tv Closing Bell CNBC February 11, 2019 3:00pm-5:01pm EST
schultz isn't one and teas. >> oh. they have that >> on the menu now so popular. >> little -- rum in there or something might make it even better all right. folks, thank you for watching "power lunch." >> "closing bell" starts right now. ♪ welcome to the "closing bell." i'm sara eisen. >> i'm wilfred frost a. very good afternoon to you. >> happening right now, president trump scheduled to sign an executive order on maintaining leadership in artificial intelligence. we'll bring you details, what it means for the relationship with china as soon as that happens at the white house. former australian prime minister kevin rudd knows about dealing with china and joins us to tell us why a trade deal will not be finalized this week. paul tudor jones, the thoughts on the market and
investing socially and in a responsible way in a cnbc exclusive interview. but first the marktd less than an hour left of trade and pretty much at session lows, near them. the low for the dow was down 89. currently down 70 points the high of the session was up 90 as it's not been a huge spread today. we are right near the lows towards the end of the session. >> let's begin today with breaking news in washington. eamon javers with the details on the president's executive order. ylan moi with the possibility of a government shutdown. eamon? >> reporter: just a few seconds ago i hung up the phone with steven swartzman of blackstone and supporting this executive order saying this is a super important issue in his words for american business competitiveness saying he's been interested in ai himself since
about three years ago when he was sitting on a bus with jack ma of alibaba explaining what the future of ai could look like an concluded in the united states was not nearly as organized perhaps as other countries around this issue. and so he and others have been leading a charge here for a comprehensive federal government strategy involving the private sector and universities, as well, on artificial intelligence so what we'll see from the president here is a five-point executive order. let's walk you through what it will do. in the first place, it will direct federal agencies to prioritize ai investments, that is, not spending particular amount of money but going to encourage them to focus their spending around ai it's going to make federal data models and computing available for ai researchers that's giving them the access to a lot of that information to be helpful they argue here. it's going to provide guidance for federal regulators particularly on the issue of
safety skeptics have said they want to be cautious of how it's done because runaway out of control artificial intelligence could be a problem for safety and fellowships and training programs for ai workers and open global markets to american ai technologies here at the white house they look at china as a big competitors. they want to make sure that the united states is doing everything it can to maintain a lead into the 21st century on artificial intelligence. that's what we'll see here at the white house, guys. >> does it allocate new funding toward this research and projects >> reporter: no. >> isn't china throwing billions at this? >> yeah. this is the united states telling agencies to prioritize spending they're doing on ai but you're right the new money will have to come from congress to go specifically to ai so this is the president telling the bureaucracy, look, let's get with it here. >> eamon, thank you very much
for that coming up, we'll talk more about this topic with former u.s. chief technology officer megan smith, the president due to sign that executive order any minute. reaction coming up. the other big story out of washington is apparent stalemate in negotiations to prevent another government shutdown. ylan moi has the latest for us from d.c. >> reporter: this impasse is no longer just about the border wall but also about immigration beds and democrats want to cap the number of beds for interior immigration enforcement. republicans say it could force them to release people convicted of a crime the top negotiators on the shutdown committee both republicans and democrats, they're going to be meeting in just about a half an hour or so to see if they can break the logjam and coming under pressure from federal workers to keep the government open. >> puts news a hard position you know
and yes, i want to continue to protect the community. i'm going to continue to go to work i want to continue to get paid while i'm at work. >> reporter: workers are fanning across capitol hill today. both the house and the senate to urge lawmakers to reach a deal guys, they said if there's no agreement by the end of the week there will be no protests. back over to you. >> ylan, thank you. joining us now to discuss, libby cantrell of pimco. what are the odds of a shutdown starting on friday >> look. i think they're quite low, actually if you're a member of congress, you're going to try to extract everything you can from the opposite party however, you realize that the political costs and the economic costs are simply just too high so i don't think that a shutdown would originate from congress and trying to find a resolution or extend the deadline beyond friday however, i think the big question mark is what does president trump do it is not clear that even if the congressional negotiators come to a deal to sign that into law
and may declare this a national emergency on the southern border. >> i'm surprised you say that because i feel like the sort of reason behind not going as far as a shutdown is losing face which he decided not to push ahead with last time would he not be hurt more from declaring a national emergency >> he could declare a national emergency and even if it's contested in the courts, it would allow him to declare victory on that singular issue which is, of course, very important for him and his base same time, allow the government to stay open he could do it simultaneously, fund the government and declare a national emergency to ingratiate himself with the base. >> what's the feeling of market reaction last time it was largely shrugged off but we were in the middle of a big rebound in january? >> i think it's not necessarily risk and a negative because the economic kind of adverse affects
are quite transitory however, and a big however is the markets extrapolate what does the government shutdown this time around mean for things like the debt ceiling? mean for the fiscal cliff? the deadline is october 1st of this year. those actually could have meaningful impacts on markets and the economy. >> switching focus to the china negotiations what's your latest hunch there do you think we'll avoid things getting worse and don't reach a deal soon? >> our view is the president likely wants some sort of political victory on china however, a big however, the things that the administration is asking for china are pretty big, large structural concessions and get at the china 2025 industrial policy so i don't think we believe that a deal necessarily resolved by march 1st. but we do think is likely to see an avoid dance of an escalation. so again, when's more likely here is either an extension or some sort of a down payment to a bigger deal and not necessarily a quick resolution by march 1st.
>> did you see it largely priced into the market? >> the expectation, the hope is not seeing escalation. seeing escalation is not necessarily priced in the market. >> if the tariff rates go up >> yeah. march 1st. >> as for china is thinking or should be thinking, i guess originally it was thought that president trump was the worst-case scenario for them he had the bit between the teeth on china was clearly going to push hard for a deal as we are seeing the democratic candidates announce, do you think that's a fair point of view or an issue to take on china and really force a tough all encompassing deal to actually try to get a deal closed with the president? >> that's a great point because president trump and the democrats are strange bedfellows on china if you look back to senator schumer or speaker pelosi on the issue, they have been really opponents of china and certain terms of china with the wto and trade for decades. so in some ways, you know, the
democrats again are very similar thet wick the president and the democrats putting pressure on the president to strike a harder deal and taking a trade deficit deal, doesn't get structure or concessions, you could see pressure from the left here and this potentially be a campaign issue in 2020. >> speaking of that, what sort of questions are getting from investors or concerns around all of the democratic candidates that stepped forward >> i think that ocasio-cortez is capturing the imagination. i think people are extrapolating her victory to sort of 2020 democratic field however, of course, she represents a very blue district and in order to win the general election you have to win places like wisconsin and pennsylvania. so probably we're going to see a moderate democratic candidate ascend i would think if the democrats were trying to capture those states but from top of mind for our clients is will we see sort of a paradigm shift like with
president trump? will we see sort of an unexpected candidate like with president trump emerge on the left you know, again, a very crowded field. debates start in june. i think this is going to be a very long slog to 2020. >> great to see you. thank you for joining us. >> thank you. still to come, the deadline for a trade deal with china, 18 days away. former australian prime minister kevin rudd to weigh in on the odds of a deal done by then. after the break, paul tudor jones joins us for an exclusive interview. his thoughts on fed, global growth concerns and socially responsible investing next and we want to hear from you reach out to the show on twitter, facebook or send us an e-mail "closing bell" back after a quick break. when you look at the critical issues facing our world, what do you see?
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s&p is flat. the world's largest etf conference under way in florida. our own bob pisani is there and joined by hedge fund manager paul tudor jones it is a cnbc exclusive bob, take it away. >> and we're here at the biggest etf conference in the world, sara 2,500 investment professors talking about the future outlook for global growth and investing in general paul, thank you for joining us you are about to give a major speech on let's call it social responsible investing. your point is an interesting one. you're telling the crowd it is time for the american investing public to change the outlook on how and what they believe the purpose of corporations are. the old milton freedman model you argue that the purpose of a corporation to maximize shareholder returns is an outmoded one why and do you want to replace it with? >> you have to realize when milton freedman said, he was a
hero of mine, that was in 1970 the top income tax rate was 70 wealth inequality was one fifth of what it is today. we were living in a semisocialist state in that point of time and he was a counter balance to that. fast forward to where we are today. and we now have the highest wealth inequality in the history of this country. we have got literally half the country that can't raise $10,000 for a family emergency we have got 35% of the wealth used to be owned by 90% of the population today the -- they have lost a third and that 12%'s gone to the top 1% so we've got a system that i think we all could agree on the wrong track. >> you'll share a slide that's
fascinating. capital firm. >> foundation. >> foundation, excuse me you helped found >> right. >> has very different principles to maximize return you surveyed the public and had different values of what a corporation should be doing to maximize shareholder return. they said 25% of the corporation should be doing is making sure workers get fair pay and benefits 20% say customer treatment of privacy are essentially. products socially beneficial 15% say. look at this good for the environment, 13%. put up the next one because only respondents felt about 9% of the real purpose of a company, 8%, excuse me, to maximize returns your point is the american public is already socially responsible. how do you go to a boardroom and tell them, no, no. adopt this model >> here are the facts.
since 2008, 92% of corporate profits gone to shareholder. it's the photo negative of what the american public thinks a just company should do so we have this big disconnect of what the american public thinks and what corporate boardrooms, c-suite, are actually doing the interesting thing is there's a way to bridge that gap where everyone wins. so what just capital does is we rank the russell 1000 companies 1 to 1,000 every year according to metrics not determined by us are an academic panel but by the american public and polled over 100,000 people over 4 years and what the american public thinks. we rank those companies 1 to 1,000. we created an etf which is why i'm here that takes in the 33 industries that track the
russell 1,000, it takes the top half, the topper forming of those 33 sectors and we have an etf that has half the names of the russell, the best performing on those metrics, according to the american public that are important. that index on so many metrics outperforms the rest of the companies. >> now, that symbol -- >> stock prices better outperforms the just index, outperforms the russell 1,000. on average those companies create jobs that are 27% faster rate has a 3% higher return on equity recycles waste nine times the average. i could go on and on. >> that symbol is jdst is there a connection here do you think that corporations address the issues and started adopting the kind of values you're espousing here to help
address the wealth inequality here is there a connection? >> clearly i think we have got a mania going on and buybacks and a mania going on in terms of shareholder supremacy. it wasn't always that way. right? if we go back to when i was a youngster, corporate pay, ceos made 20 times that of the average line worker. so things have been different and can be different again if they're not, i'm nervous about what the ultimate social consequences are in this country. >> senator schumers and sanders sponsored a bill to limit salaries. >> i'm talking about justness over a year. i don't know if i want to see a legislative outcome for this i'd love to see this happen organically. if i was and i'm not, if i was a director on a public company or a private company, for-profit
company, two questions to ask before i thought about shareholder buybacks, dividends or anything. the first question would be, how many of my employees are not making a living wage that's the first question that i would ask. the second one if i were a director, what are we doing to help local communities what percentage charitable contribution is going to the most needy and the place where we have customers? what are we doing? in 1985, charitable contributions by companies were 2% of revenues today it's 1%. why is that? why is that? >> let's move on let's go to the taxing wealth question we have seen. we have democratic hopefuls announce recently. how do you feel about the new democratic proposals for taxing wealth >> i think the reason that we started just is so that we wouldn't get to this point,
right? if i think about the taxes, it is the most inefficient way to allocate resources in an economy and just capital is so important and find an organic solution and that means a complete cultural, social, intellectual shift of the way that we think about our companies and what their responsibilities are why don't they have greater social responsibilities? the smartest people in the world run american companies let them -- let's bring them in to this discussion on how we take care of those left behind. >> i got to move on and ask you about the global economy and the markets. global growth is a major issue what do you think about the united states market right now europe and china right now >> i'm very bullish on the u.s. stock market if you think about what happened last year, last year we -- i
think of things in terms of flows and last year we walked into a situation with a lot of euphoria a huge amount of investor positioning. both united states and globally. and we took those positions and pret te much washed them into a trillion dollars of corporate buybacks fast forward to where we are today. all that leverage positioning in particular from the long short community, macro community that's all been washed out but we still have like the terminator 1 trillion plus in buybacks probably scheduled -- well, certainly globally and maybe close to that even in the united states. i don't know where the stock's going to come from it will have to be i think higher prices defined, a group of investors willing to sell the stocks. >> eu flat growth in italy going nowhere. 1% at best for the rest of europe right now
is there any kind of relative value play given how europe underperformed >> so again -- right so i think we are going to have -- this year we continue to have u.s. exceptionalism and outperformance i think the s&p 500 will outperform its peers, emerging markets. and i think from that you'll have to take all the core lated trades and rates won't go down they'll probably go back up. and i think the dollar will probably stay firm. >> okay. paul tudor jones, a timely topic about wealth inequality and ways to address it. thank you for joining us. >> etf, just that's the index and the etf. >> thank you very much paul tudor jones, always a pleasure here. i'm here today and tomorrow and will have other guests to talk about, as well sara, back to you. >> great to hear from paul tudor
jones, bob thank you very much. very bullish on the u.s. stock market and continues to be exceptional this year. stocks and the dollar and bonds. >> and that very bullish call because positioning is more favorable than the start of last year and tail winds including the economy and buybacks. >> not such a fan of. >> nonetheless, they're coming there in the middle of a mania i think was his word mania in terms of buybacks and shareholder primacy. great interview from. shares of tesla getting a boost after a wall street firm up jades the stock to a buy. later online sneaker marketplace goat with a massive investment from foot locker. >> do you know what they are >> nike. >> offwhite. >> i could have told you this. >> i'll teach you about it before the segment. >> perfect interviewing the ceo they'll have a great conversation and i'll just tch. we're back in a couple
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discretionary all doing well today though you have weakness in communication services. video game makers. media companies are lower and health care and utilities. time for a cnbc news update. >> hello, everyone here's what's happening at this hour representative omar of minnesota drew condemnation including speaker nancy pelosi after she insinuated on twitter sunday american support of israel is fueled by money from a lobbying group. omar apologized but reaffirmed the problematic role of lobbyists in politics. more confirmed cases of the measles in the u.s the cdc says 101 cases in 10 states this year the majority of the patients were not vaccinated. a public health emergency was declared in washington state last month. a public visitation for the late democratic representative john dingell is under way in michigan the 92-year-old passed away last
week after a battle with cancer. he was the longest serving member ever in congress. and new jersey sports books are the first to legally accept betts on the academy wards on february 24th. analysts say the state is breaking new ground on the readily expanding legal sports betting market and you are up to date that's the news update this hour, guys back downtown to you. >> i would rather bet on this. >> not sports betting so much as just betting or i guess it's a bit of a sport. >> some people it's a sport. >> there you go. >> thank you. >> see you next hour. key week for trade u.s. trade delegation in china as the negotiations continue ahead of the deadline. kayla tausche is tracking it with the latest. >> the second day of negotiations for this round will get under way as that delegation of number two officials from the u.s. trade representative, the departments of agriculture,
commerce and treasury work to edge closer to a deal with china before treasury secretary mnuchin and u.s. trade representative robert lighthizer join in on thursday and going into the week there's still quite a bit of space separating the stances. china was willing to help close the trade deficit, a priority of president trump and structural issues and enforcement were elusive. the u.s. may be willing to remove or relax tariffs as china is asking and some concessions on recognizing china as a market economy or allowing access for chinese companies in the u.s. are unlikely now, if a deal comes together or potentially just moves toward a deal later this week, the march deadline may get moved and talks solidify on that trump/xi summit on a to be determined date and time there's debate there, too. a senior administration official
tells me there's no meeting on the books and we'll see what this week brings >> kayla, we will. thank you very much for that. joining us in an exclusive interview to discuss further, former australian prime minister mr. rudd thank you for being with us. >> good to be with you. >> you wrote an op-ed of this is a new and dangerous phase. >> yeah. >> your take on that is not so much whether these daily or weekly developments are heading in the right direction but the bigger picture that china/u.s. relations are the worst point they have been and could get worse from here for decades? >> probably the lowest since '72, since nixon went to china and that's nearly half a century. trade if you look at that as one box, the nontrade economy, investment, technology and then beyond that foreign policy, national security, cyber, space.
if you tick the boxes one after the other including human rights they're negative territory deeply negative territory and according to the administration and washington have moved from a period of strategic engagement, post-'72 to open competition. >> you outlined in the article a number of ways on both sides that suggest we're not heading in the right direction so if we do reach a deal now, on trade as kayla just outlined it's quite possible in the next couple of months we will, do you think that's a superficial deal or do you think it could really be the fundamental deal that solves all of those issue that is you just outlined >> i think it will be as it were superficial plus but it will not get into fundamental te tori. i think kayla's right, by the way. what i have sensed of the two principles of xi jinping and president trump met in buenos aires setting as much a deadline
to have a joutd come, an agreement. why? because xi jinping's economy is softens more rapidly than he wants and for a series of reasons beyond the trade war and of course, here in the united states, here in wall street, you have seen what's happened to markets in the last couple of months and a slight recovery based on what's happened with interest rates and some sense might be a positive outcome on trade, as well both principles, both leaders want a deal. the negotiators are divided on the substance of the deal, trade, technology transfer, forced ip protection and strait support of china's ai industries and other high-tech. they're the sticking points. >> at this very hour, the president is at the white house signing an executive order that would make ai more of a priority not sure what the exact specifics are of this but where's china and where's the u.s. on this and if we are in some sort of competition, what does that look like >> even if we fix the trade war,
whether we like it or not we are in an undeclared high technology war at present you see that manifest through the fight of what's happening with huawei and, of course, across the whole range of artificial intelligence technologies, same applies, as well. the chinese back from memory of april of '17 launched a national ai strategy. xi jinping said at the time it's our number one priority. it provides with us a unique opportunity to achieve a quantum leap in the competitive race against the united states. both in military and nonmilitary applications so the united states is a bit slower on the uptake if you read the literature, chinese total investment is probably just under that in aggregate terms of the u.s but it's graph's going like that and the u.s. graph like that. >> the companies moving faster than the government on this. >> they are. but you've got to china a
massive government effort. in the united states, a much smaller government effort so on the executive order which is well publicized in the last 24 hours, as with everything, the devil will be in the detail. is it real substantial? or is it a press release >> there's another interesting thing in the op-ed i guess australia has a different perspective and the uk, as well. investment from china is almost always a benefit whereas the u.s. says that sentiment remaining the biggest economy in the world is an important one. would none of this be an issue for any of these countries or economies if china was a democracy? >> well, you hit the nail on the head in one large part xi jinping been in office for nearly six years has doubled down on the reverse ideological direction. the emerging chinese model as of when he took over in 2012 is authoritarian capitalism or state capitalism and more
intense in that direction rather than the reverse so when you stand back from it all and you look at the emerging rules which china begins to lay out, for example, the belt and road initiative and some of its initiatives more broadly in the international economy and politics, it is more consistent with china's domestic model opposed to the one we have by and large adhered to since the u.s. effectively led us to victory in the war so that's the race that's under the way. the more fundamental question i think, wilfred, are the chinese likely to democratize? no. >> you mentioned china slowing and puts pressure on xi jinping. interesting time to have you on because the joutd outlook out of australia softened i feel like the downgrades of various countries that have links to china much more severe than china's has
do you think again that china's sort of lying to the international community? and things are slower much more than they reveal >> it doesn't usually lie. you collect the stats of the other end and not just domestically all of china's principle economic partners and not an economy in east asia without china today as a number one trading partner recording similar trends domestically the chinese shadowing growth in the first quarter of this year of 6% that's the lowest in decades in fact, i think likely to be south of that in real terms. and certainly in my travels in china last six months of last year softening business confidence, softening consumer demand look at chinese consumer expenditu expenditure for new year, up but not like the previous years and first signs of an unemployment impact, as well. these are the reasons making the
chinese leadership anxious at present and then the trade war on top of that that'sy think there's an overwhelming political will in beijing to get this thing done and i think the president of the united states would like to declare victory, as well. >> wall street's trying to figure out the chances of a deal, what the deal will look like, who's going to give way and claim victory. you're prime minister from 2007 to 2010. again in 2013. you negotiated with the chinese. what's something to tell wall street investors about the way they play the game and they negotiate? >> the market with this answer, kevin. >> sure. that's why i'm going to be ambiguous in the response. i know what i'm good at and bad at and telling marks what to do is not something i'm good at if you're giving a probability out of 10, will there be a deal on trade by 1 march, yes there's a political will by the heads of government to do it whatever the hawks and the respective governments might
want but that is what i describe as only a partial resolution to an unfolding economic war with china. so if you're an investor and you're looking at long term risk, be mindful of an on balance negative direction i should say for u.s./china relations. >> back to the title of the piece, dangerous phase, one speech i guess we haven't talked about was president xi jinping and said he's willing to use military force in order to reunite taiwan with china. do you think taiwan could be a pawn in the negotiations or would the u.s. and the allies like australia continue to defend taiwan? which i guess would raise the prospect of a military clash. >> i think the taiwan language used in january, we shouldn't read too much into it but the chinese saying for a long time that they would not disavow the use of military force to deal with the taiwan contingency so i
think can't read too much into that xi jinping overall hardened the rhetoric about taiwan and not on the table in the current trade and broader strategic negotiations between the two sides. that's my honest analysis. >> kevin, great to see you thanks for joining us. >> we have got just under 20 minutes left of trade. the market is lower on the dow and flat on the s&p. higher for the nasdaq and the russell. still to come, "closing bell," we'll talk to former chief technology officer megan smith for the push of artificial intelligence. tesla shares jumping after a wall street firm predicts a 40% rally in the stock we'll share the details next
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movers morgan stanley announcing the largest acquisition buying solium capital it manages the stocks of corporate employees receive as part of the pay and small bolt-on for the wealth management business. the stock down 1.2%. people are saying a premium price. we did hear in the earnings call looking at small bolt-ones on in this area and not a huge surprise and this is not part of that will we see more consolidation and interesting to see the ability of the biggest banks in tech to do this these purchases rather than lose market share overall slight difference from other industries is threat of newcomers. >> framed as a way to tap into millennials and growing start-up wealth. >> correct. >> that's true but it's also a different way of gaining structurally market share in
asset management of managing corporate pools of shares which at the moment is the likes of fidelity have a big kind of stranglehold on. >> watching tesla on a positive note after got an upgrade to buy from hold. the firm saying it is underappreciated by the market its stock off the highs. it was up 3% some of the points and by the way the analyst on "power lunch" and we're in the early stages of americans buying electric vehicles that's going to continue to grow and touted the autopilot and the bears have a negative reason for everything listed including saying not many worries about profitability and delivery of the model 3s the bears say, actually, this's the whole story. by the way, there's a demand issue, as well continues to be a battleground stock and today getting it from wall street. let's get to a market flash on activision.
eric >> sara, that's right. the shares of the company testing new lows of the session on pace for the worst month of trading since november after reports the company is planning to announce layoffs this week. potentially in the hundreds of employees and that could be announced as soon as tomorrow. the publisher of games of call of duty and warcraft seen the stock lose half the value in four months as the industry deals with competition of the blockbuster game fortnite. electronic arts and take two interactive reported disappointing earnings mainly because of fortnite. >> it is a hard trek for them lately thank you. we have ten minutes to go before the closing bell. dow's down 64 points s&p 500 little change. we have strength in groups of industrials, weakness in communication services s&p's flat nasdaq outperforms the russell 2000 having another good day track it is dollar up for the
eighth day in a row. >> dollar big move higher today. apple iphone shipments in china reportedly fell in the fourth quarter we'll tell you why when "closing bell" returns. the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.
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♪ welcome back to the "closing bell." everybody's positive except for the dow. s&p's kind of flattish some strength in industrials for instance key week of trade talks kicking off in beijing speaking of china -- >> apple, iphone shipments in china fell nearly 20% court reports in q4 and josh lipton with more on the story hi, josh. >> wilf, new data highlighting apple's challenges in china. shipments did drop 20% in the final quarter of the year. that according to idc saying that the smartphone market overall there contracted about 10% so apple dropping harder idc's ryan tells me there's factors at play for apple in china right now, a slowing economy, lengthening replacement cycle and the iphone's price other phone makers fared better.
huawei grew 23% as it took share from smaller local rivals. ceo tim cook highlighted china as a big reason they cut the sales forecast last month and emphasized weakening economy exacerbated by the trade war and cook told me that there were signs of apple's business improving in january, at least relative to december he said and apple did reduce the price of iphones in china to negate the changes of currency and while the franchise under pressure cook said other parts of the business like services and wearables are strong wilf >> did you say the huawei gains from smaller chinese rivals as opposed to sort of direct transfer from the u.s. brand to the china brand? >> yeah. so that was interesting. it was uneven. you saw huawei jump more than 20%. i checked in with idc's analyst
there and asked him what he thought the explanation was for the jump and mentioned it was really huawei stepping in taking share for the local competition there, wilf. >> is idc usually accurate we get signals of iphones from everywhere but apple. >> well, it is important i think everyone's looking to the third-party researchers more in the quarters ahead because you're getting some less information from apple they're no longer to break out iphone units you're going to be looking to these guys at idc for the information like the data we got today. >> josh, thank you very much i mean, sara, one takeaway, with lots of companies you cover doing well in china this quarter. the common theme is not -- it's price point in china that's high and hit. >> dragged in with the durables
and the industrials like a caterpillar which are getting hurt. next, the closing countdown. we have got four minutes left to trade. after the bell, former u.s. trade representative robert hollyman will be here to tell us what he says is the biggest hurdle for the trade negotiations going on this week in china "closing bell" back after a quick break. obvious. sometimes, they just drop in. cme group can help you navigate risks
welcome back to the "closing bell." just over a minute left. a snapshot of the strong returns we saw internationally today last week, a case of the u.s. outperforming, being resilient internationally. today we have just switched and the u.s. is the relative laggard. if we look at the four u.s. indices, not down significantly. we have got gains for the s&p and the nasdaq and the russell also at the moment the dow is slightly lower down 52 and off the lows quickly the sectors for you, likes of energy, industrials, top communications services at the bottom and bringing in seema mody, a big bounce in the dollar continuing last week's theme. >> eight straight weeks of gains. specifically looking at the energy sector, oil came under pressure as did gold emerging markets, as well. to your point, a positive setup with the shanghai composite at a
two-month high on that note, a number of multinational globally centric companies reporting this week. we'll see what they have to say about the dollar. >> seema, thank you very much. there's the bowl down 38 points on the dow. well off the session lows. and for the s&p up and the nasdaq and russell a little higher down 49 points at the close on the dow. sara, back to you. ♪ welcome to the "closing bell." i'm sara eisen wilfred frost rejoining me in a moment with mike santoli, cnbc senior markets commentator let's at the day on wall street. the dow was the only big loser down 55 points as low as down 77 and as high as 90 and really swinging around today. united health group, the biggest drag nike the biggest gainer. as for the s&p 500 ending the day flat strength in industrials,
weakness in communications services the nasdaq eked out a gain of a little more than a .1% russell 2000 strong throughout the day. keep in mind a lackluster action here masks very strong performance. coming up, this hour, former u.s. chief technology officer megan smith tells us whether president trump's new executive order on artificial intelligence give it is nation an edge in developing the technology. here are the stories on the radar for the investors. final hour of trading the most important, we already knew this, and delivered the biggest market day returns recently a. new government shutdown deadline approaching as talks on capitol hill appear to have stalled and more trouble for the video game industry and a publisher reportedly prepares to lay off workers. but first, joining us is
paul hickey of the spoke investment group mike, not a lot of catalyst in today's action stale focus on lowered earnings expectations and a key week for trade talks. >> that's the backdrop, sara the market idling below the recent highs and inconclusive today. the index net positive but really i think it seems benign right now volatility bled out of the market for the moment and yes at the point of fine valuations rebuilt to some neutral level. waiting for the catalysts. they're there. we don't have the intelligence on which way they break and hanging in there for a while. >> if we were to see a pull back what sort of amount percentage terms would be reasonable? >> you know, up 15% or more than that in the s&p 500 in 7 weeks people are looking for some kind of pformation we're bullish.
i knew that would feel scary and represent a scare and have people saying we'll retest the lows of december and might not be anything more than a relative standard kind of half step become and that's what i would scale it as and not much of an indication right now that it's poised to do that. >> paul, do you guys have a lot of conviction in the market rally we have seen going on in the beginning of the year? >> you have to listen to the market sometimes and even though you typically see a retest seeing a decline like we saw in december and we haven't seen it, the internals have been strong we have seen this last hour strength and ridiculously strong you haven't seen anything like this in a few years and came up to the 200-day moving average and need a correction in time or price and sideways action or a little bit of a decline to get people scared again. >> the final hour of the trading day with increased strength
since christmas according to a pair of charts of paul hickey's investment group the first hourly returns during the trading day on the s&p 500 from september 20 to december 24 while the second shows the data from december 26th to february 8 when the final hour of trading performed significantly better paul, talk us through this is there a factor that explains why in those two different periods we have seen better returns? >> the two weakest hours 11:00 to 12:00 and then the last hour. what are the hours last hour of our trading day and europe 11:00 to 12:00 hour. the fact you have seen that kind of reversal in the performance shows you that investors are more willing to take overnight risk so the fact that we have seen investors coming in and buying weakness, friday was a case in
point. rocketed higher toward the close and i think today up slightly. technically that streak eight straight days of last hour gains. >> 11:00 to 12:00, the europe i don't know markets influencing u.s. buyers? >> all the equity markets around the world interconnected so much now and european money towards the end of the day driving and seeing accumulation coming in into the new year. >> this is -- i was going do say this is totally reversed from what we saw in december. it was like final hour of trade, time to sell the rallies. >> you were putting a helmet on in december waiting for the declines and now real strong market performance and shows, again, it's a healthy sign people are more willing to do and comfortable holding overnight when you could get a tape bomb overnight. >> mike, does this imply anything as to the strength of the rally, where we are in the rally where the last hour of trade the most pronounced to the up or down side?
>> all else being equal it is a net positive saying real money institutional accounts wishing to have more exposure. if you procrastinate an wait you want to get up to what you hope to buy and get more exposure going into the following day so yeah. i think it reflects what we have seen in the market, a persistence to this rally and not always been moving very fast. >> buy the dip is back as a strategy everyone -- all the bulls mourning that last year. >> i think for the moment showing you that and hard to know to project that far ahead. >> as long as that trend's in place seeing last week pretty much flat week and it's more comfortable holding things a coupled with the gains just two hours. >> wall street lower has the smart money buys late and the
open for the amateurs. >> checking the imbalances and why "closing bell" is most important show of the day. last hour paul tudor jones speaking exclusive to our own bob pisani, here's what he had to say about calling a buyback mania. >> i think we got a mania going on in buybacks and a mania going on in terms of shareholder primacy. it wasn't always this way. right? if we go back to when i was a youngster, corporate pay, ceos made 20 times that of the average line worker. so things have been different and can be different again and if they're not i'm nervous about what the ultimate social consequences are in this country. i don't know if i want to see a legislative outcome for this i'd love to see this happen organically. >> mike, i guess that's the key point that the various
politicians proposing legislation for this saying it hasn't happened organically and despite mr. jones' argument there is an argument to legislate for it >> right it is difficult to know what comes along to change corporate behavior in the absence of a changing of the incentives not literally legislating away the ability to buy back stocks but tweaking the incentives it could change an i wonder, you know, what problem we're diagnosing here. okay i think that this is all the focus on share buybacks because of many of the things. corporate profits as a share of the economy are higher the biggest companies are more profitable than they used to be. wages suppressed a lot of the companies with the strongest cash flow are not with the high return reinvestment opportunity and dividend payouts
have down in recent decades. all those things are going on. it is not necessarily just people saying, i want to give money to shareholders instead of paying somebody. >> i mean he did say if i'm director on the board, going through a decision, how many of the workers are pay a living wage. >> right. >> that seems like a very basic question >> looking at the companies not big buyers of their own stock. like alphabet. facebook huge but relatively young companies paying the people a lot and only the jobs are hard to get and it's a very educated work force. >> starbucks, they don't make what they get at google but treat the workers right and not necessarily going to kill the stock. you don't want to legislate things away and it creates other imbalances a reason buybacks is popular because dividends taxed so high.
it was a more effective way to return cash to shareholders. legislation i would say is not a way to do it but companies need to keep their work irs more compensated in line with the shareholders. >> fascinating debate. no doubt to continue with big couple of years of political developments ahead the end of the week may or may not find the federal government in the throws of another shutdown cnbc's ylan mui in d.c. with more on that for us. >> lead negotiators are meeting right now to see if they can break through the impasse. democrats are more money for physical barriers in exchange for limiting the number of detention beds in immigration enforcement. nito lowey told reporters she is cautiouslyoptimistic of a deal and earlier on the senate floor majority leader mitch mcconnell was a lot more bleak. >> here's what happened. house democrats decided to add a
poison pill demand into the conversations. at the 11th hour it's a new demand. it's really extreme. a hard statutory cap on the number of illegal immigrants who could be detained by the federal government >> reporter: some republicans are already looking toward a plan "b" and that could be full-year funding for the department of homeland security but keeping that spending level unchanged. democrats say that won't fly saying that would allow the administration to spend more money still on both detention beds and on border barriers. guys, we'll let you know what if anything comes out of the meeting happening right now. >> ylan, thank you very much for that mike, i guess the key question for us is whether the markets would worry more about this time than last time largely shrugged off as sara argued. >> it was. although the market's higher and depends on exactly what the
starting point is for the market looking for an excuse to pull back and the fact it's not a routine standoff used to shutdowns in the past. they went away and we had some resolution so i don't think it would be taken well but i still think it's shovelled in the side of the argument for the markets right now which says keeps the fed patient. the other big things aren't really affected by the shutdown but reinforcing the idea of dysfunction and both sides digging isn't great. >> we were talking last week saying that he is getting questions of when exactly the debt ceiling deadline is i think sometime in august what that is going to look like an how it can be expressed in the bond market. >> a big driver of stocks is earnings that have been not as bad as people feared and that's driven things and when's the catalyst then? does the government shut down?
trade? debt ceiling all come in to the forefront this is all coming as the market getting up to resistance levels and getting out of earnings season and then these other issues are going to come to focus. so remains to be seen what happens and worries for the market looking back to the fed meeting since the close on january 30th the market hasn't done a lot and the dollar up every single day for a dovish fed statement which by all accounts it was but you -- the market performance hasn't been necessarily what people would have expected since then. >> but you mean it's - >> stock market has. >> could have been a lot worse bad news internationally the dollar strength. >> if you look at the -- i mean, held up. >> resilient. >> treaded water we have not seen much in the way of gains on that wednesday and the dollar which people expected to go down or at least flat is -- >> the fear is that everybody else is more dovish because global growth is looking worse in the u.s.
>> certainly is. >> dive into company specifics and video games. activision blizzard down on planning job cuts and set to report after the bell tomorrow meantime, electronic arts up more than 2% in today's session but shares sliding throughout the day to end down. did get an upgrade from neutral after the company saying its fortnite competitor of apex legends gained 10 million players in 72 hours on the back of that story which i think came out on friday. mike, in terms of the movement we're seeing here, clearly this is a big growth area. >> yeah. >> sub sector. sounding like it peaked out a little bit. >> look like broken growth stocks i think also the latest news flow reinforces the old idea of a very hit driven business which for a long time it seemed like they didn't trade that way an the economics working in favor of the publishers.
it seems as if it's more of a name by name story now opposed to everyone's spending the eyeball hours on video games and where you should own them. >> is it an overreaction or not? >> look at the reaction of electronic arts. the stock down to 72 from the high 90s to 72 on the earnings on the earnings call they mentioned this apex game and the release and then stock didn't react at all two days later, the stock's back up above where it was when it reported the broader market in genre active nature rather than trading on momentum rather than focusing on the fundamentals. >> if all of the market to be more reactive like that but if it is how are we shaping up for the rest of the year earnings down significant. are we not looking ahead enough? >> it's interesting you bring
that up. the guidance spread is one of the weakest of the bull market and looking back when the company's lowering guidance by this degree, the performance is actually better than average because again it's all about expectations and at the margin and when companies set the barlow it's easier to beat. >> there's a bull case that feels and looks like 2016. which basically has a december fed hike and earnings estimates trailing off into the middle of 2016 and the market rebuilt a lot of the value lost. different, as well not trying to say a replay but interesting the market can do okay even when earnings are eroding. >> how do valuations compare >> similar 17 times forward earnings in the middle of 2016 brexit hiccup and then the election kind of put everything on its head but up until that point you had actually done fine the caveat is we're much earlier
in an earnings downturn than 2016 if that's what we get tie brexit hiccup to come this year. not sure what shape it will be thanks again, paul hickey. up next, megan smith tells us whether the executive order will be able to help the u.s. retain the leadership in the ai space. and later, goat ceo eddy lu to discuss the foot locker $100 million investment in his company.
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we have got an earnings alert on cheg. >> surging after the bell following a beat on the top and bottom lines and issuing strong guidance both for this quarter and fiscal 2019. it's worth noting, though, the stock more than doubled the value over the past year heading into february posted gains in 19 of the past 25 months and recovering from the data breach of the past fall back to you. >> eric, thank you very much. meantime, president trump signing an executive order to create the american ai initiative in an effort to push
federal agencies to focus more on artificial intelligence. >> what will it mean for big tech here in the u.s.? let's bring in megan smith, former chief technology officer under president obama. megan, thank you so much for joining us what are our country's, government's capabilities right now in ai, especially if you look compared with someone like a china which is said to be making enroads >> you know, the united states is a major leader in artificial intelligence and we have incredible companies the challenge is keeping up. they're moving really fast and so what we want to do and not slow them down and we have to speed up a lot of other sectors to join. for example, ai right now, you know, technology's not good or bad but what you use it for. we use it for precision medicine or self-driving cars why not also for poverty and hunger and finding everyone a great job? all pieces and really one of the things that's good about the government moving today as we did with president obama with the future of ai report is
getting the hustle going to get many more americans engaged in ai across every organization in the country. >> so, as you said, megan, ignoring exactly what ai is used for and just focusing on the outright quality of innovation here, do you think this executive order transforms the outlook in the next one to three years for the u.s. to dramatically improve the quality of its innovation? >> you know, just came out and looking at it. it's covering key topics same ones we were looking at increase r&d spending and we already have let's have an ai component of it. that was something i recommended and i encourage this group to look at that way we want the workforce and children involved. there's an op-ed talking about ai and hoping that all of our college students are fluent in computer science and whatever their passion is i have a raspberry pie here.
it's a -- a circuit board here just a board from your cell phone and so in second grade in england kids get them and playing with them and fluent and not afraid how do we make sure that the children are -- we have a movement across the united states wyoming, virginia, arkansas, rhode island and a couple other states signed up can't graduate from high school in chicago without learning code so we have to get this going across a whole country and it was something we were pushing hard for it's urgent for the future of our country and urgent to both broaden participation of who codes so we get everyone in and also the topics we put them on put them on all the topics. >> megan, we have heard the case made that perhaps china in one respect has an advantage in terms of developing ai capabilities which is the sheer volume of data from the larger population on smartphones and maybe set bounds of how it's used and crunch the numbers.
is that something that's insurmountable a way to match something like those capabilities >> yeah. this is a very big risk for us, for everybody. data has -- you know, passing oil in terms of its value and we need to make sure we pay attention. we opened up 200,000 data sets in government, generalized data around economy or agriculture, other kinds of data so that all kinds of people, students and companies and our nonprofits and philanthropy crunching with this stuff. it is very important that we upgrade the capabilities in every organization meaning the nonprofits, the government, all people and if you're feeling like i don't know how i would start ai, find someone that does and have them join your team add the people to every organization across the country so we can get moving and start to apply these kinds of technologies in great powers for what we want to have in the world and the american values to
have and critically you are cent to keep the american values around privacy and the individual and individual security and safety. these are really important issues for us to be addressing and discussing. >> megan, separate question. senator klobuchar, the latest democrat to throw the hat in the ring to run for president. here's what she said at the campaign rally announcing it she made tech a major issue. listen >> we need to put some digital rules of the road into law when it comes to people's privacy for too long, the big tech companies have been telling you. don't worry. we have got your back. while your identities, in fact, are being stolen and your data is being mined our laws need to be as sfis katded as the people who are breaking them. >> just want to get your reaction, megan, because your
party shifted toward hard line here on technology a lot of people blame the obama administration for being too friendly and not invest ghaithing regulation and letting the companies like google and facebook expand and that's why we are in some of the problems with privacy that we are in right now. >> yeah. you know, i don't know whether administration or not but i really agree with the senator. you know, we have crossed the line certainly with facebook i'm in a film called "the great hack" that launched at sundance and really not okay for these companies to be using our information and blending and mixing it to grab our attention, children's attention and really sort of violate the privacy consistently and offends me facebook keeping track of people who weren't even their customers, their data. this is not okay and i agree with the senator bipartisan perspective here of regulating now, the key is having been a tech person who went to
government, many great technical people in government we don't know what to do but having us in the room making the decisions is really important and we need to get -- continue to have all kinds of -- just like a surgeon general for medical policy and tech talent together away from the companies in a neutral real in government with our senators and our congress folks and everybody it's urgent and the application for the positive side also needs to accelerate because we want ai to pay attention to solving problems in the world with us and having values and all kinds of people able to play at the table of creating it men, women, people of all colors, such - >> megan smith, thank you for joining us current ceo of shift seven. we'll break down the charts to see why the market appears to be betting the fed to keep rates on hold despite the strong 'sonomic data. it a santoli special coming up
welcome back typically whether the u.s. economic surprise index jumps it means the market can expect the federal reserve to lean toward tighter policy, raise rates but recent weeks it is not the case. mike santoli has more. what did you find? >> this is from morgan stanley mike wilson, the strategist over there. the blue line, the u.s. economic surprise index how well the economic numbers coming in
relative to forecast the orange is the market implied odds of upcoming fed rate hikes. usually they more or less go together except for right here. you have u.s. economicdata surprise going up and the market assumption for rate hikes going down and split right here. obviously this coincides with the change in tone from the fed. this is obviously not a very longstanding trend and could close in a couple of different ways the data can come down and maybe start to see expectations for fed rates rebuild and you have seen periods of a temporary divergence way before there were any fed rate hikes coming up i think it raises the question have investors been too fast to completely write off the fed or, is the fed the central bank of the world and global growth will keep them calm when u.s. numbers are still good >> or, does this confirm what some people said as a vague
critic of the fed, is this the fed looking at the equity market and not the fundamentals >> if capitulated and keep policy too easy relative to the fundamentals for a 1999 scenario where the fed was too easy a the economy did well and we built a bubble i don't think we're close to that i don't think you're really even, you know, in the early stages of something like that. but it's a relationship we should - >> can i tell you, it is nonsense and could just tell you that expectations got too low for the economy and the surprises are on the upside and the economy is still slow. >> that's very true and would have happened at times in the past the blue line always jumps up around the zero line because it's an oscillator and expectations go up when the numbers have come back no doubt about it that's there's ways to say it's noise and perfect world and inflation is benign, the fed doesn't have to do anything, then this is -- this could be the picture. >> always noise and fair to say that until the last move as you
just pointed out since the fed started hiking rates in late '15 the two lines have been pretty close on top of each other. >> that's right. time for a cnbc news update. >> hello, everyone in a rare move, the illinois attorney general says that he is going to ask the state supreme court to review what they consider to be a too lenient sentence for the white chicago police officer that shot black teenager mcdonald. jason vandyke with a prison term of six years and nine months >> this is the first step in asking the court to declare that the trial court improperly sentenced jason vandyke for the murder and aggravated battery of mcdonald and order a new sentencing hearing. the cdc reporting nearly 5 million middle and high school students used a tobacco product last year compared to 3 million in 2017.
they say the biggest reason for the spike was e-cigarettes. the cleveland browns have signed running back kareem hunt who was released by the kansas city chiefs in december after video surfaced showing him pushing and kicking a woman in a cleveland hotel. the nfl's investigation into the incident is expected to end soon but he will likely receive a suspension you're up to date. that's the news update this hour i'll send it back down to you. >> sue, thank you very much for that. still to come here on "closing bell," robert holleyman tells us whether he thinks president trump will raise tariffs on china. and later, we'll talk about the future of footwear when goat e 00ilonusu joins us to discs th$1 mli investment in his company. this is loma linda, a place with one of the highest life expectancies
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and accessoriesphones for your mobile phone. like this device to increase volume on your cell phone. - ( phone ringing ) - get details on this state program call or visit representatives from the u.s. and china meeting in beijing today to kick off a new round of trade talks with u.s. trade representative robert light lighter hizer and treasury
secretary steven mnuchin. >> joining us now to discuss what he thinks it takes for the u.s. and china to reach a deal ahead of the deadline ambassador robert holleyman under president obama and a current partner at cromwell and thank you for joining us. >> thank you much. good to be with you. >> do you feel like that ultimately good progress is being made on these talks regardless of the daily or weekly ups and downs >> progress is clearly being made the fact that there is a cabinet-delegation in beijing as we speak is a sign that we are making progress on the negotiations i think the uncertainty revolves around what the u.s. needs to get a final deal and whether china will be able to give that deal, whether in the short term ie before march 1st when you
have tariff taxes kick up or if china's willing to do those things in the long term but i'm encouraged that they're meeting, a preseason for any subsequent meeting by the leaders to try to resolve these issues. >> when you watch how the trump administration has sort of played this whole trade war with china, brought them to the table and brought them to their knees in many respects, do you wish that during your administration your time you had done it differently? because a lot of the issues were the same the intellectual property theft and joint ventures and opening up china's markets and the fact they're on the table in these negotiations does it make you question how we have been dealing with the chinese >> we have been trying to figure out how to deal with an emerging chinese economy. we were negotiating bilateral investment treaty with china to try to open up some of the same
markets. i think clearly the trump administration was willing to embrace the increases on the american population and something we were not willing to do clearly, while it may be having some impact on china, it is also having a negative impact on the u.s. economy we wanted to avoid that by using other tools that were available. but the fact is there are many long-term systemic problems in china in terms of how closed their market is and now through tariff taxes it's incumbent we get the very best deal possible. otherwise, the price that the american consumers and businesses paid all for naught i wish the negotiators well. they have a tough road ahead of them but this is really -- essential. not just for immediate it's certainly not essential for just the short term issue of
reducing the u.s. trade deficit with china but it's essential for the long term of the u.s. economy. >> ambassador, you mentioned you're encouraged by the fact administration officials and meeting quite regularly and focus as to date of a possible upcoming meeting between the two presidents do you fear that's not happened since buenos aires and could undo some of the progress or something you expect to cement the good work? >> i think that would be useful and necessary to cement the good work at the right time so earlier it was floated that president trump would go to china. that president xi would come to the u.s. certainly, president trump will need to be part of signaling and signing the final deal but it would also be quite premature at this point for the u.s. or any country quite frankly to put a date out by which their leader is going to
meet with another leader you don't want an will not have those things happen if the meeting will yield a failure we are still even with several weeks ahead still a long way from getting the kind of deal that the u.s. would think is necessary before they would commit the president of the united states tomeeting with president xi jinping so the dynamics of this are playing as i would expect they would. and you'd keep some of that kind of close to your vest about a possible meeting until you knew you were in a zone where you could actually reach a deal. >> yeah. appears what the administration is doing valuable to get your perspective. >> thank you very much. are you ready for some football the super bowl may be over but pro football is not and cbs and at&t could be the big winners. that's on the radar next edward jones came to manage a trillion dollars in assets
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welcome back here's some stories on "closing bell" radar today we haven't covered. firstly, award season in full swing. lady gaga receiving the grammy in weekend for best pop duo group performance for "shallow" for her "star is born" film and but her costar was not there, bradley cooper, of course, because he was in london collecting award for best original music this film, nominated for seven baftas
best sort of new film in a song and framed as a disappointing day for them only getting one. the big winner, i don't know if it's a forewarner for the oscars is "favorite" about queen anne. >> and roma? >> is that terrible planning or what though? having both on the same night. >> i guess it shows not many people in the u.s. cares about the baftas little misleading. british film and they tend to do well at the baftas. >> tends to be a favorite? >> four nominations. >> only you fill us in on bafta. >> bradley cooper was there. >> no but dolly parton with katy perry. really good. >> michelle obama. reddit, $300 million, bringing the valuation to $3 billion. investors including ten cent and interesting on so many levels,
guys jul julia boorstin with a story on reddit half of the users between 18 and 24. so that's a hard reach valuable demographic for advertisers. the ten cent investment is fascinating because it's blocked in china and considered one of the most open places with free speech in a way that's often criticized for being a place of bullying and other problems. >> the other point, as well, i say year and a half ago when they did a fund raising round are they going to be squashed by the facebooks and googles of this world. >> fought it. >> looking at those, the names, of these investors, i think firmly established now interesting to see how much of that advertising dollar spend they steal. >> i'm sure they believe it's an undermonetized audience. looking at the alliance of american football, so that's a league which debuted this weekend with two games on cbs and those games had better prime
time ratings than a houston rockets/oklahoma city nba game which, i mean, one conclusion, there's a certain audience that is in football withdraw the week after the super bowl and watch whatever football is on there and, too, was a good game on the nba but not a marquee matchup. >> you have leagues below in uk but how often does a pop-up league arrive? >> they don't have to quash it out. the usfl put to rest the difference here is it's centrally owned league like major league soccer where the league owns all the teams and had the tv deal and a lot of advantages and nobody's pretending to go up against the nfl because obviously there's an offset with the season and not competing directly. >> very interesting the ratings.
up next, we have got the goat founder we are talking to eddy lu, unr fodeof online marketplace for sneakers s need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.
welcome back we're watching three stocks making headlines after hours eric has the details >> that's right. gilead plunging. the biotech giant said they were disappointed in the data but remained committed to advancing therapies for patients with the disease. shares of amkor sinking 6% the company forecasting first quarter net sales that imply a
15% drop year over year. the apple supplier saying in a statement that the outlook reflect, quote, an inventory correction currently under way in this smartphone market. colgate naming noel wallace the new ceo. it's part of their long-term session planning. >> thank you quick note on colgate. the current ceo has been for a long time. stock up 100% since then outperforming p a& g. the toothpaste which was growing so fast in emerging markets but facing competition from new upstarts that do the more natural thing. >> the ceo has been there since
1987 he used to run the toothbrush division so maybe he's prepared. >> going internally. retailer foot locker has made the largest investment in its history. e ead we'll talk to the ceo of thupstart that lured that landmark deal. thing, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you.
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welcome back foot locker securing its place in the growing secondhand sneaker market investing $100 million in goat group which is one of the world's largest marketplaces of rare high-end and high-end sneakers. for more, eddy liu of goat very good afternoon to you, eddy congratulations on the investment. >> good sewing you again >> good to see you so i guess when you guys started you were very much a challenger and disliked by companies like foot locker who probably felt threatened by you and now you're teaming up with them is it a change in strategy and see you become more mainstream. >> yeah, so goat group, we're the largest marketplace for authentic sneakers so goat brings trust and safety to the online marketplace whereas flight club is a consignment shop that started over sm years ago and pioneered sneaker consignment. when you think about the foot
locker partnership, first of all, they are the largest sneaker retailer out there so any time you can have the opportunity to partner with one of the kingmakers in the industry you're going to take that call and as we started to chat we realized that both for goat and foot locker are consumers shop at both places so we saw the partnership as really bridging the primary and secondary markets. >> so do you think we could actually go that a world, eddy where because of that partnership we see sneaker resale in the foot locker stores i mean, they've got thousands of stores all over the country? that could be a big opportunity. >> yeah, what we're really excited about is the fact that foot locker has over a 3,000-store global footprint so if you think about it they bring their prowess in retail and we bring our expertise in digital and because they're a global marketplace, there is a lot of partnerships and synergies that can happen from that. >> from the foot locker
perspective it seems as if obviously this is an outlet into a different type of buyer and different product category of i guess shoes where there's a sort of scarcity value? how do they fit together >> well, what we're see something that, so goat started selling primarily the high heat product, limited edition product but over time we're seeing that even over 40% of our product now sold on goat is under retail prices so we are seeing that convergence of the primary and secondary markets right now so i think just with the foot locker partnership allows us to leverage digital and retail to bridge that gap even further. >> eddy, whether because of the partnership or otherwise, is there room for you to expand beyond sneakers? >> we are always open to servicing our customer and definitely open to that. >> eddy, i think you can tell a lot about the cool factor of a current brand and nike or adidas by how they're doing in the
resale market in the secondary market who is hotter? you got the off whites which i had to teach will fred but easy is selling pretty well which is it? >> so traditionally years ago nike was the dominant player in the sneaker space. and the secondary market a few years ago as sneakers became more mainstream, you could wear sneakers to work, maybe not at the nyse but other places you could definitely start wearing sneakers out to dinner, we started seeing a shift towards lifestyle and adidas really took that market especially with timely partnerships with kanye west and pharrell that boosted their sell wets like the ultra boost. recently we've seen a shift to designer led collaborations with nike and virgil ablo like you mentioned with off white and seeing that it's come back to nike and nike is punching back and have been innovative with the vapor max and nike react a year ago so now we're seeing a
shift back to nike being that trend. >> eddy, what is the single most expensive sneaker transaction you've had >> a nike air mag was abo about00,000. auto lacing air mag. >> "back to the future ft. shoes. >> thanks for joining us, the founder of goat and does it for "closing bell. >> "fast money" starts right now. >> live from the site, i'm in for melissa lee and pete najarian, tim seymour, dan nathan and fabulous, fantastic guy adami. yeah i'm being nice to you guys and you know the reason. >> good to have you on board. >> why. >> tonight on "fast," the maximum point of uncertainty is how one of the biggest bulls on wall street is describing the market but says it could be your best chance to buy and he'll explain why.