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tv   Closing Bell  CNBC  July 2, 2019 3:00pm-5:00pm EDT

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here we are. markets are sort of in a grind -- >> here we are i'm still trying to get over the guy with the drone we saw the sharks with the kids and said to his wife, go get the kids out >> that's the best story of the day. >> i love it okay >> something to leave you to think about. thanks for watching. >> "closing bell" starts right now. no drones. how do you know that welcome, everyone, to "closing bell." i'm down here at the nike post shares under pressure today as the company continues to deal with the fallout of a decision to cancel a line of sneakers featuring an early version of the american flag. the company has a new response i'll get that to you and tell you what it means for investors. and good afternoon to you. let's look at what's driving market action. despite a choppy session, we're on record close watch still for the s&p 500. any positive close today would set a new record currently just on the flat line. oil prices also plunging as opec wraps up its meeting in vienna and yields on the ten year
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falling back below 2%. as i said, the s&p 500's essentially flat at this moment. the dow's just lower the nasdaq down 0.1% the russell looks down a full percent as regional banks down almost 2%. joining us for the hour today to break down the market action is steve grasso from stuart frankel. great to have you with us. >> good to be here >> what's your take on this sort of softish session only a day or so after great positive trade news? >> you have a holiday week, so you have a shortened, abbreviated week you have people looking for either you had a rebalance on friday, you had end of quarter, end of month, end of week. people are starting to take a big, deep breath in. seeing where they want to reassess, and -- and redistribute their equity holdings it's all about the fed people are on fed watch right now. that's really the only thing that is taking up the brain of a lot of the market participants right now. even though trade is all over the headlines, it's still fed. >> fed still cut, but the trade truce in place
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>> you know, powell kind of walked back and bullard even who has been dovish walked it back last week. i think you have to really kind of watch where you're stepping in this marketplace. powell only has a certain amount of ammo. and usually to fight a recession, the get cuts between 5% and 6%. he has nowhere near that now he has to walk the fine line give the market what it wants, what it craves, what keeps the markets going higher, but he can't give it to them as quickly as they want it. >> let's get back to the top corporate story of the day nike and sarah, you've got mother nature details from the company. >> the company is responding to all of the backlash which has been the story of the day, and a rare second statement from nike. i'll share that with you nike is saying, "we regularly make business decisions to withdraw initiatives, products, and services nike made the decision to halt distribution of the air max 1 quick stripe 4th of july based on concerns that it could unintentionally offend and
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detract from the nation's patriotic holiday. then they go to great lengths to say how patriotic they are ni nike's proud of its american heritage and our continuing engagement, supporting thousands of american athletes including the u.s. olympic team and u.s. soccer teams we already employ 35,000 people in the u.s. and remain committed to creating jobs in the u.s. including a significant investment in an additional manufacturing center which will create 500 new jobs. that would beoutside of phoenix, arizona, where the governor of arizona this morning has said that they will pull the incentives to nike in protest, compromising those jobs because he disagrees with the decision to pull the sneaker. obviously this is striking a nerve at nike, being called un-american. and being criticized for pulling the sneaker. nike's just saying, hey, we didn't want it to be misinterpreted as a symbol of hate it was brought to our attention by colin cop ni-- colin kaepernc
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who they have gotten behinds >> they could have waved a flag and i don't know if that would have curtailed the hate they're getting. obviously there's a lot of patriotic people in this country. there's the military that the flag stands for. it's offensive to a lot of people nike's stance on this. i understand that it's offensive to some people in the country. but it's really a fine line that they have to walk, as well >> did they say, to you was colin kaepernick unequivocally -- >> they're not confirming that that's a journal repo"new englao medicine" -- that's the "jour l "journal" reporting. by all accounts, it's a point of contention and what makes people so angry who is he to be the arbiter of what is racist and what symbols are to be interpreted in certain ways i think me and a lot of people did not look at this particular version of the 13 original colonies flag as a racist hate symbol but once you learn about some of the places it's shown up, you know, nike decided we don't want to be a part of that >> what about the main driver for why they make these
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decisions? whether it was originally embracing colin kaepernick, the recent decision to pull the shoe in china by the japanese designer who had embraced the protests in hong kong or this. is the primary aim doing what's right, or the primary aim what's going to be best for sales >> i think both. this is a company, and despite all of those controversies and there have been no shortage of them in the last year, nike's sales have rocketed. the stock has gone to a near record high. it has not affected them there's only upside even when all the noise is negative like we're seeing on a day like today. >> and having said that -- >> they're progressive they know their consumer better than we know their consumer. when they take a stand on colin kaepernick, despite the pushback, sales speak for themselves >> under armour is up three times what nike is up year to date 2.5 times or close to 3 times. a lot of times when you're a stock investor the first story doesn't hurt you, the second story might hurt you a little bit. but investors don't have to pick
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who's right, who's wrong they're agnostic when they look at the stock price, they want one that goes up more than competitors in the field. when you have the choice of under armour who people battle with valuation but has a three to one outperformance of nike -- >> the smaller company and profile -- >> more domestic leaning, had more of a tailwind when it came to the corporate tax cuts. higher effective tax rate. >> nike is down a little today we'll discuss more on that story coming up. great additional reporting there to get the comment from the company. let's get back to the other big stories we're watching we have more from the stock exchange on the biggest moves. we have the latest on trade and we're covering the auto sales number in chicago. brian sullivan is at the opec meeting in vienna. sima, let's start with you >> reporter: we saw a one-day pop related to the trade truce, and that was it. stocks lower, fighting toy to stay in the green -- fighting to stay in the green. the ten-year yield at a 2.5-yea
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low. that tilt is evident when you look at the sector check it's utilities and real estate seeing buying. the real estate etf up 2% with every stock in that sector higher keep in mind this sector has an average dividend yield of about 3% when looking at the real estate investment trust. one specific mover is hcp. it has a yield of 4.5% one of the highest among its peers. and again, all 32 components are trading higher in today's trade. the dow trying to stay in positive territory yesterday it was financial that led us higher. that's reversing today mcdonald's, verizon are leading, gold man and chevron are lagging. chevron on weaker oil prices back to you. in trade the u.s. today proposes new tariffs on europe we have the details in washington kayla? >> reporter: the trump administration is adding another $4 billion to a list of proposed european goods that would see tariffs as a result of the long-running dispute between boeing and airbus at the world
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trade organization the wto sided with the u.s. in a lawsuit against airbus that was first filed nearly 15 years ago. and that suit argued that airbus was illegally subsidized by european governments so the ustr in response is trying to level the playing field via it was on some $25 billion in european goods. everything from italian cheese to scotch whiskey and the e.u. in retaliation has said it would hit back on about $20 billion in u.s. goods from tractors to tobacco. that response back in april when we first heard from ustr we're still waiting for a response from brussels to the administration's announcement yesterday. white house trade adviser peter navarro said on cnbc ustr will have another announcement in the coming weeks there's currently an august 12th deadline to refine this product list i imagine we'll hear from a lot of the companies involved. >> thank you meantime, auto stocks on watch as new sales numbers roll in phil has more in chicago
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>> reporter: the pace of sales last month roughly in line with expectations a pretty strong month. for the second quarter, and the reason we're showing 2q numbers is because gm reports on a quarterly basis. let's see how they did relative to their competitors and they were all fractionally lower for the second quarter again, the pace of sales overall still pretty strong. one storyline that did come out today, fiat chrysler's ram pickup truck brand sales up 56% in the month of june that is a huge pop, guys, in any category but especially in pickup trucks. the ram outsold the chevy silverado in the second quarter, two straight quarters that that has happened look at overall sales pace and we're showing you the pace on an annual basis most believe we probably came in at about 16.8, 16.9 million for the month of june. quickly look at shares of tesla. we continue to await q2 delivery numbers. whether or not we get them today or tomorrow, that is the number that people are looking for in the auto space right now what did tesla deliver for the
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second quarter guys, back to you. >> phil, thank you turning to oil, seeing a big drop today as the opec meeting wraps up our brian sullivan is in vienna with more. brian? >> reporter: guys, it was maybe a more eventful day than poland. oil prices, first off, falling a couple percent during the day. listen, russia coming out and solidifying a couple of things one, agreeing to that 1.2 million barrel per-day cut for nine months. that's longer than usual they like to go six months for every meeting. now they're going well into 2020 agreeing its cooperation with opec, making opec a little bit bigger and directly and indirectly controlling about 41 million barrels per day of global production. but also in our interview with the saudi energy minister said a couple of things of interest number one, i asked if he thought that global economies were going to slow down. he said no, he thought they would pick up. he also expressed concern about the levels of debt for u.s. energy companies so a lot more happening at day two of opec here in vienna, austria. >> brian, thank you so much.
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we have got stocks trading essentially -- what, just higher on the s&p it is set for a record all-time closing high once again. only fractionally higher the dow similar with the nasdaq low. the russell lagging significantly. the regional banks suffering there, also energy underperforming with oil prices down 4.5%. let's discuss more on the markets moves. joining us, rebecca felton, senior portfolio manager at riverfront investment group. steve grasso with us, as well. you're a chief risk officer. is it risky to be buying quits at these record all-time levels? >> thank you for having me i think all of us have to agree that these valuation levels seem a bit extended given the fact that there's no real news or resolution on the trade front. and yes, the fed is positive, but valuations are higher and earnings growth is trending lower. >> what specifically do you have in mind in terms of what earnings season is going to look like >> well, right now q2 forecasts
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per fact set is for the overall earnings estimates to be down about 2.5% which is a stark difference from where we were six months ago which projected q2 earnings to be up at around 2.5, almost 3% so with ceos telegraphing more negative comments as it relates to expectations for sales and capex plans, it's understandable why wall street has lowered those estimates quite a bit. >> do you agree that earnings season could hurt equity markets? >> i believe that it could hurt the equity markets, but i think the backstop is going to be the fed. the fed gets wind of a negative earnings period or negative to the point that it will hurt the equity market, i think the fed will press a little bit on the dovish gas pedal so to speak >> why doesn't that encourage you to be more bullish, rebecca? over the years post crisis when the fed goes easy, typically the market likes that. >> right but we have to have earnings growth to see multiple expansion from here. and i think that there is reason
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to pause because last year in 2018, for the year, almost all sectors of the s&p had double-digit earnings growth when we start seeing negative numbers year over year for q2, it could cause some sort of a wait a minute, we're -- we're a little extended at about a 16-plus trailing or forward multiple versus the five year and ten-year averages. we're right up at the highs. >> steve, when you see the small caps underperforming like they are today, is that a concern for you? >> sure. there's a lot to be concerning in this marketplace. and i think rebecca's right to be concerned about the host of issues that she's worried about. but we both could have said that a month ago or a month and a half ago, and you would have missed the rip that you've seen in the markets right now so the markets are clearly focusing on stuff that professionals and fundamental strategists and analysts are looking -- aren't looking at and it's the fed, it's trade, and it's macro, not micro. so i think the market can still move higher inexplicably to a
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lot of the participants. >> quickly, your picks in sellers of sectors of where to avoid some of the macro issues >> we're looking deeper into some of the subindustries, certainly technology, it's telegraphed that earnings will be down year over year in that area we're tilting toward software and services in health care we have a bias toward medical devices expecting that perhaps they won't be as heavily scrutinized in the current regulatory environment. >> rebecca felton, thanks for joining us >> thank you still ahead, we'll have much more on opec and oils drop when we speak with sadad al-hesseini. we'll ask where he thinks prices are headed and nike's decision to pulls it sneaker line. what it could mean for nike's brand going forward. dow positive, up about five points we'll be right back. to a single defining moment... ...when a plan stops being a plan and gets set into motion.
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welcome back the s&p just about on pace for another record all-time closing high the dow and nasdaq flat. the russell lags, down a full percent. now to the "market dashboard," mike here's a quick outline of where we're headed to. seeking self-help. we'll get to that. that's about companies seeking
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self-help, admitting to fault a little bit later then looking for some room for improvement. that's about the kind of stocks that have not done as well as others in this market. then giving credit where it's due. another way to look at the credit markets seeking self-help. there's a report in the "wall street journal" today expressing that the pace of stock buybacks has come back a little in the first quarter. really a modest decline from record levels in the fourth quarter. but here is an annual look of just how much stock is being bought back. this, by the way, is $1 trillion that's basically where we got to almost, a little over $900 million last year. that's the orange line here's where we're pacing this year so pretty much close to last year's pace. there is bayback announcements, this is not completed buybacks the other lines is where we were in 2016 and 2017 even if we come back off of last year's levels, it's hardly a loss of support for the stock market from this channel stock buybacks the other point often gets lost
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is that the performance of those companies buying back a lot of stock is -- they're not automatically better than the overall market these are two etfs that track companies with heavy buyback programs, the spider buyback and buyback achievers etf. as you see over the last two years, they've both trailed the s&p 500. now this is some with sector mix, some have a lot of financials and all the rest. they don't have a lot of consumer staples in utilities either there's nothing automatic about buying back stock and getting your share price higher. it is a source of support and new cash into investment portfolios certainly a positive i don't think it's time to raise the alarms yet, though, guys >> maybe why dividends not quite as tax efficient, but more certain in terms of their cash return >> absolutely. >> thank you >> and less political scrutiny, too. >> but fair point on the -- on the tax rates. but buybacks haven't really worked that well necessarily >> why is a buyback a symbol of weakness for a company >> i think, well, you're saying because they don't have anything
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else to do with their money. i think if you look back to the portfolio managers and analysts, they'll point to buybacks as one of the reasons why the markets have outperformed or have performed the way they have recently but when you look at a buyback, a buyback can't by its nature run the stock up you can't be there on the open, can't be on the close, you can't have a plus tick they're more a supportive bid versus aggressive bid. nike under pressure after the company pulled a pair of sneakers that had an early version of an american flag, also known as the betsy ross flag in a new statement, nike says in part it made the decision to halt distribution of the air max 1 quick strike fourth of july edition based on concerns that it would unintentionally offend and detract from the nation's patriotic holiday. let's bring in eric desenhall, he specializes in these case and the head of labrea media
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gentlemen, thank you eric, i'll go first to you how do you think nike is handling this? >> look, a company like nike doesn't do this to be virtuous they do it because they've made a calculated decision to reach a particular marketplace namely minorities and progressives so far, the evidence would show this is the right thing. let me tell you the con founds confound number one is whenever you make decisions or policies like this there's going to be an invisible consequence. there are going to be people who will never take to twitter who despise you for doing it, and you'll never hear about it, they just won't buy your product. second, i think that companies that become activists don't -- and i use that term, social activism, not financial activism -- often don't understand that when you make activism a priority you have to understand that you could never go back you may think you are engaging stakeholders, but what you've really got on your hands is a partner.
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and you will always have that partner. that is the thing that they're going to have to face. i think that they've made the decision that it's worth it. >> my question on this particular nike-related issue is, surely internally before they announced the shoe in the first place they weighed out the pros and cons of using this particular flag. so why didn't they then stick to that decision? what changed after the fact? and if it is simply a high-profile celebrity telling them which way they should be acting, is that the right decision to follow it? >> well, i think that's the confounding issue here is how did this happen, how did they make this mistake. and they may not have had the diversity inside -- and i don't want to pick on nike because i think they've been known as a fairly diverse company but how did they not know that this was potentially going to offend people? it's obviously an unforced error. and how did they not know this
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was going to offend certain amount of people by coming out with this. that this was symbolic of certain things that harken back to slavery - >> i don't think it does i mean - >> yeah -- >> 13 original colonies stands for the revolution and american independence and other things. i don't think it was widely known. >> yeah. i think you're making an interesting point which is a lot of people would look at that, and it wouldn't occur to them that this -- in this day and age where everybody is absolutely mortally offended by everything, i don't think that this is something that absolutely jumps out and kicks you in the teeth and i think one of the challenges is what i'm finding with companies is they often are so beholden to internal politically correct issues that they assume that external audiences will have the same reaction that they are having internally and they do a very bad job at anticipating hostile backlash. i think that there's a mythology that these companies are all so
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sophisticated that they couldn't possibly not foresee everything. and i think that they rarely do. >> you made a very good point. >> continue -- >> i was going to say, eric, you made a good point that they have already chosen to be on colin kaepernick's side. >> right >> i'm surprised that colin kaepernick didn't call somebody within nike and do this quietly and more low key and say, hey, guys, you may want to rethink this, and then nike would have quietly pulled it as opposed to make it a p.r. moment. i think nike should be grateful. it's getting big play today. it getsing big play because it's a relatively quiet newsday in the business world right before the fourth of july holiday it's a novelty shoe. it's not a shoe line it's -- it's a moment for them, and by monday, obviously i think we will be forgotten and this will move on. but it does reinforce what you said, eric, this is where nike has chosen to stake its claim as
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a company. and this is where they're going. i don't think this is going to change i think it's a speed bump versus a sinkhole for them. >> i think that that's right i don't think that this is going to be a huge singular issue for them i do think that what we're getting at is the broader issue of companies taking on political issues believing they are -- that they are going to be universally beloved. and i'm seeing time and again a company, for example, will invite an environmental group internally thinking look how open-minded and prague revenue i am, and -- progressive i am, and they find i've got the in-laws living above the garage, and i can't get rid of them. >> exactly right >> good discussion thank you for joining us >> thank you we've got 35 minutes to go here before the closing bell dow, s&p, positive territory s&p up just fractionally, but that will do it for a new record close. any close higher the nasdaq is down a bit the russell 2000 stands out as a
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laggard. down about 1%. after the break, a downgrade for nordstrom and babyish note on roku -- bearish note on roku your favorite company. >> big customer of theirs. impartial on the stock price we'll talk about that next later, we'll discuss today's auto sales numbers with former chrysler president jim press your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.
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welcome back 30 minutes left until the close. time for word on the street. ubs down grading nordstrom to neutral from buy it has category and price issues and that its competitive position is weakening. >> and concerns over competition, it also cut its price target to $40 a share from $56. and rbc capital markets downgrading roku to sector perform from outperform saying the risk-regard is less compelling the analyst on this was on power lunch earlier. he's still bullish on the underlying fundamentals for roku long term. >> sure. >> it's reached the price target >> as an analyst, how do you go from -- you have to go from outperform to sector perform when the stock is up 200%. what's the risk/regard at threw- risk/reward at that point? you've hit the ball out of the park let it settle in he said he would be a buyer on
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any pullbacks that you see, any substantive pullbacks in roku. >> look at the intro today, as well it sold off this morning, then people read the note - >> did you realize that roku has been streaming since 2008? that's a long time they had a head start on a lot of players i not the interface is ease -- i think the interface is easier than others. i have the chromecast, i have a roku tv now. i've seen the amazon product i think that amazon and roku are on equal footing but roku has a lot more choices on theirs versus the others. >> they're agnostic to the content. >> doesn't matter -- >> they're going to be a big launch partner for disney plus, for apple plus, a launch partner for amazon - >> that's a big topic. amazon pushes you to amazon prime. so roku is agnostic. so you wind up getting everything you could funnel through and decide what you like better they're going to be in more and more tvs, more and more set-top boxes. i think that it is due for -- ripe for a pullback when it's up 200%
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you can't knock mahaney for backing off t. >> 30 minutes to go. here are things driving the action, mixed action on aufwall street we are on record close watch for the s&p 500. any positive close would set a new record i think it would be the seventh record close of 2019 oil prices sinking as opec wraps up its meeting in vienna they popped yesterday. and yields on the ten-year treasury falling back below 2% time for a news update with sue herera >> hello, everybody. here's what's happening at this hour after three days of negotiations, e.u. council president donald tusk confirming that the european union have reached agreement on their new leadership >> we have proposed an underline of the next president of the european commission, and nominated christine lagarde has head of the central bank
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>> russian foreign minister sergei lavrov urged iran to adhere to its nuclear deal and called on europe to offer tehran relief from u.s. sanctions he spoke at a joint briefing with the visiting irish foreign minister and here at home, the ritz carlton in philadelphia is offering champagne from a vending machine. to get the chilled mini bottle of brut or rose, a consumer can purchase a $25 gold token from the lobby bar. and after inserting it in the machine, a robotic arm will gently lower the chosen bottle to the window without shaking it you don't want to lose any of those bubbles. that's very civilized. >> but i figure that would still shoot the cork off quite aggressively even - >> i would think so. think you have to be careful when you actually do the cork. >> how has this not existed before >> i don't know. >> i was going to say i'm not sure there's going to be much market for that. you think it's going to do well? will. >> i think it's going to be great. are you kidding me >> i'd rather have whiskey come
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out of there >> not scotch whiskey if the tariffs are coming we'll see. >> that's true >> no french champagne either. >> there we go >> why not french cheese as the focus? >> all the good stuff. >> anyway. sue, thank you see you next hour. the usa might be pop something champagne coming up. >> trying to jinx them trying to jinx them. >> getting grief on the floor. i'm outnumbered aggressively up next, crude falling today as the opec meeting wraps up we'll discuss where prices could head next with former executive sadad al-husseini. and shares of electronic arts up nearly 30% this year the company is banking on its "fortnite" competitor to boost growth we'll debate what to do with the stock at these levels coming up.
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gains building a little bit here the nasdaq going positive, the dow near session highs back to mike for the second dashboard. mike >> calling this admitting to fault which i understand is a hard thing when appropriate. i can't confirm that companies in pretty large numbers are admitting that their second quarters are not going to be that great.
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look at the history of the number invested p-500 companies issuing negative guidance for the coming quarter essentially admitting numbers are not going to be as good as analyst expect what's interesting is obviously more than 80 companies, pretty significant when you're only talking about 500 in the index the last time it was this high or a little bit higher actually was the first quarter of 2016. what was happening then? we had this kind of global industry slowdown. this recession near recession globally. and the stock market had a severe correction and then had to recover from the correction if you look at what the s&p 500 was triading at back then, if w dial it back in terms of the forward p.e. of the s&p 500 for the last few years and go back to that april 1st of 2016, which would basically be the equivalent of today in terms of where we were in the quarterly setup for that quarter versus now, look at that. almost 17 times earnings where are we today almost 17 times earnings bond yields, almost as low as they were then basically it's a very similar
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setup. it looks negative. it looks like the earnings season will be sloppy. can the stock market look through that that's the question now. it has happened in the past that if you have low yields and accommodative central banks the market can say this is a downturn in earnings but it's going to pick up >> thank you so much we'll see you again in a little while. oil finishing the session lower despite on, effect and allies officially reaching a deal to extend production cuts through march, 2020. the energy alliance hoping to prop up crude prices amid a waning global economy. oil finished down 4.4% the energy the worst sector on the s&p. by phone from saudi arabia is sadad al-husseini, president of husseini energy and company vice president. thanks for joining us. what's your take on the latest production cut and the fact that we have seen oil prices slip aggressively down 4% >> well, it's been very challenging obviously.
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i think the opec thing was very successful i think the fact that they arrived at a charter with the non-opec participants, russia and the others, makes their position a lot stronger. they'll be able to be more effective in trying to maintain a stable market. of course, the demand is weak going into the balance of the year but on the other hand, they are a much more defensive position to be able to manage that weak market i think the price correction that we've just seen is probably a bit short term i think it's a bit overstate by the end of the summer we should be seeing slightly better, higher oil prices. so at year end it remains to be seen just what happens at year end. >> you have to key opec members that are under u.s. sanctions, iran and venezuela and you have the u.s. producing more than it ever has. so i guess i'm just wondering what power opec really has over prices these days.
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>> yeah. always have this in opec, skprenz iran i think they've been marginalized the rest of the opec group working with russia should be able to put together a good, sustainable strategy to provide good, reliable oil supplies but also at a price that allows investments in the future of both the opec and non-opec be sustained. that's very important. the capital investments in the oil industry have gone down very, very significantly since three, four years ago. and so there needs to be a higher margin to retain ability to provide oil supply in the long term. >> so that where do you stands on the permian basin and, more broadly, the recent discoveries over the last five to ten years in the u.s. and whether or not
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they're perhaps going to be as plentiful as some people think well, there's no doubt that the shale oil developments have been fantastic. they've certainly brought the u.s. production way up now we're looking at 12.5 million, maybe reaching 13 million next year. but on the other hand, this doesn't come without a price the oil that comes out of the shale is not as effective in producing transportation fuels and so you see this big gap between the wti and the conventional oils. and in the long term, although there's more opportunity to develop shale oil, the world is consuming almost 100 million barrels. and the total u.s. production is still only 12 or 13 million. there's plenty of room for the conventional oil production from other parts of the world to be involved in the oil industry >> do you expect the ramco ipo
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to come back to market at some point this year or next year >> yes that's been stated by the crown prince very clearly. he didn't set a time, but both he and the minister of energy of saudi arabia have said that the ipo is definitely on the horizon. yes, and i think the outcome of the bond issuing that ramco did not so long ago was very encouraging. both of those factors will suggest that the ipo is going to be back on track >> can -- you think they can still achieve a $2 trillion valuation which they're seeking with oil prices under pressure like this? >> well, that's a tough question i wish i could answer that it's going to be a very, very profitable industry. the oil industry is going to be around for a long time oil has no substitute frankly. we all go for alternatives to
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oil but the volume that is required to keep the global economy running will always call for oil for several decades to come so it will be a very profitable business and that should invite good investments in the ramco when the ideal is put out >> thanks for joining us >> a pleasure. >> steven, the s&p 500 energy sector yielding 3.7% according to fact set. does that attract you >> no it doesn't you can make money it's volatile. you can make money, but i do believe that if you look back on the xle, the etf for energy companies, it's underperformed for last five years. it's actually flat for the last five years so i think it's basically declining profitability. and you play those large integrated names, the problem is they're not specific in any one space to move the needle i would stay away from energy. >> we've got breaking news on auto sales phil >> will the monthly sales pace
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for june came in at 17.28 million vehicles according to auto data that tracks all of the automakers' sales. that is stronger than expected the expectation was for sales around 16.9 million. the pace is 17.28 million. guys, back to you. >> that's a good number. all right. thanks well, anything can happen, as you know, in the final hour of trade how about the final 15 minutes any close higher on the s&p 500 will set a new record high up next, the "last chance trade. later, former chrysler president jim press will join us ♪ lower carbs. ♪ lower calories. ♪ higher expectations. the light beer you've been waiting for has arrived. corona premier.
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♪ everything is all right what would you like the power to do?® ♪ all right 1 3 minutes left of trade. >> i think about barbecues and costco costco has been growing operating income for five years over 40% walmart has actually had a decreased operating income, gross margins have expanded. and the renewal rate on subscriber, on membership, is over 90% >> you mentioned the fourth, is this a short-term play, or you like this -- >> so all my plays are always short term if you take a profit, no one's going to ever mock you for taking a profit. i believe you can still get a
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pop. this stock has performed already year to date i do see performing a little further, a little longer in the tooth. it's been one of the success stories in the retail complex. >> great to see you as always -- >> i'm surprised you're not going with nike as a fourth of july pick? >> under armour fourth of july pick >> always great to see you we have 12 minutes left before the close any positive close today is another s&p record all-time closing high still about 0.4% from the dow getting there and about 1% from the nasdaq we do have gains for the s&p as we stand as we head to break, here's a count of the companies hitting new highs and lows in today's session. closing bell, we'll be right back
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eight minutesing ing iunti close. delta airlines raising second quarter revenue and guidance the demand for products and services remains strong, and the stock is being rewarded, up 1.3% bitcoin, the cryptocurrency briefly dipping below $10,000 in today's session. last week bitcoin was about 13,000 today recovering intraday is up 2% we are on record close watch for the s&p. up next, we're covering all angles of the market in our closing countdown. tomorrow, a special edition of "the closing bell. 12:00 to 2:00 p.m. eastern time to wrap up the shortened market trading day. as we head to break, look at the winners and losers in the dow. we'll be right back with under eight minutes until the close. hi walter.
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>> the way three of the indices were muted trade but make no mistake the crude oil move and the bill rally in bonds, the corresponding downward move in the ten year have weighed on the russell 2000 index that said, all eyes attorney a muted trading day on tomorrow only until noon, and then we're all looking to nonfarm payrolls. the biggest data is in nonfarm payrolls i expect tomorrow to be muted, low volume that being said, we thought december 24th was going to be a muted session, as well we got a big move then never say never. >> the nonfarm payrolls is that a key thing as to whether we will see the fed deliver a rate cut later this month >> yes, and here's why this is last look at nonfarm payrolls and unemployment that jerome powell will get before the july 31st fed meeting. he's running out of data pieces
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to make his final decision this is the biggest one of the month for sure >> what's taking the ten-year yield below 2% here today, kevin? >> yeah, i think it's just really strong moving the bonds we didn't have a lot of data today. all we had was redbook so this bond rally taking some people by surprise really taking its toll on -- remember, the russell is so heavy in regional banks. really weighing on the russell the biggest mover in terms of the four major indices >> kevin, thanks for joining us. great to see you as always up to mike for his third market. mike >> calling there room for improvement. yesterday the s&p hit an all-time high. only 11% of the stocks hit a new 52-week high let's look at the breakdown of new highs versus new loez. the stock exchange, we were above 200, not bad a lot of the defensive stocks are loading that up. that's not terrible. look at this breakdown by bespoke, going into today, the
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stocks in the s&p sit relative to the 52-week highs you have here more than 40% of all stocks that's your scale on the bottom percentage of stocks are within 5% of the s&p 500, say but you have a fifth of the market, more than a fifth of the market that's still more than 20% below. that shows you there's a lot of dry powder in the cyclical pressed stocks perhaps to have comeback you can lookali alitt this as rr improvement. now to the nasdaq and bertha >> thank you so much t-mobile is one of the stand yachts it's higher today -- standouts it's higher today on hopes that it's moving closer to being able to close the sprint deal with a potential divestiture deal with dish meantime, chips today are selling off. we're seeing profit-taking after the big move higher yesterday. nonetheless we have 128 new highs. 2-1 here on the nasdaq including the nasdaq itself which is on pace for an all-time high close as the nasdaq this year has had more than 90 ipos,
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although a number of them today are also seeing some profit-taking like the real which went public just on friday over to seema. >> a sluggish start for today, bertha but stocks regaining momentum in the afternoon. an $800 million bid to buy going into the close, according to our reporter who i caught up with. that helped get a lift into the afternoon. turning our attention to global markets, european stocks despite the administration turning its attention to the e.u. still closing fractionally higher, the s&p 500 on track for a record close. we are higher by six points at 2,970 which means we are 30 points away from breaking 3,000. sectors that led us higher -- defense. some big names there, l3 harris, lockheed martin, northrop grumman, and raytheon, all posting gains. and one narrative that continues to hold is those interest rate-sensitive sectors moving to the upside utilities, real estate, even gold all in positive territory.
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but one thing to points out is the weakness in retail that continues to be a consistent theme in the first quarter and now into the second quarter. [ bell ] most agreeing the sector lower by 1.7%. the s&p 500 record high, up eight points at the height of the session at 2,972 the dow jones industrials up 65 points, 26,787 yep, that will do it a new record closing high. welcome, everyone, to the second hour of "closing bell. >> cnbc's senior markets commentator. a record all-time closing high for the s&p 500. we just needed any positive gains. we actually got near the high of the session. in fact, the high of the session, up 0.3% on the s&p. nice little run-up in the final 10, 15 minutes of trade. the dow up similar as well as the nasdaq the russell very much the laggard today, down 0.6%, in
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part because we did see yields set below 2% on the tenure regional banks suffered the weight on that index the other standout decline, energy stocks with oil down 4% >> we're going to point out the places that did not feel euphoric as we reached new record highs how about the semiconductors do you know if this is about a celebration of the pause and the trade war, a truce in hopes of a deal, you're not getting the enthusiasm that you might think out of key sectors that would benefit like the semis which did close the day lower. just really yesterday kind of losing the gains and then today, with the sort of lack of enthusiasm that's been a thing -- >> i don't think any of it was euphoric with 0.3% it doesn't need to be to get another record all-time closing high when we had with one yesterday. >> joining us art cashin', director of floor operations at ubs financial services, chairman of malden economics, and writer of "writers breaking views" joins the conversation mike, what's it to you in the
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action toward the record high? >> quiet but firm. i think holding near the highs is okay. as you mentioned, you kind of unwound a little bit of that cyclical trade that benefited yesterday from the trade news. i mean, treasury yields, very compressed and then corporate yields following. i keep pointing it out, but it's the straight math of how equities get priced. that's i think benefiting things today. we had good excuses to get nervous if you don't like the way the russell trades, you don't like the way the transports trade that's been a pattern for a while. i think the market still has improvement in terms of what it's handicapping beyond the fact that bond yields remain low and bonds stay up there. >> to that point, should we be concerned about the small caps, about the transports >> well, i think we want to watch them you know, you've got the international players, people benefit from the trade and small caps are mostly domestic so they're not really in that game you benefited a little bit from the market internals, we had
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about $800 million to buy on balance for the close. that's what put you on another closing record and so the market internals were good i think volume is going to keep going down markets are going to get thinner as we get into next week >> john, how do you interpret the recent price action in this seventh now record close of 2019 >> it's the narrative. i mean, people are buying into the story. they're buying into the trade. and my concern now is if we don't deliver some tariff news pretty soon the rest of the world is having problems dige digesting all of this. and the rest of the world could end up infecting us. europe's clearly slowing down, the rest of the world is and on the russell, art was talking about, have to remember the russell just rebalanced friday you know, 400, 500, moving up and down so what's happening in the russell may not exactly be
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responding correctly for the first few days until we can get all that rebalancing done. and then it may start looking more like the market >> to your point on trade that we need get tariff news, is not getting tariff news not sufficient to allow markets to -- >> i think we get tariff weary we are tired and it really is causing problems in the global supply chains, the global markets, the rest of the world is clearly slowing down, freight indices are going down, trucking -- shipments are way down trucks themselves are off 60 percent, 70% of sales. so there's -- there's enough to make you worry even though employment's at an all-time high, you know, the markets are at all-time highs. life's good, and yet we're going to get a 25 basis points cut a strange world. >> speaking of trade, trade
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adviser peter navarro did a bit with us earlier. we asked about the latest round of the u.s.-china trade negotiations, whether the truce will still, whether investors should believe in it take a listen. >> it's complicated. as the president said correctly, this will take time, and we want to get it right. so let's get it right. in the meantime, in terms of the markets, i think it's very bullish for the markets. and the two things that have to happen in the short run to get us dow 30,000 and above are going to be passing the u.s./mexico/canada agreement and having the fed lower interest rates. >> rob cox, what do you make of mr. navarro's characterization of the bullish markets and what we need to get to dow 30,000 >> yeah, i don't think there is any -- i don't think you can make the correlation that trade war is going to be good for the markets. i mean, that's just economically nonsensical. but there is this point where -- you know, it's kind of useful for the white house to have this kind of on and off again trade war with china it's politically useful,
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obviously at home. i don't think you heard anyone last week in the democratic debates say we need to go softer on china, right. this is a #winningargument for donald trump it's also winning around the world. i spent time talking to people outside the states they kind of like -- they're glad that the united states and donald trump is doing this, but you really have to be careful. you push too far, and we are as -- as you were saying there, we are going to have a problem if we push too far. and europe goes into recession, brazil, any of these other countries. then that brings us down into some sort of crisis of confidence and global -- in the global economy it's really how close can they kind of balance this on again, off again to get through to the november, 2020, date >> to -- excuse me, to navarro's point, do you think if u.s. mca gets passed there's a further uplift in markets, or is that already expected it's china and europe that's more important now >> well, you know, china and europe are up on top right now if you did get those things
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passed, it would be helpful. i think you'd have a couple of days rally built into that but basically navarro said it's not just the fed who needs to be patient. investors need to be patient, too. he cautioned using -- you're not going to get a quick and easy answer out of this >> he also said, john, that tariffs and the trade approach has not weakened our economy at all. it's been the fed being too tight which has weakened our economy. >> i don't really see how he can say that is it making a huge difference no but he's talking his book. i mean -- he wrote the book saying that we needed to do this trump pulled him on to the team. no secret from my writing, i think tariffs are the wrong thing to do. should we have been tough on china? absolutely and there's a term for doing that but tariffs hurt the united states it's clearly hurting supply chains and it's digging into slowly and surely people are becoming more
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cautious you're not seeing people build -- buy more factories, they're not doing anything they're waiting to see how it turns out. and that waiting slows business. >> rob, you mercedez-bentioned e people international rehappy that this whole process is going on so say the germans where their economic data's suffering, is everyone united behind pushing china hard >> no. i mean, europe is kind of -- depends who you ask. but there's certainly a sense that when it comes to i.p. and also some of the actual issues the u.s. and european and other nations have been arguing about with china for years that there's at least somebody putting pressure on china. because the -- it isn't the european union, although by the way we got good news out of europe you know, that -- that's helpful in the sense that we've got, you know, consensus on leadership. but so -- i do think that's helpful. the other side is you hear it if you talk to people in china,
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there is nobody putting any pressure internally on xi jinping and on the chinese communist party to reform. and so the idea that donald trump is doing it, no, they may not agree with all of the exact measures that the united states is asking for, but it is a kind of a check and balance on the global system and on reform process in china that's generally perceived i think as a good thing. >> companies giving a gloomy outlook ahead of q2 earnings according to fact set. 77% of the 113 companies issuing pre-earnings announcements gave a negative eps outlook for the second quarter that's the worst level since q1 of 2016. mike, you had a chart on this earlier, as well to what extent do we feel that this is already priced in? >> by the time we're given the warnings and the fact that most of the cyclical companies are trading well below the highs, some of it is priced in. to me it's about whether it's viewed as kind of backing off of earnings before they bounce a little bit in the second half. or if this is kind of end of
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cycle spiral down. and we don't really know that. i think right now you still have the estimates in the second half of the year. there's probably room for them to be cut, as well, before you good night down to zero. >> if we get to disappointments, is this a market setup for heavy punishing, the facts that it's run up to record highs going into earnings season where we expect negative growth >> well, i think the trouble is slightly different remember in the last quarter, they cut pretty drastically their guidance, too. and they overshot the mark they had to recorrect. they may be doing that again however, if rates keep coming down, history tells us that the multitude -- the multiple for stocks may contract slightly so even if you had exactly the same earnings, you'd be hard pressed to try and get stocks higher if the multiples are going to contract. >> john, what sectors do you think are going to suffer most this quarter this earnings season >> i think the retail sectors,
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any sector that -- durable goods. i mean, things -- people are becoming cautious. for instance, home prices are still rising, but they're rising now at a much slower rate. ye year-over-year chances are down from what they were last year. they're increasing it, but they're increasing much less people are just kind of pulling you in and it's a cautious sign nobody's panicking but when you start getting these kind of earning warnings, there's something going on, and what's going on is the economy is slowing, not a recession. but it becomes vulnerable. and its vulnerability is when something out of europe, something out of china, that creates the problem. >> you read a newsletter that people follow, a strong following r. you telling them to get out of the market because the economy's slowing and you're warrioried about -- you're worried about trade impacts? >> i think people should be
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hedged in this market. in my own things what we do, we actually diversify trading strategies and we're about 40% long as opposed to being 80% or 90% at sometimes. we've pulled it back in. we're not completely out of the market we could be. so it will -- cautious yes. >> okay, john. thanks for joining us. art cashin', rob cox, thank both for joining us also. the u.s. and china may number a trade truce next, we will look at why new trade troubles could be taking off over aircraft subsidies. and then former chrysler president jim press tells us how the escalating trade tensions with europe could impact the auto industry.
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welcome back another record day on wall street the s&p 500 closing in uncharted territory for a second straight session. closed near the high of the session, up 0.3% seema modi is following for us and bertha coombs has the latest and boeing that continues to be a drag on the dow. seema, let's start with you.
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>> another choppy trading day but the third close high it was the sectors that led us higher, tech closed in positive territory. speaking of technology, earnings estimates continue to be revised lower with analysts now forecasting an 8% decline in profits in the second quarter. and energy right behind that with oil prices of course continuing its downward trend. that's not helping that of course another risk as we look at stocks at record highs. back to you. >> all right thanks let's get to bertha coombs to check on today's nasdaq trade. bertha >> the fact that the nasdaq composite finished higher today was a factor of the large caps again with the russell 2000 stilt in correction and negative again. we've got the nasdaq composite and nasdaq 100, both about 50 points away from new record highs which sets us up if we get a very strong number perhaps on friday with the jobs number that's likely going to be very key as to whether they catch up with the s&p
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chips today sold off after that big enthusiasm that we saw yesterday following the enthusiasm or the trade talks. we still don't have an actual date when the trade talks will resume back to you. >> bertha, thank you now boeing shares as we said lower again today as the subsidy dispute with the europeans continues to heat up phil lebeau has the details. >> reporter: this has been a long-running dispute going back 15 years ago ultimately through the wto, boeing's lawsuit was ruled in boeing's favor now the trump administration is saying, wait a second, there needs to be some remedies put in place here in orders for this to be enforced. so they are threatening up to $25 billion in tariffs on e.u. goods. we've talked about this. we've had rahel solomon at a food convention where they talk about wines, cheeses, olives that might be tariffed europe is now responding saying, you know what, we may come back and put a $20 billion tariff on some u.s. products, including tractors we've got some time here
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at least early august is when we expect the full list of goods and the next step to take place. guys, this is heating up between the trump administration and europe and ultimately it's because of the wto, that ruling and that lawsuit alo alo long-running dispute >> it's fair to say with educati agriculture and the policy the subsidies are indisputable when it comes to autos and to aircraft and airbus in particular - >> yeah -- >> it's more implied as opposed to outright. >> sure. right. and airbus has responded over the years by saying look at the tax incentives that boeing receives from the state of washington or other assistance that the company may receive in terms of tax breaks. their response is those are subsidies. now the wto has ruled in boeing's favor, but there is going back and forth between boeing and airbus for a number of years >> phil, you've been covering june auto sales for us all day
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the results have trickled out. give us some of your hot takes >> here's the bottom line -- stronger than expected 17.28 million was the pace of sales, most were expecting 16.9 million. trucks and suvs, they remained the vehicles that people want. >> phil, thank you so much fil phil lebeau with us. and former vice chairman and president at chrysler, jim press. thanks for joining us. let's start with the tariff debate and the autos who do you think's the likely winner here? we talk often between the u.s. and china of who has all the cards. who does between the e.u. and the u.s. when it comes to autos and aircrafts? >> well, the fact of the matter is there are very few winners in tariffs. it's a tax and in this particular case with the u.s. auto companies, they're paying already if you look at the sales and, you know, i liked phil's report,
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17-plus is a good number, almost 17.3, if you look at it closer, the retail sales are down 2.9. fleet sales are up 3.3%. affordability of cars is a factor the average price of a car is now up about $1,000 more than it was last year. and of that $400 potentially is what the aluminum steel tariff was. and so when you slow down demand here, you're going to affect both the consumers and the producers. so i -- i don't really see -- i understand the idea of tariffs and the need for fair trade. but using tariffs like this, it's kind of like using a baseball bat to play golf. >> hang on we're glad we have you, jim. we have those breaking numbers on tesla phil lebeau with the details phil and sarah, elon musk has said for some time we could set a record in the second quarter they have done that in terms of deliveries total deliveries, 95,200 vehicles delivered in the second
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quarter by tesla if you look at the vehicles that we want to focus on, the model 3 is what everybody has been focusing on. the estimate was for something over $74,000, maybe $74,100. they delivered 77,550. so more than expected. so again, that's why shares of tesla moving higher. stronger than expected delivery numbers for the model 3. as well as for overall because the estimate on the street was for about 91,000 vehicles to be delivered. they delivered 95,200. no breakout in terms of regional deliveries but we're going to hope to get mother natu more detail on that. that's why tesla shares are moving higher. >> interesting the share price reaction up 6% when this was in a leaked e-mail, right >> what, the -- the 95,000 number - >> it wasn't - >> the number is new >> the record is anything over like 65 -- >> yeah. he said he was going to be close to a record. he did not say we definitely will set a record. >> and to your point, phil, the
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key thing is not the absolute record, it's the relative performance compared to analysts and this is a beat which was the important thing. >> yep >> is there beat delivered because production was strong or demand was strong or both? and which do we need to see more of in the coming quarters? >> they say there's not a demand problem, but they never give any indication exactly what type of reservations or hands raisers are out there -- hand raisers are out there. it's hard what the demand is remember when they had slower deliveries in the first quarter, immediately analysts said, well, there's a demand problem must be a demand problem but elon musk has been very clear for several months that they do not have a demand problem. now he has said that, some people have chortled and said sure, there's not a demand problem. clearly they are meeting the expectations, exceeding expectations here, with 95,000 deliveries for the second quarter and model 3 better-than-expected coming in, what, at 75,000. >> yeah. the share price is plekreflectii
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up almost 7% jim press still with us, does there put to rest the concerns about demand for tesla >> i think the demand was there. i think a lot of this quarter was really done by stoking up production they had unfilled orders, especially outside the united states the model 3 filled a lot of that production needs they may have sacrificed some potential of the higher margin other vehicles we'll have to see. it does show well and, boy, i'll tell you what, the green car industry itself isdoing very well now compared to what it has been doing >> do you expect a lot of competition coming on line, jim, in the coming quarters for tesla? >> absolutely. all the major manufactures are really getting their product development on e.v.s ready, as well as hybrids, and the -- the fuel cell cars the green car market is not just in california. it's beginning to expand beyond.
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and if you look at telephones's production, half of their sales up through the end of this -- beginning of this year has been in the state of california a lot of this growth now for them is outside of california. and that shows the demand is growing for green vehicles throughout the country and -- and actually in other markets, as well, outside the united states. >> just want to hit the stock move with you. >> yeah. >> 7.5% here, a nice spike for tesla after hours. butt that in context. >> a lot off the lows, before the pop now what it brings it is exactly what used to be the bottom of a long two-year trading range, 240 to 250. i think that it's kind of interesting that we gravitated right back to that level we'll see. i also want to go back they did sell 90,000 cars in one quarter. it wasn't the first quarter or second quarter, but late last year anything over 90 or 91,000 would have been a record they did beat by a few thousand. >> musk's tweeted in the last couple of moments
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congratulations tesla team and thanks to the new tesla homeowners nothing groundbreaking in that >> nothing controversial >> they have lowered prices, they have added incentives they're giving away -- i think that now it's great, they have the demand in a quarter when they didn't have as many subsidies that's a great thing we'll see what the profitability is >> jim press to rounds things off on our initial topic, are there changes you would like to see whether tariff are the right roots between the auto industry between europe and the u.s.? >> absolutely. i think first of all the tariff discussion causes so much uncertainty that it's very difficult for the manufacturers, for all businesses, to make good strategies and plans the uncertainty is really difficult for the consumers, as well it affects the industry for many ways the -- my experience at toyota, years ago, was the voluntary
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restraint agreements where there were discussions underway to actually regulate the import volumes of key products or markets. and what that does at negotiation allows you to put pressure on the country involved for specific actions or changes or cultural changes in china's case, but it does it in a way where they have time, you have an ability to discuss plans and strategies to implement, and it isn't just hitting them with a bat and trying to force the issue. the other -- the other thing i feel is that from a standpoints of the tariffs, we really need to take a strong position. i think everybody really supports the administration for taking a position on trade but it needs to be in a much more holistic way to achieve the results long term and not just a -- a hit for the headlines >> jim press, thanks for being with us. want to go back to phil lebeau now who has more on tesla and
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the better delivery numbers. stock still up 7.3% now. >> one reason why the number continues to be strong is they have indicated that the backlog of orders has grown. it grew in the second quarter. in fact, they say specifically that they generated more orders than deliveries and so they head into we can with-- into q3 with stronger backlog they're not giving us numbers, but that's a strong statement in terms. saying, look, there's demand out there. we have a stronger backlog >> is it sustainable, phil >> well, i mean, they would say it's sustainable you need to know where it's coming from. they haven't given a breakout in terms of how many deliveries to china, at least i haven't seen it yet how many to stay here in north america versus europe. look, china is the untapped market here. we know that their vehicles are hit with a tariff right now because they're shipped from the u.s. over there. so if they can get through the next, you know, six months until they get the plant in shanghai
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up and running, i mean, that is a huge arket and i've been over to china. i have seen the demand over there for electric vehicles. it is real it is much bigger than here in the u.s. and that is an untapped market that tesla thinks that it can fill over the next couple of years. >> phil lebeau, thank you. tesla up more than 7% after hours. the ten-year treasury yields did fall below 2% today. there's a boon going on details next later, whether electronic arts' new season of "apex legends" will be able to dethrone "fortnite." ♪ ♪ creating the perfect night... just takes a little creativity. the light beer you've been waiting for has arrived. lower carbs. lower calories.
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has been excellent. they really appreciate the military family and it really shows. with all that usaa offers we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life.
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♪ get your usaa auto insurance quote today. stock closed at a new record high today let's go back to mike santoli for the final dashboard of the day. mike >> we've been talking for a few days about what a strong stock market half year it was going into the end of june look at the total return, though, in investment-grade corporate bonds. this is the lqd, the investment grade corporate bond etf, up 13%. it's hard to express what a great year that is for essentially low-risk instruments. obviously treasury yields have been falling that's been a tailwind you have the 3% or so yield on top of it. the orange is the ag the total bond market, u.s. bond market index, with a lot of government and mortgage bonds in there, as well also a really good help here at 6% we have this global rush to grab yield where available. look at the chart that says here is in dollar terms where yield
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is coming from right now all of the government bonds in the world on a yearly basis now are giving $244 billion back to investors. right? that's -- i don't know, $30 trillion or something like that in bonds because of all the negative yielding bonds out there and the rest of it now global investment grade corporates cor s is more than te actual amount of debt. you have the huge grab for whatever safe yield is available in the world to the point where the prices of corporate bonds have gone up so much because there's not enough yield. this is why the s&p 500 gets a bid for cash income investors. right now the annual pace of dividends is $470 billion. that's going to go up most likely as earnings go up so this tells you a lot about why the whole capital markets are flush and people just need to grab where they can for you >> going back to the first job, mike, how would risk yield have done, how would junk have done would it also be strong performers >> even better, absolutely, yes.
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i didn't share that because in a lot of ways that trades along with equities. there have been instances where you have a half year where it's up 20% or something. they followed right along. the spreads are not as fight as they were in the middle of last year, but they're tight. >> some of the dividend stocks like energy, as we mentioned earlier, i'm sure we'll be wondering why they haven't - >> you have to really, really love the dividend. >> right >> and be able to deal with whatever the stock price >> mike, thank you as always. time for a news update sue? >> hello, everyone here's what's happening this hour vice president mike pence abruptly canceled a planned trip to new hampshire after being called back to the white house for an unspecified reason. pence's chief of staff, mark short, telling "reuters" there was no emergency but pence's plane never left washington a national poll shows senator kamala harris has vaulted into second place following her widely praised performance in last week's nbc news democratic presidential debate she trails former vice president joe biden by two points in a
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quinnipiac university national survey 22% to 20% vladimir putin expressing condolences to relatives of the 14 sailors who died after a fire broke out on one of the russian navy's deep sea submarines he summoned his defense minister for a briefing on the fire which is now under investigation and a solar eclipse is starting to darken the sky over northern chile tourists from around the world have gathered to witness the cosmic spectacle chile and argentina are the only places that the total eclipse will be seen you are up to date that's the news update, guys see you tomorrow >> all right see you then sue, thanks. still ahead, much more on tesla's big pop going on right now after hours. and analysts weigh in on the delivery numbers and the stock move straight ahead. falling mortgage rates helping existing home sales rise last month but up next, the ceo of redfin tells us whether an exodus of chinese buyers in the u.s. could lead to big trouble in the housing market uh-oh, looks like someone's
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still nervous about buying a new house. is it that obvious? yes it is. you know, maybe you'd worry less if you got geico to help with your homeowners insurance. i didn't know geico could helps with homeowners insurance. yep, they've been doing it for years. what are you doing? big steve? thanks, man. there he is. get to know geico and see how much you could save on homeowners and renters insurance.
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welcome back chinese buyers have been the largest foreign bears of u.s.
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residential -- bears of u.s. residential real estate for years but they are pulling back. diana here with more >> reporter: in the first quarter of this year, chinese buyer inquiries for u.s. properties on a chinese real estate site were down 27.5% from a year ago while they were up for properties in canada, the u.k., and australia. it's called the trump effect aim combination of ant -- a combination of anti-chinese rhetoric, clamp down on visa processing, and tariffs. the trade war is hurting demand from chinese students, especially in california and texas where parents were buying homes for their kids to move into after graduation. in addition, the chinese government is cracking down on the amount of money chinese citizens can take out of the country and spend on u.s. real estate back to you. >> thank you, diana. we're going to discuss this further with glen kelman, ceo of redfin glen, you agree with that? the scale of the pullback in chinese investment in u.s. property, and what's your take
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and why? >> well, it's declining this year it began last year in earnest. i think the u.s. housing market has priced that in we can take it the main pullback was last year when you couldn't take as much money out of china to buy u.s. real estate. that's when we saw the really profound effect. investment last year declined by about 63%. this year, i think it's going to be a much smaller drop the indication is that it's probably in the 20s, just baitsed on searches against -- based on searches against chinese sites. >> i would think it's different in different parts of the country. like on the west coast or in new york we'd be more vulnerable of the drying up of chinese demand. where do you see it getting hit the hardest? >> you've got the absolute right markets. you also see it in university towns, you see it in city centers. so condominium buildings with 10, 20, 30 stories, those have often been the targets for chinese investors who are comfortable to that style of life so we see demand declining
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there. but the overall picture of the u.s. housing market is so strong right now. we were really worried about it in the back half of last year. but today there still aren't enough homes for u.s. buyers to buy. the decrease in chinese demand is something that the market is going to shake off >> you are seeing foreign money get into u.s. real estate through another trend you call i-buying talk us through what that is >> yeah. that's the way you're seeing the market change. so you've got tech companies like redfin, opendoor, zillow, knock, and many others buying up u.s. real estate and basically giving people who own a home an instant cash offer where we take responsibility for flipping the property, and it counts for 8% of sales in places like phoenix and the capital for that very risky business has mostly come from the middle east and the far east so if you're looking for the way that foreign capital is really deforming the u.s. market especially in the sand belt,
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you've got these starter homes that are being bid up by tech companies that see a good deal and pounce on it >> i'm surprised to hear you talk about how strong the housing market is, glen. i mean, i know -- i know you do that usually but haven't we seen some mixed signals on that front? prices down -- >> whoa. whoa, whoa, whoa >> they're supposed to boom after lower mortgage rates and you're not exactly saying that >> right so in the back half of 2018 we were the first ones to say this market is much weaker than anyone realizes. we called it in august we were even stronger at the back half of the year when we said that it is going to end with a whimper, not with a bang. but now it's very strong home builder confidence is reasonably high. mortgage rates are falling and the home buyer is exquisitely sensitive to that because people can barely afford a place. and so with inventory declining, prices having their largest gain in seven months, i'm not just saying it because i work for a real estate brokerage. i'm telling you the truth.
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the market is fairly strong now. and it wasn't very strong in the back half of the year. if rates go up again, we're going to have a sharp correction >> all right fair enough. thanks for correcting the record glen kelman, always great to talk to you. next, tesla soaring after strong delivery numbers. find out if this could spark a turnaround coming up [ "done melody" plays ] ♪
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after reporting better-than-expected second-quarter delivery numbers. dan nyes from wedbush securities joins us bull turned bear turned skeptic r. you inprmpressed >> no doubt this is a step in the right direction for musk and tesla. you got to give them credit. this is a strong rebounds from 1q in terms of unit models and number second half numbers and profitability. there's where there's more wood to chop. no doubt questions still remain. >> what's your take on the fact that they've said that this is a growth in order backlog, as well is that a key factor, and if that is delivered in the next couple of quarters, are you going to be massively upgrading your price target? >> well, that's key in terms of tea leaves going into 3q obviously we have earnings in a few weeks. but ultimately does that mean you'll have orders and deliveries up in 3q and ultimately into 4q that's where they're trying to say they could hit the numbers
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we continue to think that they'll rip the band-aid off and ultimately have to lower those targets over the course of the next few quarters. but this is one -- this company had their back against the wall, you got to give musk and tesla major credit here for what they did in the quarter the bulls win this battle right now. and i think obviously you'll see the stock up, you know, significantly tomorrow as shorts have to go back into their cave to hibernate >> good way to put it. dan, thanks. dan ives, phoning in from wedbush. coming up, a big video game battle e.a. out with its newest "apex lej ges"ean loing to take on "fortnite" in a big way. the impact on stock ahead. to s that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater
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when we come together. ♪
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welcome back
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the european council officially nominating christine lagarde to be the next president of the central european bank. lagarde saying in part she has, quote, decided to temporarily relinquish responsibilities as managing director of the imf during the nomination period the current president's term ends october 31st. official appointment for lagarde is likely in the in the coming months the other point is that ursula van derleon, has got the european president's job, as well for all the tensions of the last couple of days at the european consul, some are asking about the german and french person in the top two jobs both of whom from center right political party backgrounds, all very pro-european union. this is a big win for european unity. you also don't have a hawk which is potential in the ecb role which, again, is important for
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markets. only other thing i'd say, it does have to be confirmed by the european parliament. all of these announcements are framed as if they're locked and loaded they probably are, but they haven't been confirmed yet >> i'll take the lagarde piece of this. it's somewhat surprising much she's a world leader coming int. she is by training and by background a lawyer, and has a front row seat and first class ticket to all world leader meetings at g20. this will be a bit of a change, becoming a central banker. however, you know, it has been asked of her by all european heads of state hard to say no to that also, you know, she is a person that firmly is a long-time believer in the european project and the euro and has a strong sense of duty when it comes to that so i expect this to go through what happens at the imf now is she is stepping down temporarily. david lip ton, the number two, will take over once it is confirmed as expected, then they start a new search project for the imf the big question for investors
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and the market implications, what does this mean for the somewhat controversial policy from the ecb they're in deep negative interest rates now they're stimulating for what looks like to be forever, and whether it is going to actually prop uptheir economy which has turned south i talked to her just in april about ecb policy and whether the ecb now easing again would do anything for the economy do negative rates work here is what she said. >> well, they do that if you look at the rationale behind it. they do that because inflation rate is certainly not at the level where it is expected you know, they have this -- this 2% expectations minus or plus, but 2% close to. they're not there at all it is much lower at the moment, both in terms of core inflation and anticipated inflation. so that's the reason why they are moving in that direction, and it is -- we see that as completely legitimate.
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what we are also saying is mo monetary policy alone cannot address the current delicate moment where we are, and it requires those, you know, fix the roof, please, which means conduct the structural reforms which will boost productivity and that will support long-term growth that is absolutely needed. >> i think the takeaway here for investors, guys, is expect the same from drahgi she did two things there she justified negative interest rates because inflation is missing. that's what he has been doing. she said, look, policymakers, it is time for structural reform. that's what he has been saying as well. we can't just be the only game in town. there's a limit to what central banks do. >> there is a long record when she was finance minister of france, criticizing germany's trade surplus, all of the rest of it, all of the things you might say to say, yes, you have to have a fiscal response here. >> and the key being it is not one of the last names in the last six to twelve months on the list and someone that probably would have been more hawkish interestingly, sarah, to your
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point you are surprised whether or not she would take this i completely get she was a politician by background, not an economist, and maybe she would have preferred the president of the european commission job had that been available, too but either job, i would ink this, is a significant steppup from the imf. >> i'm not sure. >> being president of the ecb, if it is power you are after, has more power than the imf. fixing certain, you know, em crises, the imf is at the forefront, but the ecb is second biggest currency bloc in the worm. >> she is a world leader and that's her domain. >> she has access to the meetings but she doesn't have real power amongst the biggest economies. >> now she has power. >> that's what i mean. maybe she wants to go back into politics and it has been delayed in france or maybe she would have liked the commission president job slightly more, but it is a big step up. so i would have been amazed if she turned down what the offer is. >> you don't turn down heads of state when asked for a job like this switching gears, electronic
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arts, apex legends launching the new season today and looking to take on "fortnite" in a way. josh lipton has the details for us. >> it is now live. ea's free to play shooter made the prize debut in february, quickly attracted 50 million players. ea executives saying "apex legends" is the fastest growing new game the company ever had and saying bookings or adjusted revenue from the game could be at much as $400 million in fiscal year 2020, though analysts say that the initial fehr ver for the game has cooled can ev spark renewed interest in the game and give the stock which is up 30% this year a lift back to you. let's bring in michael packetor w pactor on the list more skeptical with the rating on the stock, michael? does it factor into your bullish view >> i actually put it on the best
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ideas list because i know vince, who runs respond pretty well he told me how committed they were to making season two work and to continuing to have regular updates every three months or so he thinks he will reinvigorate the user base. i think it is right. this update is 18 gigabytes. it has tons and tons of stuff, in-game tournaments and stuff to reengage players i think that 400 million that josh talked about is probably light. i think the game probably will end up doing 500 or 600 million with upside if they continue to see user growth. they're at 60 million downloads right now. probably about 40 million users. to get $10 per user per year is not crazy talk that's what harthstone did it is what overwatch does. it is an achievable target. >> brandon, why are you more skeptical? >> sure. i mean obviously this game came out of the gate pretty strong and has fallen off since
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as michael mentioned, vince, who runs respond, has said that he's extremely committed to making this game work but we actually noticed in an interview he did a couple of months back at a conference vince said, first of all, that he was not sure how much content was necessary on an ongoing basis for this -- for this game and what the cadence of content should be, and that they were just sort of feeling their way around it. it took them several months to launch this more sizable season two, and we believe that in the post "fortnite" world players want a very constant flow of content and of changes to the balance of the game and new things to engage in and that every three months is probably not enough there has definitely been a pop and engagement today
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we have seen it in the twitch viewership, but we are just not sure how sustainable that's going to be past a couple of days >> michael, i guess for the overall thesis on ea right now, how important is this game i mean where does it fit within, you know, the longer term earnings story for the company >> you know, it is a company that does over 5 billion in revenue, so we're talking about maybe 10% of its revenue stream. it is a pretty profitable title. that's probably throwing off 60% operating profit, so maybe, you know, near a dollar a share contribution on a $4 kind of base so it is pretty meaningful you know, brandon is right that gamers want content every day. "fortnite" does big content drops every ten weeks. so i don't think every 12 weeks or 13 weeks is crazy late. you know, vince spoke at the conference i was actually a speaker at the same conference right before him and i saw him two weeks ago at
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e3 for four hours at my party. he is pretty confident about this i know the guy well. this is a big update ea, i'm really comfortable ea is going to hit its numbers, and i think you will see intermittent interstitial updates between the three-month big updates. i think brandon is right gamers want it, i think vince is smart enough to deliver it and the stock is going up. >> yes. >> brandon, quick final word go for it. >> i just want to say the other issue here has been that the game was buggy out of the gates. we have watched some twitch streams today and a lot of the streamers, including shroud, who is a major streamer of the game, are reporting that there's bugs in season two. his servers were so laggy he had to leave the game in the middle, and it took him a long time even to get back on so we look to -- for vince and crew to fix the bugs as well >> michael and brandon, thank
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you both for joining us. >> thank you. >> bye back to the major market move today mike, s&p 500 record all-time closing high as well the other positive being we were at the high at the session of the close, albeit up 0.3% and did see small caps, transports underperform. >> there were opportunities within there for the market to sort of back off i think it makes sense to be in the sort of treading water mode. we do have some, you know, relatively significant economic numbers coming out in the morning, even though it is going to be a short day. you have pmi, durable good orders and things like that. i think the market is on a bit of edge to be 100% certain it is getting a fed rate hike it doesn't fully absolutely need because the economy is falling off a cliff. >> pay attention to the move in yields below 2%, no data, what does it tell you >> i think globally you had a beeper move into negative for a lot of the developed market bond yields yes, it shows you despite the
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fact that everyone is pointing out that yields look over-sold, people are too bullish on bonds, the move has gone too far, too fast, you're not getting a lot of relief there. >> sometimes it is bearish because it means economic weakness. >> on a programming note, don't miss "closing bell" special time tomorrow, 12:00 p.m. to 2:00 p.m. eastern time. that does it for today's show. >> "fast money" begins right now. ♪ >> "fast money" starts now live from the nasdaq market site overlooking times square, i'm melissa lee. tonight, the s&p 500 closing at a record high for the second straight day as a bull run wages on there's one name that has lagged the market for the last decade that the chart master says is about to break out you won't believe what it is we start off with breaking news out of tesla charging higher, the company reported delivery numbers moments ago, record ones at that let's get to phil lebeau with the


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