Transcripts For CNBC Closing Bell 20240714

It really is a mixed picture here the dow is up 49 points, so well off the highs of the session the s p is down fractionally right now, but keep in mind, we are still in striking distance of a potential record close. So the next hour is going to be one to watch closely joining us for that hour is Michelle Mckinnon from Payne Capital management here at post 9. Welcome. Thank you what do you think of this market here . Were poised for gains for the week for all the major averages, but the russell 2000 and the transportation average are both up 5 , week to date. And so are the banks, like you mentioned. What im really looking at is the bond market. We started the tenyear treasury at 1. 55 for the week and now were up to 1. 88 and the longterm treasury are down 5 for the week thats basically two years worth of coupon that you lost. Wow do you think thats going to speak bond holders, that it could go worse than that or not . You know, i absolutely think rates look like theyre going higher however, this could be just a shortterm move higher i certainly dont think were going to get up to four. But i think people realize that even though you had that quick move up in prices, if you locked into those 30 years bonds, youre in trouble. How much of this hinges on the fed meeting next week . I absolutely think the fed is priced in. I dont think anything to do with the fed does, as long as the fed doesnt dramatically do anything that were not expecting, its priced in. Lots to discuss with michelle over the next hour first, lets focus on the stories were watching today bob pisani is covering the market moves as we approach new record highs dom chu is watching the surge in bond yields. Eamon javers has the latest from the white house and morgan is having a look at pressure on big tech leslie picker has the details on weworks ipo, but bond, lets start with you that was the bottom for the stock market and its the banks and other cyclicals that have led the rally. Its been a great week for jpmorgan this is an historic high today look at that move up for the last couple of weeks in jpmorgan its up 6 in the last week or so industrials and materials, the other classic groups, have been strong, as well. So 3m is up about 5 in the last week the dow is up about 11 . Caterpillar is up 9, almost 10 in the last five days. Again, big cyclical rally that weve had. One comment on apple we were weak this morning. Goldman sachs cut the companys price target theres news that lawmakers were seeking emails from tech executives see that pop in the middle of the day . Apple responded to that Goldman Sachs cutting the companys price target saying appletv plus, which was a big comment from Goldman Sachs, would not have a Material Impact on their financial results. So apple came back and refuted Goldman Sachs claims. So apple still down, but well off the lows great week for jpmorgan, but Morgan Stanley and bank of america up more in percentage terms week to date bob, thank you okay. The bond market in focus today, all week long, as well as yields have seen a major reversal dom chu is back at hq with more. Dom . Like Michelle Mckinnon said, its ground zero what has been a steady downtrend for a year now reversed with a vengeance this week. Those tenyear treasury notes fell and yields rose to the highest level since august 2nd at this stage. And that weekly rise in yield was the biggest since november of 2017. Its a mix of better Economic Data and extreme positioning by traders betting on a continued drop in rates and a rise in bond prices that led to that very violent reversal now, the low in tenyear treasury yields was 1. 429 percent. That happened on september 3rd got as high as 1. 99 today intraday some on wall street argue that the move is what led to those massive rotations among sectors in the stock market this past couple of weeks. By the way, for all of you house hunters out there, it also led to the biggest shortterm jump in 30year fixed Rate Mortgage rates since the week after President Trumps election, just to put things in perspective back over to you guys, morgan. Volatility looking all across the markets weve got new comments on taxes out of the white house eamon javers has the latest on that eamon . These comments came from a white house official they actually happened in baltimore, which is where larry kudlow has been along with republicans who are on a gop retreat today. Larry kudlow stopping to talk to reporters and talking about the administrations plans for tax cuts next year heres what he said. We are going to go through what i call tax cuts 2. 0 and i say that because i spoke with the president at some length about this idea we will gather together the best ideas from the hill. We might put something out some time maybe the middle of next year so kudlow there saying theyre in the ideagathering stage now. What aides tell me here, this is envisioned for tax cuts 2. 0 as a campaign thing for the 2020 campaign the president will go to the campaign trail and make the argument to voters that i cut taxes in my first term if you reelect me and elect a republican majority on capitol hill, well do it again. This time, a massive middle class tax cut will be the focus. The president is, of course, aware that nancy pelosi is the speaker of the house and democrats not likely to pass anything he wants next year. They dont envision this as legislation for 2020 they do say its something they could work on for 2021 over here at the white house eamon, thank you very much for that michelle, to what extent are investors getting concerned about the size of the deficit in the u. S. , or is it something thats always kind of three, four, five years away and we can ignore i think its kind of a three, four, five years away that we can ignore now, should we ignore it i think thats a different question what makes me question is i know that elected officials have mentioned, maybe we should be looking at 50year, 100year bonds. And when you look at the tenyear treasury, youre like, why not . Its a shame that we cant get together and do something to refinance some of this debt at longterm rates and talking about bond yields, i forgot to mention, you know, with the yields being so low at the beginning of the month, you had Companies Like apple, deere, disney, all refinance 30year bonds for less than 3 its like, why cant the government do that the question will be if theres a lot of demand. The hundredyear didnt seem to get it well see if it materializes turning now to the crackdown on big tech, the House Judiciary Committee requesting documents from the leaders of some of americas biggest tech companies. Morgan has more on that for us morgan it is a story that just keeps developing across a number of fronts so the tech lash continuing to grow the House Judiciary Committee announcing today it has sent letters to each of the big four tech companies, facebook, amazon, apple, and alphabet to turn over a trove of internal documents, including executives emails, relating to competition matters. The lawmakers, both republicans and democrats, gave each company a deadline of october 14th and this really marks the latest development in a congressional antitrust probe but it also comes in whats already been a really big week of heightened pressure on Silicon Valley after state attorneys general launched investigations into both google and facebook and google also disclosed in the past week or so that it received a separate investigative records request from the department of justice so the ftc has also been investigating some of the Big Tech Companies and ftc commissioner rchopra discussed some of those issues earlier today. It bugs the hell out of me that we see so much reduction and investment in sectors where some of these firms dominate and thats just not a country or an economy that we should want to live in yes, theres a lot of actors involved but that means that theres going to be more resources to be analytical and to find where there might be violations and be smart about those remedies now, commissioner chopra, who is a democrat and who has been very critical of some of the settlements the ftc has arrive to already with some of the tech companies, for example, with facebook, said he is in Constant Contact, that they are in Constant Contact with state ags across the country and hes happy to see the congressional probe is bipartisan. I also pointblank asked him about amazon and whether the ftc is officially investigating that company. And he did not confirm that. Said he wasnt going to discuss any specific company didnt take the bait, despite the very sadly, no. Despite the repeated attempts it speaksto the climate out there. And the other point, of course, as you point out, lots of things breaking this week and tech down 0. 0 as a whole. Is that rotation or because of this political threat . You could say its rotation however, as big as people are calling that this rotation is, when i look at tech, you often say, okay, what led you into this rally is probably is whats going to lead you out of the rally. And i think youre probably seeing new highs with tech ill just say this Companies Like apple, Companies Like facebook have had financial returns yeartodate and i think as investors, okay, maybe be a little fearful of this headline, but it could be just time to take profits, just because you had a great run this year lets stick with tech, but move forward to weworks rocky road towards an ipo. Leslie picker joins us with more is it a tech company and does it deserve a tech multiple as a result that valuation range, though, could be set some time next week according to sources reuters saying that the valuation could be as lowe as 10 billion. Though those ive spoken with say it hasnt officially deny decided yet. Now, still, weworks Parent Company is considering debuting at a far lower valuation than initially expected and they made some Corporate Governance changes today, both of those tactics are in response to muted investor interest one investor, though, with a vested interest is softbank. The wall street journal citing sources familiar with the matter reporting that softbank will buy at least 750 million worth of the ipo. They are citing sources familiar with the matter. Guys leslie, how often do we hear that sort of worded headline that theyre committing to an arbitrary amount, but with no comment about the valuation whatsoever it does strike somewhat of desperation. I will say. So this is known as an anchor investor, of sorts we saw that with peloton just this past week they had tcv come in as an anchor investor saying they would buy 50 million of that ipo which is upwards of 1 billion. Its not uncommon to see these previous investors be investors in the ipo it helps the supply demand dynamic while still raising capital. Its become increasingly common over time. But as you mentioned, this deal, there are so many just changes and kind of a rocky road towards this ipo, its hard to know exactly whats going on that propelled them no invest that 750 million, if the people that the journal is citing, if that ultimately winds up to be the number all right leslie picker, thank you stocks are trading mixed right now, but hovering near the flat line. The dow is up 31 points and the s p is down four points right now. The nasdaq is the underperformer, down about 0. 3 . Weve got 48 minutes left of trade. For now, lets bring in kneela richardson, investment strategist at edwards jones. I want to keep sticking with this ipo theme for a minute. We had another one here at the Exchange Cloud flare which is right behind me. It jumped 20 out of the gate on its first day of trading its been a mixed bag. Smile direct club yesterday plunged Something Like 27 how do you think all of these ipos that are coming to market reflect back on broader sentiment . I think the sentiment is low enough that they dont reward negative earnings. Thats what we need to be able to focus on. You have to not only be able to make a dollar, but if you cant make a dollar, show a path to profitability. When we look at some of the biggest valuations weve seen, theres no path to profits and i think investors are finally starting to clue into that and adjust their expectations accordingly. Now, do you think that thats healthy . That the market is identifying that, hey, you dont have earnings and were not going to give you a price that reflects that earnings is the biggest driver of raernearnings absolutely michelle, to what extent if these ipos dont go well does it hurt alreadylisted stocks is it just a handful or huge amounts of market space. I think its more reflected upon new ipos coming to the market looking at the private market and saying, hey, are you guys giving the correct valuations, because clearly the Public Markets arent agreeing with you. Nela whab do you like right now . Especially if profits are carrying more importance right now at the cycle to be a little tongue in cheek with your question, i like consumers. Because consumers are really driving up this entire market. People point to the fed for stimulus, i point to the consumer for growth on the economic scale so for that reason, we like Consumer Staples we think consumers keep spending and because of longterm demographic reasons, aging of the population, we Like Health Care so a little bit slight defensive posture, but overall, were bullish on the s p we think returns will grow over the year it will be a little bit bumpy, though nela, to what extent are cuts from the fed still needed . Next week was widely expected. If that was the only cut we got, could it spook the board equity market in the year ahead you know what, i dont think fed cuts are needed at all i think theres a disconnect between market expectation and what the fed will actually end up doing and that will play out in volatility over time. The fed, in my view is playing defense. Its being having an insurance cut against a possible stumble related to global events it has no control over if the fed changes its posture, lowers its outlook and starts playing offense to grow the economy, it gets my attention. Otherwise, were just trying to push off some traderelated attentions still ahead on closing bell, shares of apple under pressure following a bearish call from Goldman Sachs, but the company taking the rare step of fighting back against the note those details, coming up and later, well dive into weworks shrinking valuation and the growing crackdown on tech with kara swisher. Heres a check on our data tracker. Retail sales climbed 0. 4 in august, beating estimates by 0. 2 and the university of michigans Consumer Sentiment index also topped estimates closing bell will be right back hmm. Exactly. Liberty mutual customizes your Car Insurance, so you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty Classical Music playing throughout welcome back weve got 42 minutes left of trade. Heres a check on the dow leaders today. The dow itself is up 2. 5 . Jpmorgan chase is hitting a record high in todays trade is up at 1. 7 the dow is higher only just 13 points it would be eight Straight Days of gains for the dow if it closes higher. Lets send it over to mike for todays market dashboard hi, mike hi, wilf. Heres whats coming up, if you come at the king maybe you know the rest of that line this is about the king of banks. Get to that in a second. And enthusiasm has been curbed for one of the biggest name stocks out there ill talk about wall streets opinion of it in a little bit. Big little highs big cap stocks on the verge of records. Little ones, not so much and eastbound and down thats the direction of riskier credit yields. And thats an interesting input into the stock equation, too so, if you come at the king you guys have been talking about the alltime high today in jpmorgan shares. Its hard to be too bearish if jpmorgan is making new highs but what i like to look at, it really does whip around quite a bit the relative performance and i want to point out a couple of spiked peaks. This was middecember. This is when the overall market was finishing a massive pullback and we have that huge reversal higher in overall stocks, but lower in the Jpmorgan Bank of america relationship another one right here, thats june 3rd that was the bottom of the springtime correction. So the pattern here is, when the market as a whole is having a hard time, jpmorgan vastly outperformed bank of america its considered the quality, the more stable, the defensive one they hide in jpmorgan when things look rough. When things look better, they go back into bank of america spop weve seen this little spike here this is a relationship to look at for the overall Risk Appetite of the market, just with these two big relatively similar institutions, guys mike, i mean, i love this chart, of course, so thank you for bringing it to us. Of course the interesting thing with bank of america, as well, is it does, of the big caps, always trade as the most sensitive to interests, because its earnings are by a fact, more sensitive to Interest Rates in terms of the multiple there, bank of America Today versus five years ago is much closer to jpmorgan in terms of pricetobook multiples than it used to be and it has closed that gap it has. Its ground its way in that direction, right whereas youve got citi and Goldman Sachs at book and Morgan Stanley below book its much closer to joining jpmorgan than being a part of the rest of the pack even though this is only a twoyear chart and you can go farther back and you can probably see jpmorgan at higher highs relative to bank of america. That is true that youve roughly been range bound here for this entire year even though its kind of chopped around wilf might be loving the chart, but i love the theme. It seems to be hbo tv shows. But no game of thrones no hbo or at t had anything to do with sponsoring this, but, yes, you did pick it up. Well keep it going meanwhile, michelle, what did you think of the chart great chart i would be curious to see how far back we could go but a couple of things i think, in general, banks were ripe for a recovery, right we had much lower valuations in the s p. Weve got better yields. And also, they spent so much money into technology. I think thats helped. And finally its all about the consumer particularly with bank of america. Theyre the largest in terms of deposits if you have a strong consumer, i think youll have strong banks and double whammy this year clearly, the yields are massive factors supporting the banks but also those updates we got at the barclays Conference Monday and tuesday, that earnings dont need to come down as much as people feared. Thats why theyre the bestperforming sector of the week after the break, shares of netflix are down nearly 20 over the past six months, but one firm says to buy the dip, were going to get the word on the street on that call, next. Plus, democratic president ial hopeful Elizabeth Warren laying out details of last nights economic plan at last nights debate well speak with a former ceo who says warrens agenda is a threat to the economy. When you retire will you or will you just be you, without the constraints of a full time job . 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It is time for word on the street mac quaurry upgrading southwest and spirit to its recommend list the firm saying that southwest will be able to schedule aircrafts as the 737 maxes are ungrounded and reintroduced. Both of those stocks are higher right now. Piper jaffrey out with a note on netflix, saying the firms netflix navigators search index and youtube trailer analysis point to inline Third Quarter subscriber additions Piper Jaffrey reiterating its overrate rating and 440 price target Morgan Stanley has a positive note on bank of america, saying its the banks best in class efficiency has best in class efficiency and room to run, reiterating its overweight rating 31 price target. Of course, kbw and Raymond James downgraded bank of america in the last couple of weeks we brought you those word on the streets. Those guys probably feeling the heat with bank of america stock up about 8 so far this week lets talk about the netflix call where do you stand on that, michelle we own the stock, but in the index. So i wouldnt hold it outright 440, thats expensive and lets face it, its got 10 billion of debt its on Balance Sheet and disney plus is going to release in november, and i think disney plus is going to run could potentially take netflix off the throne well see. I mean, you just mentioned the debt for netflix if we do have a rising if we do have rates rising more than anticipated right now yes, 10 billion i imagine that becomes a more bearish absolutely. Whos really at fault for wewospork is woes. Well discuss whether the companys Public Offering can still be a success when closing bell returns. We trust usaa more than any other company out there. They give us excellent customer service, every time. Our 18 year old was in an accident. Usaa took care of her car rental, and getting her car towed. All i had to take care of was making sure that my daughter was ok. If i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. Were the gomez family. Were the rivera family. Were the kirby family, and we are usaa members for life. Get your Auto Insurance quote today. Welcome back weve got just under 30 minutes left to trade. The dow is higher, the s p and nasdaq just lower. Here are the key things driving the action today strong Economic Data, better than expected retail sales have helped calm some worries about the threat of a recession. Plus, yields surging to their highest level in weeks, and trade optimism continues, but stocks like apple and broadcom sinking, weighing down the Broader Market gains its time for a cnbc news update with sue herrera. Sue . Hello morgan, hello, everyone heres whats happening at this hour Felicity Huffman in a boston courtroom awaiting her sentencing in the College Admissions bribery scandal prosecutors are recommending she receive one month in jail, plus a 20,000 fine her lawyers want her placed on probation with 250 hours of Community Service and a 20,000 fine House Republican leaders holding a News Conference this morning where minority leader Kevin Mccarthy commented on President Trumps next steps with gun background checks the president is getting all the information from law enforcement, from the legal community, from barr and others. Hes meeting with members on both sides of the aisle. And i expect hell come forward with a package quite soon. But he wants to gather all the information first and make sure whatever we move forward solves the problem that none of this happens again. Patriots wide receiver Antonio Brown will be eligible to play for new england against the Miami Dolphins on sunday. He has not been placed on the commissioners exempt list after being accused of Sexual Assault in a civil lawsuit he post eed this live video on instagram from tom bradys training center. You are up to date thats the news update, guys ill send it back downtown to you. Wilf sue, thank you very much. Lets send it over to mike for the second installment of the dashboard. Calling this enthusiasm curbed i know youll be talking about this that got some attention on apple. But whats interesting to me is the overall sentiment set up among analysts, among wall street analysts towards apple, which is very cautious a little bit skeptical and unusually so for apple so what you have here is really what you want to watch is in the yellow, thats the percentage of buy ratings on wall street its about 49 right now so fewer than half the analysts on wall street recommending this stock. This orange here, thats the equivalent of sell ratings so essentially, wall street is telling you not very excited about buying this thing. And right here is the average target price, which is basically where the stock is right now and typically what youll see is some kind of a premium of the target price to where the actual price is this is probably a net positive if you want to look at the sentiment setup and say theres a wall of worry around apple not a lot of people are enthusiastic you can also make the case its somewhat underowned by big institutional active investors kind of interesting right here basically, wall street has not believed this little comeback in the stock so far mike, thanks very much for that its a very good indication. Still how low the actual underweight waiting is relative to equal waiting and overrate. Apple, by the way, disputing goldmans analysis today, and the very, very rare act of disputing an analyst call, they said, quote, we do not expect the introduction of appletv plus, including the accounting treatment for the service to have a Material Impact on our financial results. That statement coming to cnbc in about the last hour so pretty rare, this, michelle. Absolutely, very interesting. Whats your take . I mean, i think its apples right to defend. Ty agree that i think its probably a contrarian indicator when all the analysts are bearish on something thats usually a very bullish sign and flatout, apple is a phenomenal company. Its got, what, 200 billion in cash it just did a massive bond loan program, so not only are they going to have the 200 billion, but theyre going to have a lot more cash flow that they can use. And its trading lower than the s p. And i think its been a hated stock and i think thats a positive sign. The other thing i would add to this, as we were just discussing, morgan, in the break. Read the statement again we dont expect the introduction of appletv plus to have a Material Impact on our financial results. So the bestcase scenario is no actual impact from appletv plus. Which is something weve been leading up to and talking about, oh, its pivoting to services, all of this. They are basically saying, its not going to help, in the bestcase scenario well, theyre starting with nine pieces of content and theyll continue to roll out more i think this is still very early innings, Material Impact, positive or negative but the i think the point is, they have so much cash, that they can create so much content. I think versus netflix, not to talk about something else, but netflix has so much depth where they dont have the capital to be able to create all this content. Apple really can they can, but its a question of whether they need it or not and its wasted money spent, which you could then argue why its worth just dipping your toe in the water rather than going all out attack to begin with anyway, very interesting, that cnbcs got that pushback from apple, and you can read more about that online at cnbc. Com. Now, weworks troubles continue ahead of its planned ipo. The companys target valuation continues to slide that the companys ipo valuation could be slashed to 10 billion to 12 billion, a huge drop from the 47 billion the company reached in its latest private funding round and the 65 billion reportedly discussed earlier this year for the ipo. This comes as a slew of negative headlines have swirled around wework, leaving investors skittish and forcing the company to make repeated concessions just this morning, it announced more changes to its Corporate Governance structure so whos to blame for these public missteps for a Public Offering joining us now, david schneider, founder and ceo of harness wealth david has previously workeded with startups like Real Estate Company compass and helped the tech company sinsarta go public. Thanks for joining us. Good to be here on the sfat, everyone assumes its the company itself that makes these mistakes but that said, to what extent is it the Investment Bankers that have advised them on these in the past or the previous investors that just didnt do their Due Diligence and this company was perhaps always worth 10 or 15, not 50 billion . I think its always challenging for a company thats sort of a category definer, when theres a public copout in the market iwg has been around for a long time wework seeks to be trading at a huge multiple premium to that company, just in part by the growth rate that its had. But ultimately, its really the function of the bank to be able to tell the companys executives, the bankers, broadly, where should the valuation be and also, what are the red flags that are possible from a governance structure. There were way more things in this s1 than i think is typical, even for a company that seeks to have a preferred founder voting share class like weve seen before without a significant disruption to an ipo process. And if they remove some of those red flags, would they have got the higher valuation and they could have slipped under the radar if they didnt have that 6 million payment, for example, or odd governance structure . I think it was going to be a challenge to get the premium that they were looking for regardless, but certainly, the news cycle influences investors. I mean, no one wants to be sort of holding the bag at 45 billion if the stock drops on its first or second day to a fraction of that and so, ultimately, i think you saw a tremendous amount of News Coverage of, you know, at a minimum, owning some of the real estate leeds by the company, being congressmmpensated for tr. So i think that was just a little too much in changing preipo sentiment. Very little is in the market about. Data dog going shortly and other companies that are traditional tech businesses going public no bad news in the sentiment and to that point, how much does that set the stage for all of those companies that are in the ipo pipeline right now all of the government issues, the other issues that have been coming out i wonder how closely all of these other companies. I think this is an outlier. You have had other companies go public that have the dual class structure. Adam newman had 10x Voting Rights they have increased that recently to 20 taken it back down to ten. Its a particularly small board, at least as they designed the original 11 you have a very unusual spousal role, despite her having been a cofounder of the company to have that level of influence. If adam previously was incapacitated. And so i think it was the combination of a lot of factors versus just a, you know, facebooktype structure, where investors get comfortable that its a founderled company and there should be perhaps comfort with a different type of voting class. And how do you think softbanks role in all of this are people going to now look at softbank and question how they Value Companies . Its possible i mean, i think theyre demonstrating that if your company is is a great investor with the news today that theyre perhaps going to invest up to three quarters of a billion dollars in the ipo so well see what happens. The fact that theyre sticking by the company bodes well for their ability to win deals but its a challenging instance when a companys value really is derived by one major investor versus a broaderbased consensus. Do you think other Property Companies will be looking at them now are they cheap so that theyre an opportunity to them or they just licking their lips that this threat to their traditional longstanding Business Model is now suffering in a way that perhaps it hasnt done for the last five years . Well, if youre a traditional Real Estate Company, wework has been great theyre becoming one of the biggest consumers of what if youre a compass, which is another prop tech company thats based out of new york, which i know youve worked with as well sure. I think its a very different business i think there are similarities that there are existing publicly traded companies and compass will have to show how different its economic model is. But ultimately, i think its a different instance of a company, kind of like uber that really is a categorydefining business, but hasnt yet demonstrated what longterm competitive advantages will come from that position and ultimately, what the path to profitability looks like i want to come back to the bankers on this that have advised on this structure and allowed the s1 to be filed as it was initially. Surely a lot of the blame must have been on them, because they should have realized that the reaction, i dont know how strongly, internally, that we were pushing to keep it that way, but they should have realized it could have gone down badly and it has i think its a tricky situation. If youre an investment bank, this was at least scheduled to be one of the biggest ipos of the year sou so you want to be a lead left bank on a companys Public Offering like this so that unfortunately sometimes means that the bankers are telling the company what they want to hear rather than what the Market Sentiment might be. Finally, since i know you also advise employees when companies that they work for are going public, as well. How would you advise employees who are working for wework right now given the fact that there is so Much Negative attention publicly i think with a private stock, theres not a lot you can control, even if it goes public, theres still a sixmonth lockup for employees, typically i think at the end of the day, valuations are a function of longterm growth rates and ultimate profitability if youre there and believe in the companys ability, be a category leader and really unlock value, eventually, you should hopefully have confidence that market values will catch up with that. David snyder, thanks for joining us today thank you we have got just over 15 minutes before the bell. And here is where we stand right now. It is a mixed picture, though. Trading close to the flat line right now. The dow is up about 40 points. The s p is down less than three. The nasdaq is down 0. 2 . Small caps once again the outperformer, up 0. 3 . Keep in mind, all the major averages are on pace for gains again this week. Still to come, we could see a big breakthrough in peanut allergy treatments weve got the details on a key vote, next plus, bernstein publishing a list of highquality stocks that are on sale. Well reveal the names, coming up [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. 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 today. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Welcome back we have some news on the College Admissions scandal and sue herrera has those details. Indeed, i do actress Felicity Huffman was just sentenced to 14 days in prison, a 30,000 fine and supervised 250 hours of Community Service. The 14 days in prison is about half of what prosecutors were asking for, but the judge mentioned several things one, that huffman was contrite second, that she did not repeat the crime, because she has two daughters, but she only paid 15,000 to get her daughters s. A. T. Scores changed for one daughter the judge did cite that as one reason why he basically split the time in prison in half and it is prison, it is not jail so that is basically the latest that we have miss huffman has not come out of the courtroom yet and the judge is still speaking, so well bring you more when we have it guys, back to you. So, sue, just to confirm. Shes the first to be sentenced. Yes she is okay. The question is, the question is whether or not, because there are 50 defendants in this particular scandal a number of them are coming up against this same judge. So do we take this fine and this prison sentence as a blueprint for some of the others but the judge also pointed out, she only paid 15,000 compared to some of the other defendants who paid six figures to get into the various universities so she did cite the fact that it was a low fine well see what happens when some of the other defendants come up against her. Sue, of course, the other part of the punishment for all of them is huge humiliation, as well absolutely. Which isnt going to go away anytime soon sue, thank you you got it. An Advisory Committee voting today on whether to recommend a peanut allergy treatment for fda approval meg terrell has been following that story for us and joins us with more. Hi, meg. Hey, wilf the company is aimmune therapeutics a group of outside advisers to the fda is discussing the risks and benefits of what could be the first fdaapproved treatment for peanut allergy now, the treatment was shown in a Clinical Trial to help a majority of patients be able to tolerate peanuts the point of the therapy is to build up enough immunity to protect against accidental exposure but some questions from the committee today focused on its safety the treatment consists of peanut proteins, so some in the trial had allergic reactionsand required use of epinephrine. But the desire in the Patient Community for an fda treatment is high and the panel heard from some of those patients today, including this one who participated in a Clinical Trial. I can sit with other kids that i couldnt sit with before. I believe that other kids that are allergic to peanuts should be able to do this so they can experience the same freedom that ive experienced and guys, we are expecting to get the result of that vote any minute now and we will bring it to you, of course my heart is melting it was a great story, anyway. But it was worth it just for that clip. Oh, yeah. Meg, i have a specific question how many people have peanut allergies . What sort of percentage of the population is it its estimated up to 2. 5 of American Kids could have peanut allergies. Pretty big it could be a 1 billion drug, some on wall street estimate meg, great stuff. Thank you so much, meg terrell back at hq for us. Coming up next, weve got your last chance trade. And later, leaders of the House Judiciary Committee are requesting emails from executives at amazon, facebook, and google well talk about the crackdown on big tech with recodes kara swisher. She joins us live at post 9, coming up. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Classical Music playing throughout 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. Welcome back weve got six minutes left of trade. Michelle, what are you going for . Energy transfer its a Master Limited partnership, in the mlp space. Its basically the infrastructure that carries oil and gas across this country. It is number one, trading much lower than its peers, so definitely a valuation opportunity there. And in general, mlps are trading lower than the s p and then lastly, drumroll, please, it gives an 8. 7 dividend and particularly in this world where were all hungry for yield, mlps are a great place to not only get some price appreciation and asset appreciation, but some yield when you talk about Midstream Companies and mlps, how exposed are they to the moves and weaknesses weve seen in crude i dont think theyre that exposed at all thinking back to that harsh selloff and they were highly leveraged, they have since deleveraged and cleaned up their Balance Sheets and not really followed oil oil is up 20 yeartodate, theyre only up about 11 and what about versus if youre bullish on Oil Prices Going higher any other sector you like . I think Energy Sectors in general here in the United States we were talking about europe offset i think if you can pick up bp or Royal Dutch Shell is trading on a much lower valuation compared to exxon and has global revenue and their prices are absolutely depreciated because of brexit and all of that news in europe sorry. We have less than five minutes to go in todays session, so its time now for the closing countdown as well. Lets trade the close with tom cruise sean, what are you watching in these final moments of the week . I think its really an interesting trade playing out today, but what ive noticed is that youre really seeing value perform very well. And i think whats happening is, a little bit more of an appetite for risk, now that weve about won the ecb coming out, weve got some pretty good data out of the u. S. Here domestically, especially in that Consumer Sentiment report, but i think what youre seeing are those bonds that push yields so low is very crowded, got incredibly one sided and that trade is getting unraveled right now and youre seeing investors go in and maybe buy some of those unloved names, which is why youre seeing value perform so well, that its really been impacted negatively by a lot of this geopolitical overhang but weve had so many positive developments this week, youre starting to see investors no back in there. Its a riskon move were seeing today. How much further is this yield increase got to go i think its going to be very interesting to see if we can get one above 2 on the tenyear and then also maintain those levels, especially with the fed coming up next week, largely expected to cut. I think what really is going to matter is what we hear from chairman powell after the fed goes out there and presumably cuts those rates do we get enough of a dovish commentary out of him, where maybe we do expect those rates to this isnt just an insurance cut. There may be a continuation of further rate cuts going forward. It will be interesting to see how they handle that when you talk about upside moves and unloved stocks materials, the bestperforming sector its poised to end the week up 3 how sustainable is that . And these trade headlines that seem to pingpong back and forth on a daily if not hourly basis affect that . I think if you didnt really get, i would say china coming out there and extending that olive branch and that theyre going to maybe start to dial back some of those measures that theyve put in place, i think thats really gave the market the optimism they needed to make the second leg higher. So as long as you donate sconti see a little bit of a dialing back, maybe not everything all at once, but a deescalation, which is what weve gotten pretty consistently, thats allowed to us really make some of these highs and allow some of these sectors that have been beat up as a result of a lot of these trade disputes make a little bit of a comeback this weekend. That looks like investors are going in and going riskon, theyre trying to find those types of sectors and its really benefited a lot of those names this week. Sean cruz, thanks for joining us lets get over to mike for the third installment of the market dashboard. Thank you, mike. This is about big, little highs. Maul cap indexes running up to levels with a lot of eyes on them look at the s p 500 over the past year. You see us having the steepest since august flattening out a little bit. I would point out a year ago, this was the former record high. And then we kind of overshot it and then rolled over and something similar happened here in the spring sp so its not that unusual to overtake a high and plateau, stall out a little bit, rest and see how that goes. Look at the small cap russell 2000, in a very different position it is significantly below its highs. But here where were looking at is this kind of trading range weve been in for a while. And this latest rally where its outperforming the s p is taking it up toward this level. People will be watching this 4016, 50 area and see if it can get up towards these highs if not, this will be another step along the way and were going to roll over again lets get up and talk about the nasdaq with bertha large caps are flat today thats why the nasdaq is nowhere near that alltime high yet. Apple, though, good performer for the week, and in terms of sectors, it was really hardware led by apple and chips this week that were really moving things higher but small caps, as mike noticed were really the standout, best week since 2016. Over to bob. And what weve got here is a rally in cyclicals all throw the week, bertha banks, transports, retail, energy, all moving up. Today, weakness, again in those consumer stocks. Coke, procter gamble, pfizer, all lagging. Theres the closing bell Dow Jones Industrial average up 33 points. If youre just joining us, welcome to the closing bell. Im wilfred frost. On this friday the 13th, along with mike santoli, as markets, stocks settle here, just getting a check on where we finished the day here on wall street the dow finishing up 33 points well off the highs of the day. The s p and the nasdaq, a different story, though. Both closing lower the s p level there at 3070. Russell 2000 was the outperformer today and dow transports actually finished the day up 1 keep in mind, gains across the board for all of the averages this week. Yeah, and the russell was the outperformer for the week, as well up a massive 4. 9 leading the charge the dow has had eight Straight Days of gains in a row other stand out for the week was the banks and thats so tightly linked to that huge move higher weve seen in yields higher, as well, at the longer end, a steeper move. And there is the banks index for a whole, morgan. Its not just the past week. This past week was particularly strong, but also this whole month, really. The last two weeks, if we go back to the yeartodate chart, you can see the scale of the jump in the last two weeks, recovering all of those recent lows yeah, it was another big week for ipos as well, with socalled unicorns going public. Today it was cloud flare, which actually jumped about 20 right out of the gate. Pit priced at 15 a share last night. It closed the day just under 18 a share here at the New York Stock Exchange that, of course, on the heels of smile direct club yesterday, which also actually jumped 10 in trading today, though still well below its ipo price as well and tenex genomics which also went public this week too and had a strong start joining us to talk about the market day more broadly is Michelle Mckinnon, senior wealth adviser at Payne Capital management, still with us. And liz young, director of Market Strategy at bny mellen investment management. Good afternoon to you both mike santoli, ill start with you. The big theme this week, the great rotation it was a huge rotation, continued rotation i think that the bond market has been the leader. It was a leader on the way down. Yields going down into august. Now theyre leading on the way up i think very notable today the stock market just identify kind of idled, sitting on the gains from the week and cruised into the weekend, but it didnt get further lift with bond yields continuing to go out with the highs. Its ami move, tremendous volatility the banks peaked at 1 00 p. M. Today. My point is we got a great benefit going up, but too much too fast just tells you that theres some urgency or instability in the market. And you dont necessarily get the benefit tick for tick after a while when you have this big overshoot. Have you seen the yield curve go back to something that everyone can just look at and the shape of it and say, okay, this is more constructive for the economy, for markets and the fed can then be a little bit less worried its already done so across parts of curve youre back to where the twoyear is below the ten. I dont think it will be decisive just with another 25, because you still might be kind of flattish there. But i do think in general, the questions about the fed meeting are going to be significant. You might get 25 and you really dont noknow if theyre going to signal, that might be it for now or ratify the markets continue expectation for more to mikes point, were now at fourweek highs or higher. When you look at the moves here, do you suspect this is sustainable and well continue to see rates move higher or do you have a different assessment . I think we can if the fed does what we expect them to do, which is two more cuts this year were expecting to see one in september and one later in the year whether thats october or december i dont know if that really matters at this point. But if they do it in september and signal that theyll probably do another one, i think we can actually get ahead of this a good phrase to use there that the fed is running out of time, not running out of bullets, but they need to use those bullets quickly. I think theres a good chance if they do it this year, you can turn it around and change the trend of growth and see a little bit of upward movement next year what dou you make of the retail sales data this year . I think its a great indicator. And all of the positive news was built on a continued strong labor market the fact that some of that data has stabilized and now actually surprised to the upside is definitely a good sign michelle, i wanted to ask, because we now have a bull and a bear on the set for european equities youre actually attracted to european equities . I am. I think as a longterm investor, you have to be simply because of lower valuations and the yield is so much higher. And lets face it. I eventually think investors are going to look at negative yield and move to the equity markets thats the only positive yielding place they can get. I definitely agree that it makes more sense to own stocks than it does bonds at this yield. I want to make sure that youre still in the equity market i dont know if im ready to say that this rally is sustainable and put a lot of risk on the table. Im not even ready to say its time top jump into small cap full speed but i think if we see some of is that come back and the fed does what we want them to do and the yield curve noshl irmalizes, thi agree. Bernstein publishing a list of 40 largest quality on sale stocks this list includes names that have sold off in the shortterm due to controversial news or challenges but still look like quality stocks longterm the list includes names such as facebook, disney, and microsoft. Mike, is this part of the rotation, or are they trying to pick out individual names that they like and their analysts like theyre screening for by the way, quality stocks, defensive stocks really were leading the way. They were the way to kind of stay protected from the overall turbulence but with this recent rotation into more cyclical and value stocks, these have been coming in a little bit. If you dont think the world has all of a sudden changed and the economy is going to accelerate and we have years and years to go on this economic expansion, these stocks are slightly more modestly valued than they have been, and theyre kind of a good hiding place for capital if things are not looking too clear in the outlook liz, whats your take on quality stocks whats Something Like big cap tech, even though theyre under fire and more regulatory scrutiny, would that, i guess, constitute quality for you i think the definition of quality in this environment is important. For some people quality means that its cheap and its still a Sustainable Growth trajectory. For us, what quality would mean is strong free cash flows, a company that can pay a dividend and increase its dividend. We do like that larger cap space, which i know sounds kind of boring right now, but if you want to be in the equity market, i certainly would still be fully invested, but quality stocks are certainly the place to be. Valuations matter. But at this point, i think Quality Matters even more than valuations do. Liz, michelle, well leave it there. Thank you both very much great to see you we have a news alert on peloton. And Julia Boorstin has those details. Music publishers are doubling their demand for damages from peloton to 300 million. This follows Music Publishers suing peloton back in march, which peloton did cite as a risk factor in its s1 filing. The ceo of the national Music Publishers association saying since filing this lawsuit, we have now discovered more than double the number of songs for which the plaintiffs song writers were never paid by peloton. He notes that theyre adding songs including taylor swift, adele, and beyonce peloton sending a comment to my colleague, diana olick saying, quote, this platform could only have been developed with a close collaboration of our trusted music partners, which include all of the major labels, major Music Publishers, and Performance Rights organizations, among many others as a result, we have the largest audiovisual connected fitness music catalog in the world we will continue to defend ourselves against claims made in this matter and look forward to pursuing our counterclaims wilf, back over to you julia, the difficulty for them is that they do have agreements with some publishers, but not this one so it does kind of flash a bit of an outlier that theres some grounds for complaint. Look. Music rights are very complicated, wilf. Because its not just about having a relationship with the artist, its the whoever owns the rights to the underlying music. There are various different rights issues here and peloton cited the complication of all of this, the complication with dealing with music licensing is one of the issues and i think were seeing this play out here. They may have some music rights all tied up, but were still dealing with these other issues. And the fact that were now looking at a 300 million lawsuit, it shows you just how complicated this will be we will, by the way, hear directly from National Music Public Association david israelite on monday on closing bell. You dont want to miss that. Mike, not a good time with all thats going on with wework to have this wild card threat ahead of their ipo its not. And i think it would remain an overhang if they continued to market and it try to get it out on schedule. But its not the kind of thing where it completely upends the Business Model it would obviously push out profitability. They would have to raise their cost of acquisition for the content. But so i think it would be one of those things that would restrain the valuation, maybe, you know, the pricing. But not necessarily say its game over somehow if they have to pay higher fees its opportune timing, of course, from the publisher to exactly this is the leverage, right. But with that in mind, its kind of extraordinary that they didnt manage to settle this and tie it up six months ago, before they even come to this point and its like it is true, though. Its not just a line that this is a complicated area and music rights are always disputed and its always haggling back and forth and all the rest of it but i also think that again, with wework, too, just because you think you have a worldchanging product or service, it doesnt mean the world is going to make it easy to be profitable with it it just just because its a great idea and people love it, it doesnt mean that the margin is there absolutely. And theres youve got to get the contracts lined up otherwise it could come back to haunt you. Coming up, kara swisher will weigh in as a struggling actor, i need all the breaks that i can get. At liberty butchemel. Cut. Liberty mu. Line . Cut. Liberty mutual customizes your Car Insurance so you only pay for what you need. Cut. Liberty m. Am i allowed to riff . What if i come out of the water . Liberty biberty. Cut. Well dub it. Liberty mutual customizes your Car Insurance so you only pay for what you need. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Weve got a news alert on movie pass Julia Boorstin has it for us the subscription movie Ticket Company movie pass announcing that it will shut down tomorrow and not sure if or when it will launch again its efforts to recapitalize the company have not been successful and its forming a Strategic Review company just to remind you about movie pass has been on our air before. It offered one movie ticket a day for 10 a month with restrictions it did seem too good to be true and it has turned out to be. The company at one point had more than 3 million subscribers. That number falling to about a quarter of a million earlier this year, as it imposed limits on when you could use those tickets and faced more competition from the theater chains morgan, back over to you and certainly shares of amc finishing the day up 10 today they, too, had launched their own competition to this. So its definitely been one to watch. Julia, thank you the nasdaq underperforming the Broader Market this week and Bertha Coombs looks at the weeks biggest movers. Among the weeks biggest movers were chips. Today you had broadcom weighing on the chip sector not sure when its going to see a rebound with the situation in china. Nonetheless, chips were among the best performers in bigcap tech this week apple certainly was among the big performers this week, as well, in terms of the point basis, it was the biggest contributor to the nasdaqs overall gains this week, up for the fourth week in five. Software services were among the biggest losers they had been big winners earlier in the week, really kind of surged, actually. But at the end of the day, they were losers this week, but small caps overall were the biggest performers and we did see those financials, the Regional Banks doing especially way the Regional Bank index up 8 this week, morgan. Back to you. Ill pick it up there, bertha thank you. Wework agreeing to sweeping governance changes today as the Company Facing mounting skepticism and a lowerthanexpected valuation ahead of its planned upcoming offer later this month part of their changes includes removing newmans wife, chief branding officer Rebecca Newman from playing a key role in choosing newmans successor. Joining us now is kara swisher great to have you here in person assuming those headlinereported numbers are actually correct, it was 47 billion and now it could be as low as 10 billion to 15 billion. Who takes most of the blame for that the company itself the people that fail eed to do e Due Diligence, or the bankers that have been advised throughout this process . Greed takes the blame it was a ridiculous s1, it was laughable. I wrote a column in the New York Times about it a lot of reporters reported on it it was this suspension of disbelief. Like you talked about movie pass just a second ago. The numbers just dont work out. But to the companys defense, if they did get 47 billion last time, you cant blame them for that, can you . I suppose theres one Born Every Minute i guess i cant. If they want to build an actual business, why lie about things like that . And what was really astonishing was the amount of power, the amount of selfdealing that was going on, the control that someone had over it. And trying to foist it on the investing public no, i do blame them for that do you think these changes are enough or do you think its little or too late i dont know. I dont think its going to go public i think its going to be really hard to take it public and their main investor, softbank, which is sprinkling money all over Silicon Valley in a sort of haphazard way, this is just what happens when you overcapitalize things that dont have a business. But to that point, asking me first question in a different way, so is softbank not to blame more than anybody else many this because the Public Markets and the journalists done the Due Diligence and exposed this in a way that somehow soft bank, the most equi most educated investment banker in the world failed to do. I dont know. You can look at any of these businesses and their valuations. Uber is down by half because its economics are troubled doesnt mean its not a great service. Same with wework its a pretty cool place to work but you have to sort of ratio l rationalize a lot of these things and i think wall street is finally getting woke to the idea that economics has to work, it has to make sense and this is not all just to benefit vehicle for a bunch of entrepreneurs its actually building real businesses that has sustainable economics. And to have to say that is sort of shocking that you have to sort of say that and so theyre getting what they deserve here its almost as if wework is an illogical extreme to where this has been headed and just because something is a great idea and customers love it, it doesnt mean great idea. Great brand. That the world is going to deliver the profit margin. And the tech is at the place where theyre doing the hard stuff now. Its not software and network stuff. They have to do the hardware. And maybe facebooks business isnt so good if they have to monitor the hate speech. Maybe they need more people, maybe its not you know, we in media know how hard it is to make money doing it, so maybe everyone has to come to reality instead of living in these places that are not wall street has funded a lot of it. Theres so much money washing around, we dont know where its going to go . Whats the stone back in Silicon Valley are there a lot of companies screaming at adam newman saying, youve ruined nor all of us. I think a lot of people are worried. Theres some really good interesting businesses, airbnb going public, ill be really interested to see their numbers and growth a lot of interesting stuff, and it get in the way of building sustainable businesses that are really interesting but a lot of people in shriek a Silicon Valley are probably like, this is a problem. Meanwhile, you have the antitrust business thats asking facebook, amazon, and alphabet for a trove of sensitive information. Its been quite a week in terms of antitrust scrutiny for the Big Tech Companies do you think were hitting a Tipping Point in terms of investigations and where this is going . Well, im excited to see those emails and all of those internal memos, arent you these are things that reporters have im pretty good at getting memos out of companies but im someone with subpoena power. You probably know theres things that they may not want to be seeing now a lot of these companies, google, a great company, amazon, a great company. But in a lot of ways, they have to be, you know, this is an industry, which i talk about, i feel like i bang on a drum over and over again, that has no regulation theres no major industry that rules the world that doesnt have some guard rarails. And thats where we are. Every single industry ever since the beginning of time this has happened to. And they should go along with it and have smart regulations because we could overreact and sort of ruin the idea of where innovation is going. Kara, as you know, apple made big announcements this week. Lots of analysts notes came out of that. Goldman sachs came out with a bearish note today and very rare, cnbc got a statement from apple saying they do not expect the introduction of appletv plus including the account and treatment of the service to have a Material Impact on the results. Whats your take on the fact that apple felt it necessary to come out and make a statement about an analyst note . Everyones been able to fly above the fray and apple is like others theyve got to create Innovative Products that make a lot of money. I think the great worry around them is not so much regulation, although theres some issue around the app store, that they can continue to make exciting products that people buy and the bulk theyve been buying them in and even if they sell billions and billions, wheres the hit products and thats a really, really hard thing to do over that amount of time with the service that they have, with a relatively low price, theyve got to get into this business, just like they had to get into music they had to say, its not going to make much money i think thats what that note says, but they have to be there. If theyre selling these devices, the content and everything else, theyve got to be part of this, so they should be spending money on this. All of them should be. Kara swisher, great to see you. Ill be in new york a lot up next, well break down the charts to see why the highyield bond market is helping sox help ing stocks to move higher. And well debate whether president ial candidate Elizabeth Warrens plan to raise tes oaxn wealthy americans are a threat to the economy pharmacistrecommendeds the memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to the closing bel bell. Lets send it over to mike santoli for his final dash board of the day calling it eastbound and down this is a look at highyield debt yields, but the yield that the company is paying when the bonds are issued basically, this is the cost of the company on newly issued highyield debt and look at how its gone basically to a record low. Its just about around 5 . There was a time that we were in double digits for high yield and at least in the high Single Digits this obviously shows you how low treasury yields got. The fact that high yield spreads remain very tight to those the reason at issue is important is because you have an outstanding highyield bond that people pay up for in price as Interest Rates go down and the nominal yield is going to go down but the company is still paying the coupon they paid at interest this is an example of how the corporate debt market is really refreshing corporate Balance Sheets and supporting equity valuations this is going to curl higher, because treasury yields are going up, but this was a very good issuance opportunity and a lot of companies have taken advantage. And any company thats failed to has only got themselves to blame. And maybe they didnt have access mike, thank you up next, we will debate how tax proposals from president ial paenouate Elizabeth Warr cld imct the economy were back in a couple of minutes. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Welcome back time for a cnbc news update with sue herrera. Hi, sue. Hi, wilf. Hello, everyone. Heres whats happening at this hour actress Felicity Huffman receiving 14 days in prison for her role in the College Admissions bribery scandal she was fined 30,000 and ordered to perform 250 hours of Community Service and will also have one year of supervised probation. In her statement, she was remorseful and said she hoped to become a better person she also apologized to her daughter and her family. She reports to prison in six weeks. A federal Appeals Court has revised a lawsuit claiming that President Trump profited from restaurants and hotels patronized by government officials. That violates the constitution by a 21 vote, the federal Appeals Court in new york said the judge was wrong the dismiss the original case. Swedish teen climate activist greta toonberg joining other youth protesters in a march outside the white house. This to demand action by the u. S. Government on Climate Change and whole foods, the grocery chain owned by amazon is Cutting Health care benefits for its parttime workers. The move could leave about 1,900 of its employees without medical coverage that is the news update this hour, guys, ill send it back downtown to you, wilf . Okay, sue, thank you very much have a great weekend president ial candidate Elizabeth Warren taking on the wealthy at last nights democratic debate. I have proposed a 2 cent wealth tax on the top onetenth of 1 in this country. This is how we build an america that reflects our values, not just where the money comes from with the billionaires and Corporate Executives this comes after our own jim cramer sounded off on the senat senator or what executives on wall street were saying about the senator earlier this week. You get off the desk and talk to executives, theyre more fearful of her winning ive never heard anybody say look, shes got to be stopped shes got to be stopped. I dont know shes very she keeps going up in the polls shes raised a ton of money shes going to win iowa, i believe. Shes a very compelling figure on the stump meanwhile, andy pudzer, policy adviser at americafirst policies has been outspokenly critical of warren, out with an oped last month entitled, Elizabeth Warren is the real economic threat. Andy pudzer joins us now along with David Gammage who has consulted with warrens campaign on her design of the wealth tax reform plan. Andy, on the heels of those comments from jim cramer and of course the democratic debate that we saw last night, your take on senator warren and is she why is she why would you argue that shes a real economic threat . Look, i think enlarging the size of government, materially, grossly increasing taxes on not only wealthy, but also middle class americans to implement these large Government Policies would be damaging to our country and economic growth. Were seeing incredible job growth, were seeing great wage growth, a reduction of income inequality on the report the Census Bureau came out last week and a reduction in the poverty rate were seeing all the kind of things that democrats like Elizabeth Warren have said they want to accomplish over the past ten years are actually being accomplish and i think implementing policies that would be a setback for the private sector and a setback for growth would be damaging to the american public. But andy, strip out all of the potential other policies that youre inferring there that Elizabeth Warren would enact just focus on this, a tax on money above 50 million, and stepping up more aggressively, above 1 billion, thats not going to hurt the economy, its just going to redistribute wealth, isnt it well, i think thats youve framed it exactly correctly. Is the point of tax palace to implement social justice is the point of tax policy to try to punish the wealthy and benefit the poor or is the purpose of tax policy to raise government revenue . So that we can cover government expenditures and what weve done with the tax cuts and jobs act, and in fact, revenues increased about 4 from 2017 when we didnt have the tax cuts in place, 2017, its increased more than inflation. In other words, tax cuts have generated more revenue if we can generate more revenue, thats great if were trying to punish people because theyre successful, i absolutely disagree with that. I am not somebody who believes in Wealth Redistribution i think its damaging. David, you consulted on this wealth tax reform plan what went into the methodology and how did you arrive at the results or help the campaign arrive at these results for this proposal yeah, and most of the work i did falls under the sense of more complicated ways to do valuation right. But lets get back to the central issue. Our current income tax is broken when it comes to the 0. 01 , the 0. 01 , the super rich pay lower percentages of their income in tax than the ordinary members of the top 10 , and they put a lot of resources into economically damaging, tax avoidance transactions, that i know my students advise on these things, and i write on them, to make this all happen. A wealth tax like Elizabeth Warren is proposing is carefully targeted at exactly where our current tax system is broken restoring progressivity to the overall tax system at the federal level and it would actually, i think, help the economy, not damage the economy. But david, your main criticism there could be rectified by closing tax loopholes. You dont need to add an extra wealth tax to even things out based on what you just criticized specifically. So the primary loophole in the existing income tax is based on it being on realization this has been true from the very beginning of the income tax and its very hard to fix. Ways in which the taxpayers and the super rich exploit this fundamental problem called the achilles heel of the income tax have gotten much more sophisticated. So basically we had what was from the beginning a mediumsized loophole that rich taxpayers have found ways to drive trucks and tankers through now. There are ways to fix this loophole without going to a wealth tax, but it requires doing Something Like what ron wyden has proposed, a moving to markettomarket tax system, and that would be like a wealth tax, a dramatic, complicated reform i, overall, think a wealth tax is the better way to go. But we could argue about whether these loopholes are better fixed through a wealth tax or a markettomarket tax either way, the main point is, it takes fundamental reform, addressing the structural big problems of how the income tax gets at the returns to wealth. Theres no small fixes here. I want to shift gears a little bit before we let you both go and andy, i want to get your thoughts on what developments within the democratic president ial candidate polling, when you see somebody like senator warren starting to poll a little bit more strongly here, when you look at the debate that happened last night, quite a number of candidates are becoming more and more hawkish on china and trade. And i wonder what you think it does to the current trade talks, especially given the fact that we have had reports that china was potentially looking to hold out and get through the 2020 election before striking some sort of deal i think its actually very helpful and its good to see something be more bipartisan so its good to see people wanting to go after china. Look, i know its an election clear and therefore its difficult for them to be supportive of the way President Trump wants to pursue the negotiations with china, but i think if china realizes, no matter whos president of the United States, were one country and we cant let that continue to engage in the conduct theyve been engaging in, i think that would be very good for the negotiations and one Tax Deduction that really benefited the wealthy was the salt deduction and all i hear from people on the democratic side, not professor gamage, but others, is that we should we should reinstate the salt deduction, which is really kind of contrary to what theyre talking about. Guys, well leave it there. Thank you both very much, andy and david. Thank you weve got a news alert on the fed fda panels peanut allergys treatment vote that vote just coming in. They have voted in favor of the safety and efficacy of what could be the first fda approved peanut and allergy treatment its a peanut protein, so its going through the drug approval process. This therapy would be the first potentially approved by the fda to treat this. Its made by a Company Called aimmune therapeutics that stock is currently halted could be a big move, because this could be the first treatment for this company, but theres been a big move coming into this. The fda is set to decide on the drug by the end of january well bring you anymore including what the stock does when it comes back open, wilf. Back to you. Straight ahead on closing bell, carl icahn becoming the latest billionreai investor to flee a high tech state weve got that story , next what a time to be alive. The world is customized to you. Built for you. So why isnt it all about you, when it comes to your money . So. Whats on your mind . We are edward jones, a 97yearold firm built for right now. With one Financial Advisor per office, were all about knowing whats important to you the one who matters. Edward jones. Its time for investing to feel individual. Classical Music playing throughout Liberty Mutual customizes your Car Insurance, hmm. Exactly. So you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty billionaire investor carl icahn is leaving new york and heading south. Robert frank has more on that. Robert more sunshine, less taxes, whats not to like carl icahn says hes moving to miami next year for the warmer weather and slower pace. But taxes may also be a factor florida has no income tax or an estate tax and those tax rules make it much more expensive to live in hightax states like new york 70 Financial Services sfrims already moved to Palm Beach County in the last few years david tepper, Barry Sternlicht have all packed up and headed south. In 2017, about 64,000 people moved from new york to florida thats about in keeping with the historical average, but tack experts says that pace has recently accelerated now, icahn who is 83 is worth about 18 billion. Hes the fourth richest new yorker, but in florida, he will be the number one richest. Guy, back to you maybe he just wanted that title. Its worth it alone, right . Yeah. Thank you, robert. Thanks, guys. Up next, china adding u. S. Agricultural products to its tariff exemptions. This as the two countries gear up for more trade talks next month. Well discuss the potential big ecom iac aad onicmpt,he onicmpt,he have you lost weight . Of course i have ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. Liberty mutual customizes your Car Insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Welcome back to the closing bell. China adding some u. S. Agricultural products, including soybeans and pork to its list of tariff exemptions ahead of next months trade negotiations joining us to discuss is joseph kearns, president of kearns and associates joe, great to see you today. Nice to be here ive got to get your thoughts on these latest developments the exemptions and also the fact that you are at least, according to reports, starting to see some more purchases of some of these Agricultural Products by china what does it do for prices well, its weve had this happen before, where weve had the promise of china coming back in china is by far our most important export market for several Agricultural Commodities. You specifically referenced pork and soybeans, and i think its in that order. The pork market has responded very favorably, as of recent here the 220 optimism thats built into prices is reflective of some of those trade talks going well and the United States being able to supply more pork into china. Similar situation for the soy complex, were in a millennial dogfight with the south americans over whos going to supply the most important import market for that particular product. The south americans are on the cusp of getting ready to plant the valuation of the dollar versus their local currencies. Certainly, we would give them every incentive in order to plant as much as possible and continue to compete with the United States. Its a very Important Development here, as we take a look at the impact to Rural America. Its an Important Development, joe, but i wonder, hoe surprising is it especially when you talk about Something Like pork. We have swine flu has just eviscerated the pig population in china i would imagine that plays a role in this as well, right . Absolutely. China contains about 50 of the worlds pork supply. The pacific rim, the same area thats been decimated, represents about 70 and so weve got those of us that are in the export markets, and i would put the european union, canada, and the United States are all poised in order to take advantage of this development with more shipments to china we have seen that begin. Weve had a few fits and starts along the way with some tweets that we thought were going to lead to further development, only to be disappointed. This one appears to have some more legs underneath it. Its a very Important Development. Youre right so what extent is china just being opportune in the shortterm need for some of the Agricultural Commodities that the u. S. Can export to it fairly quickly, as opposed to this being more broadly a positive tone from the trade talks. I think theyre probably the most sophisticated and wise trade partners that we have. They have taken advantage of a pricing opportunity, where u. S. Prices are relatively depressed. And if they are, in fact, in buying, i would applaud their effort in the timing and think its a good deal for both sides. If the chinese are acquiring product at a very favorable price and allowing the promise of further shipments for u. S. Producers. Very opportunistic traders and very wise traders. This is not a huge surprise. Joe, quickly, given the fact that you do sit at that intersection between farmers and wall street, youre located out in iowa, what is the sense from farmers around the Trump Administration right now, especially as we do look to the 2020 election . Its kind of funny, because we just had the state fair in iowa and from the outside looking in, you would think there might be a little bit more discouragement in the way that the Trump Administration has handled specifically rural affairs. The polls would show that hes, you know, roughly running 50 approval rating. It seems that Rural America is very patient in its and supportive of relatively conservative issues. And just allowing us to have a fair playing field, we will compete and we will win. So i think theres a lot of optimism in the heartlandof measuring of what could be joe, thanks for joining us today. Thank you up next, were looking ahead to next week fedex results are on the docket. A preview when closing bell comes back ure right sir. Eve. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. At verizon, were building the most powerful 5g experience for america. Thats why the nfl chose verizon. Because they need the massive capacity of 5g with ultra wideband, so more screaming, streaming, posting fans. Can experience 5g all at once. This is happening in 13 stadiums all across the country. Now if verizon 5g can do this for the nfl. Imagine what it can do for you. Welcome back wave got a news alert back at hq back to meg tirrell with the details. With more details on the billionaire Sackler Family behind Purdue Pharma the new York Attorney generals saying its tracked about a billion dollars in wire traverses by the family including through Swiss Bank Accounts this is important because the new York Attorney Generals Office continues to pursue litigation against the family and purdue even as the company said it reached a settlement with thousands of cities and counties and states. But the states that dont agree with the massive settlement say they may go after the family the news today indicates that the new York Attorney Generals Office says that these records allow the state to identify previously unknown Shell Companies that at least one of the sackler defendants used to shift purdue money through accounts around the world. We reached out to the new York Attorney Generals Office, havent heard back well bring you more updates back to you, morgan. Quite a report. Meg tirrell, thank you we have ipo news as well we have the details from headquarters. We are getting word that the madewell under j. Crew specializing in jeans they have now just filed to go public. The number of shares to be offered for the price range hasnt been explained just yet but we know that chin o fold be the Company Behind madewell is going to be called madewell. Say they expect to use the proceeds to pay for debt and also just for general corporate purposes but again madewell brand which a lot of folks know especially women know for jeans under j. Crew saying they plan and have intentions on going public back to you. Thank you. Mike what do you think i mean, j. Crew is a Company Going public went private and now now madewell. Madewell seems to be the kind of core value of what was you know used to be a small piece of the business i think also a bit of resonance with the Younger Generation is probably the key here. Thats the only way you sell the apparel brand to the public. And i think that they are making the bet in has some resonance. All right another name to put in the ipo pipeline up next, your wall street look veoree the key things every inst ndso watch heading into a new trading day when closing bell returns ng busine. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Can i get some help. Watch his head. Im so happy. Whatever they went through, they went through together. Welcome guys. Life well planned. See what a Raymond James Financial Advisor can do for you. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Classical Music playing throughout announcer markets way to fed decision and global richks whats the next move for investors . The weeks first trading action. Squawk on the street, monday well back. It is time now for our wall street rack ahead. The fed decision will be center stage. But fedex results will be in focus. Lets start with a look at the fed, wilfred has a preview. Investors morgan will be closely watching the fed decision the fed is expected to cut rates by 25 basis points fed chair jay powell on employment ob inflation and trade will be key. As always, the fed statement will be issued 2 00 p. M. Eastern time followed by a News Conference at 2 30 p. M. Eastern time the reaction to which will of course be live on the closing bell. Yes, a big one to watch turning to fedex, another big one to watch, especially when you try to get a sense of the economy right now. We get those results next waeb and frank colin has a pre. You fell exexpected to see a 8 in decline in profits epa at 3. 17. Express segment revenues rb the one to watch forecasted to decline by 3. 6 . When the company gets 52 of the revenues early in the quarter it ended the contract with amazon for air delivery and said that along with trade uncertainty would hurt operating income. Two other things to watch. Detailson 7 day a week deliver starting german. And 2020 fiscal outlook. No full guidance last quarter. Thank you frank another thing to watch the dlifrgt alpha summit back on thursday, september 19th some of the flujs Money Managers and political figures. Blackstone steve shrtsman, Vice President mike pence and many more you can go to discuss me delivering alpha. Com to register for that you dont want to miss it, thursday as we said. Back to the Broader Markets, mike were close again to the record alltime highs, 25 points or so away on the s p. It doesnt seem to be the same fear that that means were overvalued that there had been the last couple of times we tested the levels. Thats true i do think its happened rapidly the last 5 . And the fact we were there without that much change in the fundamental landscape, also to note, july of itth when we had the alltime hey in the s p 500. The 10year treasury yield was 2. 0le. Crashed down to 19. 45 now up to 1. 90 if we get back to another two thirds of one high ner the s p, brings us back to the old highs with slightly lower bond yields. Therefore it seems as if if there is some buffer but i also think we have gotten confirmation the economy is not slowing faster than people feared yeah, to that that point you have both the dow transports and the russell 2000, 5 gains for each average this woke and certainly seen as more economically sensitive, maybe early indicators is that what do you believe the snapback in those areas they had gotten too cheap relative to the rest of the market the question is it just a reversal of fast money thats whipping us around or reassessment or both . I would note in both may and july we got to marginal new alltime highs in the overall market fed meeting, fed delivered more or less what we expected then we pulled back hard you know. The morgan, the kbw. We loaf it there have a great weekend. Fast money begins now. And live from Nasdaq Market site overlook New York Times square money im im tyler mathen in tonight on friday for melissa lee. Traders are tim seymour, dan nathan appear steve grasso jefferiry mills. Welcome good to have you with us. Thanks, tyler. The big show, the drama goldman and its credit ka card partner apple, arguing over television pricing apple tv that is goldman seeing a 26 downside for the stock. Apple doesnt like it not one bit. That Company Fired bac