only additional stimulus that can come to the economy is the fiscal side no. I certainly would not say were out of ammo. Not at all first of all, we do have lots of tools. Weve got the lending tools, the balance sheet, and weve got Forward Guidance, further Forward Guidance so theres still plenty more that we can do we do think that our rate policy stance is an appropriate one to support the economy. We think its powerful as i mentioned, this is the kind of guidance that will provide support for the economy over time, the idea being that policy will remain highly accommodative until the recovery is well along, really very close to our goals, then will remain accommodative even after we lift off. I think thats a really strong mass for rate policy to be but again, we have the other margins we can still use so no, certainly were not out of ammo. If i can follow up, in terms of the balance sheet, are you concerned that your actions are more likely to produce asset Price Inflation than goods and Services Inflation in other words, are you risking a bubble on wall street . Of course, we monitor financial conditions very carefully. These are not new questions. These were questions that were very much in the air a decade ago and more when the fed started doing qe i would say you look at the long experience of tenyear expansion in history, quantitative easing and low rates for seven years. I would say it was notable for the lack of emergence of some sort of a financial bubble, a housing bubble or some kind of a bubble, the popping of which could threaten the expansion that didnt happen and frankly it hasnt happened around the world since then that doesnt mean it hasnt happened of course we monitor carefully after financial crisis a whole division of the fed to focus on Financial Stability. We look at it from every perspective, fomc gets briefed on quarterly basis at the board we talk about it more or less on an ongoing basis. It is something we monitor i dont know that the connection between asset purchases and Financial Stability is a particularly tight one but again, we wont be just assuming that, well be checking carefully as we go by the way, the kinds of tools that we would use to address those sorts of things are not really Monetary Policy, more tools that strengthen the financial system. Thank you don lee. Chair paul, id like to ask you about the labor market as you know in august there were about 30 million persons claiming Unemployment Benefits if the jobs for august show 13 1 2 million unemployed, about 6 million more than before the pandemic, i wonder how you reconcile that and what you think the labor Market Conditions are. I think the overall picture take a step back from this the overall picture is clear the labor market has been recovering but its a long way, a long way from maximum employment thats the bottom line on it within that, claims in particular, the number of claims, quantity of claims, the fact pua claims are new, pandemic unemployment assistance claims, thats a new system that had to be set up the actually counting of the claims is volatile and very difficult to take much signal about the particular level people were setting them up. When they got them set up they had them counted certainly what you see is the level of initial claims has declined sharply from the levels of march and april and now at a lower level. Appears to be flat or gradually decline and thats good. Its worth noting that level is maybe five times the level of what claims were claims were around 200,000 now they are 900,000, in that range weekly for initial claims. That just tells you the labor market has improved but its a long way from maximum employment and a long way to get back there. Thats a way to think about it in many parts of the economy, theres a lot of disruption. Its really hard to say precisely where we are ill give you another example. We say unemployment is 8. 4 . If you count those who are misidentified as employed when they are actually unemployed and add back some part of the participation numbers if you had a job and in the labor force in february and you lost it because of the pandemic, some of you are now reported as being out of the labor force i would more look at those people as unemployed if you add those back the level of unemployment is probably 3 higher on the other hand by that metric, the unemployment would have been in the 20s in april. So the improvement is quite substantial under any measure but the level is still high. Is the feds goal to get back to 3. 5 . Yes, absolutely i cant be precise about a particular number but let me say theres a lot to like about 3. 5 no one will say that number is the touch stone or maximum employment you ask about 3. 5 , a 3. 5 Unemployment Rate showed gains shared widely across the income spectrum, going more to people at the bottom end of the spectrum, Labor Force Participation coming up, up above many estimates of its trend as people out of the labor force were pulled into a tight job market theres a lot to like about a tight job market particularly in a world where we didnt see inflation. Yes, wed love to get back to that i would say wed like to get back rather than to a particular number wed like to get back to a strong labor market where wages are moving up, where people can find work, Labor Force Participation is holding up nicely thats what we would really love to get back to of course we need inflation to perform in line with our framework, but the good news is we think we can have quite low unemployment without raising troubling inflation. Thank you Nancy Marshall genzer. Hello, im with marketplace the market gap i know you have tools. Are there things you can do possibly in the area of research, maybe expand your research on racial economic gaps you know, we do we are gifted with a substantial group of researchers who really cover the waterfront we do a significant amount of research on Racial Disparities across multiple variables, including wealth, as you asked about. So we do that. We also remember we have our division of consumer and Community Affairs, which is present in communities around the country and reserve banks have very active Community Affairs groups they are present in communities around the country so it wasnt just the fed listens events, its more just over a long period of time we are in contact with people in those communities to understand their experience of the economy. We serve all americans we know that were going to use our tools to reflect that fact. The answer is yes, we do quite a bit of research. I suppose we could do more we do a lot. We tribute to those fields and those assessments of the state of the economy we do that not because its interesting and important but because its important for the economy and important for our mandate. We are assigned maximum employment now, what does that mean as i mentioned earlier, it doesnt mean a particular headline unemployment number what it means is maximum employment so we look at that in many, many different variables and ask ourselves whether those variables those labor Market Conditions with our assessment of maximum employment and that would include all of the things were talking about. Thank you greg. Thank you thanks for this. I want to go back to the new Forward Guidance that you have you say that its powerful youve already two dissenting voters on it i was wondering if theres other people that argued against it and what do you say to the two who dissented . It looks like president kashkari wanted simpler Forward Guidance and president kaplan thought the current guides we have are fine from now how did you argue back on those arguments . Thank you. I wouldnt i dont want to comment particularly pot two dissenters, but they dissented from different perspectives. That should be clear they are sort of on two sides of the discussion but i would say this i am blessed with having a committee of highly thoughtful people who bring diverse Life Experiences and diverse careers and, of course, diverse views to our work and i wouldnt have it any other way. I wouldnt so i would just say the in our discussions the last couple of days, the whole committee, everybody on the committee is very supportive of the statement of belong term goals and Monetary Policy whats in there. Very broad support unanimous support for that everyone sees the changes in the underlying economy and sees in their own way the need to address those including the changes we made to the employment mandate and to inflation so that were now flexible average inflation of course were the first Major Central Bank to dont this framework. Theres no cookbook, and, you know, this is the first guidance under our new framework. Of course there would be a wide range of views and you would expect that. Its actually a healthy thing. I welcome that discussion. I would also say this. This is all about credibility. We understand perfectly we have to earn credibility. This framework has to we have to support it with our actions i think today is a very good first step doing that. It is strong powerful guidance it ties in nicely with longer run goals and monetary strategy. We had quite a robust discussion and there are different ideas on how to do this thats just the way it is when you have a Diverse Group of highly thoughtful and effective people so im pleased with where it came out. Thank you hannah lang. Hi, chair powell, thanks so much for taking my question. I want to ask about commercial real estate. I know you mentioned there was a way the fed could support cre borrowers but i was just wondering if youve had any other discussions on that and if theres any potential way the fed could step in in that area thank you for that question weve actually spent quite a bit of time on this as secretary mnuchin mentioned the other day. Ill say just a couple things. First, our facilities are essentially always have to be under the law broadbased and not targeting any single sector. Also important to remember cre, commercial recommends benefits from several of our existing facilities so the talf takes commercial Mortgage Backed securities and sba commercial real estate deals and new york fed purchases agency directly. In addition i would say main street helps businesses pay their rent so were helping realize. Cmbs, spreads have tightened on cmbs a couple issues, commercial properties with cmbs have covenants that for bid them to take on mosh debt. You have a situation where some innovation defies discovery, providing mass relief in commercial backed securities were still working on it, still looking. Further support for commercial real estate will require further action from congress. The last question, go to brian cheung. Chairman powell, seems like framework is about shaping Inflation Expectations but average american as to why the fed is overshooting inflation whats your explanation to main street, average people and what the outcome will be for those. Thanks. Its a very important question and i actually spoke about that in my jackson hole remarks a few weeks ago. Its not intuitive it is intuitive high inflation is a bad things less intuitive that inflation can be too low the way i would explain it is inflation thats too low will mean that Interest Rates are lower. Theres an expectation built into every Interest Rate to the extent inflation is lower and lower and lower, Interest Rates lower and lower, the fed will have less room to cut rates for the economy. This isnt some idle academic theory, this is whats happening all over the world you look at many jurisdictions around the world, you are seeing that phenomenon. We want inflation to be we want it to be 2 we want it to average 2 if inflation averages 2 , the public will expect that and that will be whats built into Interest Rates thats what we want. Were not looking to have high inflation we just want inflation to average 2 . That means in a downturn, what happens is it moves down to well below 2 that means weve said we would like to see and will conduct policy so that inflation moves for some time moderately above 2 these wont be large overshoots and wont be permanent to help anchor expectations at 2 , so yes, its a challenging concept for a lot of people. But nonetheless, the economic importance of it is large. You know, those are the people were serving. We serve them best if we can achieve average 2 inflation we believe. Thats why we changed our framework. Thank you. Thanks very much. Fed Jerome Powell wrapping up his conference there welcome to closing bell, im wilfred frost with sara eisen. Lets get market reaction. We hit session high and session low within the space of 45 minutes during the press conference 1. 4 turnaround in the space of 47 minutes there we were at 1 now down 0. 3 . Started to rally really when the statement came out as opposed to the press conference clear commitment rock bottom Interest Rates until late 2023, which is the first time the fed considers the possibility of inflation getting above 2 but sold off during the course of the press conference albeit led by tech the less Interest Rate sensitive sector and quick look at yields, sara, which started to move up more during press conference and reaction to the statement a little later than the market moved up and pulled back a little bit, 0. 69 on tenyear not a huge move there for Interest Rates some serious market volatility within the session and during that press conference, sara. Dollar stronger as well im not sure what was new about this, the fed and jay powell found another way to say Interest Rates are going to stay low for a very long time with the forecast that four members of the fed say by 2023 they will look at raising Interest Rates but a majority of the fed members expect rates to stay zero through out that year 2023. They now expect gdp to contract 3. 7 in 2020 this year a little better than expected weve got a lot to talk about, an allstar panel standing about i to break down headlines from the fed and chair powell in just a bit a reaction from former fed vicechairman stan y fischer. Used to be number two and janet yellen ey, new research on investing affecting bottom line for business and focused on. Looking forward to interviews lets get straight to our fed panel and get a reaction Federal Reserve governor and deputy treasury secretary. Chief economist add umbrellas, chief economist add pimco and cnbc contributor and commentator markets at Cnbc Mike Santoli with us. Ill come to you first of all, clearly sara said finding a new way to commit to not raising rates at any moment in the foreseeable future but i guess that kind of rekpimt to that point perhaps less Market Impact than it did over the last couple of times. Exactly right so there was a challenge here for the fed because it has to take that new framework and it has to figure out how to move it into guidance and how to communicate it you could see particularly in the press conference, you could see chairman powell having to explain it several different ways for the questioners you know, he also took two dissents here. He also probably had wished he hadnt, although he sort of wrapped it up in a nice bow saying he loves having this diversity of thought you know, you saw here an extensive markup really in terms of what the statement looks like, even though the action itself wasnt really news. There was quite a bit of a new red ink her on fomc statement then you saw an attempt, first attempt to explain to the public what this means and exactly the extent to which theres going to be real change i think as a first attempt it was okay but you did see really a sense of a little bit of struggle her on what this means of course, there were two dissents. Sara, the other thing that stood out to me is clearly his support for more fiscal action my sense is more fiscal support is likely needed again, he said that before but we are embroiled in this stalemate basically in washington for more fiscal support. I guess the question is how much more can he do if congress isnt going to do anything exactly ive heard him before give a more fullthroated plea, really, for fiscal support and you didnt hear it coming through as much this time a sense of resignation a little b bit. I think this is going to be what it is. The fed may be the only game in town in terms of monetary and economic support Going Forward you heard him say there might be a deal, certainly not the consensus view at the moment there is no deal in sight as we sit here yet he clearly indicates he would prefer there to be some kind of economic support. You didnt hear him push for it the way he has in the past this puts the fed in a particular tough decision. If the fed is the only game in town and there is no future fiscal support, youre going to see the fed struggle with a ned for target assistance. As you know the fed, that is not the strong point, the target assistance thats the fiscal set of tools hes going to continue to get questions about the emergency lending facilities and why there isnt the amount of takeup that they would like to see with it the fed will continue to struggle with that if there is no fiscal support. Mike santoli the market turned around in the last hour is that because of this press conference mostly tech leading the way down it seemed almost as if ongoing pullback consolidation was a little bit on pause waiting for the fed. I do think perhaps chair powells repeated emphasis or mention of the assumption in many private Sector Economist forecast of more fiscal help, being pretty essential to the outlook had wear and tear on Market Expectations but the lack of incremental shortterm thrust in terms of these policy moves i see the Market Action having been on pause up to and during the statement period as opposed to reacting to it. Tech was soft now lows. 1 to 2 lower. Stay with us definitely want to get to you guys but we want to bring in steve liesman. He was part of that virtual News Conference with the fed chair, asked a question about the guidance steve, what were your main takeaways . Go back to the statement. It is an historic day where the Federal Reserve says its aiming for inflation above 2 , longterm strategy in august now makes it part of policy. Some of the keys leaving Interest Rate unchanged. More than that forecasting, as wilf said at the top of the show, zero funds rate into 2023. Raising gdp recovery going faster and lowering Unemployment Rate outlook Sarah Bloom Raskin asked about, she was being kind about the way the chair struggled to explain this policy. He struggled when i asked why the forecast didnt show him exceeding the goal its a slow process but there is a process there inflation does move up over time we do expect that will continue today. We expect our guidance is powerful and will help that outcome. We think effectively saying policy will remain highly accommodative until the economy is very far along in its recovery should provide strong support for the economy and get us there sooner rather than lat later. Two implications, guys. One is the fed has to be doing more now if its aiming above 2 inflation. Or two, above zero for longer than two years to achieve above 2 inflation sara. Steve liesman, thank you very much seth, well bring you in on that question what is your inflation forecast, how does it stack up with the fed and what does it mean for policy the fed is in a tough position you saw from their forecast today, just getting to 2 in 2023, i think thats slightly optimistic going back to what steve said about why dont they have more of an overshoot in the forecast, i think its an interesting contrast they dont have, overshoot in the forecast, chairman powell kept insisting they are not out of tools, the statement was so powerful. I wonder why there was a need to stress how powerful it was if they arent able to achieve in the forecast. Another for me is when chair powell said if you look back over the last 10, 11 years what was noticeable not a bubble created by policy. Was there a little bit of complacency in that statement . More of resignation, i think, complacency in that his focus and fomcs focus is squarely on the real economy and they are willing to accept that wall street is giddy and they dont think its out of line right now. I think really trying to communicate focused on main street in general i think i would give chair powell much higher marks than sara or steve did in communicating the new framework. The one nugget i would pound out, when he was laying out the sequence of things that would be necessary in order to hike rates, he put full employment before inflation at 2 inflation going above 2 would not be a trigger the primary objective, number one objective is full employment or maximum employment and 2 thats the nugget that was really powerful from a standpoint of Forward Guidance and was the signal to the Fiscal Authority to get on with it and get some serious fiscal expansion. Thank you all for joining us as we watch this market give up some of its gains, dow still positive, nasdaq deep in the red. Sarah, paul, on a fed day, our special fed panel. Thank you. Still ahead we have much more on todays fed decision, what it means for your money well talk to former fed vicechairman Stanley Fischer. Fresh comments from Bank Executives its only september but owakre making an appearance on wall street. Those stories and more when we take you inside the market zone. To deliver your packages. And the peace of mind of knowing that important things like your prescriptions, and ballots, are on their way. Every day, all across america, well keep delivering for you. Every day, all across america, you can go your own way go your own way your wireless. Your rules. Only Xfinity Mobile lets you choose shared data, unlimited or a mix of each. And switch anytime so you only pay for the data you need. Switch and save up to 400 a year on your wireless bill. With the carrier rated 1 in customer satisfaction. Call, click, or visit your local xfinity store today. I keep working my way back to you, babe with a burning love inside yeah im working my way back to you, babe and the happiness that died i let it get away servicenow. The smarter way to workflow. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. Twelve minutes left in this trading day. Were in the closing bell market zone commercialfree action into the close. Mark santoli here to break down crucial moments. Today management ceo josh brown here as well welcome back, josh well kick it off with Broader Market stocks losing steam into the close, dow up 369. At one point session highs earlier during News Conference giving up most of its gains ticking higher 159 points. Josh, do you demand to come on during fed days so you can explain what the market is doing with powell . If so, explain it. Its in my contract, sara i dont know we want to take this late day swoon as anything more than buyers and sellers matching prices. I dont think any message specifically big picture what i want you to focus on is this pervasive idea weve had the entirety of the market rally has been pushed up by a group of five or eight stocks, large cap tech, consumer discretionary. All those stocks are red, nvidia, netflix, go down the list meanwhile, materials breaking out to fresh highs Home Building stocks, itb names, every single one of them, i went down the list, looks incredible. Technically, they are acting like they are involved in cloud computing. Industrials breaking out the reits look like the world fair so i think youve got so much happening outside of large cap tech that those stocks can have a red day and we can look pretty decent on balance. Thats where my head is at and i think thats the most important thing for investors to remember. It is a market of stocks despite how big the big guys have gotten. Mike, those cyclicals, mentioned legitimately rallied on fundamentals or clearly because they underperformed for so long in recent years and recent months coming into the loss of runup. Legitimately rally because the direction of change is positive in terms of increasing earnings off depressed levels and also the stocks were down a ton. Fedex numbers last night, thats a stock you had earnings estimates hacked away at for quarters and quarters on end and the stock got super cheap. That was an area of transport bear market two years and they are lifting off of that. I dont think its completely a matter of just the fact the laggards are catching up its certainly that in part. Theres sort of dry powder in those parts of the market. In general its much more about kind of riding what the cyclical forces will get us doesnt mean the market is right and great in time to justify every single stock price but i do think thats mostly whats happening there. Yes, there was an ongoing retrenchment pullback in large cap tech stocks. Apple down 2 an nothing to do with jay powell. Average stock up thats fine. You know, you could make a case theres no incremental new fresh reason that powell gave you to get excited about the market except told you going to keep real Interest Rates super negative as long as they can see and that in general should not be bad for the market. Banks strong before the fed decision jpmorgan ceo joined from arab and addressed action by the fed in general and also addressed government action. What they didnt want was a Global Financial crisis in addition to Great Recession where markets close down and people cant get money so they kept the markets open, which benefited everybody. They dont need right now they are so wide open they dont need to be pumping it up anymore. Let nature take its way. The governments of the world took dramatic, bold, rapid action, fiscal, monetary the company, the vaccine companies, et cetera, i think thats very admirable. Of course finger pointing and yelling and screaming at each other for years about the part that didnt go well. It is a little disappointing we havent come together in the United States with a second another round here i do think we do need their round. That was cnbc singapore summit there bangs mentioned up today sharply continuing a crazy week of uturns for the banks share prices today at the barclays conference ceo Jonathan Pruzan said good, q3 rather than q4 blowout. He talked recently about their etrade acquisition. Were more excited than we were when we first announced it. One of the things were excited about is the performance they have had through this period they have got more clients, record new assets, record clients, record levels of cash, Record Activity levels up about 1. 7 now morgan stanley, most of the banks are today. Mike, the moves today hide the volatility this week overall kw bank up 1. 5 . They have been up and down citigroup remains sharply in the red for the week. I would characterize it as a mild bounce given how weak they have been to this point. The Immediate Response after the fed statement and during the press conference was the yield curve did steepen, longerterm yields went up that moderated still in that sway theres no doubt about it if youre geared toward wealth management, individual stock trading, capital markets, the more you have there, the better you should be doing right there even though interactive brokers, the one smaller trading focus retail broker, the stock has not been great i think because mostly on balances they arent earning anything with rates where they are. Lets talk about the newest, hottest tech stock on the block, snowflake. Shares skyrocketing after making highly anticipated review on wall street. Leslie picker with details leslie. Its the biggest ipo of the year, largest software ipo ever. The law of large numbers does not seem to apply here this stock more than doubling, 115 on its first day of trading. That comes as mixed news for the ceo as he contends with leaving about 4 billion on the table while investors generate massive paper profits. As frothy as it looks today, this is just a hot deal. We will have to live with the consequences of that. Hot deal is an understatement here snowflake was valued at 12. 4 billion just seven months ago. Today its almost six times that size looking to close upwards of 70 billion in terms of market cap, guys. Thats a wow number leslie, thank you. Josh brown, is this an indication of how growth starved investors are in this low Interest Rate environment or snowflake in particular, a story there of that stock with the buffett backing . Yeah. I think theres a lot of Different Things going on. I think youre exactly right, sara id also point out weve been playing this game with low floats and ipos for a long time, too. You see general enthusiasm for the stock there. I want to turn everyones attention to what i think the biggest takeaway is with snowflake. Its not snowflake itself, which the stock price obviously is a fun side show but i think the real story here is berkshire hashaway i own the b shares so im biased in what im about to to tell you but i think this is important. I think Berkshire Hathaway is on the verge of undergoing the mother of all reratings. I think the snowflake involvement, its tiny, 560 million, so its not going to have a huge impact on Berkshire Hathaway no matter what the share price does the signal, they started buying amazon now involved in preipo venture backed technology companies. They have been involved in other Companies Listed as Tech Companies such as visa and mastercard a lot of people dont realize those are considered tech. Just this idea that Berkshire Hathaway out of 500 million market cap, half of that market cap is made up of the apple stake and cash its just this extraordinary situation where you have a company that everyone now expects to keep making these clumsy, ridiculous 20th Century Investments like wells fargo and kraft heinz and airlines, they arent doing that anymore. They are become participants in 21st century nobody is valuing this company as though they could seriously play there they have the cash, they have the clout. Ted and todd understand that a business like snowflake doesnt look very different than some of the best investments buffett ever made. Its this kind of toll booth gateway business so that is what i think is the big thing here berkshire should be 250 minimum if not 300 at some point because they are going to play in some of the most important parkts of the markets of the new century and have stewards doing that work with buffetts blessing i think thats the takeaway. Josh, i have a follow up on this after the close, which i know we have to go to next. Wait. Okay. Weve got about two minutes left in the session, lets go back to mike for market internals. They have softened up if you look at New York Stock Exchange outside nasdaq still very solidly positive. 31 advancing, declining, obscured by the fact s p is down under weight of megacap Growth Stocks also a reopening flavor to the market if you look at a couple of etfs that will track roughly whats going on. Lease youre entertainment etf pop on days people think closer to going back to normal. I like this other etf long on retailers and short on physical retail and that obviously is weaker today so thats an undertone not evidence in big cap index. Volatility we try to revisit this very sticky up here in 25, 26 area thats something that isnt changed. Still declined from recent highs in the 30s shows you were on alert in a weak seasonal period heading into an election even if the market as an index level is holding up okay. Just under one minute left s p down 1, peaked up an hour or so dow high by 71 points but had been as high as 370 points its in the green unlike the nasdaq and s p nasdaq compound 1. 2 energy the comfortable sector as oil is up nearly 5 . Banks doing well as we discussed, kbw bank up only up 1. 4 for the week, up and down all over the place tech worst sector followed by consumer discretionary, all those names were mentioning suffering, tesla, apple, amazon, et cetera. Weve got the dollar just a little bit higher. 2 following fed decision yields higher 0. 69 on tenyear. At the close s p down nearly half a percent near session lows, do you near a session low only up by 0. 15, nasdaq composite down 1. 25 sara. That will be the first down day for s p in the last four welcome, everyone to closing bell, im sara eisen with wilfred frost. Take a look how stocks finished up the day, post fed post jay powell, dow closed 38 points, lost its gains, up 369 at the highs of the day following the fed decision and then sort of gave up its gains in the close s p 500 closed the day lower, half a Percent Technology was a big part of the story, one of the biggest losing groups with Communication Services and consumer discretionary. We did see strength as wilfred noted from energy, financial and industrials. The nasdaq down 1. 25 , which was a rauf day for tech heavy index but only worst since september 10th september continuing to be bumpy for tech trade russell 2000 small caps interestingly went up. What we saw is a real rotation selling some of the winners in technology and into small caps and value, which have underperformed this market for this year. A lot to talk about. Coming up Federal Reserve vice chairman phisher about the outlook and whether congress is putting this recovery at risk by not passing another round of Coronavirus Relief joining us first, though, to talk about the market josh brown is with us joining the conversation, sara malek and Michelle Meyer from bank of america globally research. Welcome to everyone. Weve got a lot on our plate first, mike, ill turn to you. The action we saw from the stock market, how fed related it really was and some of the rotations there and groups like industrials and financials and small caps. I dont think the fed was the main driver today, although it certainly confirmed investors premise of what the policy will look like for a very long time zero Interest Rates even up to full employment, even inflation over 2 . Thats supportive but not fresh. The story of this month has been people felt overcommitted to large cap tech after the rally they have been for sale. A little suspension of that pullback ahead of the fed. It resumed afterwards. The overall market youve closed lower than we opened most of the days this month. It seems theres a little bit of sell to rallies mode here, still kind of a mild correction and has to play out longer im not seeing anything in there that says economic stress. Other parts of the market, cyclicals have held up okay, credit is fine whether you have risk appetites across the board in huge successful tech stocks that will be able to support these levels any longer. Michelle, the fed seems pretty confident were not going to see any inflation for at least three years and no move in rates because of that. Do you think it could be surprised . I think the inflation story has a bit of a time dimension to it in the shortterm you could see Inflationary Pressure build because of increase in durable goods spending, the fact there are supply chain issues, so challenges in terms of manufacturing. Thats apparent if you look at recent data with car prices higher, household appliances, et cetera at the end of the day, the medium term, inflation will ultimately be driven by the amount of slack in the labor market, whether or not wages are rising, expectations are higher. I think largely points to the idea theres more disinflationary tendency i do think it will take a long time before you achieve average inflation target before you get inflation to run above so sara, what are the market implications and this whole new regime where were watching for overshoot. We agree with michelle. Its going to be a long time we need to worry about structural inflation. We think the fed could overshoot inflation before they react, which is positive. Low Interest Rates until 2023 are positive for the market. We look at powells comments about the economy is actually positive for Growth Stocks that rolled over today. Our view is moderate growth. These Growth Companies less levered to the economy we think they will continue to recover from here and creep higher because these are strong companies, strong revenues, margins and earnings and continue to perform well from here. Josh, im going to pick up on your point about arguing Berkshire Hathaway about to have a breakout its relevant. Pushback before the close would be to say could this not mark the top of the growth run and the start of the value run when the ultimate Value Investor finally throws in the towel and makes a pivot. Whats interesting is Warren Buffett historically has not been a Value Investor, hes been a growth at a reasonable price investor the they will tell you if you break down security it looks way more garp than classic ben graham despite the fact graham was Warren Buffetts mentor and thats unknown the Value Investor is a miss nomer. Thats number one. Number two, when i talk about a rerating, im not saying all of a sudden they are going to start treating Berkshire Hathaway like a tech incubator and give it a tech multiple but come on. This stock is being valued like a utility with no dividends or like its just an insurance company. Apple is paying Berkshire Hathaway 800 million in dividends. I dont think most people realize that so if they are going to be a participant in the 21st century and recent indications tell me they might want to, that is going to be in my opinion a big sentiment shift in the way people value this company. That could happen really fast. Give you two quick examples. Apple itself selling at a multiple of 15 times earnings until the street realized, wait a minute, they subscribed to phones, apple music, this is a subscription tech business and took the multiple up to 40 times earnings walmart buys jet. Com in 2016 four summers ago all of a sudden walmarts multiple goes from 12 times earnings to 60 times three years later. That is the type of thing that happens once in a generation to certain stocks when it does its very powerful. Im not saying it definitely will, who knows, i think it will be appropriate given how much Financial Flexibility berkshire has and how interested it appears to be in businesses other than old leather shoes and cans of saltwater. Or crystal light made by kraft heinz. The point taken, lets talk about snowflake, what josh was talking about that investment there. Shares surged. What do we need to know about this company and how its valued on wall street. So many threads running through it prevailing in this market first of all, theres some willingness to believe that a company can come almost out of nowhere and become indispensable in a hurry in this new world of cloud computing, this one better mousetrap in software that can completely change things that, i think, is basically the baseline belief thats behind the embrace of this company right now. We saw it happen with shopify, by the way down 5 went to 100 billion before anybody knew it in market cap. Not to say it would happen with snowflake but thats the thinking behind it these companies could go from zero to everybody has to own it in no time at all. Another ipo that took on a life of its own, became the must have i know cnbc. Com said it was the most requested ticker on our site earlier today that tells you the world at large decided this had to be something they had to own. Of course it gets priced out of the gate at this crazy demanding multiple of any conception of what their revenue could be down the road all of a sudden the bar is amazingly high for this company. Sara, what did you make of the fed decision today, this promise of low rates for three years or more . Does that mean avoid bank stocks generally the fed decision positive for equities overall with low rates, low inflation, supportive Going Forward were fans of bank stocks, we think a lot of head winds Going Forward. If were looking for value companies, were looking for areas in u. S. Small caps more protected from some of the tariff issues were seeing were also going outside of the u. S. And looking at an area, europe, recover nicely, high exposure to Cyclical Companies also a sign of stimulus, not seeing another package yet the classic value areas are not of interest right now. You may see some rebound but dont have that catalyst in place beyond some what reversion to the mean. Beyond that we dont see the catalyst to take them higher. Michelle, is it puzzling to you to see a group like transports rally today i think they are trading alltime highs, industrials, financial, energy, really cyclical value groups that without a stimulus package do you worry about that . How does it shape the forecast with big unknown with relief from the government . Yeah. So i mean, i think theres certainly the reaction to the fact that the recovery thus far has been faster. Weve retraced about half of the decline as a result of covid that happened at a rate that was quicker than many had anticipated. I think markets are reflecting that with make of these movements here but the next stage of the cycle, the rest of that healing process i think will be more challenging, because you dont have as easy of a bounce you have to figure out how to recover in industries that are really tied to the covid shock how do you think about longterm trajectory for services spending, particularly those in entertainment or in travel presumably its going to be more challenging. Its really important to think about this in two stages the first stage the bounce off the bottom it was impressive, faster than anticipated. The second stage i will presumably take a bit longer the recovery is ongoing but there will be more speed bumps one of the pead bumps here right now which just mentioned is the fiscal stimulus. If we dont see another round of fiscal stimulus in near term, which looks like we wont, that does create challenges for ability of the consumer to continue to spend at the same pace they had been spending. Doesnt stop the recovery but could create stumbling blocks. We will leave it there. Guys, thank you all for joining us talk about markets today, josh, michelle up next well have Federal Reserve vice chairman Stanley Fischer whether banks around the world are doing enough to support the global enocomy during the coronavirus pandemic and what other options if they want to do more. Were back in 90 seconds thats what my dad does. Good job, michael ok, lindsey now tell the class what your mommy does. My mom has super powers. Its like she can see the future. What . its like she time travels in a rocket ship. Thats cool and then she comes back saying try this or try that. She helps everyone. She helps them feel less worried. Wow mommy, so what is it that you do . Im a financial advisor. She is aig proudly supports all the professionals taking care of our financial futures. Averages closing mixed for the day, nasdaq fell 1 1 4 , small caps rallied, dow closing and groups like financials and industrials stood out. Fed wrapping up twoday meeting in the last hour fed chair jay powell emphasizing fiscal policy in helping the economy bounce back during his News Conference. Listen. Elected officials have power to tax and spend and make a decision where we as a society should direct our collective resources. Fiscal policies actions taken thus far have made critical difference to families, businesses, and communities across the country even so current economic downturn in our lifetimes will take a while to economic and employment that prevailed and for monetary and fiscal policy to achieve. Joining us Stanley Fischer, former Federal Reserve vice chairman welcome back its great to have you my takeaway of the news currency from jay powell was its going to take a while. Everything will take a while, the economy and the return to higher Interest Rates. What was your impression you hit that right where it needed to be that was a massive slow judgm t judgment weve come back much faster so far a far. There are areas where things are coming along very well theres a big items that we didnt talk about or that the panel didnt talk about and that is whats happening with the vaccine. Is it really about to happen before the election, which seems unlikely, but who knows . That could make a big difference in getting more workers into the labor force. That would help getting employment up considerably thats another factor thats out there unknown to us how that dynamic is going to move it could be a big what about this new posture on inflation saying they are going to let it run hot. Powell going to Great Lengths to say this is a powerful new tool of Forward Guidance. Does that resonate with you . Do you think thats going to be effective . Well, it could be the problem is weve been trying to get inflation up for ages i think theres a shortage of attempts to get inflation up over the last 10 years or so but nobody has done that in the United States now for 10 years presumably weve been told theres going to be stronger efforts to keep Interest Rates low lower. Then theres the other element which chairman powell is emphasizing. I think most macro economists have been emphasizing, which is weve got to do something, the fiscal policy or aggregate demand we cant do it all, the Monetary Policy that still remains clear chairman powell emphasized that point very well. Well have to see whether there is a workable compromise that could happen within a couple of weeks. It doesnt seem like it now. Well just have to watch another source of demand out of fiscal policy. Were still waiting to see if that happens to that point, clearly we have had some fiscal stimulus this year. Weve had a lot of fiscal stimulus of course there was weaker demand out there its seemingly likely more fiscal stimulus even if it doesnt come before the election to that point is there a chance that inflation risks are underpriced at the moment . Theres a chance. I dont think its a particularly high one. If anything were seeing inflation rates a little slow than at least i thought it would be we have to watch and see whether the amount of money put into the system, the amount of demand put into the system will have any chance of moving inflation rate up if that happens were in a different world than we have been sips the start of the recession. That would be very helpful it really would help more if there were actual fiscal moves to make sure that we go get the economy moving more rapidly. So having two major uncertainties out there, which you just spelled out, we dont know if were going to get fiscal stimulus, we dont know whether were going to get a vaccine if and when and how widely used it will be given those unknowns, if were looking at the downside scenario where things go into a hole again. Fed chair powell said theres more ammo, theres more they could do is that true what could they do and what would they do . I dont know what extra can be done through Monetary Policy. Obviously Interest Rates are very close to zero i think theres an issue whether the American Public will prevail against negative Interest Rates. Its not logical but it may happen well see what happens there i dont think the other elements chairman powell machinesed would make a big difference in fiscal policy would make a difference we still have room for that, particularly Monetary Policy Interest Rates, the Interest Rates start going up, will be in a different world. Low rates. Theres a lot more that can be done through fiscal policy as well. We got the message. Its on the fiscal policymakers at this point. Stanley fischer, its great to hear from you especially on a big fed day. We appreciate it. Thank you, sara nice to be with you back with you after a fairly long time. Were happy to have you back and see you looking well well have you back soon wilfred. Weve got some news out of washington on stimulus to follow up on what stan fischer was looking for. Set to unveil a twopart proposal aimed at fasttracking funding for a new Small Business program according to congressional aides. The effort led by Ranking Member on Small Business Committee Steve shab ott, washington congresswoman. They are expected to unveil stand alone ppp and socalled discharge petition to force a bill reopening of 138 billion in existing ppp program that was not spent. Business is that have gotten ppp can apply for second loan but qualifiers businesses would have to have fewer than 300, prove they have seen a revenue decline of 25 or greater. The petition according to aides is going to be open friday for signatures it needs 218 to move forward that means 20 democrats would have to sign onto this to force a vote on the program. House Speaker Nancy Pelosi told her caucus as recently as today that anything short of a comprehensive package was nothing short of a republican bill butthis is essentially a good morning bell by the end of next were if there is no other stimulus package present that some moderate democrats would be willing to break ranks with the speaker and back something simple and streamlined like this but well see in the coming days if it gathers any steam. Wilf and sarah. Once weve got you, anything new on the ticktock oracparti. Weve called all our sources, essentially treasury secretary backing oracle bill, wanting something to move forward with oracle but Significant National security concerns presented by others in the room there are suggestion attorney general william barr and secretary of state are the ones who raised concern we dont have that level of detail yet but well bring the latest reporting when we have it. I guess the concern, kayla would be that bytedance in this deal we reported would still be owned by the china heese becaus either not a sale. Structure oracle and bytedance were proposing but that deal structure was overturned early in the process. That certainly has raised some eyebrows here. The Senior Administration official we spoke to did note that dynamic, mnuchin and the president and others on the National Security team whether mnuchin and the president can win out here remains to be seen. All right well wait to hear word from you on that. Kayla, thanks. Up next mike is back with how the average stock performed when momentum names faced a correction take a look how snowflake finished its first day of trade, more than double in its debut, 319 at the high, closed at 254 just under that. Well be right back. Tech led stocks lower today, s p down half a percent. Nasdaq down double that. Mike santoli with the recent Market Correction or stumble not quite 10 off the highs. Certainly havent reached 10 but a process thats when were going. S p down 7 high to low on closing basis. Actually looks quite a bit what we saw in june would it be that weird entering sideways periods to maybe rebuild. Pressure from large Growth Stocks is mostly what this has been about and inability of the index to fully offset that i think the market in a tentative spot unable to get above last weeks high see how that plays out lets look at credit relative to equity market. High yield, solid united pinning, reflecting price of highyield bonds its been incredibly steady. However, it does not improve in terms of its price or spreads to treasuries as the stock market has had this last little ramp. Arguably providing a cushion underneath but not necessarily improved so much that accounts for how much the market has gone higher here. Something to watch, even if nothing to be alarmed about. Look at the performance of the average stock as measured by equal weighted s p 500 against some of these big high flyers. Cloud software etf, shopify, down 20 of course, apple this is since september 2nd. Thats the high for the major indexes. Youll see here not a lot of net damage done, just about flat you dohave massive momentum names given up a lot of ground right now that remains a dynamic, guys. So the reason you keep explaining, mike, crowded positioning, getting to very high levels. Thats still the case . Have we washed any of that in the corrective phase you call it certainly been rectified to some degree. You could never point to a price or moment in time and say, okay, were all fixed because you did get to severe extremes in august over how overbought the nasdaq was and tethered to longterm trends i do think this is a process and you have to see how it plays out. Whats interesting as i said earlier, one of the underpinnings for fundamentals of Growth Stocks feds keeping real rates negative and longterm cash flows reflected in Big Companies are that much more attractive and worth more at some point that equation comes back into line i guess you have to see how many weaker hands give up on these and just exactly how much more of that upside from july and august has to come out of the names. Okay, mike. Great stuff. Thanks so much steps toward broader testing two Companies Teaming up for first rapid athome coronavirus test that doesnt require a lab. Accurate that test is and how it could help america get back to work when i was in high school, this was the theater i came to quite often. The support weve had over the last few months has been amazing. Its not just a work environment. Everyone here is family. If you are ready to open your heart and your home, check us out. We thought for sure that we were done. And this town said not today. Just been announced and promises results in 20 minutes, no lab necessary just a smartphone. A Biotech Company partnered with Ai Health Tech company to develop the test and the app that analyzes and delivers the results. The First Company to earn emergency authorization for its rapid Antibody Test in april however the new antigen test has not been authorized by fda joining us how it works, ceo james lee and founder satesh thamgs for joining us. How rapid is the test, how is it administered and how accurate is it the test takes 15 minutes to complete its used like a pregnancy test. Its simple. Its used in conjunction with the app thats available on the cell phone can you complete the test. This can guide you through the process. Sid. Thanks, james thanks for having us, first of all. The way this works, the user orders a test online or telemedicine visit when they get the test in the mail they effectively take a simple nasal swab, exterior nasal swab, drop that in a tube of liquid and drop some of the liquid onto a rapid test cassette in 15 minutes use your smartphone, take a scan of that test, and you get a very accurate reading that tells if youre positive or negative. What will it cost were committed to go ahead, sid. Making the test widely available and accessible and afterwardable as possible. We havent sort of nailed a final price yet but were confident its going to be very competitive with other point of care offerings currently on the market. I mean, james, these are kind of innovations very exciting and game changing. No lab required, do it at home you dont need a nurse, dont need a doctor. Why hasnt it received fda approval or at least emergency use authorization approval like so many other tests . Well, i think that it is difficult to give up this type of test. Particularly youre thinking about very serious disease being diagnosed in a very unforgiving environment, a home. So its natural that Public Health officials are very careful approving this weve been working with regulatory agencies, officials for quite some time to bring this type of test to the home use. Second, with the aidriven app would enable the user to actually perform this to make it available at home. So its not this type of test is really not available unti now that we came out with this solution. Sid, do you expect fda approval soon . We do were very confident about the pathway to an emergency use authorization. Our current goal is to have that available this fall after successful ua. Were following the fdas guidance carefully on both Clinical Trials and usability necessary for usability. This is unique because the first time the fda issued strong and well written guidance around the specifics of what it takes to ascertain one of these approvals. So were feeling pretty confident about the outcome of that process. James and sid, thanks so much for joining us. Thank you thanks for having us. Ceo of consulting and Tax Services Company ey whether he thinks esg itiivniates are creating profits versus tradeoff in the corporate world are we prepared for this . With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations, with access to taxsmart Investment Strategies designed to help you keep more of what youve earned so youll know youre doing what you can for your family and your future. Thats the clarity you get with fidelity wealth management. For your family and your future. The big events are back. Xfinity is your home for the return of live sports. Time for cnbc update with sue herera hi, sue. Hello, wilf, hello, everybody. Here is whats happening this hour pictures coming in showing the damage in the wake of Hurricane Sally like this condo in hard hit gulf shores, alabama sally is now a Tropical Storm but the slowmoving system is still dumping 10 to 20 of rain in its path across alabama and florida. That is producing substantial flooding michael caputo, it is top spokesman at the department of health and Human Services says he is taking a 60day leave of absence due to a lymph attic issue. He put off seeing a doctor that along with violent threats increased his threat level he accused cdc scientists of sedition against president trump. And the president is taking some credit for the big tens decision to play football this fall after initially delaying games until spring the head of one university tells nbc news the president s demand games be played did not affect its deliberations. You are up to date, sara thats the news update this hour send it back to you. Sue, thanks. Up next, new data on how social good initiatives are affecting businesses bottom lines. Well discuss with ceo of ey after the break. Talk about a hot ipo, take a lo at snowflake and how it finished its first day on wall street what a debut priced 120, north of 250 a share. At the highs it was rtwoh as much as American Express in terms of market value. Closing bell will be right back thats what my dad does. Good job, michael ok, lindsey now tell the class what your mommy does. My mom has super powers. Its like she can see the future. What . its like she time travels in a rocket ship. Thats cool and then she comes back saying try this or try that. She helps everyone. She helps them feel less worried. Wow mommy, so what is it that you do . Im a financial advisor. She is aig proudly supports all the professionals taking care of our financial futures. Welcome back esg has back buzzword among investors and Companies Alike but actually measuring those initiatives and the impact they have on a business is up in the air. Ey and biggest Economic Forum companies are working toward a core set of metrics as a way to hold businesses accountable and make themselves accountable to esg issues joining us now chairman of ey. Great to have you. Last year at davos, it was all about esg. Everyone and their mother had a peloton for this now were in a different place for corporate america. The profit picture is different. These companies have laid off millions of jobs and trying to figure out a way to get back to work and in many cases survive is esg still as much a priority . Sara, it definitely is. I will tell you, when we think of the pandemic and what were in for you, we usually talk about the three cs of covid, connection, culture and the community. Part of the community is around esg and it is around sustainability next week is climate week. One of the things thats fog to come out next week, we have been working at the world Economic Forum with the International Business council, which is chaired by moynihan, ceo of bank of america we and the other big four are working on comprehensive metrics that our clients and companies out there can disclose that would be obviously helpful to investors, helpful to everyone, frankly. Its something weve all been working on together, the big four there are going to be 21 core metrics and 25 supplemental metrics. This will all be voluntary we have gotten and in the process of getting more and more companies from the International Business council, which is over 100 of the worlds Biggest Companies to commit to these metrics. Its something were going to roll out next week, something weve been working with all the ceos, all the big charms and ceos have been working with their clients to really commit to disclosing the metrics. This will help its an off shoot of what was done a year ago stakeholders versus shareholders. This is another piece of that i think will two a long way. Also gives us something to report on and hold Companies Accountable for. If its voluntary to release information, wont Companies Release it if they have got a good story to tell or have shown some progress. This is where obviously were going to look for consistency and help companies in terms of making sure they are consistent. We want to get buy in and get people disclosing, obviously refined over the next few years but we need to start hopefully some of the regulators will jump on this as well and require this more. This is not a requirement, this is more voluntary. We needed to get a start the big difference, weve incorporated all the different frame works out there. At ey involved in a project called epic a couple years ago or two years ago which really focused on Human Capital metrics but weve put them all together. Really these metrics break into four areas, prosperity, planet, people and governance. We each took one of these areas and devolved the metrics behind it. I wanted to move on and ask you about wire card. Particularly if you have a message for those who invested with wirecard, invested money, if they are assured with your name on eys companies and if you have a message to those investors. Wilfred, i put out a client letter yesterday that was publicized around the world. Were talking to our clients some had invested in wirecard. Its obviously a very unfortunate situation. Its a massive collusion fraud we did disclose it in our audit of wirecard. I wish we had disclosed it earlier. I wish we had found it earlier we went through Great Lengths until in 19, we asked the company to move cash around, which was the only way we could really ensure that it was there. We were given falsified documents the years before, falsified bank statements. It was a well orchestrated fraud. Like i said in my letter to our clients, i regret we didnt find it earlier but we did find it and we did raise it to the board and regulators once we did. It might well have been well orchestrated you might well have located it eventually, which was something i picked up on in your letter yesterday, picking up on right now. Maybe im getting this wrong, carmine, youre seeking credit for having located fraud eventually, which is ultimately the job of auditor would you have found it without journalists, ft a shout out. Finding something so late when its your job to be tracking those things. Wilfred, let me be sure, were not taking credit fo anything im just explaining the facts. We feel as pad as anyone this wasnt found earlier as i said in my letter, we are going to improve some of our processes around fraud you have to understand theres a big difference between a financial audit and a forensic audit. We dont really do forensic audits as part of the financial audit. Its not part of our standards if it was, audits would be a lot more expensive and take a lot more time. With all that being said, it is something that we all have to improve on and we have to improve on we have to improve on who were dealing with this is make of the processes, we say client acceptance and continuance in terms of looking at individuals in management and should we continue or should we accept the client. These are processes we will improve. There are techniques today that should give usa lot more information on individuals, and we need to be utilizing those. The coo is missing hes in russia somewhere no one has found him yet when youre dealing with bad people, its difficult. As we sit here today can investors be confident all of the other companies you audit have no fraud within them. Of course the answer to that is yes, but there will always be companies out there that are problematic. But we have a robust, 99 of all our always b companies out there that are problematic. Were always going to have issues in terms of when were dealing with bad people, frankly. Our processes should improve this is really an overall industry matter in terms of making sure that we are improving processes around fraud. The other big four have been saying the same thing. For that to happen we also have to have some different standards. Thank you so much for joining us t appreciate it. Hank you still ahead, quarter pounder problems mcdonalds having some major supply Chain Shortages give you my world how can i, when you wont take it from me you can go your own way go your own way your wireless. Your rules. Only with Xfinity Mobile. Sony Just Announced pricing for its now game console playstation 5, 499 launching november 12th. Sony going head to head with microsoft which has two game consoles on the way, the series x for 499 and the series s for 299. Sony and microsoft have been going head to head for some time so many people looking for inhome entertainment during the pandemic up next, its only been a week since mcdonalds say debut collaboration with travis scott. And all ranks s whether they served one tour or made a career of it. We also made usaa for military spouses and their kids usaa is easy to work with and can save you money on auto, home and renters insurance. Become a member today. Get an insurance quote at usaa. Com quote usaa. What youre made of were made for with the icon that does the same. The rx, crafted by lexus. Lease the 2020 rx 350 for 409 a month for 36 months. Experience amazing at your lexus dealer. A lot goes through your mind. With fidelity wealth management, your dedicated adviser can give you straightforward advice and tailored recommendations. Thats the clarity you get with fidelity wealth management. Eight days since mcdonalds launched the travis scott meal the collaboration with the popular rapper guess what its been such a hot item, mcdonalds is already reporting shortages, saying some of its restaurants have temporarily sold out of some ingredients in the meal its now trying to control the supply and theres the merchandise drop, of course, as part of this, including a chicken mcnugget body pillow and uniforms for mcdonalds staff. This is the first celebrity k collaboration since Michael Jordan theres nike travis scott has had a deal with nike since 2017. Releases of his sneakers are sold out instantly theyre on resale sites for 500 to 1500 for a pair of shoes then theres general mills, that cereal box that sold out according to epic, 12. 3 million players participated in the april 23rd concert 27 million experienced it 48 million times across the five events forbes put his net worth at about 40 million june which is a fraction of Kylie Jenners but it is growing fast my takeaway, guys, and i think the insight here and the Common Thread in all of these big brand collaborations is authenticity travis is meticulous about getting his hands dirty, curating, designing, being part of the process to the brands credit, they have allowed him to do so that in 2020 is what young Consumers Want its not enough to stick your name on something. Sponsorship game is totally different. Kanye west totally changed the game when it comes to Creative Control and has shown it can lead to billion dollar brands. Lets put bacon and onions on a quarter pounder. Maybe that would be a great addition its his favorite meal. I get it. Its hilarious not so much that this particular product is breaking new ground as it is the association of his marketing power. I wasnt quite sure what the new innovation was it looks like a quarter pounder with cheese meal with sprite it speaks to the power of his endorsement. Its not like they came out with a totally new menu item. It sounds delicious and i want one. I would say its personal he chose it and then he teams up and he drops all the merch the outfits and the uniforms worn by mcdonalds staff, it feels like it was chosen by him and that he was involved in the process, which is kind of a new model and has been very successful hes not the biggest star in the world. Hes not as big a musician as drake or jayz but he has this effect when it comes to branding power. Im melissa lee. This is fast money guy adami, tim seymour, steve grasso and brian kelly snowflake surging in its public debut. 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