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tv   Closing Bell  CNBC  February 27, 2019 3:00pm-5:00pm EST

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fire works today in washington. >> we might be able to have an agreement that helps us turn the corner in our economic relationship with china. let me be clear, much still needs to be done. >> we actually don't know what the equilibrium will be and my gut is we'll be announcing something very soon. >> i am ashamed because i know what mr. trump is. he is a racist he is a con man and he is a cheat. >> meanwhile, in vietnam -- >> your country has economic potential, unbelievable, unlimited. and i think that.
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>> what it all means for investors right now on closing bel bell. >> good afternoon. welcome to the closing bell. also welcome back again to morgan, who is filling in for sarah, who is off today. let's get right to the market action we got one hour off of trade we are well off the session lows, down 60 points or so on the dow. nasdaq and s&p are flat. intra-day chart on the s&p, we are off the lows first hour of trade or so is soft we've had steady improvement since then and s&p just below the flat line. >> closing back in on the 26,000 level for the dow as well. coming up, we will hear from the hoofr institutions neil ferguson he will weigh in on the global economy. >> first let's begin with our reporters. steve liesman, ylan mui and
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javers on the meeting with kim jong-un let's start with you. >> it was a relatively warm reception for president trump's top trade official at a committee that is led by democrats currently. most lawmakers on a bipartisan basis praised ambassador lighthizer by taking on the challenge of u.s./china relationship many lawmakers shared anecdotes from their districts as these trade talks drag on. some of these long-term, really tough changes are worth collateral damage in the short term. >> i always start with the proposition of do you think we have a problem with china? if you don't think we have one, then all of this is crazy. if you think we have a problem with china, then we have to weigh what is necessary to move forward. and in terms of what we're willing to accept, no, i don't think we should accept anything that doesn't have structural changes and isn't enforceable. absolutely not. >> some of those changes have
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been agreed to in more than three hours of questioning, lighthizer revealed a few details about where current things stand a deal currently being worked out would include agricultural purposes for several years and on the structural front there would be end to subsidies that are in short supply that there's a mechanism to stop china from manipulating its currency downward. lighthizer says he believes while those points are agreed, lighthizer was clear that unless every one of the white house's priorities is met, there will not be a deal. the other detail he didn't share, wilf and morgan, how long this trade truce will be extended for. >> seems like he also didn't share on any details about what will happen to the tariffs that are currently in place right? >> he said it is china's view
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that if there were a deal, excuse me, that china wants all of the tariffs to be rolled back he didn't say whether the u.s. would actually be willing to grant that but he did say that if there were a deal that were signed, at least china's retaliatory tariffs against the u.s., those would go away. as for the large tariffs that the u.s. put in place, unclear. >> kayla, thank you very much. jerome powell appearing on capitol hill for a second day of testimony. steve liesman joins us with the highlights. >> fed chairman going further than he has in the past about plans by the fed to have the run-off of its balance sheet and now confirms, the fed is working on a plan to end the run-off later this year. >> you now have three consecutive meetings on the balance sheet and we've worked out, i think, the framework of a plan that we hope to be able to announce soon that will light the way, all the way to the end of balance sheet normalization
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and that will result in the end of asset run-off some time later this year. >> as you heard at the top of the show, they haven't quite figured out what the right equilibrium level is it's not raising its inflation target but rather changing its inflation. the house financial services committee as well there. and in addition, powell stuck to his mantra of the fed being patient on policy and that the u.s. economy is in good shape but faces risks from abroad and some domestic issues as well many fed watchers say that balance sheet could be agreed to and made public as soon as the march meeting. it can show that the fed would be comfortable around 3.6 or 3.7 million. just 350 of assets to run off, guys. >> we heard from the fed chair a little more of late, whether it was a specific meetings or hearings like this, or brief
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interviews on stage. has his communication evolved? and how much of the pivot we've seen over the last six months do you think really came down to fundamental changes in what the fed was thinking versus more refined communication and delivery from the fed chair? >> oh, no. there was definitely a change in policy and we can actually count that, right? so we know that the average fed official had three rate hikes penciled in. that's now down to two and many think it's one or zero now we also note that there was talk about a balance sheet between 3 and 3.5 trillion and now they're going to stop north of 3.5 trillion those are real changes rather than just rhetorical ones. i think the chairman has learned along the way. it was a surprise to the fed by the way, a lot of fed watchers, including myself, that all of a sudden after, i don't know, 17 months of the plan being out there, the fed executing the balance sheet, the market became sensitive to it. so when fed chairman was criticized for using the term
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autopilot for the run-off, that had been used by him and previous fed chairmen beforehand and all of a sudden the market became sns active to it. all of this stuff is unprecedented, bringing up a $4 trillion balance sheet and bringing it back down. they're learning as they go. >> surprising how few questions he got about things like monetary policy and interest rates. >> when the fed doesn't hike rates, everybody is happy, both republicans and democrats. >> there you have it steve liesman, thank you president trump's personal attorney michael cohen also testifying on the hill today, appearing before the house oversight committee. ylan mui has the details on that ylan >> reporter: that hearing is on break. it's not over yet. so far, it's been combative and, at times, emotional. michael cohen saying he repeatedly lied on behalf of president trump but now he's ready to set the record straight. >> and i'm sorry for everything. and i'm sorry for the pain that
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i've caused them and i wish i could go back in time. >> reporter: in addition to calling president trump a liar and a cheat, michael cohen also called him an autocrat and suggested that federal prosecutors are looking at unspecified criminal allegations against the president as well. in addition, cohen presented documents that he says are evidence that president trump personally funneled money to stormy daniels, that he knew about a wikileaks data dump and that he was aware of the plan to build a tower trump in moscow. however, he said he does not have any evidence that there was collusion with russia. republicans went on the attack, criticizing his character and credibility. >> this was all for yourself, not for the benefit of president trump. this was to benefit michael c cohen. that's my question
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did you just get caught? >> reporter: cohen will be going to prison for three years over campaign finance violations as well as lying to congress. he said today that he will not seek or accept any pardon from president trump. back over to you guys. >> ylan, thank you for that. one person not in washington today, of course, is president trump, as he kicked off his second summit with kim jong-un in vietnam eamon javers joins us from hanoi with the latest. eamon? >> reporter: we saw pomp and circumstance as the two leaders met for their summit what we didn't see, though, was what exactly denuclearization will look like on the north korean side. lot of warm greetings, handshakes, smiles between the two men. the president emphasized the personal relationship they've struck up during the course of these two summits. >> i thought the first summit was a great success. and i think this one, hopefully,
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will be equal or greater than the first. we made a lot of progress. the biggest progress was our relationship is really a good one. >> so the president saying the relationship is really a good o one. we'll see whether it bears fruit in terms of denuclearization tomorrow the white house has a signing ceremony between the two countries. what we don't know is what they're agreeing to in that summit tomorrow. we do expect there will be a press conference tomorrow afternoon. we might be able to get some answers directly from the president about what's been happening in the closed door pieces of this summit. we had some today and we'll have more tomorrow. there's a lot going on here that we may not be aware of yet, guys >> eamon javers for us in hanoi in the early hours of the morning. thank you for staying up for us. all these hearings and political developments impact the markets. libby, thank you for joining us.
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i'm going to start with robert lighthizer's appearance and the trade issue with china what did you garner about how closely he and the president think what is left to be done to get this trade deal over the line >> well, look, i think that in some ways, what ambassador lighthizer said was to be expected he was cautiously optimistic on one hand but emphasized that there were still some roadblocks, headway they needed to get through in order to make a deal i think an interesting thing from an investor's perspective, market's perspective that he did say was that if there were a deal that enforcement would be a process. in other words, there would be monthly, quarterly and semi annual meetings with the chinese to hold them accountable for whatever they agree to the reason i bring that up and is important for a market
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perspective, if there is a deal in the next few weeks they're still going to be kept at a simmer we're using a metaphor that u.s./china trade tensions will be simmering they may not go over to a boil but they're not going to be removed from the stove top all together i think the point here is that, yes, there might be sort of a risk positive deal in the short term but this is not a binary event. tensions with china are not necessarily going to completely disappear. >> libby, to that point -- we were just talking to kayla tausche about it the fact that lighthizer didn't answer the question about what would happen to the tariffs the u.s. has in place currently on those chinese goods and metals coming into the country. your thoughts on that? >> yeah. it's a great point and i think that, you know, ambassador lighthizer and president trump are kind of a meeting of the minds here, that they believe that tariffs are an effective negotiating tactic i think president trump has said
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that tariffs have gotten a better nafta agreement, that they brought the chinese to the table. and so i think that they are going to be, you know, very ambivalent about rolling back tariffs too quickly. because i think both of them, both the president and bob lighthizer agree that tariffs have been an effective tool here in terms of increasing u.s. leverage over our negotiating partners. >> libby, what's your take on president trump's efforts with north korea and not so much whether it's likely to lead to ultimate victory there, but what it means back here in the u.s. is it a significant vote winner or issue that will gain him support? >> look, i think he would like to think it is i'm sure he is disappointed that of the top stories that you covered, kind of the north korea/u.s. summit was number four i think it shows you that all of this are domestic activity on the hill and otherwise sort of
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distracting him from the political victory that i think he would like to take on this. to his credit, the fact that the u.s. and north korea are talking, i think lots of foreign policy experts would say that's unexpected and probably at least a minor step in the right direction. i think expectations should be realistic here, though north korea and places like china have made a lot of promises, haven't honored them i'm not sure that many people think it would be different this time. >> libby, quickly, the thing we didn't even talk about and haven't been talking about is the debt ceiling how closely should investors be watching that right now? >> of course the statutory deadline to raise the debt ceiling is march 1st, effectively, though, it's not going to be until the end of fall i think people hope that nancy pelosi and mitch mcconnell won't weaponize the debt ceiling like previous congresses have the big question is how does
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president trump approach it? if the government shutdown is any indication, he might use this as at least a tool to increase negotiating leverage over especially a house democratic caucus. >> libby cantrill thank you for joining us. >> thank you. robert lighthizer, does it alter the odds of a deal with china? we'll discuss with niall ferguson. top investment strategist says there's one thing that could help ppel rothe market higher she tells us what it is when the "closing bell" returns the future of technology investing lies beyond the tech sector.
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welcome back to "the closing bell." the dow up, s&p and nasdaq slight gains we have improved significantly since the first hour or two of trade followed by industrials. communication services at the bottom. >> joining our closing bell exchange today, lindsay bell from cfra research and our own rick santelli.
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good afternoon to you both lindsay ooishlgs start with you. there's been macro headlines and focus on policy. earnings, mainly from some of the retailers. how would you assess those right now? what's the read through on the state of the consumer? >> retail earnings have been pretty good. mind you, the bar was lowered going into this reporting period we've seen the names that go out so far almost all of them have beat on the bottom line. sales have been better than expected for the most part, i think. there is some mixed data there the consumer is in good shape right here, right now. the retailers that are taking market share and innovating are the ones that are winning this year. >> how about home depot and lowe's >> there's a little bit of a bifurcation there at lowe's. they had a better report than home depot yesterday you see the stock reacting well to that. the guidance was better and in line whereas home depot was a weaker guidance there. i think that that speaks to the
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opportunity that lowe's has versus home depot. they have long lagged home depot. >> rick, what's your take on the data on that front pending home sales earlier today, i guess, better than expected but of late, it's not been the strongest part of the domestic u.s. data. >> no. matter of fact, you picked the perfect number to describe that condition because pending home sales month over month looked pretty good. year over year, it didn't. what we're zeroing in on is the current rate of change due to the eterioration the one data point that really was interesting to me today was the december advanced trade number just a whisker shy of 80 billion. a record amount. the reason i find it so fascinating is, of course, because of what ambassador lighthizer is working on right now and what all his people are working on with regard to the china deal some of the great interviews that he has given. at one point quickly on
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lighthizer, that makes me nervous with respect to the u . u.s./ u.s./mca deal. but in the china trade agreement, he's calling it a settlement of a 301 action, doesn't need to go in front of congress i'm sure we'll hear more about that that's a big story to concentrate on, especially given the headlines of the progress they're making with regard to china, trade and i.t. protection. >> and to that point, lindsay, if you take a look at when we hit the lows of the session for the dow today, it was on those early comments from ambassador lighthizer in his testimony where he basically suggested that we're still, you know, somewhat far way from a deal there's still a lot to be worked through. how do you think the market has been pricing this in where do you think we go from here if we do get some sort of short-term deal or on the flip side if maybe we don't >> i think the expectation that something is going to get done
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here, that's what's pricing the market that's why, like you said, the market was down this morning when there was an indication that we're further away than some people expect if you look at the valuation of the s&p 500, trading 8.6 times that's in line with its historic average. expectations have come down so significantly for 2019 we're looking at under 3% earnings growth for the full year that's pretty weak assuming a deal gets done, that removes major uncertainty from the market and corporate operations, which means that earnings will probably come in better than that 3%. we could get another point or two, which means valuations, you could see the market go up because valuations are at historical levels. >> rick, after two days of testimony, where has the market settled in terms of expectation for rate hikes in the year ahead? >> well, i think that the jay powell hearings have really not changed much perception that was drawn after the volatility at the end of last year
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they're on a pause he's penciled in with a much sharper point all the balance sheet issues and how that's going to end in terms of the run-off, as steve liesman has appropriately covered all day. but i think outside of that, it's just a comfort now. the markets are having a bit of a comfort with this chairman, as you can see. rates actually climbed a little today. i don't think it had anything to do with jay powell i think it was hedging for corporate issuance even though i thought politicians in the senate and the house today really didn't ask as many questi questions, specifically zeroing in on fed policy like much of the past outside of the specifics, really highlighted more today on the ending of the balance sheet run-off. >> yeah. definitely, rick we'll leave it there lindsay bell, rick santelli, thank you for joining us today coming up, has the market come too far, too fast from the december lows? top strategist making the case for why jerome powell's
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testimony could help push stocks to new highs. >> elon musk tweeting,ri fday a massive down payment is due. [knocking]
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we have 33 minutes left of trade. down .2 but no major movement today. neil ferguson joins us live to
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discuss hearing on u.s./china trade and potential impact on the market. >> later, big moves for big box stores top analyst breaks down the best play notice sector, coming up. your typical bank. capital one is anything but typical. that's why we designed capital one cafes. you can get savings and checking accounts with no fees or minimums. and one of america's best savings rates. to top it off, you can open one from anywhere in 5 minutes. this isn't a typical bank. this is banking reimagined. what's in your wallet?
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welcome back to "closing bell." 30 minutes left of trade industrials at the bottom of the pack communication services and health care markets broadly flat with eight minutes left. >> time for cnbc update with sue herera hi, sue. >> hey, guys former trump lawyer michael cohen, delivering his long-awaited public testimony before congress. he was not amused when a republican member of the house oversight committee showed a poster directed at him saying "liar, liar pants on fire. >> i'm responsible for your silliness, because i did the same thing that you're doing now for ten years. i protected mr. trump for ten years. the more people that follow mr. trump, as i did blindly, are going to suffer the same consequences that i'm suffering.
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>> chicago's next mayor will be an african-american woman for the first time in that city's history. laurie lightfoot and toni winkel advance. 14 candidates in all that's the highest number in chicago's history. >> in an extremely rare tom brady rookie trading card has sold for a record amount part of the 2000 playoff contenders championship ticket collection was auctioned monday for $400,000 you are up-to-date that's the news update this hour guys, i'll send it back down to you. i'll see you in an hour. >> that's a lot for a card. >> yeah. >> sue, see you next hour. >> china exposure, including some chip names dipped after representative robert lighthizer indicated that a china trade deal isn't close to being finalized. >> let me be clear much still needs to be done.
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both before an agreement is reached and more importantly after it is reached, if one is reached. >> joining us now, senior fellow at the hoover institution, stanford university and author of "the square and the tower," niall ferguson good to see you again. >> good to be with you, wilfred. >> we discussed the china deal, of course, and did discuss the balance of power of negotiations between robert lighthizer and the president. you said if robert lighthizer had all the cards and the power, a deal was harder. where do you believe we'll stand now? >> no question that robert lighthizer is leading the negotiation in the sense that he's the man with the command of the detail but we saw just the other day that the president has the power to overrule him, even in the terminology of the deal. he was on tv, explaining why he doesn't like the phrase
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memorandum of understanding and robert lighthizer very quickly had to drop that phrase and get on with trumpian language, like trade deal so i think the big question -- and i'm here in washington, thinking about this, is whether or not president trump is going to overrule robert lighthizer and take a deal that lighthizer would regard as inadequate, as weak i very much hope he doesn't do that i think robert lighthizer has done an excellent job, driving a very hard barringen. and when he says we're not there yet, i take that very seriously. >> to that point, niall, the key point to all of this will be enforcement, what that mechanism looks like and thus that whole process will take time as well even if you do get some sort of short-term deal right now and decision to not increase tariffs, to see china carry out what it agrees to, which it hasn't done in the past, despite
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other plans to the contrary, that still you're looking at a timeline that could stretch into years. right? >> this is not going to be over at mar-a-lago if, indeed, president trump meets xi jinping there in the coming weeks because ultimately it's about much more than just the trade deficit now. if you think back, say, a year when all of this was kicking off, the chinese assumed that if they could just figure out a way to reduce the bilateral trade deficit, president trump would be happy and it would all be over very quickly. it took them a while to realize that mr. trump was in earnest and that robert lighthizer was in very deep earnest about getting the chai nieces to do much more, in particular going after their made in china 2025 program, essentially a program using all means, fair and foul, to get china off the chain this is a big, complicated issue and i don't expect the trade war
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to become a trade peace via a tweet or, indeed, a dinner between two presidents the other thing i would add, which is significant here, in the course of the last year, the trade war has been about more than just trade. it is a tech war that is also going on now as the united states congress goes after china in a number of different ways, potentially limiting exports of very sophisticated chips from the u.s. to china and also limiting chinese investment into u.s. tech companies. i think the tech war is much more important, ultimately, than the trade war. you could say the trade war with tariffs and negotiations is sort of 1970s throwback, the thing that happened in the nixon/ford years. competition in 5g, competition in artificial intelligence and quantum computing. that is not going to be over any time soon. in fact, it could define the new cold war of our time. >> niall, is it linked to the
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china trade -- we're reporting them as separate stories but is any progress with north korea possible without a china trade deal and if so, which should the president be focusing on more? >> you ask diplomats on either side this question they tend to say there's no linkage but i have a sense that the president sees there as being some linkage. it has been his assumption from the outset that china would be the power that could put pressure on north korea to shift its position on its nuclear arms program. i think that's a vain hope, in the sense that it's not obvious to me that doing any kind of deal with china is greatly going to increase the president's leverage with kim jong-un. that leverage was pretty weak to begin with and it must be said that since his first summit with kim jong-un, he has only given the north korean dictator an easier time in return for not very much i would rather there was no linkage. in my view, what president trump
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did with north korea was to make two easy a deal too quickly without teeth, without enforcement. i really hope he's not going to do the same thing with china and i hope robert lighthizer, in that sense, gets his way. >> niall, all eyes are on north korea. meantime you see this really fast and, quite frankly, alarming ratcheting up of tensions between two other nuclear countries in the last couple of days as well india and pakistan should investors be watching that more closely? is this something that could actually really, truly spill over into a full-fledged conflict >> i thought all eyes were on michael cohen rather than hanoi but you're quite right as to raise the question -- >> eyes have been in a lot of places today, i think. >> a good question is whether we should be more worried than marks appear to be, about the fact that india and china are engaged in military hostilities,
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with at least one fighter plane shot down by the back stannis. i doubt very much that this is going to escalate into full-blown war of course, if it did, that would be extremely alarming since these are nuclear powers i've seen this kind of thing before it's about kashmir and from the perspective of india, it's about mody i think this is a little local difficulty and it will not escalate into something bigger. >> niall, i want to ask you about brexit prime minister theresa may has promised various remainors she will offer a vote to allow them to delay brexit if no deal, as an eventuality, is looking more likely do you think no deal is off the table now? >> it does look that way of course, it's become the
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longest running political soap opera in the world but my sense that the probability of a no-deal outcome at the end of march and a really major economic shock to the uk, that probability is down in the single digits now. and the most likely outcome, i think, is that she's going to have one more attempt with her withdrawal agreement and i suspect will fail. one reason she'll fail is prosighsly the no deal danger has been reduced and that reduces the incentive to withdrawal from her agreement. my fear is that we'll end up with a postponement, extension further months will pass at the end of it all, britain will be in the same situation with deep divisions on both parties about what exactly brexit means so, unfortunately, i can hear the distant sound of a can being kicked down the road kind of familiar in european policy isn't it >> indeed, it is niall, we'll have to leave it
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there. >> my pleasure. >> as always, great to see you, niall ferguson best buy is on track for its best day after earnings. >> plus shares of box are up 45% since the start of this year it will report earnings along with hp, square and booking holdings after the bell.
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welcome back to "closing bell." let's get a check on some of the market movers. weight watchers falling nearly $40 million after they missed on earnings down more than 33% today you can see that right there 34%. the company issuing weaker than expected revenue guidance and says it saw significant decline in recruitment in december and january. weight watchers saying that oprah will play a central role in its upcoming spring television and digital marketing campaign meantime, j pchlt mopjp morgan g weight watchers. last time we heard oprah was taking a stake and stepping up in terms of being more of a
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spokeswom spokeswoman, we saw the stock rally. i have a theory cooking here, wilf we talked about how millennials and younger adults are interrupting a lot of these older, more classic brands and i think that's happening here, too. you have intermittent fasting. you've got things like avocado toast and fat is good now and these younger generations doing paleo, et cetera. >> i don't know what paleo is but yes, i agree that said if there's one thing top sellers know on the jp morgan list, one thing you can't disagree with is a massive celebrity like oprah getting behind it again. best buy up 16%, beatings earnings forecast, comparables up 3%, announced a dividend increase to 50 cents from 45 cents per share.
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they attributed the sales boost to popular video game fortnite, in part, saying it's a phenomenon that lifted all boats in gaming. in general, this has been quite lumpy over the last couple of years, depending on each quarter but there's also a clear trend that the last two years have been a heck of a lot better. and they have turned a corner in that timeframe this particular quarter expectations came down, smart phone forecasts coming down. >> i think you saw that weakness because we saw the weakness around apple, the iphone and what's going to happen with that fortnite seems to be the tide that lifts all boats except when it comes to the teenagers and people sitting at home, not socializing. they're sitting there, playing fortnite. >> too long. >> it's good for companies i don't know that it's good for young america. i sound like my parents right now. >> i kind of agree i can't believe the amount people seem to play on this. >> gamers make a lot of money. >> best buy up 15%.
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>> yes so we've got about 15 minutes until the bell and the dow is currently off lows of the session but it is down 80 points right now 25,977 s&p fractionally lower and nasdaq is right around flat line. >> dow climbing 15% since christmas eve. why tony dwight thinks the run can continue excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today.
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welcome back to "closing bell," 11 minutes left of trade and we are higher. sor sorry, excuse me, lower by 73 points on the dow. there are the dow winners, though some gainers to speak of industrials, energy are the sectors that lead the charge with communications services at the bottom >> potential headwinds in d.c. weighing on the markets today. despite the drama, one market strategist believes new highs are on the way joining us now is tony dwyer here at post nine. lay out this case. why do you think we're going higher >> because the fed actually -- in october, we definitely didn't think it would be down 20% in the fourth quarter
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when fed powell said in october he thought it might be different this time because of the buying of the treasurearies for the balance sheet, it was artificially suppressing the long end he almost indicated he was willing to invert the curve because it's, quote, unquote, different this time. yesterday what got missed was on the written side where he said that the actions that they had taken had an impact that made them want to be patient. it was one of those factors that were in there. we went from making a policy communication mistake because of the flatness of the curve to basically saying that he's not going to invert the curve, which means that credit is not going to shut down and, truly, that is the bull case. >> so the bullishness comes from what the fed has done. >> absolutely. >> can they go further than they've already done without the data changing? is this already priced in? >> great question. have we ever had a president under investigation, sharply slowing growth acres fed that almost inverted the curve, all the things that are happening --
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and a potential trade war and the answer is 995, we absolutely did. in february of 95, they raised rates for the last time after almost doubling them in 1994 the economy slowed in growth to under 1% growth for both the first and second quarter of 95 market went up 10% guess what the market did through all of that, plus a trade war with japan it went up an additional 20% into year end. i'm not looking for that kind of run. our target is 2950 but with the fed not in your way again, i think it's all about that versus the growth rate. we know it's slow. >> q4 gdp reading tomorrow finally. when you talk about the comparison to '95, do you think the u.s. economy is poised to slow more than we are now? >> that's the whole bull story it drives me bananas when guys, and gals, like me come on and say how can the market pay more for slower growth? that's what happens in the past
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as long as you don't have credit shutdown i think it's a really important point for the bull story to be right, you have to have slower growth and, in my opinion, you have to have a fed rate cut like you did in july of '95 february of '95, everybody thinks -- i read the fmoc minutes from back then everybody thinks there will be two or three more heights. they cut rates market was up 15%. it went up over 30%. >> do you think we'll get a cut this year? >> i do. the growth is going to -- it is slowing sharply. there's no question. >> i don't know exactly what happened in '95. my history is not good enough on this point but with the rest of the world in the same position as the u.s., were they able to pivot and cut rates in a way that will make global growth pick up later in the year? it doesn't seem like that's an option here. >> it was more of a neutral policy, wilf the fed went from 3 to 6% in 1994 into february of '95. they only cut rates once by 25 basis points in july, again in
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december and once in '96 it's not like they took it all back and went through this massive easing cycle the globe was in trouble japan was slowing dramatically, we were threatening to put tariffs on their top three cars. that's the way president clinton kind of deflected what was going on with ken starr and the special investigation and the paula jones lawsuit and all the fun stuff. there are so many similarityies to that period the most important one, the fed brought the yield curve, the 210 yield curve down to seven basis points in december of '94. it got up as high as 40, 50 bases points and never inverted. people kill me for not saying it's not different this time we're nine years into the cycle. there's been so many reasons for a recession. why hasn't it done it? because the banks incentive to lend and the yield curve so positive. >> it's been cyclical.
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cyclical trade, which is financials, tech, industrials. industrials have been a leader something weird is happening in financials that has to do with shadow banking taking some of their demand. >> tony, thank you so much for joining us. >> thanks for having me, guys. up next, we'll be back with the closing countdown. six minutes left of trade. l brands, hp, box, square, booking hoinldgs we'll break those numbers down coming up on the closing bell once we get them it's inspected by mercedes-benz factory-trained technicians. or it isn't. it's backed by an unlimited mileage warranty, or it isn't. for those who never settle, it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through february 28th. only at your authorized mercedes-benz dealer.
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we have a news alert on southwest airlines and phil lebeau has the details phil >> as expected the faa has finally given the official clearance for southwest airlines in terms of top certification for flights from california to hawaii that means that southwest now has the clearance to begin flights from california to hawaii they'll announce those flights probably within the next couple of days and expect them to actually start within the next couple of weeks. wilf, back to you. >> phil thank you very much for that we'll be speaking to you in the next hour of the show as well. the stock exchange, 2 1/2 minutes left of trade. s&p 500 chart view, predominantly red throughout today's session, nearing the hi highs, only down 0.1%. you can see it's a similar
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picture, all of them around the flat line. nasdaq and russell not the dow and s&p. sectors for you there, oil doing well energy sectors doing well. financials and industrials toward the top at the bottom health care and communication services going to bring in bob pisani and show you the pound as i do week to date, what a jump in the pound. no deal as niall ferguson was talking to us there. looking much less likely a big gain for the pound after the last one week, and main takeaways here >> another potential for the market that's kind of gone away. not gone away, but lessened up saying the probability of a hard brexit is now largely -- >> single digits, he said. >> thank you that's exactly it. three big hearings on the hill we got a lot of meanderring around lighthizer, trade representative, said we're not
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done with the deal yet they implied there's a lot more work you see the market priced in the idea that the trade deal is happening. it's done. lighthizer said hold on. there's a lot of other things we need to do here. the market kind of dipped on that that showed you how much we're dependent on the trade deal. how do we keep the market going here with the trade deal priced in largely, powell being benign on the markets the key thing here is some better economic news in the united states, numbers keep picking up and they stop doing that it stabilizes and then you can argue for higher multiple. >> a couple of nice retailers. lowe's, best buy. >> they're not dead yet. >> not dead yet? >> but it's the discounters, walmarts, department stores are still having a hard time i just want to note that the medical service providers,
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humanas, democrats unveiled that, medicare for all legislation and those names are trading down. >> oil having a good day today top performing sector. week to date is essentially flat the bell at the close, dow down 80 points, nasdaq and russell holding on to slight gains morgan, back to you. >> welcome to the closing bell i'm morgan brennan in for sara eisen. wilfred frost will join me in a moment we are finishing the day on wall street as the stocks settle, dow finishing down about 72 points, 25,985, .75% the s&p also finishing lower, just barely, at 2792 and the nasdaq finishing just about flat but to the upside,
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7,554. russell 2000, the outperformer, finishing up .2% in terms of what did outperform sector wise it was cyclicals health care, communication services and real estate as we had three major hearings on capitol hill and president trump in vietnam for that north korea summit coming up we'll discuss the fed's interest rate policy. harvard economics professor ken rogoff u.s. trade representative robert lighthizer says a deal with china is not yet certain retail stocks, bright spot tjx. speaking of earnings we're awaiting results from hewlett packard and l brands senior vice president of wealth management and senior portfolio
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manager at ubs first we will start with mike santoli. it was a narrow trading range. >> it was. >> here today despite all these major potentially market-moving events. >> on a market-wide basis it was really idling. over the last seven trading days, the mark has not moved as much as three-quarters of one percent as far as the s&p and smaller moves typically. people are watching it as bob mentioned, though, there's a lot of push/pull within the markets health insurers going down, retail up today. it is a little more of opposing currents keeping the indexes in place for the moment anyway. >> jim, what did you make of today's action and intra-day chart looking quite encouraging, recovering off the lows from earlier in the day. >> it's very representative of the situation that we're in. we were in a deeply oversold situation. we have this big rally now it's a natural place for the market to take a little bit of a
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breather to consolidate, 2800 to 2017 the russell 2000 is just below its 200-day moving average that's another resistance level. and we haven't consolidated this rally. it's a natural place for the market to take a breather. not only that but pretty soon you're going to have this closure of the window where companies can buy back their own shares and we've had lower guidance moving in to the first quarter so, this is a natural place for consolidation. i don't think it's going to be a big sell-off we might see a little bit of a pu pullback here. the reason i don't think we'll see a big sell-off is what you mentioned, strong intra-day closes, hedge funds are underinvested. individuals are still under invested cash on the sidelines. interest rates have come down. treasury yield at 2.6 isn't going to attract a lot of money. equities are still going to be the place for risk asset
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positioning. i think we just need a little bit more of a consolidation first so people feel more comfortable. >> jim, what do you think is potentially the next big event that could move markets, given the fact that we are in this place of consolidation right now? it seems like we're under uncertainty with u.s. trade talks. we got comments from the fed chair. not necessarily anything new or, you know, unexpected this week. >> right. >> what do you think is the next -- >> lack of catalyst. >> i think you're right. >> yeah. >> at least for six weeks or so, we'll have a lack of catalyst until these earnings come in let's look at these earnings they've really lowered the bar for the quarter. the ironic thing about the stock market is that it's always what the reality is versus the expectations and if you look at the history of our quarters, where it really lowered the bar this much by the time those actual earnings come out, our stocks tend to do very
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welcoming through those earnings periods. the challenge here, morgan, is that nobody knows how to game earnings is because nobody knows when we're going to have a deal. the longer we go on with trade uncertainty, the longer businesses aren't going to be doing factories, properties, planned, equipment, new hires. and business owners in this uncertainty stage and that clogs up the business cycle. i think inventories are rising, that's why i think retail sales are starting to tail off we've been going on too long with the uncertainty we don't know if the deal happens next week or this summer or this fall that's why we may bounce around here these earnings are going to come out. i think come mid april, we'll start to see the markets moving north again as we get past this lowered bar of earnings expectations. >> mike, quickly on the fed,
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jerome powell made a little incremental news today, confirming about that balance sheet run-off ending this year the fact that we didn't see a big market move off the back of that suggests that it's priced into equities already. >> that's what it tells me the fed, this benign fed story has rebuilt equity valuations as earnings estimates have gone down i think you have gotten to a point where, look, we've priced out any heights. we're looking at the next handicap move in the foreseeable future in terms of the bond market i do agree at this point i think you're waiting for that march meeting, what are those dots going to say? here we have to have something on paper from the ferd that says here is where the consensus is relatively large amount of room between here and there in terms of data to see where that swings. >> markets finished lower, a little bit anyway. we're going to switch focus again. we have earnings and they are
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from box josh has the numbers for us. >> reporting eps, expectations of two cents revenue is light 163.7 million street was looking for 164.2 million. they're calling for q, loss of five to six cents, wider than expected and revenue they're looking for 161 to 162 million that misses the mark street was closer to 169.6 million. same goes for guidance for the year they expect a loss here of three to profit of one cent. that misses and for the year they're looking for 700 to 704 million. the street was closer to 733 million. i had a chance to catch up with ceo aaron levy to get his take and ask him about this fwiedance, weaker than expected. he cited two points of weakness. a few seven-figure deals did get pushed out in the quarter. he talked about in terms of geography here,continued
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weakness in middle east, europe, africa drop box ceo was on cnbc last week and he told us he was taking customers from box. i asked aaron levy whether that was true he said that's not unreasonable that drop box is taking customers. we compete in that small business category but he says he's not seeing them show up i the enterprise market. this call starts at 5:00 p.m. eastern and we'll be on it back to you. >> thank you very much for that. mike, clearly competition from both these players and others, big pullback in the stock price. >> very big pullback it went up more than 50% to 25 it's been vertical it's interesting this entire subsegment of tech has been a leadership group. software has been fire this has participated in that. that's why i think there was so much air underneath it for when you have a guidance cut. >> it is interesting to hear
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those comments that some of their potential deals from customers have been pushed back. we talk so much about the certainty and what that's meant from a consumer sentiment standpoint definitely one to watch. markets finishing lower after u.s. trade representative robert lighthizer testified on capitol hill today and says more still needs to be done as china and the u.s. reach a trade agreement. >> we are making real progress if we can complete this effort -- again, i say if, and can reach a satisfactory solution to the all-important, outstanding issue of enforceability as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with china. let me be clear. much still needs to be done, both before an agreement is reached and, more importantly, after it is reached.
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>> now, jim, i know president trump has expressed, especially in the last couple of weeks, what could be called more eagerness, to see some sort of deal reached with china. but these comments are the types of comments in general we've been getting from the administration for weeks and months now, right? >> yeah and everybody is going to look for what the deal looks like and at the end of the day, the markets will rally because we don't have to worry about the uncertainty. we'll have the devil we know versus the devil we didn't know. the markets go up when there's a deal either way. what really needs to happen here is a meaningful deal and that means technology transfers. that means intellectual property theft. if you focus on just the number, that doesn't really mean anything they're always going to be able to make stuff cheaper over there than we make it over here. we're probably going to have an imbalance. unless they do something with technology transfers and intellectual property rights, it
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won't be that meaningful of a deal if you get that kind of deal, markets really take off. if you get any kind of deal at least the market doesn't have uncertainty anymore. a, let's do a really good deal but b, the markets go up either way. >> mike, your take >> i think the market is much more mercenary and short term about this it wants to be rid of the issue. maybe the 10% comes off and get it away from the radar at this point. maybe long term economically, you would want to see the more structural movement in terms of business opportunities for u.s. companies there. i honestly think the market never wanted this fight. they would be fine if the presses caved and said fine we're going to come to some agreement on paper. >> it's going to happen. the point is my market doesn't want to hear it's a long fight, it's a new cold war. we're in this forever. >> and the tariffs are going to -- >> and we have an election next
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year this is not going to be that long of a fight. it will be over, most likely, some time this year. that's not going to be something that the president is going to want to be arguing about during an election year. >> we are going to move on from tra trade. another earnings alert on booking holdings seema has the report for us. >> reporting earnings that easily beat street expectations but revenue was a bit light at $3.21 billion. furthermore, gross bookings of 19.6 billion, increase of 9% from a year ago but bloi below wall street forecasts and that seems to be weighing on the stock. it is down about 6 prs%. hewlett guidance, a bit light. booking holdings starts at 4:30 p.m. eastern and we'll be on and see what ceo glenn fogle has to say. back to you. >> thank you for that. mike, any take on bookings >> not so much but to seema's point it's a little bit of a
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zero sum dynamic it doesn't seem to have the leverage over the hotels. >> 6%. meantime, hewlett packard is also out and josh has the numbers on hp. josh >> wilf, eps of 52 cents, back in line with what the street was looking for. revenue of 14.7 billion. that is light. street was looking for 15.86 billion. 50 and 53 cents, that's in line. they reaffirm their call between 212 and 222 eps. they returned $1 billion to shareholders in the quarter. got a chance to catch up with hp ceo. about that top line missed he talked about the shortage of intell chips that the industry is dealing with and impact hp in the quarter. i did ask him about his outlook for the overall pc market. they're telling us the first
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half of the year is expected to be more challenging than the second half. he expects tail winds from the windows 10 refresh i asked him also about these implications from the trade dispute from tariffs is he seeing any impactfrom hi business he said the impact from tariffs has been incorporated into guidance he believes in free trade, he said they operate in 170 countries. what could be do coming down the road in terms of trade disputes, he said we don't chase ghosts. personal systems at 9.66 bill n billion, printing at 5.1 billion within that. executives mentioned some challenges they saw on the quarter when it comes to supply. you can expect to hit that on the call at 5:00 p.m. eastern back to you. >> josh, thanks for that. >> mike santoli, very similar comments that we heard, that the first half will be more painful than the second half the other thing -- it's been more of a theme out of this earnings season than we've
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talked about the idea that the worst pain of the tariffs that are already in place are priced in. >> right seems like they took the hit or acknowledged that they built it into some of the guidance. that is the upbeat take on that. >> the shortage of intell chips if that impacted the one-off quarter was something that a few analysts pointed to and guidance reaffirmed we'll see if they can get that performance going in the year ahead. it's down. >> and i see you nodding your head, jim. do you agree >> i do. what happened with these trade wars, a lot of companies front loaded orders and purchases and so it looked like prior to last fall that things were really going better than they really were then you started to see the data fallout because people had preordered in jumping these tariffs. now that the trump administration has stayed at 10% and it doesn't look like they're going to go beyond 10%, maybe
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they even fall off, businesses can start at least gaming a little bit about when to order, how to pay for things. and i think you'll see some stabilization, particularly in the technology sector, where we do a tremendous amount of supply chain business with china. >> we've got another earnings alert right now. this one is on square. deirdre bosa has those numbers. >> not enough for investors, stock dropping 5 p% on weak guidance adjusted earnings per share of 14 cents, a beat by a penny. also adjusted revenue for the quarter, $464 million versus $454 million expected. service and subscription segment continues to grow by the triple digits, 194 million in revenue that is growth of 134% guidance light as i mentioned. eps guidance of 6 to 8 cents the street was looking for 11
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cents. revenue forecasts between 472, $482 million and that was in line with the street's expectations square also updating its cash app, monthly active users for the first time in a year we have exclusive comments from ceo jack dorsey. the cash app more than doubled its monthly active customers and products launched in the past five years are more than half of the adjusted revenue jack dorsey giving us this comment to cnbc and that's 15 million, up from 7 million a year ago mention gross payments volume two, in line at $23 billion for the quarter. back over to you. >> deirdre, thank you for that down some 6% the guidance line, must be something on the margin coming forward. the eps line of it is disappointing. >> it is i mean, this is a stock that, first of all, is a very favored group. it has exactly the kind of chart that fang-like stocks had.
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then a recovery from the lows this year and fundamental momentum has to be behind it it's 150 times earnings or something like that. it is trading mostly on that users momentum. >> jim, what's your take on square do you like this, or the more traditional banks? >> here is the thing it's just like michael was saying, a lot of these tech stock stocks when you look at companies like box that just reported today in square, you don't really leave them any room for error when you're trading at very rich multiples and then you miss on anything it doesn't matter whether it's revenues, guidance or margins. if you're trading in triple digit multiples and miss on anything you haven't really left any room for error that doesn't mean they're not good companies it means that you have to look at how people are positioned versus -- and expectations and then the reality versus those expectations now, some momentum investors might take advantage of a sell-off in some of these names
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to start positioning but you've got to be careful when evaluations get very rich in an uncertain market that's made a very big move off the lows. >> jim, thank you very much for joining us today great to see you as always. >> always good to see you. >> up next on "closing bell," ken rogoff explains how the fed's policy and potential trade deal with china will impact the economy. >> later find out why a bond payment due friday could raise new concerns about tesla's cash reserves ♪ (butcher) we both know you're not just looking for pork chops. you're searching for something more... right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place. the road is yours, dig in.
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welcome back another set of numbers out on l brands. >> the stock down to about 10% right now onearnings here, despite the fact that the company actually beat on their eps $2.14 relative to the $2.07 that the street was expecting. here is why the stock is down. they missed on revenues by $30 million. and the full-year guidance is much lower than the street was expecting. instead of 271, the company is looking at 220 to 260. and that's why you see the stock down more than 7% right now. wilf, back to you. >> eric, thank you very much
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mike, different sets of performance within that space, stock pacific. >> in the retail space. >> yes. >> without a doubt l brands, too many stores, too many malls just out of step victoria's secret being undercut by a lot of other retailers. >> bath and bodyworks. >> and that has slowed down, yep. >> two market moving hearings on the hill today fed chair jay powell and robert lighthizer in front of the house ways and means committee on china. here are key points from both of those testimonies. >> we've worked out, i think, the framework of a plan that we hope to be able to announce soon that will light the way all the way to the end of balance sheet normalization and that will result in the end of asset run-off some time later this year. >> i'm not foolish enough to think that there's going to be one negotiation that's going to change all the practices of
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china or our relationship with them i don't believe that i believe other problems will arise and they're going to have to be dealt with i view this as a process. >> joining us now with this take, ken rogoff, professor of harvard university and former chief economist at the imf good afternoon to you, sir in terms of all the commentary we got today on the hill, your takeaway >> well, first of all, on chair powell, i thought he gave a very smooth, confident performance. he knew what he wanted to say and what he didn't want to say you feel like he's really taking control now. and that's a good thing. it gives him a more predictable fed. i like very much that he sort of recognized that they might be at the neutral rate now and so that is kind of reigning in people say unemployment is low, the economy is growing we have to keep raising interest rates. and he has done the same on the balance sheet. i think that's less important.
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but, again, i think it makes the fed more predictable and easier to understand. >> what did you make on his comments about the balance over the last couple of days, balance between fiscal and monetary policy and kind of what he sees as his role long term? >> well, i mean, there's this idea floating out there that a number of progressive democrats have had that you can just print debt and then let the fed buy it and put it on their balance sheet. in other words, we were talking about the balance sheet run-off. they're talking about the balance sheet run-up and, of course, that could go on they could do that for a while but it's no way to run the central bank eventually, you get higher inflation, higher interest rates. and there's no reason with the economy going well to be playing that game right now. >> you're referring to modern monetary theory, right >> i guess. >> what did you think in terms of -- yeah. >> yeah.
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he answered the questions very specifically. >> what did you think of -- >> i think he gave a very candid answer to that he was not holding back. >> on the top of negative rates, of course, we see abroad that. negative rates as a concept, do you think, could work one day? >> absolutely. within ten years, all central banks will be doing it in a significant way if interest rates stay this low. you have to lay the groundwork, decide how you'll deal with cash, tax regulation they've done that to a limited extent in europe, more in sweden and denmark. we'll be doing it in the united states if interest rates don't go up. you can't just stabilize with fiscal policy. you need monetary policy every time we have a recession, if you're really close to the zero bound and you hit it, you want to be able to use monetary policy mind you, if the short-term
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rates get negative, it actually could raise the longer term rates because people expect inflation to come up they expect growth to come up. but right now that's just starting to be debated inside the federal reserve. >> which begs the question, ken, what is in the arsenal in terms of u.s. monetary policy if and when another recession does come is that when you see something like negative interest rates become a reality or, you know, balance sheet run-off? how should they be thinking about this right now >> not this time i think for the united states we're looking one to two recessions out, at least, before we can start talking about this. no, i think this time they'll quickly get to the zero bound and they'll increase their balance sheet, quantitative easing, do their smoke and mirrors with forward guidance. i think the evidence is that stuff does not do much and the plan will be to use
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fiscal policy. of course, that's already very aggressive we'll use it more. but i think it will be a bad experience when we have the next recession. if we have a significant recession, we really don't have the tools we usually have and it's going to be worse than it would be otherwise. >> just a quick one, ken, on china. regardless of the trade deal, do you think we have a major chai nieces slowdown on our hands and will that come back and impact the u.s. economy this year >> we absolutely have a slowdown going in china that's not just a bump i think they may achieve a soft landing but it will be on to a downward slope when you centralize the economy, centralize power to the extent they have, you may produce political stability. you do not produce higher economic growth. and i think we're facing that. the world is facing that it's much worse for asia, worse for europe it will come back on the united states but we're not affected by
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it nearly as much. maybe after the trade deal, we will be, but europe is more dependent, asia extremely dependent. >> ken, thank you for joining us ken rogoff. >> thank you. >> up next, we will break down the charts to explain why history says a pullback could be in the cards for the market after the strong start to the year. >> home depot under pressure after the advisory group downgraded the stock we're back in a couple of minutes. , , and saying, "really?" so we built capital one cafes, with savings and checking accounts you can open from here in 5 minutes. this is banking reimagined. what's in your wallet? this is decision tech. it's screening technology that helps you find a stock based on what's trending or an investing goal. it's real-time insights and information,
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welcome back more numbers rolling in. this time from fitbit. >> stock is down more than 15% right now. it's not because of the earnings themselves they actually beat on the top and the bottom lines it's about the outlook going forward. they expect a decrease in the average selling price of their devices. they see weak first quarter revenue guidance and a wider loss per share than what the street had been expecting. it's not about this quarter's results. those results were fine. it's about the guidance going forward. that's why the stock is down more than 15% right now. back to you guys. >> eric, thank you s&p 500 has seen one of its strongest starts of the year ever mike santoli has the details on all of that, joining us from the telestrator. >> yes, morgan four years, not including this
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year, that basically have had a very similar path through the first two months of the year the blue line, obviously, is this year. that leaves us right at this point here you see the path has been generally positive for these other years that were completed. essentially after february, the average gain was a little more than 10% and the medium gain was 8% all four of these years ended positive two most recent, 97 and 2012, you did have these pull backs which got you almost back down to flat for the year you just about gave up all the january/february gains before taking off again i would say it's one of these many measures that are saying look, when a market starts off very strong, you tend to have better than average results, but no guarantee of anything in the short term i would also point out another year that you are also up more than 10% in january and february was 1987 it is not on here because it had a little bit of a different shape the first couple of months that year went up 4% year to date and then gave it all back with the crash in october that
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year. >> mike, the other thing to consider is what happened around the rest of the world in these environments. >> yes. >> and is that a sort of similar trend for the most part? >> i don't know if you could generallyize and say it was a similar trend. i wouldn't be able to tell you about 1943 lots of dramatic things were going on in the rest of the world. 2012 was interesting in that regard think about how the year started. big sell-off global bear market, downturn without a global recession in 2011 you had a dramatic recovery late in 2011 into the new year. and so that would suggest that you're sort of coming out of a similar position where it wasn't as if the prior year was very strong as would be the case in '97. '96 was a strong straight-up year. >> and shaped investors' resource, i should say. >> sue herera has an update for us. >> i do, indeed, wilf. former trump lawyer michael
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cohen still testifying before the house oversight committee. he talked about the trump tower negotiations in moscow. >> mr. trump knew of and directed the trump moscow negotiations throughout the campaign and lied about it he lied about it because he never expected to win. he also lied about it because he stood to make hundreds of millions of dollars. >> the montreal allouettes releasing johnny manziel because of violating the agreement which made him eligible to play. it's unclear what he did he thanked the cfl fans and said he looks forward to exploring new options in the u.s late president george h.w. bush's service dog, sully, has a new mission. joining walter reed medical center facility's dog program.
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will he help reduce stress for patience at the hospital you are up-to-date that's the news update this hour i can't think of a better guy to do that. >> i agree. >> great mission. >> very adorable. >> he is. >> cute, indeed. >> sue, thank you. >> you got it, guys. a look at nearly whether a $1 billion tesla bond payment due on fday ulricod raise concerns about the company's financial health
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welcome back to "closing bell." we have a market flash and eric has the details. >> celgene has fallen more than 5% after a statement was issued saying it does not back the deal between bristol-myers squibb and celgene. its opinion carries a lot of weight in early january bristol announced a deal to acquire celgene. wellington saying it believes the transaction asks bristol-myers shareholders to take on too much risk.
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back to you guys. >> okay. eric, thank you very much for that bit of a movement. down 5% or so, celgene, at the moment. tesla's elon musk tweeting big news tomorrow but some think it could be a distraction from another big event the automaker is facing. phil lebeau joins us phil >> a lot of that surrounds what the company will be doing with a bond payment that is due by friday they will be making this payment for $920 million it is a convertible note we should note that the conversion price, if they were going to be able to pay it with all stock, tesla shares had to be above $359.87 clearly they're not going to come close to that come friday they'll make that payment. it raises the question we've heard from a number of people, is there a cash crunch at tesla? that was a concern six to nine
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months ago take a look at the shares at tesla. they ended the third quarter with just under $3.7 billion in cash the question will be how does the liquidity hold up? they also said they do not expect to be cash flow positive in the first quarter not likely first quarter is likely to be a tough one. they expect to be cash flow positive second, third and fourth quarters the remainder of this year. capture expenditure target, by the way, is down $2.5 billion this year compared to $4 billion last year, in 2017, it was higher as well a lot of this money being spent is for model three production over in china. though the company said we expect to be taking out loans there that will cover the cost of building that plant and that we are in okay shape in terms of liquidity. having said that, guys, there is a lot of focus on what happens as tesla not only makes this
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payment but as it heads into the second quarter as you said, wilf, elon musk has said in a tweet in the middle of the night, there will be news from tesla tomorrow in the afternoon. other than that, we know nothing else we'll have to wait and see what they have to say. >> i was going to ask you, phil, if you had any guidance on what that news might be sounds like it could be a twitter mystery. >> there's no indication keep in mind, morgan, we've seen these types of things in the past where they say we've got news coming out and people get worked up thinks it's a huge announcement and it really isn't. it remains to be seen what they'll be saying tomorrow afternoon. >> it might be him walking to the bank to pay the bond. >> yeah. walking down the street with a check. here you go. >> poking the s.e.c. >> there you go. >> no doubt, the reaction from you as well. phil lebeau. coming up next, releasing the most millennial sneaker ever
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we've got details. >> and a long-time home depot 'ltagrading the stock today. wel lk to kelsey advisory group about that call, coming up are you one of those folks who needs to connect to the traditional stock exchanges? then i'm about to show you something you cannot succeed without. literally! this cable. looks ordinary, right? (and it is!) but plug it into your trading systems, and... whoah... you open a whole new world of shockingly basic access to those fusty old exchanges and the data they distribute. we're talking monopolistic-levels of access. like, what-am-i-paying-for-exactly levels of access. want the ability to simply trade on modern markets? it's in the cable. want access to the information you need to function at your job? it's in the cable. want to be forced to join in a pay-to-play system that's anti-competitive and learn to like it? come on folk, kiss that cable! it's the only cable you're ever going to need. this cable absorbs all your extra capital! now other places may try to sell you this cable for a hundred bucks.
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autonomous delivery robot that helps make same today and deliveries to customers. here with the inventor, based off the ibot wheelchair, it can move over stairs, multiple terrain, round trips up to 10 miles to deliver to people's homes. and ten miles? >> yeah. they're going to start piloting this in certain cities this summer. >> leaves the package at the front door if you're not there, or not drops it off you need to sign it? >> that's a good question. i don't know >> sounds like most of them, they drop now. >> and the thing is because one of the focuses will be security. there's full monitoring, speaker system attached to it. they can redirect it there are people that can be attached to it. >> i like it a lot. >> if you thought we hit peak avocado toast, think again
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now selling $130 avocado toast sneakers or as the website read ho holy sauco-mole. they're not as absurd looking as the idea might suggest. >> you don't look at that and immediately say that looks like food even though the color scheme is there. >> i think they kind of -- >> maybe somebody at the company thought it would be a good way to get attention. >> i don't think they look that bad. i would never be able to pull off lime green sneakers but they look all right. >> as a former break dancers, sauconys is what i used to wear. they'll be collectible people will buy them. >> and i would love to -- >> that kind of buries the lead, as a former break dancer. >> we're all break dancers.
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>> i'm watching billionaire ken griffin's recent purchase of a manhattan condo, the most expensive home ever sold in the united states. new york city tax department is valuing the apartment at less than $10 million wall street journal story. fascinating. really an excuse to look at this twisted way that new york city values high-end residential real estate. >> there's been so much focus on everything with the whole h2q amazon pullout and tax incentives tied with this deal yet we have a wacky process of valuing the uber wealthy. >> it treats high-end condos as if they were rentals the value is based on what it would bring in as a rental essentially he's paying for property tax .2% of what he paid. >> if he's ever going to pay tax
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on this purchase, it will be capital gains tax. >> or capital loss we'll never know just the way it is. >> pay that much tax on it there we go. >> meantime, l brands are out with earnings a short while ago. we'll talk with the advisory group next at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.
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l brands plunging after hours after the company missed revenue estimates and gave weak guidance let's bring in dana telsey that stockes down 6% or 7% what's your take on the numbers. >> i'm not surprised at the weakness definitely weaker than the street expected. when you have a victoria's secret business who needs to
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update itself, you have a new ceo that just came into the brand, there's a lot of work that needs to be done. the bath & body works business has to keep on keeping on in order to maintain that momentum to offset some of the weakness from victoria's secret >> dana, give us your investment thesis on home depot. >> i think overall joe feldman just downgraded home kdepot. they have had such tremendous top line growth the past few years, comping the comp is the issue there. they are a best in class company but when you're going into this marketplace where we're having a little bit of a housing slowdown and you have them being able to comp the comp, you may not get the same uptick in the stock you've gotten in the past. you can't call home depot and lowe's the same story. it's different given the low-hanging fruit that lowe's has to execute against while home depot has to keep raising
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the bar. >> dana, as you and your analysts look company by company and sector by sector, how are you treating the very weak government retail sales report and what kind of pace of activity have we seen entering 2019 >> i think overall just look at the first quarter guidance that we're seeing many companies provide. the first quarter is a tougher challenge than people originally expected the december government numbers overall, we don't know all the puts and takes of them certainly in the midst of the government shutdown, getting those numbers out, what the revisions will look like, there will be changes ahead. overall the state of the consumer right now, companies are looking to keep inventory levels clean i think the second half will be better than the first half but my theme of 2019, it's all about flow-through where can you leverage flow-through to get to the bottom line. we have a later easter, we have tax refund data that isn't very helpful and seems to be getting
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weaker, not stronger so we're going to have a first quarter where everyone will have to manage expenses carefully >> dana, what's your take on what best buy got right in this past quarter, and is it sustainable for the rest of the year >> i think what's so interesting about best buy is this is a stock that peaked around $80 back in august the stock came out, they just gave very good guidance for the upcoming year. i think the other categories that worked for them besides mobile phones, i think they got the rest of the store working and that's what was able to reed to better sales and a better outlook. when best buy gets all their ducks in order, they can produce and that seems like what's beginning to happen right now. >> meantime, dana, e-commerce continues to grow. we saw that really adding strength to the walmart numbers we got last week we just got this news today as well that fedex is unveiling this autonomous robot for deliveries your expectation around
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e-commerce, who's winning at it in addition to amazon, and what does that mean in terms of costs and margins for these companies moving forward >> i think overall it's not a matter of either/or. every company today needs a brand that's integrated to operate a multi-channel platform i think the cap ex spending that so many companies are doing, we need to reinvest in the stores as well as technology. when you talk about delivery and supply chain, i think the size of stores are going to change. we may have smaller, more productive stores and that will be good. walmart is the one that competes, it's the one that wins they have the platform and they have the dollars to spend on that technology. other winners, look what nordstrom does frankly on the whole omni channel side. i think we see them to be ahead of the league compared to many other department stores out there and being able to monetize that pivot, we should begin to be able to see by the end of '19 or '20 that's impressive. if you have an omni channel
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platform, you know your customer better the other ones that are doing well in the omni channel platform, we have specialty that has a little room to go but overall look what american eagle is doing and even look at what gap has done you can't forget william sonoma integrating physical stores and digital. >> dana, great to see you. >> thank you. up next, we will round up the stocks making big moves in after-hours trading. tomorrow larry kudlow will join can the squawk on the stre street" at 9:30 eastern time sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances.
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change the music. ♪ when i move, you move beep. beep. use the rocket. [ sputtering ] if only everything in life listened to you like your new a-class. hey mercedes. [mercedes-benz voice assistant] how can i help you? change color. make it cooler. play my music. the a-class... ♪ time for the rapid recap of the headlines making news after the close. box plunging after hours beating on earnings, narrowly missing on revenues guidance is down 23%. a similar story for square but zippinging on weak first quarter earnings guidance. those shares are down 6% shares of fitbit also getting hit hard after hours also on weak guidance.
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the company did beat fourth quarter estimates. they are down 12.5%. and we've got about 10, 15 seconds left mike, tomorrow key things to look at. >> gdp we get some real macro numbers we'll see if it can shock the market off this slumber. >> and larry kudlow at 9:30 on "squawk on the street. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. tonight on "fast" stocks falling for the second day in a row but steve says buy, buy acti, buy. plus a bit of an earnings dip after hours. we'll bring you all the details of those conference calls. first we start off with two sides to the trade war robert l


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