tv Closing Bell CNBC February 28, 2019 3:00pm-5:00pm EST
discussion on modern monetary theory i don't think we solved it for today at all. >> no. we could revisit it. >> want to hear about it reports are that bryce harper the outfielder will sign with the phillies for the largest contract in baseball history, $330 million over 10 years. >> wow "closing bell" is next ♪ good afternoon welcome to the "closing bell." i'm wilfred frost. >> i'm morgan brennan in for sara eisen fourth quarter gross domestic product coming in higher than expected we'll talk to jason furman about whether the growth can tonight. plus william dudley on what that gdp read means for the fed's next move. he is here first on cnbc you don't want to miss that. what are the markets doing, though, right now? 59 minutes left of trade they're lower.
not meaningfully that is actually pretty near the lows of the session and been a sort of flat seesaw session. no major moves the dow down about 70 points and currently down 60 points. >> very tight trading range today but it is the last day of the month. joining our "closing bell" exchange, steve grasso and our own rick santelli is at the cme. goo good afternoon to you both steve? >> yes. >> how would you characterize the trading of the week despite major events for market watchers >> i'm still negative. we have this -- such an overreaction to the downside that you have an equal overreaction to the upside so when you start to think about the way the markets have moved, they've overshot to the tune of maybe 10% so i had seen, you know, in the technicals you would see maybe a 10% move off the bottom. we have seen a 20% move. i don't think the data supports the bounce that we have seen in
the overall markets. >> the big macro factors given that i haven't spoken to you for a while, like the fed's pivot, like china trade deal progress, is that priced in? or how much more do we go up >> i never think it's all priced in until you have the deal but gdp coming in as a precipitous fashion. china deal, what is that going to do for china right now? they're sitting on a ton of debt stimulus measures haven't helped what is a deal going to do other than make it worse for the economy? nothing. >> not going to make it worse. >> how can it make it better by the idea that a deal's going to be done they have to give up something. correct? if they give up something, that's less of a been fit. >> well, or it's the fact that we don't get tariffs imposed or elevated and otherwise would have come into place and go back to free trade with the rest of the world, the eu, as well. >> right sitting on how many trillions
basically of debt? how much have they tried to stimulate already? they have a shrinking work force. so there's none of this is going to be addressed in the overall trade deal so i don't think it's a win for china. it's not a win for global growth it is not a win for the united states. >> i do agree there's lots of china problems which might not be addressed but - >> i'm sorry i'll take that back. i think it is a win for the united states. it is not a win for china and it is not a win for global growth i think it's a screaming win for the united states where no other president's been able to do what he's already been done. >> rick, what say you on this topic with the stronger than expected gdp number and other data points this week? >> i think the answer lies firmly in last segment i did just export to china modern monetary policy and the deaf sits vaporized and grow immediately. no just kidding, folks. listen i really disagree with steve on this one
on all respects. politely disagree. i think we underestimate -- i really think you're underestimating how an eight cylinder engine runs smoothly pulling half the spark plug wires out. that's what we have done to china. the difference is they're not the mature economy like the united states or the uk and i think they bring more people into the middle class and allowed to that's why the gdp is higher but disatonight disappointed with it the u.s. ramped up or down and inversely core lated with economic data but in this instance i don't think the end of the year was earth shattering but a rug pulled out for a variety of reasons and not how much underestimating due to the glitches in global trade going on if anything, i am thoroughly
impressed that where we are given the conditions that currently exist. >> so, rick, though, when you say you disagree, you have a falling labor force, you have a stagnant productivity in china. >> wait, wait, wait, wait. what about the labor force what's your point on the play boar force. >> i assume it's the economy is not growing but falling for years in china no one should be shocked. >> right. >> i get where you're coming from but the growth engine of the world. >> it's been the growth engine of the world in part because the united states is the lead dance partner of trade has been on the dance floor. we have been sitting out some dances >> okay. so the overall economy you have germany, you have europe, you have japan and italy either teethering or in recession you have china growth go no place. you have our gdp falling
precipitously. where is the silver -- >> why is our gdp falling precipitously? >> q2, 4.2% q2 3.4% q3 and now where is it? would you say that's not precipitous? >> running on cylinders, steven. tuning up the ferrari most likely it will idle better and generate more horsehower. >> what number, santelli number on the cylinder index? it's fallen from 4.2 down to the middle 2s where it is now. >> how about rational thinking you are an investor. you have money where will you put it? >> well, right now we are at -- close to all-time highs. >> doesn't sound germany or china. maybe right here, maybe right here. >> do you think that germany and china doesn't get here the slowdown there doesn't get here, rick >> germany can fix its own ills. just take their blindfolds off.
>> are you telling me -- rick, they're out of bullets central banks are out of bullets. >> doesn't mean that the german auto industry can't ramp up the exports. i agree. banking system has issues. it still doesn't mean that the corruption is coming over here. >> there's no more bullets, rick. >> gentlemen - >> plenty of bullets >> no, there's not. >> clicking off 30,000 you ready? >> hamburgers and cylinders. >> we have to leave it there morgan, i enjoyed that a great deal. >> rick, i love you. i love you, rick don't go changing. >> i love you both steve, rick, enjoyed that very much great debate we are going to continue the debate now about gdp, larry kudlow on earlier today talking about the strong print here's what he had to say about growth going forward. >> people are saying, well,
there's a sugar high one year that's it. they're just plain wrong the tax rate reduction will be in place for years to come in fact, the business tax rates are permanent. the individual tax rates i think expire in ten years. and the 100% expensing habit in four or five years that will go on. these policies are working so i'm going to say 3%, 2018. and i'm going to say 3% for 2019 and 3% as far as the eye can see. >> so is this a sugar high or not? bring in jason furman of the white house council of economic advisers and doug halts-eiken. doug, is this this kind of current rate of growth around 3% going to be sustained for the rest of the year ahead of us >> i think the economy's in very good shape if you look at where we are at four over four
fourth quarter over fourth quarter, we have seen it steadily ramp up since the second quarter of 2013 it was 3.1 inside that number you've got a very solid household sector between 3% and 2.7% four straight years no reason to change. a lot of jobs, wages are rising. income growth is quite rapid we saw business investment drop a little from last year. still up that's a concern in the third quarter. rebounded in the fourth. so that's good news. i think the government's spending is a sugar high we saw a big boost from that that goes away no question. we expect the residential sector to turn around even flat we are back to roughly 3% again so i'm actually quite pleased with the report and it makes me optimistic about the outlook. >> jason, i'll put the same question to you. do you think it's reasonable to see 3% growth as far as the eye can see? especially if we get some of the trade overhangs resolved >> it's absurd to see 3% growth.
>> why >> as far as i can tell the only people forecasting that are republican operatives. you don't see anyone on wall street forecasting that. you don't see any of the independent economic forkers, the institutions, the cbo. it is only republican operatives they're cheerleading for the tax cuts look at what's happened to growth rates they were lower in q3 than q2. lower in q4 than q4. we had a huge fiscal stimulus this past year that's not repeated we are closer to full employment than we were before, maybe we're past it. the underlying potential growth rate of the economy appears to be at 1.75, that's a consensus view and in fact as far as i can tell just a month ago everyone was going on about how weak the economy was and how vulnerable to an interest rate increase and president trump saying you'll destroy the economy and not what
you say about an economy to grow consistently at 3%. >> but, jason, in a relative sense, two relative senses, one when president trump came to office, he's done better than people forecast at that point. perhaps more importantly, in 2018, particularly in the fourth quarter, he's done a lot better relatively than almost all of the developed world which is something to applaud. >> absolutely. the united states had a bigger fiscal stimulus than anyone else in the world in 2018. >> tighter policy. >> just like the keynesian models predict, you get better growth than everyone else with bigger stimulus. will that carry into 2019? 2020 i don't think so i don't know of anyone other than republican operatives that do think so. >> doug, i want to dig into this full expenses situation a little bit more because, yes, we did see the numbers soften a little bit. you know, the business investment numbers soften in q3
and start to come back in q4 all of this with the uncertainty of trade, slowing global growth. you know you have had kevin hasset, larry kudlow saying we haven't realized the affects of that change to the tax code and do you think that begins to materialize this year? >> so we don't know the full impact of the tax cut. we don't and we can't. there are 1,000-page dissertations to try to disentangle it i think that's all there is to it unfortunately, the net effect is what you get on the ground so i'm concerned about that. i was pleased that the fourth quarter rebounded somewhat i think you go to the core of jason's concern which i'm sympathetic to if you believe as he does that the potential growth rate's still stuck at 1.7 there's no way to grow at 3% for any sustained rate of time i would agree with that. the real issue is have we made a
dent in poor productivity growth will we see that go north? we don't know yet. no one can know yet. we have this phenomenon which is wages rising, the gap of net productivity, not measured yet but promising for a rebound and that is the key. >> and, jason, productivity clearly an issue with demographics of most of the developed world. going back to my point of the relative outperformance compared to the likes of germany, japan and the uk, do you think because of the strength of the u.s. consumer and the percentage of gdp that makes up here to continue the relative outperformance in the years ahead? >> i'm not incredibly worried about the u.s. economy cornually the consumer spending numbers were good in q4. that continued a pattern out of q2 and q3. i bet on us over most other countries over the next several
years. as well. i just think you want to calibrate what that, you know, bet you're making is a lot of that is our demography is more favorable. we have no idea what's going to happen with productivity growth. i think it would be incredibly rash to take, you know, 50 years of productivity data or ten years of data, throw them out and think we have written a brand new rule passing one new law changed one regulation you know you don't want do look at productivity numbers quarter to quarter but if you did right now, productivity looks dismal with not a commiserate amount of gdp. i don't think there's any evidence we have rewritten a rule that this time is different and people that think this time is different are the people that tend to be pretty disappointed. >> we'll see how all of this plays out. gentlemen, thank you for joining us for this discussion jason and doug
still to come here on the "closing bell," former new york fed president bill dudley for a first on cnbc interview, his take on powell's testimony this past week and the gdp number we just discussed. after the break, the second trump/kim summit ending without a deal. >> it was a very interesting two days and i think actually it was a very productive two days and sometimes you have to walk. >> up next, we'll discuss how the stalled north koreans negotiations could impact china trade talks. stay with us we see breakthrough medicines getting to patients in record time. at emerson, when issues become inspiration,
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[ ding ] [ cooing ] [ door closes ] [ cooing ] ♪ [ ding ] show me fish on youtube. say it and see it with the x1voice remote. from netflix, prime video,youtube and even movie tickets. just say get "dragon tickets". welcome back to the "closing bell." 42 minutes left of trade down .2% pretty much all four of indices. about 51 points on the dow the low 67 lower at the high of 50 points or so. a thin trading range and we are towards the bottom of it president trump departing vietnam without a deal after the second summit with north korea's kim jong-un collapsed over disagreements about sanctions. eamon javers has the latest from
hanoi. >> reporter: more than eight hours after president trump left hanoi earlier today, the north korean delegation held a press conference of their own and disputed one of the president's central arguments. the president had said that the north koreans wanted the removal of all of the sanctions. the north koreans said they asked for the removal of some of the sanctions. >> basically they wanted the sanctions liftded in their entirety and we couldn't do that they were willing to denuke a large portion of the areas that we wanted but we couldn't give up all of the sanctions for that so we continue to work and we'll see but we had to walk away from that particular suggestion we had to walk away from that rorp the north korean delegation said the proposal offered this week was practical but not clear when they might have the opportunity to present that proposal again president trump leaving here said there's no plan for the two
men to get together any time soon back to you. >> okay. eamon, thank you very much for that for more on the summit and what it could mean for trade negotiations with china, bring in nicklas burns of harvard and christopher hill, university of denver professor gentlemen, very good afternoon to you both. ambassador burns, if i start with you, do you think the president was right to walk away from the table as it were today? >> i do. despite these contradictory statements by the two governments, it didn't appear to be a deal on the table that was at all acceptable to the united states so the president made the right decision i think you do have to question the preparation for this meeting. ordinarily you wouldn't want to put the president halfway around the world in a high profile summit meeting without a very good sense of what the other side was going do say. ordinarily you would set up the agreement ahead of time. that obviously didn't happen
here and this buddy relationship that the president has put together, he's been so overt in his appreciation of kim jong-un and so e fusive in the praise and clearly didn't work and time for normal diplomacy we have an able negotiator in steve biegun but my sense the north koreans don't want to give up the newseum clear weapons program. this is a hard negotiation ahead. >> ambassador hill, the fact that they -- there was sort of a warm greeting of these two leaders ahead of time and even been on the schedule of an agreement signing and canceled when this deal got pulled or didn't go anywhere earlier today, what is the read through for china? we have these talks continuing between the u.s. and china on the trade front, as well the fact that we could see something like that play out with north korea, what's the message to that country? >> well, first of all, i think
one of the fundamental problems with the trump administration's approach is the lack of diplomatic architecture. i mean, china is not indifferent to the fate of north korea china has a great deal of interest there very long border so the idea that the chinese are content with after action reports is really i don't think going to work for china. now, maybe if there is movement on these trade issues and we get -- can get back into some kind of pattern of cooperation with the chinese, i think it behoove us to talk to the chinese to make sure that the north koreans don't go shopping for a better deal. and, you know, i must say when i was negotiating with the north koreans and they walk back something they told me they were going to do, we'd march over to the chinese and tell the chinese chairman there, i say, i'm not going to talk to your friends anymore until they walk back
that walk back i'd strut away the chinese rush off to the north koreans. ask what happened. then we'd eventually work it through so i think there's real consequences to the idea that we don't have any partners in this and finally i would say i was a little surprised that secretary pompeo left hanoi and went to the philippines. i'm sure it's very important to meet with president duterte but i would have made a buy line to one of the -- to the countries involved after all, japan was very concerned we might do a deal with long-range missiles and ignore the missiles to reach japan and we have to talk to the north koreans. i'm sure the secretary gets there but why the stop in ma mina on the way? and with respect to, you know, dragging the president 20,000 miles to hanoi and back, yeah, i would like to know how that all happened because the north koreans have talked for some
time for this idea of shutting down a factory and have it dismantled under american -- not supervision but we would have observers there. pretty big step. and they're saying that they were only looking at some aspect of the trade of the trade sanctions, again, you know, we need to hear from the americans what this was about. anyway, you just get the impression this is kind of raggedy ploem sy and it just doesn't have to be this chaotic. >> ambassador burns, we had treasury secretary steve mnuchin earlier on today making comments of sanctions and that they work, iran or north korea. what do you think the next step should be in terms of the u.s. pushing north korea towards denuclearization and more realistic talks? >> i think we've seen the end of this bilateral diplomacy, this focus on kim jong-un by the united states. the united states has to reengage with china, with russia
and certainly with the republic of korea, south korea and japan. this is the way to exact leverage only north korea. the trump administration, the president himself, has been so e fusive about kim and going back to the singapore summit last summer has been indicating he thinks that the problem is well on the way to being resolved and allowed china and russia to weaken their own application of sanctions and what you need to do is strengthen the sanctions regime and beijing is most important country with an economic relationship with north korea so here's where the trade disagreement, the trade war between the united states and china becomes so important if that can be resolved, then perhaps you have a chance to convince the united states, beijing that they should use their leverage with us against north korea. until the trade war's resolved these two are linked in the minds of the chinese and the americans. i think there's very little
chance of that so the president has to decide. i would say the trade agreement is the more immediate goal for the united states because at least one -- one by-product of the diplomacy in north korea has been that the probability of conflict is reduced, the atmosphere is much better. i think the administration can conduct diplomacy on north korea on the side but focus on the trade deal first in the weeks ahead. >> ambassador hill, i want to go back to what you said about whether the u.s. was sufficiently considering the interest of the allies in the region like japan because hasn't korea been quite keen for these talks to progress? president moon of south korea had quite a few friendly meetings with kim jong-un himself. was he not for president trump's tactics here >> oh, i think he was and, in fact, he was the person in the region not abe but he was the person who thought president trump should receive a nobel
prize. needless to say, you know, moon has tried to be helpful although we have seen as the north koreans have dug in moon's popularity sunk from some 80% last year to under 50% right now. and i must say korean public opinion on this is rather volatile they were not comfortable with the fire and fury and who has a bigger button but they were -- so they're much happier seeing this thing going forward but a lot of koreans are skeptical of how this is being done and certainly the president's effort to have this personal diplomacy which i understand but he frankly i think paid a little bit too much of wit the comment about otto warmbier. i mean, that is just way too much for many americans and, frankly, for a lot of people so, you know, i think the administration needs to regroup. i think the president needs to stay home for a bit. stay away from this and, you know, let the negotiators do what they can do i would suggest a broader
architecture and i would suggest a lot more specificity on the papers they negotiated with the north koreans. let's see what they want to get in return for yongbong it is less significant with other facilities to prepare to move to and questions to use some really professional work and let the president stay home and let the diplomats do the job. >> all right a lot of work, indeed. thank you for joining us today to discuss all of this. >> thank you still to come here on the "closing bell," should investors look outside the u.s. for growth we'll discuss whether now is a good time to invest in europe. now i'm thinking...i'd like to retire early.
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welcome back we're down about 0.1%. that's the sector performance, quite a defensive tone to it real estate. utilities at the top materials, energy and consumer discretionary at the bottom. time now for a cnbc news update with sue herera. >> hello, everyone here's what's happening at this hour "the new york times" reporting all american troops will withdraw from afghanistan over the next three to five years under a new p&g plan being offered in peace negotiations with the taliban the rest of the international force in the country would leave at the same time a russian court ruling that
prominent u.s. investor calvey to be in custody while pending trial. they're accused of stealing $38 million which they deny. here at home, pacific gas and electric said the equipment may have ignited the 2018 campfire which killed 86 people and destroyed an entire town in northern california. the utility says it is taking a $10.5 billion charge for claims connected to the fire in the fourth quarter earnings. and baseball free agent superstar bryce harper signed a 13-year, $330 million contract with the philadelphia phillies this according to multiple reports. the contract will not include any opt-outs congratulations to him that's a lot of money. back downtown to you. >> sure is. >> i wonder how he'll invest it. >> i don't know. we should have him on the show
and find out. >> we should sue, thank you. >> you got it. european stocks finishing mixed today as variety of factors weighed on the market. how should investors play european stocks? joining us to discuss, ben mandell of jpmorgan asset management here at post nine great to see you. >> thank you. >> what is your take on europe we talk about china but if you look across the earnings season, at least here in the u.s. quite a number of companies have said that the weakness in europe is one of the things that took them the most by surprise. >> yeah. i'd say that's absolutely consistent with an underweight in european equities using europe as a funding source for looking for opportunities elsewhere which is how we're currently playing in i think there's drivers that have been persistent one is growth. growth is persistently disappointing in europe and it's been a story where over the
course of 2018 it was one idiosyncratic shock after another and no full payback for the shocks you can look at germany, italy both had very sharp shocks which affected growth and both of which have not been fully paid back it is a less friendly external environment, as well in general, exposure to weak goods demand globally so there's a general malaise in europe characterizing the fundamental picture and then layer on top of that geopolitical risk and difficulty of banks having to do well, as well. >> on that note, totally get your point that some of the bigger economies like germany are feeling the pain this time around rather than just some of the smaller southern economies but does that mean the ecb is more likely to act and even if it does mean that, have they got the flexibility to do so >> i think it's -- first of all, trying to look at that from the aspect of a multi-layer
investor, once again on the equity side, european equities, euro stocks is 18% financials, so depends a lot what rates are doing to govern the performance of the overall index so the fact that growth has been weak, ecb is on hold, there's a narrative over 2018 that eventually they'll turn hawkish but that narrative keeps getting pushed back and now it's years before we see that. and so, the prospect of rates staying lower much, much longer, maybe indefinitely is weighing on banks and weighing on the performance of the overall index. and so, you know, when another issue i guess would be the political risk premium that's another contributor to why the ecb should be cautious and you could characterize that risk premium across all european margins so the fact you have issues in itly, you know, issues in france, brexit looming, they contribute to equities lower
and bond yields lower, as well >> so, if you don't like europe right now in terms of investing, what do you like >> well, we do like some things. i think we are using this opportunity given the somewhat soft outlook for europe for overweight positions in the u.s. so, you know, the u.s. we like to joke is an evergreen market it is hard to see a situation where you go underweight and, you know, if things are going well, good exposure to cyclicals, going poorly, it is the high quality defensive market i would say a general overweight to the u.s. in the late stage of the cycle makes a lot of sense and we are being opportunistic and tactical is emerging markets. what is the market that benefits if and when things do start to improve this year. a lot of that has a benefit to em. >> not to end on a bearish note but to quickly go back to europe because it was a negative summary. is it headed to another 2012
eurozone crisis or a slowdown? >> i think there's a difference between a european recession scenario which we don't see and just a general economic malaise which we do see in this part of the baseline assumption. one of the -- you know, positive developments or one of the -- some of the good news for europe and the rest of the world is we see limited recession risk in the u.s. this year and that's something where the causeality runs from the u.s. to the rest of the world and the correlation across different economies in terms of gdp syncs up with the u.s. in recession which we don't see. >> thank you very much thank you for joining us now we have got a news alert on tesla phil lebeau has the details. >> let's show you the tesla order page so if you go on the we believe site and want to order a tesla today, you can't order one right now because the page it basically redirects you to this. and if you look closely, it says the wait is almost over.
great things are launching at 2:00 p.m., 2:00 p.m. pacific time what an hour and 23 minutes from now. yesterday elon musk said we'll have news out of california at 2:00 p.m. and that was it and immediately started people saying what's the news this website now this redirect here makes you think are they launching a new product? typically when tesla launches a brand new product it usually is with great pomp and circumstance and a show musk usually says here you go. here's the model 3 or the new roadster i'll give you a taste of it. you will see it. we won't build it for sometime but that's the plan. so the people who are out there speculating is this the model y, show us an electric pickup possible though typically elon musk likes to make those types of announcements, huge announcements, he likes to make those at an event, surrounded by tesla employees, supporters,
fans and let's be honest. to easy are some of the best marketing events to see in the industry so it could be that we're seeing the launch of some type of a derivative relative to the current product lineup or a service that the company already offers but that's a bit of a tease ahead of the announcement coming up in about an hour and 20 minutes >> phil, fascinating stuff we discussed this with tony earlier. he thought it was a new financing partner for the china factory. >> possibility, too. >> it wouldn't be a hold page on a product page, would it >> probably. probably not but look it is hard to read into these things i can tell you the number of times over five or six years they said big news is coming and everybody gears up for it and they say, well, we have got a leasing program that's starting up look that's important to tesla. >> oh yeah. >> is it important for investors? is it going to move the needle a lot of times it hasn't
you have to sit and wait and see with this. >> i still think it could be a video of elon walking out of the bank with his check saying i'm off to pay off the debt for friday settling that out. we'll see. phil, thank you. we'll be glued to that coming 2:00 p.m. pacific standard time. 5:00 p.m. eastern time end of this show top of "fast money." pot company canopy growth surging this year getting another boost. we'll discuss if it's safe to bet on the cannabis craze coming up well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy.
welcome back ride sharing companies uber and lyft reportedly planning to riders money to invest >> reporter: now, both companies faced criticism that the drivers would not share in the potential wealth generated by the anticipated ipos because drivers are considered independent contractors, not employees this would be a way essentially to give them access and recognize their role in building the platforms. i'm told that uber and lyft are planning to give some of their
most active and longest serving drivers a cash award and the option to buy stock in their listings the journal reporting that lyft planning to give drivers who have logged at least 10,000 rides on the platform $1,000 a source tells me that uber's program would be similarly structured to reward drivers based on length and service and number of trips and also says that it would apply to a larger proportion of its drives that could be big money for both companies that, remember, are already very unprofitable. in the u.s. uber says there's over 900,000 active drivers and a huge fleet for years uber is looking to give drivers equity in the company and this is essentially a work around solution but it brings up questions over that independent contractor status of ride sharing drivers and key to the business model and flashpoint for labor groups and
the issue is expected to be a key risk factor when the companies make the ipo filings public as soon as tomorrow. >> you brought up to me the key factor yes, it causes them money to offer the cash awards and options for their drivers to buy into these ipos. but it's still a heck of a lot cheaper than converting them over to employees rather than independent contractors, right >> that's right and that's what this whole debate is over. they don't have access to things like benefits and there's been rulings here in california that have set a precedent to make it more likely in the future that they could be treated as employees and might be a little bit of pr going or here. uber and lyft saying we'll let you take part of the ipo and the drivers have helped build the companies while keeping their independent contractor status and a work around here we'll see if it's enough to appease them. >> thank you very much
could be as soon as tomorrow, morgan, for the ipo details. >> it would be i'm not convinced that the drivers would want to be employees since many of them i know here in the new york area -- >> work for multiple. >> exactly. >> exactly none of them drive asn aston martin at the moment. >> how do you know i've been picked up in nice cars. >> an aston mart sin >> shares are down 21% we'll tell you why coming up banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.
and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. welcome back to the "closing bell." individual market movers for you. aston martin with disappointing numbers. sending shares lower the ceo saying the company is operating in a no deal brexit scenario with lag time for building cars and any car built now will be sold after the deadline and also provisioned around 30 million pounds for brexit it's down 21%. if you strip out the one offs, it was a gain of 70 million pounds and behind expectations significantly. all of this now -- since the ipo
late last year, around 19. now trading at about 10 pounds so clearly it's been an expensive ipo. everything rests on their suv that's coming out soon and that really can drive demand and at the moment it is not been a great first three or four months of trade. >> i wonder how much is short term pain for longer term gain as they make the contingency plans and not caught flat footed later on >> smoother transition for i'm sure a jump to the shares based on the downgrades today. keeping an eye on party city shares the party store chain and by the way, fabulous for kids birthday parties, blamed margin pressures and higher helium costs for weak guidance shares down 17% right now. helium >> helium. >> so freight and supply chain distribution costs were a big issue for the company in the last quarter and a helium
shortage afoot i had no idea. second most plentiful element in the universe. >> not just -- >> here on earth there's a capacity crunch. there's not enough refining of it we have a federal helium reserve that's in the process of getting wound down here. it is causing a supply crunch for companies like party city who just can't get enough of this element for their balloons. >> letters spell out, the numbers, animals there we go. down 17% party city. still to come here on "closing bell," we will have the close which is six minutes away. we're down .25%. after the bell, we'll get a read on the state of the retail sector with earnings from gap and nordstrom reporting with del technologies and marriott. we have more "closing bell" right after this duncan just protected his family
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but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. welcome back to the "closing bell." we are at a new session low. we approach the close. we have just over two minutes left we are down 82 points on the dow but that is only 0.3% and the percentage terms the decline is kind of similar for all four of the indices so session lows, it's been a tight trading range. the high of the day up 44 on the dow. the last hour of trade down .2% or .3% there's a defensive tone to the
sector performance real estate, staples, utilities at the top energy, materials towards the bottom so no real beater moving higher. only now three sectors are in the positive and a full 1% decline for both energy and materials. i was going to show you the 10-year treasury note week to date we have seen yields tick up the last couple of days, nothing too resounding but a decent jump wednesday and thursday um to 2.72 on the 10-year. a snapshot of february s&p 500 up a healthy 3%. germany's also up 3% ftse 100 up. shanghai in the month of february is up 13% enormous seema, main takeaways? >> 18% for the year. tough day for today but for the month, china best two-month performance since 2000 and then
emerging market margin up 10% and the implications of the fed policy, fed chair powell yesterday saying they'll sticking to a patient approach coming the prospect of future rate hikes and implications of stocks here and overseas even in some of the -- even some of the trade sensitive names have done very well this year. caterpillar, boeing up double digits and even in retail best buy on the back of that earnings report up 16% so far this year cody up 50%. you have a lot of standout names within retail and even those trade sensitive stocks doing well in 2019 tonight earnings, marriott watching that name you have a big hack, stock dipped lower and then had a nice comeback how much did that hack impact the bottom line? we'll see tonight. >> certainly will.% for the day, the floor pretty much flat. oil down a little bit today is down more sharply week to date
an weighed on sentiment, as well approaching the close, 10 or 15 seconds left, down 0.3% on the dow. down about 70 points russell, s&p, excuse me, and the nasdaq also down similar amounts. 0.3% and not much of the lows and a trading range. at the close, down 75 points that does it for the first hour of the "closing bell." morgan, back to you. ♪ welcome to the "closing bell." i'm morgan brennan wilfred frost will rejoin me in a moment along with mike santoli. here is how we're finishing the day on wall street as stocks settle really finishing at the lows of the session. keep in mind, though, it was a very tight trading range moving in and out of negative and positive territory today for the major averages dow finishing down 70 points or about a quarter of a percent
25915. the s&p 500 also finishing the day down about .3% 2784 the nasdaq composite also down .3% the russell 2000 finishing down about .3%, as well it was more defsive sectors that outperformed also, it's the last trading day of february and for the month all of the averages did finish up 3% or more for the month. second straight month of gains here in the u.s. for major indexes. coming up, former new york fed president bill dudley discussing monetary gdp stronger than estimates and weak guidance is weighing on some key stocks and now we are awaiting more earnings this time from del, nordstrom and gap.
we're going to bring you those joining us to talk about the market day, alicia levine. good afternoon to you. let's start with mike santoli. mike >> you know, morgan, we have been operating at stall speed in this market for a while. today we closed on the s&p 2784. exactly where we closed eight days ago and eight days before that or five days before that, ten points lower half a percent obviously we got this sprint higher up 10% or 11% year to date on the s&p and then saying are we flattening out a breather are we trying to test the limits of how much to go up just on treasury yields low, fed patient and growth not as bad as we feared in december >> sector performance today and the chart by the end of the day selloff into the close not that encouraging. >> no. i do think it's a little bit of a -- i wouldn't want to say it's a risk off mode but definitely not aggressive so i do think
it's -- look i think a lot of investors came in feeling under exposed to stocks because the market was off to a great start that's why i don't think if it sags more it is going to be a necessarily deep or ugly one but i do think it makes sen for the market to churn around these l these levels are lower alicia >> the s&p is up the highest for the beginning of the year since 1991 including all the dividends. it is a spectacular start to the year we keep on bumping against the ceiling of 2800 where the market turned around three times in the autumn and seems like a good place for consolidation and to really take stock of where are earnings really going and will overseas slower growth hit the u.s. >> where are earnings going? >> in the short term, down we'll see probably a troughing in the first and second quarter
both here and overseas and to the extent that you can get a trade deal and that you can get china stimulus by the summer, probably stabilize the earnings and need to do because all of your earnings growth coming in the fourth quarter. >> but, alicia, is earnings themselves declining in the quarters ahead or is it just guidance that's come down allowing companies to beat expectations for the next couple of reporting seasons >> the longer we wait on a trade deal with china which means the longer we have uncertainty, and the longer the global growth slowdown continues the lower the earnings will be for the s&p so 40% of s&p revenue as you know comes from overseas so as we drag this out even if there's an ultimate rez dugs to it, you will get earnings coming in. some point they go too low as we know that's the game. we lower the estimates low enough that companies can beat and i don't think we're there yet. >> the way the math shapes up right now it is sort of a close call as to whether the estimates -- i think the first
quarter showing a down 3% year over year number, well, usually companies come in and beat by around a 3 percentage point pace right? that leaves you about flat i don't think it's -- it's not a binary thing if earnings go down it means something particularly for the market because it's different sectors have different multiples and feeding into that but it's definitely an issue in terms of we have kind of rebuilt valuations on the back of this fed pivot and the rest of it to about average levels and so the question is, you know, how much more can you squeeze out of that with the backdrop being benign. >> on the seasonality, we spoke yesterday with your chart of a really strong january and february doesn't necessarily mean by the end of the year we are lower and discussed with arthur cashin earlier, it doesn't mean two or three months of positive because -- >> that's right. >> there's almost -- really no strong bias in terms of how the next month or two goes after a strong january and february and i would caution that as we look at all of these kind of
historical precedents and all of the almanac wisdom, you know, last year you never had a year up 10% in november go negative by the end of the year and a double digit loss in december before last year and we did. these are tendencies and not predictions. >> looking what the's performed the best sector wise year to did it and for the month of february, as well, cyclical stocks, industrials, technology stocks, energy does that -- are those trades that still make sense at these levels >> so i do think they still make sense because ultimately growth is better than expected here in the u.s. i think what we saw on the gdp print today was a perfect example of how we could getter growth and it really came on the r&d side and when you have higher r&d you extend your cycle. and that's what we have seen in the cyclicals. we have more juice and the only question is what happens
overseas >> which is a big question we will have to wait and see as for back here in the u.s., the fourth quarter gdp came in better than expected, 2.6% versus the 2.2% that was forecast full-year growth around about the 3% level depending on how you're judging it mike, overall, there was a beat here on the inventories. so does that have to come off? >> inventories and business investment which was a bit of a splurge at the end of the year, probably going to be giveback in the first quarter. i think it tells you that things were not really falling apart the end of the last year and if you're jay powell, see, this is the reason i wasn't panicking in november because things didn't look so bad but there is probably some pull forward from the first quarter. the first quarter with seasonal tendenciesto be weaker than th models even suggest and a shutdown i have a feeling that it's, okay, great, 2.6%, a 3% year and
2018 we're going to probably give a pass to the first quarter numbers just because of the noisiness of them and i see the bond market really didn't react dramatically to today's gdp number not seeming to extrapolate directly from the action. >> not for nothing doesn't the market give the first quarter a pass weather or something >> last few years, you're right. >> to that point, you think that we could potentially see stronger growth. >> that's right. central banks worldwide are handcuffed and not having pushback from central banks. we don't see movement unless until september and really see steady stake growth because first quarter with the shutdown impact, the sell yauft of the market impact as investors got the statements that third week in january so that will have some affect, also but i think normalize by the summer. >> european banks in handcuffs and we talk about the fact that the fed has flexibility if necessary.
at this stage of the cycle, how real is that flexibility we were to cut rates, would it mean to hit a high gdp number and automatically kick in more stum lu stimulus >> i could see the poerm ssibil of a hike. that's a big if. that's in particular with growth revving up in the summer but having said that, i think that the fed's very patient one of the -- you know, the greatest things of today is inflation is not existent. despite the consumer is so strong and seen on the earnings estimates, they have really done well, there is simply no inflation in this system we are importing disinflation from all over the world. >> mike, you know, we had a discussion in the last hour of fiscal stimulus and this idea that, you know, that that spending was maybe going to dry up, a sugar high, et cetera.
wu you have had higher and higher levels of military spending. >> true. >> i think the expectation this year to increase, if you look at one of the groups that actually outperformed today in the s&p it was aero space and defense paying more attention to that? >> without a doubt even talking about the president proposing 5% discretionary spending cuts for every department except for defense. right? that is absolutely true. i don't think really we're bracing for anything approaching austerity but basically saying, look, the best year on year impacts would have come last year in terms of the radical cut in tax rates and that boost in spending after you had spending capped for a few years i don't think the fiscal story is a huge swing factor for whether we have a growth slowdown that's pronounced this year or not. >> we have an earnings alert and it is on nordstrom leslie picker has did details
for us there >> it's a miss on the top line for nordstrom but the street seems the like what it sees in terms of guidance for the year on the top line, though, they reported $4.48 billion in sales. the company reported $1.48 eps on a gap basis but that's -- it's unclear at this time whether that's comparing with what the street's estimate is. comps up about .1% in the quarter. now, for that guidance, they see fiscal year revenue up 1% to 2%. that is below where the street was up about 2.7%. estimated. they do see fiscal year eps of 3.65% to 3.90 on an adjusted basis comparing pretty much in line with what the street was expecting and see there shares up more than 5% in after hours trading. back over to you. >> leslie picker, thank you.
mike >> look. the stock was trading near a low. not expensive. less than a year ago the board rejected the family's bid to take it private at $50 a share and then traded well lower than that and now at the cusp of $50 again and it seems like the market braced for not so great numbers and got better than that. >> high 60s late last year a big tank in november. >> alicia, your thoughts on the retailers, earnings and what it tells us about the consumer here in the u.s.? >> the extent of the retail in malls, you have a problem and as long as you have a good internet presence and also internet strategy we have seen the earnings held up well enough and the mall based retailers, the expectations have become so low that even missing it's not so bad and seeing that here. >> yeah. like the value plays, right?
weak guidance hitting big names. and right across the board today for those stocks is this a cause for concern? >> the market didn't really take any of these and start to slam whole sectors so i don't think it's a positive trend. it does show you that we had this funny cadence of fear right? december everyone says, oh no, growth is in trouble we have to radically cut estimates. all the stocks lift. and it's maybe the worst is over and then the confirmation of some of the weakness and some parts of the businesses that the market was sniffing out in december that's why the market has these double dips sometimes so i think that's mostly what we are seeing a lot of it is structural problems with the old line businesses like hp and l brands and then coming to box it was sort of regional issues and some caution on business spending so i guess it makes sense the market didn't really fully generalize this weak bs but it's
not great in terms of guidance. >> what's the play on the tech names at the moment? lots of sort of sub sectors at play in the stocks we mentioned. >> i think you do pretty well investing not in the large cap tech names like the fang they have been doing really well large cap tech names in the communication sector, i.t. struggling and not close to the highs yet. unlike the rest of the market which is why the equal weighted index on the s&p is outperformed the market cap weighted. i think you do better on the smaller names. than the larger ones right now. >> even though some of the bigger names and make the argument of the box numbers we put up or fitbit that they're facing ever-increasing competition of the biggest players in the space >> so look you have to pick and choose but if you are a single note company, you know, you have got one song and you sing it really well and it's been like remixed several ways but you have one song, that's probably not a
great way to go. it just isn't. there's -- there's too much eating up of those kinds of strategies and pretty quickly. >> where you do you stand on the direction of the dollar for the rest of the year and how does that inform your sector prem preferences? >> that's the central question of the market and the overseas markets are going. if you saw the dollar strengthen in the first part of the year because growth here was much better than the rest of the word but the last couple of weeks we sold off a little bit. the dollar weakens as the year goes on and very positive for the s&p and it's great for emerging markets and they need a dollar to weaken we think it happens because we think you get global growth moving by the summer by the third quarter and next few months could be a bit of a toppy area. >> great stuff thank you for joining us. >> thank you still to come, former new york fed president dudley tells
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welcome back to the "closing bell." gap earnings are out leslie picker has the numbers for us. >> missing on the top line but some big news out of the company with plans to separate into two separate companies spinning off a yet to be named company, newco for the gap brand athleta and hill city and the remaining company is old navy. each company will have approximately 9 billion in annual revenue whereas old navy will have about 8 billion in annual revenue they said gap's current president and ceo will hold that same position as newco whereas the current leader, current president and ceo of old navy leading that company as a standalone company. on the earnings side, that miss
on the revenue, $4.62 billion. you can see shareholders liking what they're seeing in terms of separation shares up about 23%. back over to you. >> leslie, thank you very much for that mike, old navy to be standalone, lower cost, more family based brand and up 22%. >> growing this is what it is mature companies, splitting the parts of the companythat are growing and those not only mature and shrink mode interesting that athleta in there, as well a small growth engine within gap but it soeems like pure play of price and higher than gap currently and then you kind of left the other company go and maximize cash flow. >> it would be harder to split off than old navy is. >> perhaps.
>> let's bring in a guest from proforma liz dunn. what is your take on this? >> it's a great strategy a. really great move. obviously, old navy has been the real growth engine of gap, inc. it is the majority of the profit and i think the market isn't valuing it as such and this allows old navy to get a valuation and gap to manage their business or whatever's left, the other company to manage its business with different priorities and a different priority set >> liz, you surprised by the size of the jump in the stock price for a technical split out, particularly a day when the earnings slightly disappointed after a buyback announcement earlier in the week? >> yeah. very difficult for companies that are these large conglomerates to get a fair multiple with something that's going right and something going wrong.
not always sometimes a lot going wrong but i think it unlocks value for shareholders and we have seen it before with -- i mean, think about coach spinning out of sarah lee decades ago or abercrombie & fitch spinning out of limited brands. there's large, important companies coming out of these type of transactions allowing a prioritization of capital and resources for both companies for growth and shareholder value, unlocking shareholder value and givering cash to shareholders in another probably. >> up to about 30, the stock was at 30 several months ago, even on a standalone basis and clearly it's been beaten down and trading on kind of yield and buyback and financial maneuvers. >> liz, i think the thing that jumps out to me, old navy, revenues of 8 billion and the other brands combined is 9 billion. it would seem that if you look
for growth trade here in this split-up it's old navy right? >> it is however, i think within an organization like gap, inc. it's very hard to prioritize resources with one behemoth in the form of old navy sucking up the oxygen in the room right? split it off and then focus on what's left and prioritize resources to, you know, grow some brands like athleta and to, you know, unlock the crash flow of others like gap and so i think that it's a very important move for gap and i think the market is in part reacting to the part of a plan and a way forward. >> you can look at other industries, too. so, for example, old viacom split into cbs and viacom. cbs was considered the no-growth at the time. or hp, inc. and then it's
interesting because it doesn't always go as you predict as the market rewards the companies. >> alcoa and arconic. >> perfect. >> thank you for joining us. meantime, canadian pot growth canopy growth after announcing it would be partnering with martha stewart for animal health problems stewart is not the first celebrity to endorse the pot industry which counts high profile figures of former house speaker jeon boehner to snoop dogg among the backers. joining us now is two guests here to discuss, gentlemen, good afternoon to you both. sean, i'll start with you. martha stewart getting into cannabis are we at peak pot here? >> not even close. this is the normalization of the industry trying to see the companies develop brands it's very hard to build an
authentic brand. a shortcut is celebrities. this is very hard to execute. >> sean, even if it's outright growth in the industry to come, what about the stock price there's extraordinary multiples out there at the moment. >> we think canadian stocks are pretty rich. u.s. assets listed in canada are not as rich. we think that the u.s. is going to continue to ramp and see a great deal of news. >> kevin, what do you think of the cannabis stocks right now, especially when you have some of the big names like martha stewart coming in as spokes people or advisers >> well, it's very intriguing. it's an obviously a phenomenal industry but i want to make everybody remember that the majority of the u.s. states thc, marijuana is a schedule 1 narcotic i'm an institution in terms of building products, index products for institution alibiers so if we were going to use and we looked at this.
we went to several of our largest clients and said, look, we are building a new index. ousm, a mid cap, small cap index built out of primarily small cap companies we wanted to include a few of the cannabis companies in it the majority, i would say 99% of the institution alibiers that use our product as investment product said, no their compliance department saying they cannot hold the asets because they work in states or invest in institutions in states where it's a schedule 1 narcotic this is a big problem. and i urge the industry if it's listening to bifurcate the recreational use and get the regulators to give them release out of the schedule 1 listing of the medicinal version so that i can invest in it i speak on behalf of billions of dollars of institutional investor who is are not going to touch this space until this rico
statute schedule 1 narcotic issue is resolved. >> okay. so some of those institutional investors won't touch it how about you personally, kevin? >> i would never touch this. i'm subject to as an issuer, scrutiny of the regulators the drug i love is my cabernet 2013 i try it i every night it is excellent. >> sean, what is your pushback have people done enough due diligence with the regulations the way they are >> a lot of opportunity are people like kevin that won't touch it creating inefficiencies we hope it stays like that longer we think you see real developments in washington this year and we do think that as you see already here on the new york stock exchange companies will list on the new york stock exchange and nasdaq and institutions and the biggest banks out there are there are opening up. >> kevin, just quickly, do you think the celebrities have done their own due diligence or not could it come back to hurt their personal images an brands?
>> i actually spoke to one of our compliance officers and then the legal team that backs them in washington. and i asked them about this because i was offered personally a convertible venture. very exciting product. early on in this and he said to me, quote/unquote, are you out of your beep mind? and i said, why? what's the problem with me personally investing in this he said rico statue. schedule 1 narcotic. they would love to find you over state lines somewhere in an airplane and land in somewhere where this is not legal and test a case on a guy like you i would talk to a lawyer first this is a schedule 1 narcotic. it doesn't get any tougher than that and the -- you don't look so good coming out of prison after 26 years that's the penalty. >> well, kevin, you are a celebrity and sounds like you talked to a lawyer
transports and the utilities confirm or don't a move in the industrials, not a big call on that now but it's stark and people surprised to see the utilities in the orange line at an all-time high they did not fall as much in the decline. regained all that was lost and more opposed to transports and lagged the overall dow jones industrials both down into the lows and since then and here curling lower in the last several days or a couple of weeks. it is at least sending a little bit of a modest signal to say what's behind the recovery rally? obviously treasury yields stayed very low with a mismatch of the idea that the market was having relief that growth looks okay but the bond is very calm with a fed on hold and obviously says it's a yield chase to some degree getting stocks up in this direction so it's one thing to monitor. i don't think it tells you the dow transports are not telling you that growth is falling apart
but suggest that maybe it's mostly not about an acceleration in the economy. >> also interesting from the three lines, mike, to see how strong the correlation was between the average and the transports for the last six months or so. >> absolutely, yeah. the transports have supported and confirmed the industrial move up to this point and down today and interest dog see here in the late summer all kind of clustered together and see the divergence began. >> thank you very much time now for a cnbc news update with sue herera. >> hello, everyone here's what's happening that the hour. president trump addressing troops at joint base in alaska air force one made a refueling stop at the base on its way back from vietnam he praised the troops as america's first line of defense in north america. >> you're looking at a country now that's doing better than ever and something has to be -- you're protecting our country, you are protecting us.
and i would think it must feel good to know that the country's doing really well as opposed to really badly like it has done. not so long ago. the senate voting 52-47 to confirm andrew wheeler as the new chief of the environmental protection agency. wheeler is a former coal industry lobbyist stepping in at the epa's chief last year. and "beverley hills 90210" star luke perry is hospitalized. tmz reporting the actor had a massive stroke crews were called to his los angeles area home late on wednesday. you are up to date that's the news update at this hour i'll send it back downtown to you. >> thank you. del has reported for the first time since going public again. josh >> that's right. so del technologies reporting revenue here up 9% to $24
billion. it looks like on an adjusted basis, wilf, net income up 26% from a year ago. just looking quickly through the segments here, infrastructure solutions group revenue there 89.9 billion up 10% company saying that was driven by 5.3 billion servers and networking revenue and that client solutions group revenue there 10.9 billion that was up 4% there they highlight year over year pc share growth for the 24th consecutive quarter guys, this conference call at 6:00 p.m. eastern. back to you. >> josh, thank you very much for that up 1.7% in after hours trade. still cotom here on "closing bell," bill dudley tells us whether he thinks the fed could cut or hike interest rates next. but first, we'll look at new concerns surrounding violent videos on youtube, kids and e th
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increasingly concerned about safety issues on platforms like youtube. julia boorstin has the details for us hi, yulia. we have no audio there from julia. we'll try to get it back in just a moment reminder, of course, today we did trade down by 70 points on the dow, near the lows of the session at the close we will have much more market insight, including on today's gdp number from new york fed governor bill dlduey coming up also, get back out to julia. ♪ 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.
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welcome back fourth quarter growth better than expected an full-year growth of 3% can it continue for 2019 joining us from d.c. steve liesman sitting down with wil dudley steve, take it away. >> thank you very much i'm here with bill dudley. joining us thank you. >> great to be here. >> wilf was talking about the gdp number at 2.6% strong growth. how did that meet your expectations >> in line it is stronger than expected but when's the first quarter going to look like because we had some questions of consumer spending we have the weak retail sales but that does not match up with a lot of other data you have seen on the consumers so the first quarter for a few years is a weak quarter seems to be a seasonal
adjustment problem. >> right do you believe that there's a possibility of an upward shift in potential growth here that's something that the administration is banking on and penciled in 3% for several years as part of the forecast for the tax cuts what is the possibility of shifting upward 2% growth potential? >> there's obviously always a possibility. productivity growth is hard to forecast and growth picked up and grow as a faster pace. we haven't seen the investment response that would be consistent with a significant acceleration and i'd be betting against it. >> the federal reserve recently did a dramatic historic pivot going to hike several times this year and now saying it's patient. went from gradual increases to patient. it is going to be ending the balance sheet reduction this year what do you make of the pivot they made and is it congruent with what they're seeing in the economy? >> i think they have said for
time immemorial they're data dependent. there was set of information change despite strong payroll growth, the unemployment rate stopped declining. the tightness of the labor market didn't lead to much wage acceleration inflation was a little on the soft side and there are real questions of global growth china, europe. none of those things by themselves is koconsequential b changed their view with inflation not being a problem, i think they decided why not just wait? wait for more information. doesn't mean they're done but they want to see more information. >> how seriously do you evaluate the risks? >> well, i think there was -- been a lot of news out that suggests the global economy is weak now, what's happening is we are seeing responses so china, for example, is really now pushing out the credit again. >> right. >> so i think that, you know,
there was weakness we are seeing a policy response so i am not of the view that u.s. is likely to have a recession any time soon. >> one of the things that you were involved with was he managed the decline of the balance sheet. what about this idea that the run-up ends latter this year it's going to be something like a $3.7 trillion balance sheet. is that bigger than you thought? >> i think than most people expect but i don't think it means that much. people are very focused on they're stopping earlier therefore they're being easier that is not what's actually happening. all they're doing is finding out that the bank demand for a reserve is bigger than they thought. they want to stop the amount of reserves in the system for a buffer over what banks demand. people think it's here and stop down there they find bank demand is here and they have to stop earlier. >> you were the guy selling off the ambulance sheet. you are at fault. >> we weren't selling. >> sorry
allowing it to run off technical change there what do you make of the problems that people associate? they said it caused the stock market to decline, it caused the economy to weaken. was the balance sheet at fault >> i think that's not definitely not the case the balance sheet is running off and the stock market recovered in the first quarter and the balance sheet -- it was a convenient whipping boy. the fed's seeming, you know, inflexibility in the space of the market developments for a while was a convenient whipping boy and the markets occasionally go down for a whole host of reasons and i think what happened is markets responding to the increase in risk about growth in the rest of the world and they're going down probably stock market wrestling with weaker earnings growth. >> i'm sorry to the control room, i have one more question. you raised a good one. the idea the fed responded with the market going down, does it look like the fed was too responsive to the market and there's a big put out there from the federal reserve?
>> the fed doesn't care about the level of the stock market for its own sake but the sense that if the market is tightened that will have consequences for the real economy so, you know, the stock market down a little bit. i don't think the fed cares. if it affects the economic outlook, of course they care. >> thank you very much for joining us former new york federal reserve president bill dudley. back to you. >> thank you for that. our thanks also to mr. dudley. still to come here on "closing bell," new concerns of violent videos on youtube and the potential fallout for advertising. tonight on "fast money," chinese stocks soaring but a chieinstnt oicf vemeffer said the rally has come too far too fast he'll explain. imagine traveling hassle-free with your golf clubs.
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parents are concerned about safety issues on platforms like youtube. julia boorstin has the latest. today announcing it will suspend the comment section on most videos featuring minors. this comes in the wake of concerns about the predatory behavior of pedophiles on the site and amid another youtube content scandal. videos targeting kids that encourage suicide and self harm. the latest effort is about what they're calling the momo challenge. instructions no kids to endanger themselves a range of media outlets reporting the momo challenge is a hoax but it has been shared on whatsapp and youtube, even edited into videos on youtube kids prompting kim kardashian to
plead for youtube to help. the outcry speaks to growing scrutiny, a hang of brands from hasbro toes nestle have suspend ads. this week the uk's digital minister says a new tech regulator could fine companies up to billions of dollars if they don't protect users from harmful content. analyst michael pacter warns if the company can't control this, it will become a problem for advertisers and have to commit to hiring more content monitors. certainly something to watch back to you. >> julia, was this action by the company sparked by advertisers pulling their advertising dollars or were they in the process of this sort of internal review any way >> well, they have been in the process of updating their policies many times over the past several years
there was an advertiser boycott back in 2017 and that was inappropriate content, not pedophile comments but inappropriate content in general. so they have made a number of changes. but this does come less than a week after a number of advertisers did pull their ad dollars so they're clearly getting pressure from those advertisers. youtube understands they need to make their platform a safe place both for brands and for children, otherwise it's not going to be in their best interests. >> julia, thank you very much. julia boorstin for us there. coming up, british awairys putting in a big new order with boeing we'll have the details after the break. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪
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emerson. consider it solved. welcome back to "the closing bell." here are some stories on the closing bell radar today boeing landing a jumbo-size deal with british airways, just a week after rival airbus pulled its own jumbo a-380 off the market british airways parent company, iag will purchase up to 42 of boeing's triple 7 x jet liners worth up to 18.5 billion and ending a two-year sales drought for the model. since 2014 to the end of
january, boeing has delivered 66% -- received 66% of the orders, delivered 62% in total coming off the back of the a-380 cancellations so boeing winning in that wide body segment. the stock getting another all-time high off the back of it, up 22% in the last two months. general electric makes the jet engine there also noteworthy that these planes can seat more than 400 passengers, but british air says that they're going to put them at 325 seats for you tall people that might be welcome news right there. >> there we go. i'm keeping an eye on harley davidson harley cited trade policies and tariffs continuing to threaten the company's outlook, writing, goat, changes in trade policies, including the imposition of tariffs, their enforce maekt and downstream consequences may continue to have a material adverse impact on our business, results of operations and the
outlook. guys, what's going on here is that they have -- they are pursuing regulatory approval in the eu, where the eu has slapped on retaliatory tariffs based on all those metal tariffs that we put on them last year to basically start building motorcycles that are currently built in the u.s. from their thailand factory unclear whether they'll get that approval, but one of the things we haven't talked about is the fact that those tariffs in the eu are scheduled at june 1st 2021 to jump from 31% up to 56%. so that is another trade deal. clearly they're making the case that they don't -- they don't have faith at this point in time that that trade deal will get made between the u.s. and europe they can't as a business not make a decision to move forward. >> so they made this disclosure to put it out there. >> yeah. bumble, which is says here the popular online dating app, is releasing a new feature on
its business networking platform, bumble biz it's called women in biz allows recruiters on the app to filter out male applicants. the ceo says it would help women better compete it seems it's a piece with a general trend of reinforcing women networking modes and ways of connecting. obviously the app itself empowers women if a connection is made. >> this is a hot era in terms of social media startups and networking apps getting developed right now, but i too cannot comment on bumble since i reconnected with my high school sweetheart husband the old-fashioned way on facebook. >> not in the grocery aisle, which i think some songs are written about. >> all right let's get a check on some of the headlines making news after hours. we've got gap surging after saying it will split into two independent publicly traded
companies. old navy will be a stand-alone those shares spiking 22%. despite a slightly disappointing earnings release nordstrom also higher after hours. they beat on eps the high ending of earnings guidance came in ahead of estimates. it's still up a couple of percent after hours. marriott moving lower on earnings the company beating on the bottom line but revenue per available room came in below expectations that has slipped a couple of percent itself after hours of course all focus now on the 2:00 p.m. pacific time, 5:00 p.m. eastern time release from tesla. any ideas? any early guidance do we think >> there's some reports of a potential lower cross model but it was interesting how all the analysts disclaimed any idea of exact low what it might be the guesses were all over the place. >> by the way, i am headed now tonight down to florida's space
coast for another major launch with elon musk's other company, spacex they're doing a big test with nasa, so keep an eye on that one into the weekend as well. >> so a busy evening for elon musk tesla stock has been halted. that does it for "closing bell." "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" tesla shares halted it's suspending orders ahead of news that elon musk tweeted is coming at any moment now we've got phil lebeau standing by to break down the headlines as soon as they catch. health care catching a cold going from the best performing sector last year to the worst this year. a top technician says there is one name in the group that's a screaming buy. first we start off with the year of the china bull so forget about th