tv Closing Bell CNBC March 6, 2019 3:00pm-5:00pm EST
they put up good numbers and questions go away. when there's faults in the story, that's when -- >> we haven't talked about faults in the demand story until recently that feels new. >> right. >> exactly. >> thank you for watching "power lunch. >> "closing bell" starts right now. >> good afternoon. welcome to "closing bell." i'm sara eisen. >> and i'm wifred frost. good afternoon. >> president trump holding a meeting with top business leaders. latest from the white house. >> markets, under an hour left of trade not too far from the lows of the session, down 120 points on the dow, low down 170.
that equates to 4.7 at the moment, nasdaq down .75%, russell bearing the brunt of the selling, down 1.7% we opened lower, steadily sold off throughout the morning and been around flat for the afternoon. >> we'll talk a lot more about the selloff on wall street kayla tausche for more on today's meeting. >> we are about an hour into a round table meeting going on, on the white house campus here today with about two dozen business leaders from local government and community colleges, providing an update on retrain retraining, newly created council just created by the president's daughter and adviser, ivanka trump, just recently this is something that ivanka trump has been espousing and
pushing for as far as policy goes since the early days of the trump administration most of the councils that were taking on various issues, including workforce development, disbanded in 2017 after the president's remarks about the charlottesville protest. but this is another run at this issue. last summer. white house put forth a pledge to america's workers they were calling it in it, they said they would be creating 500,000 new jobs and more than 200 companies signed on to create 16,000 new opportunities. perhaps we'll get an update when the president speaks in just about an hour's time. >> kayla, some of these other business leader, roundtable type groupings, committees disbanded 18 months ago, you mentioned before that, had they achieve ned meaning for policy changes
to note? >> it's hard to know exactly, wilf certainly many who participated in those councils were very optimistic about the fact that the trump administration was a clean slate, blank can ve vas. they wanted the seat at the table. and many were pushing for tax reform, deregulation and certainly those executives feel they got results from this as far as this specific initiative goes, a lot of it depends on company case studies. we heard the ceo of lockheed martin talk about changing policies to reimburse employees not just for going to get a graduate degree in something relevant to the company but taking different types of courses and training seminars that would benefit the company in a different way at least from the ceos we've
heard step up to the mike today, they a they're doing that. >> certainly a pertinent issue, we hear all the time, labor shortage, skills shortage, the fact that there's so many job openings is it executive orders or a brainstorm >> there's already been an executive order signed in 2018 i reached out to the white house to see what had happened since that plec was signed last july what have these companies done we've seen the white house take on a very public support of this issue. you saw ivanka trump visiting a driving training facility at ups and talking about that company's initiatives there. it's clear that the white house supports this. it's just whether the rubber is meeting the road and where we can see the impact of this play out in the economy.
>> thank you very much for that. other thing we used to get were those introductions. go around the room and lots of congratulations on both sides at the start of the president's tenure. >> right great suit. >> one of my favorite comments. >> red carpet arrivals. >> right. >> sort of the thing of the past we'll see what happens from the white house in the next hour or so talk about this market sell-off, karen hyde is here, dan suzuki from richard bernstein advisers and rick santelli joining us, as always anything to read into markets pulling back or is it a give back after a pretty strong run >> i really think it's a pause we've called it retraced three quarters of the down draft we had late last year for the stocks in the market to move higher from here, i really
think we're at a point that we need to see earnings stop moving lower. and you look at where we are now, versus where we were in october. we were assuming 10% earnings growth now it's at 4% the question really becomes at what point do we see that bottom moving higher? >> dan, what's your take on whether to be position for the record growth or defense ofly, particularly in the u.s. equity market >> the key point and the other guest, karen, just touched on this profits growth is slow iing. people are very excited about the rally we've seen the last eight weeks or so. if you look at the data, it's basically a mirror image of what happened last year the rally is much more about what happened at the end of 2018 than what's going to happen at the end of 2019. if you want to focus on 2019, you have to focus on that profits growth is slowing. if that's the case you want to
be more defensive and focus on stable growth and quality over high beta and cyclicals, which we've seen the last month or so. >> you're tieing it to the profit picture and outlook does a trade deal with china stop earnings from going down? >> i think it can help resolve a lot of issues from the standpoint you look at how much of the earnings revision has been due to some impact in china. industrials, materials, apple revising numbers down based on china numbers. if you have that resolve and not a perfect resolution tariffs being flat to down i think that's enough visibility on top of what is now a hole for the fed for companies to start feeling comfortable, thinking out a year. >> rick, what are you expecting from the ecb tomorrow? is there room for potential for
a pivot to stimulate economies and markets again? >> they're not really pivoting away from much of a change in policy their reversal of stimulus hasn't progressed much give them cake and give them more cake, and give them cake with more frosting i just don't see that there's discipline there as it sits now i just don't see anything surprising. i think it would be more stimulus oriented and, unfortunate unfortunately, i think the markets will view that as a positive concerning the global
slowdown let's not lose sight in how the markets felt and traded in the end of 2018. whisper under 60 it came in at 621 billion, 3% of gdp, previous year was 2.8%. larry kudlow has been hinting trade deficits, budget deficits and the national debt. you'll never get politicians to stop spending. however you can grow your way into a smaller, relative percentages to the size of the economy which isn't a bad alternative. >> focus on the ecb tomorrow lot of focus on the fed today, dan. 10 out of 11 districts cited slight to moderate growth. ways the med out look in terms of policy this year? >> it's an interesting dynamic
clearly what we're seeing right now is for the time being a synchronized global slowdown. >> that's completely turned on its head and every major data point has been reinforcing the fact that growth is slowing and you're seeing the revision from these forecasters. the market just doesn't believe it if you look at how far interest rate expectations have fallen relative to the dynamic of what the fed is seeing and the growth dynamic, the risk to the upside, unless you think that growth is falling apart and we're going into some sort of global recession or u.s. recession, it's very hard to stomach the fact that the next move fed also
make is the cut rate the underlying inflation is still there. as we get toward the second half of the year it's likely you'll see those inflationary pressures persist at a time when growth is slowin slowing. that dynamic will be tougher for the market to stomach, when they have to balance the fact that growth is slowing and inflation factors are starting to pick up. the last month or so, they're clearly trending higher. >> karen, there's a couple of tech subsectors you are attracted to. >> yes an interesting point about the market right now low growth is
not a bad place for companies to take share where there's innovation people have a tendency to migrate toward financials as capex starts to improve. what you have is over 50% of that growth is actually coming from cloud-based investment. and so cloud, i think, is still a very strong secular tailwind as it relates to where we are in the economy, where a lot of companies are looking to squeeze out a little more margin and one place to get it is investing behind technology. so, call it sales force, service now, arista is a play on networking for the cloud and payments is one that it's a continuation of cash to credit and all of the underlying innovation that comes with it, whether it's e commerce that requires credit or p to p that requires credit or even business to business payments are starting to move more on the
credit side as it relates to credit cards very solid businesses with a lot of tail winds. >> guys, thank you for joining us today karen hiatt, dan suzuki and rick santelli still ahead, the u.s. trade deficit swelling to nearly $900 billi billion. we'll debate how the trump administration's trade tactics factor in here. >> downgrading csx, among the rail names its covers. we'll ask csx ceo jim foote about what he es osen the horizon for his business that's next. don't go anywhere. for your heart...
it's great to be here. >> as we just mentioned in the broad broader down transports there's been a sense of negativity over the last nine or ten trading sessions and more broadly in the last six months, more recession fears and slowdown fears what are you seeing for the economy? >> railroad industry and csx in particular touches about every segment of the north american economy. and in conversations with our customers on a daily basis they're optimistic about the future for their businesses. obviously there's confusion, noise on a political level and elsewhere, that caused people some concerns. overall, we're still expecting this year to be relatively good. >> wanted to ask specifically, jim, about the impact of the
trade fight between the u.s. and other chris. you've seen the good and the bad of the tariffs good, for instance, in the steel industry talk about whether it's going to continue and some of the other effects you're seeing as a result of all the other tariffs. >> right the two areas where we saw the issues that came at us over the last year from tariffs, one has been with steel and the net impact of that has been a slight positive for us. there's been new capacity, that we're at facilities that the railroad serves. and the negative being i think all of the railroads experienced export soy beans being down. overall it's had a net slight positive for us. there's not been any real change in that, in the near term. >> jim, let's talk about some of those agricultural products and soy beans in particular. clearly that's a big talking point in the trade discussions if the deal does get done, do you see trade levels and,
therefore, your volumes just going back to where they were before or do you see a meaningful step change much higher from the benefits of the deal being done? >> our soy bean exports are relatively small in relationship to some of the other railroads so, we would expect our volumes to go back to about where they were before. in the meantime, the markets seem to find new places to go, and the trade lanes change but we'll probably be right back where we were. >> autos, a sizeable chunk of automobile business. what do you see for demand this year >> automobile business clearly is a big segment for us. and, again, there's an area
where we're seeing some concerns in the marketplace as north american vehicle production numbers have drifted down slightly demand being down slightly in that commodity group a titch more than what we expected going into the end of the year but something we need to keep our eye on. >> what's the outlook for coal, jim? is it still a case of domestic struggling export doing well >> exactly nothing has changed there. domestic utility coal will continue to be under pressure. although there's some stabilization this year and probably next, as fewer utilities transition over to natural gas. but that's -- you know, that's a secular changeover that will be with us for some time. other hand export coal, both steam continue to be strong and outlook for american exports
continues to be very robust. >> so many companies we cover throughout the last few earnings seasons, jim, had cited this rising freight cost and trucker shortage impacting the business. i guess that's a big beneficiary for you as a competitor to the truckers do you see that continuing to help is that dynamic going to stay in place over the next year or so >> well, the trucking industry just, you know, for many years has had a lot of issues associated with driver shortages, insurance issues. and then the eld issues. so all of those things bode well for the railroad industry. but more importantly, the railroad industry and csx in particular has made great strides in transforming itself into a new transportation option for our customers. not only will it become significantly more efficient than we used to be but our service levels have dramatically improved and reliability levels
are becoming more truck like all the time, which allows us to be more competitive and better transportation alternative for many shippers across the country. >> so, jim, do you think the market share that you and some of your fellow railroad operators have taken from trucking in the last 12 to 18 months, does that stick with you regardless, even if trucking capacity increases again >> i would think that that would stick with us as long as we continue to focus, not only individually but collectively as an industry across the country in providing the customers with a better transportation product. everyone knows that rail is cheaper than truck and the reason that the product is moving on truck today is because our service levels are not where they need to be. as we improve our service levels, we will become more competitive with the trucks and we should not only retain that business that we have, but get more. >> so, i don't know what exactly is moving the stock today.
i know you presented but the stock is a little bit lower. steeple put out a bearish note, downgrade to hold, kaui incalli9 less exciting for csx, that the margin improvement had pretty much been baked in give you a chance to respond and counter that argument. >> well, based upon what we did in 2018, taking this company and transforming it from last place in the industry to first place in just about every service metric and every financial performance metric, that would be pretty hard to beat that performance in '19 so i think it's just a question of expectations. we're very confident that we're going to have another good year, as we continue to focus on running the railroad more efficiently, more effectively, and providing a better service product to our customers and, you know, as we just talked about, there are some issues out there associated with various segments over our business that
are going to cause us to have a slightly below maybe what people thought we should have in terms of volumes in terms of where we thought we would be low single digit top line growth nothing has changed for us in the last six, eight week. >> jim, thanks for joining us. appreciate your time. >> that's very nice to be here thank you. >> union pacific ceo lance fritz is coming up later in the show we have 35 minutes left of trade left today down half a percent on the dow nasdaq down 4% russell down almost 2% still ahead, airline stocks continuing their slide today, down 4% in the past week wall street's number one airline's analyst will tell us whether it's a time to buy team retail on a tear.
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>> i would say the place that we have the biggest question mark is in trade and making sure we navigate this dispute with china, and then not pick other disputes that disrupt the marketplace. >> find out which part of his stsiness is being impacted the mo by the trade war. we're back in a couple of minutes. i consulted with your grandmother's doctor. we can do the screening at her house. 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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welcome back to "closing bell." president trump holding an american workforce policy advisory board meeting with top business leaders at the white house. we're monitoring the action. we'll take you there live at the top of the hour when things kick off. time now for a cnbc news update with sue herera. hi surks. >> hello, wilf hello, everyone. president trump's nominee to be the next ambassador to saudi arabia, insisting the u.s. needs a strong and mature partnership with saudi arabia to ensure stability in the middle east this, as his confirmation hearing progressed before the senate foreign relations committee. >> i would like to make the current problems short-term problems and work quickly to fix them to the best of our ability. our relationship with saudi arabia is bigger than the relationship with just the crown prince it's all about a nation. >> venezuela's opposition
leader, juan guaido, addressing his country's national assembly after returning from a tour of latin america. in his speech he referred to the high expectations of a community that is fueling a renewed push from abroad to bring change in venezuela. wildlife officials plan to lift protections for gray wolves across the lower 48 states david burnhardt announcing the proposal at a conference in denver, saying that the specieses that fully recovered from the brink of extinction you are up-to-date that's the news update, guys i'll send it back down to you. >> thank you, sue. see you next hour, sue herera. united states imported more goods in 2018 than ever before the trade deficit in goods this year came to almost $900 billion, the highest on record, yet president trump has made
reducing trade deficits with foreign nations a key issue, repeatedly blaming former presidents for the growing deficit. >> i don't blame china after all, who can blame a country for being able to take advantage of another country for the benefit of its citizens? i give china great credit. but in actuality, i do blame past administrations for allowing this out-of-control trade deficit to take place and to grow. >> joining us now is jimmy pethoukukas. so, jimmy, he blamed other
presidents for the ballooning deficits saying it was bad policies under his watch the trade deficit goes to a decade high. how is that news likely to go down in the white house? >> i wonder if this doesn't spur the president to dig in his heels more, get tougher on trade if he believes it's been bad agreements that have led to the big trade deficit. he is right to blame past presidents but only in the fact that we've run huge budget deficits if you're not going to save at home you have to import those savings from elsewhere and the flip side of that will be a trade deficit. in that weird way, he might be right. he has given us a very clear metric to judge his administration the core of trump-enomics is bad trade deals cause big trade deficits actually it's not trade deals and, in fact, you can look at trade deficits that usually comes at a period of good economic growth and lots of jobs. the whole thing is pretty screwy. >> alan, what happes driven thi?
is it a good widening or bad widening >> you have several factors. some are good sorges are not so good so-called good factors would have to be that the u.s. economy is certainly growing a good deal faster than it had been before president trump's election and certainly strongly growing economies tend to suck in more imports, all else being equal. you also had a slowing world economy. in fact, the gap between global growth and u.s. growth has narrowed tremendously in the last five or six years and that's resulted in large part in these steadily increasing u.s. trade deficits the so-called bad reason for the trade deficits to have increased this year has to do largely, at least as i've read today's numbers, which bring us up to full year 2018, is what's called
tariff front running by china. chinese exporters, including foreign and u.s.-owned companies that produce in china have been trying to send as many goods to the united states as they possibly could before tariffs. and that's artificially inflated u.s. import numbers. >> but then there's the export picture, alan. >> uh-huh. >> it was week. >> slowing world economy. >> because of the trade war,no question about it that the tariffs are hurting other countries. yes, we have tightening financial conditions and all sorts of other reasons but certainly the tariffs have hurt places like germany and like china, which are key for buying our exports. so as this whole trade policy from the administration working? >> except even when economies like germany's and japan's and china's have been growing faster because their very growth is net export led to begin with that's going to naturally boost their trade surpluses with us.
so, i don't think that it's fair to say that a slowdown in those net export-led economies is the kind of -- a development that we shouldn't want to see. in fact, if we want to see healthier and more balanced global economy, they need to grow much more through their own domestic demand. >> jimmy, two questions -- sorry. two questions for you. does this alter the president's behavior in the trade talks at the moment does it make him push them harder because he may realize things aren't going so far in his favor or if a trade deal is done, does it make it harder for him to claim victory based on his own measuring stick, as it were >> well, i'll take the second question first to the extent that he is consistent in how he's willing to judge economic policy, yeah, it makes it much harder to claim victory. i'm sure he will say this will change in the future and just you wait and see
as far as the first point goes, i think that issue, the fact that it looks like this trade policy isn't working at all, since we have a bigger trade deficit, is balanced by the overriding fact that the president is very conscioustha markets want a deal. he seems to fixate what the stock market does as shorthand for how the economy is doing even -- maybe this is all cooked in, the deal into the market right now. i'm sure they have to worry that they don't get a deal. the market is going to go down again and the president clearly does not like a down stock market chinese know that as well. >> alan, i'll bring that to you. you've been supportive of the president's policies, you've warned of some of the unfair trading practices of china do you think the president is on the right track like you have this morning, that he wants a deal >> the trade numbers we just got this morning actually say
although you have to look deep into the weeds that his trade policies have been on the right track so far however, there's no doubt that that kind of success will be greatly undermined if he winds up accepting a grossly inadequate deal for precisely the kind of reasons jimmy just mentioned. i do worry about that very much. because, of course, you can never entirely separate politic s from economic policy it just doesn't work that way. >> thank you, jimmy pethokoukis and alan tonelson. we will talk to lantz fritz about the state of rails and his outlook for the future. later oecd, think tank cutting its global economic forecast chief economisdad seert vironbg is here to weigh in.
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shares up this year while lance fritz remains optimistic about the economy. he told me exclusively there's one key headwind he's watching. >> we don't necessarily see a slowdown in the economy, wilf. we see a lot of negativity that might scare consumers and have them pull their horns in broadly speaking it looks good, wages look good. overall wealth for consumers looks pret you good. the industrial economy looks healthy. the place we have the biggest question mark is in trade and making sure we navigate this dispute with china and then not pick other disputes. >> we saw a decline in volume last year. in fact, pricing was up a little bit. where do things stand on that front? is the u.s./china deal a swing
factor >> agricultural business, last year, the second half and early in this part of this year, we see an impact. they were a significant buyer of beans from the u.s that disrupted our marketplace that looks like that will continue until that dispute remedies we're finding other outlets for those products but not to the same order of magnitude. >> is it game changing, if you think about the numbers being talked about, is it game changing in terms of volumes that you be moving or is it just going back to the norm, where it was before >> i think it would go back to the norm what i would hope is that it would go back to the norm entirely once the supply chain has been disrupted, a lot of times that supply chain doesn't recover entirely the buyers get used to their new source or they adjust their overall supply chain logistics
around it and they're hesitant to go all the way back i would be a little concerned that now that it's been disrupted, whether or not it comes back completely. >> moving on to energy shipments, volume is down, but pricing up how are you feeling about that in the year ahead? >> energy shipments for us are largely about coal and also frac sand and both are negative territory right now. coal year to date is off by about a handful of percentage points frac sand a bit more coal is about a long-term secular decline. any given little period, it's about what's happening in the weather and what's happening in pacific burn frac sand is seeing in-basin sources replace the sources we bring down from wisconsin and minnesota into places like the perman it's a much shorter haul and it's less business. >> job cuts, 250 last month and
following 450 as well. temporary work, followed more cuts from last year. >> yes. >> is that it now or is there more to come >> those numbers you were referring to are reductions in managerial and administrative. if you will, the supporting staff for executing the business plan >> it's been hard work it's not enjoyable work. it's always difficult to adjust your administration to size. what it really needs to be in the long run it has correlary benefits and it has removed levels of bureaucracy. so that we're able to drive decisions down to where the work is actually occurring. that's all an important part of this change. >> just finally, i want to talk about your capital return program. last year around $13 billion in total return, dividends or buybacks given the political environment at the moment, do you worry that
you get a backlash for putting those programs in place? >> i worry that the general public doesn't understand what happens to cash when it's generated by a large corporation like us. if you think about all the cash we generate from revenue, we pay wages, buy stuff we make sure we've got the right capital structure in place we make sure we're investing in the railroad after that, our shareholders like dividends we pay dividends when there's cash leftover, we buy shares shareholders also like the tax-efficient method of returning dollars to them. we do all of that and will continue. >> lance fritz, union pacific ceo. sara, the interesting thing there, compared to csx, said they were a net beneficiary of the trade war. clearly that's not the case with union pacific. the thing they united on, the resolution a little bit, they
don't see as game changing long term a bit of a bounceback to where they were perhaps in certain sub sectors where it's been affected but not game changing long term. >> the other thing that stood out to me is that there's a lot of chatter on the markets on wall street about the transportation index it's noun nine days in a row largest losing streak since 2009 people are worried about the signal that sends. we're not getting a lot of gloom and doom. >> i agree. >> companies that trade in this index and whether that portends some broader slowdown. what also stood out to me that was the most full-throated defense of buy backs i heard from a ceo given all the political noise. >> i agree took it through the simple capital allocation decisions that a ceo has and stood by his defense of it. >> i'm sure we'll hear more of that. >> abercrombie and fitch soaring.
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down 90 points, s&p do down .5% and small caps continued to underperform that index down almost 2%. individual market movers in the session. shares of abercrombie & fitch surging after they beat wall street estimates for earning and revenue, guidance. jump in same-store sales abercrombie & fitch says they plan to close-up to 40 retail stores joining the likes of victoria's secret, gap and others, fresh round of store closure this is year also thought it was interesting, wilfred that despite they are closing stores the ceo said we're committed to the mall
still, one of the few specialty retailers still committed in physical space. >> if they're closing stores perfume sales globally will fall. >> i think it's cologne. >> whatever. you smell it from about two streets away. >> the fifth avenue store. although luckily not as many guys shirtless with sun screen on their noses. >> that's all changed. i'm watching shares of hello fresh. soft sales since 2019 down despite posting strong results for the final quarter of 2018. the group which delivers in the u.s., uk, germany and several other countries that sell 43% in the quarter. that was in 2018 its most successful year. hello fresh down sort of 4% today but the full year -- >> it's done well, right >> up 41%.
the loss it made narrow from 70 million to 50 million this year and forecasting and break even by the year end. contrast which has had such troubles. >> market leader, too. >> they lead in those three countries we listed and five or six other countries they deliver in and the loss is very much narrowing. we'll see if they can hit that breaking point this year up next, the closing countdown five minutes left to trade. >> after the bell, economist david rosenberg is herto tk e al about concerns of slowing global growth closing bell will be right back. ♪ (butcher) we both know you're not just looking for pork chops. you're searching for something more... ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place.
that help you get started. you like playing with tools don't you? 'course you do. ♪ don't get mad. start investing with e*trade. welcome back to "closing bell," three minutes after trade. s&p 500, 0.6%. you can see that we have pretty steady selling throughout most of the morning we've kind of hobbled along at that level through the afternoon. and we're not too far from the lows of the session. russell, the underperformer down 2% others down around .0 8%
health care down there over 1% both of those down 1.5%, industrials, financials down there as well. materials leads the pack up .2%. show you the ten-year chart as well over the course of one week end of last week we saw it tick back up to highs well above 2.7. now back down below 2.7. something to keep an eye on the direction there of yields. bob pisani with takeaways. >> nice job with union pacific ceo. didn't see a big slow wroun in the economy. that's a very important point. i love the comments on buybacks. dividends and buybacks because that's what the investors want that's the obvious defense that's going to be hard to argue against. i think what we're seeing here -- >> i'm sure people will find a reason to argue nonetheless. >> it's getting very political now. that's the obvious answer. >> absolutely. it was a great response. >> what we've seen today is what
we've been seeing the last several days russell 2000, semi conductor, energy stocks, banks they've led off the december 24th tlien they've been weak the last seven, eight -- now nine sessions transports down nine days in a row. it's not one specific problem. the market is choppy because we pushed how far we can go with the fed, with the trade talk and pushed how far we can get the prices up at this point. we're talking about 16 1/2, 17 times forward earnings for 2019, depending what you think the earnings picture is going to be. that's hard to justify with the slower global economic outlook. >> why is the russell down so much today, bob? >> it's been down the last several days slowly moving to the downside. remember something the cautious comments we saw today from the beige book, not as optimistic as it's been in prior months little signs of a slowdown i think that's a sign that the small caps will respond to first. >> the other thing to note, week
to date, shanghai is up 6%. >> they have responded to the better economic -- better trade talk story although they've still got a lot of economic growth. >> there goes the bell here at the big board. and we are down by 0.6% on the s&p. a little bit more for the nasdaq, little less than the dow. russell, as we mentioned, down almost 2%. that does it for the first half of closing bell. sara, back to you. welcome to "closing bell." i'm sara ieisen. wilfred frost rejoining me shortly. we finished lower across the board. not as bad as it was during the lows of the session, dow off by half a percent, 13 points. early morning rally that faded pretty quickly and saw stocks turn lower s&p 500 closing out with a loss of more than half a percent.
some pockets of strength utilities ended higher but everyone else was lower led by health care and energy, worst performing groups. check out the russell 2000 small caps are back in correction territory, meaning 10% off their recent highs, down another 2% today dow transports people talking about down for the ninth day in a row. stories on our radar, president trump is meeting with major ceos at the white house this hoer hour cutting global economic forecast again and new concerns about the job market, that it may be peaking. we'll talk about all of this, along with the market day with dafbd rosenberg, chief economist and strategist at post nine. what a treat nice to have you mike santoli not a ton of catalyst or major news flow driving the action, which was lower. >> sort of a heaviness, right? for a week or more we've been talking about how the s&p got up to this level, made all kinds of
sense for it to stall. would it go sideways, have this very constructive pause and go higher or are we finally set up for some kind of pull back we're a percent and a half off the intra-day highs of the s&p people will be able to look at the chart, look at the action where you did see a little more pronounced selling it's a 70, 80% of all the volume on the down side okay, maybe monday's high was but it's in the context of a pullback, you can still go down 5% or so it wouldn't necessarily tell you that you were unwinding the rally. >> week to date we're down less than 1%. vicks calm we're going to keep it in perspective. >> exactly if you look at the metrics that would tell you if there's financial stress building, not really on the other hand, treasury yields very subdued and down toward the lower end of the range. 2.5, dipped below it a little bit. that shows you that the mood is
more slowdown than it is acceleration. >> we know your position you've been on with us a lot lately you're bearish and expect a recession. some days i feel like you're right and some days i feel like you're wrong how did today's action stack up with your view >> it's a one-day view a recession call is really a big picture. i do see it out there because, as i said before, we have to put our historian hat on here. and 80% of the time when you come off a fed cycle -- this has been actually a tightening cycle. count on the sheet they're not chump change it operates to the lag histor historically 80% of the time this tightening cycle leads to a recession. i'm not going to try to pinpoint what week it's going to happen i think the markets are giving us a gift here in terms of information. this is the fourth time since the peak in september that we've tried to take out 2800 on the
spx and we can't do it that is a proven ceiling a bigger picture perspective where did we close today, 2775 on the s&p. >> right. >> we're exactly where we were january 12th of last year. we've had, really, when you think about it from an equity market perspective, for all the enthusiasm and excitement we've had 14 months of nothing except volatility. >> that said, david, would you admit that whether it was roughly this time last year when we had a big sell-off and in december when we had a big sell-off that the marks have shown resilience to come back up and test these highs, particularly when those sell-offs came so late in the cycle when global growth was trending low and we didn't capitulate >> we're in a classic topping process. this is always the hallmark of a share from a fundamental bull market to fundamental bear mark when you go through these series
of retesting again, we have to put on our historian hat here and worst december since 1931, right? worse december since 1931. what happened in january and february 1932? s&p rallied 20%, like we did this time. i'm sure that it lured in a lot of momentum investors. and then the market in the summer of 1932 rolled over 50% then we're told oh, this is the best january, february since 1991 exactly. from the economics standpoint, we were in a recession there's nothing that's been happen i happening on the lows from the rally to back to 2800 where we're as overbought now technically as we were oversold on christmas eve nothing that the markets have done have told me anything except we're on this wild roller coaster ride and i don't think anybody should be formulating a macro view based on this
volatility the action has been in the bond market what does it mean when you're formulating a macro view you have to take a look at all the markets. why is it since january last year, the total return in a ten-year note has outpaced the total return in the spx? there's information right there on what the markets are telling you about growth in the next several quarters. >> mike, you've done a lot of digging historically about anatomies, bull markets. does your view jive with that? >> it jives in the sense that nothing has been proven yet. if you were bearish and said january of 2018 was the valuation, momentum and sentiment top which is plausible, you had the straight-up move that broke and september was this, you know, marginal new high but it wasn't as broad and we rolled over hard and went down 20%. if you said okay, now we're in a bear market, what would disprove the idea you're in a bear market it has to get above where it is right now.
it stopped right where that 20% rally mark would be that kept that definition alive of the environment we're in but that doesn't mean it's decided one way or another 1991, i mean, yes, we had a similar market dynamic except it continued higher, because it was coming out of a very brief recession. i don't necessarily see it as all the cues of a recession are there. right? we still havy narrow, but positively -- no matter how you want to measure it credit markets are not flared up to the degree they were recently or even a few years ago. i'm agnostic on it the market hasn't necessarily rendered a verdict on it. >> you have a counter? >> i would just say that, look, what happened in december was the markets were telling jay powell that you're tone deaf he went to raise rates, pledged two more and then in the press conference said that the balance sheet reduction was on autopilot
oops what he has proven since then is that he's listed on the markets. what i'm saying is that there's lags between what the fed does in time a and the impact it has on the economy, which is basically stu and v. i feel like we're having this conversation we talked about this last time i was on your show i feel like i'm back in fall of 2007 when, by the way -- >> nobody saw a recession, right? >> the fed didn't just talk the talk they cut the discount rate in august '07, and i remember everybody was saying, hey, are you still calling for a recession? the fed just cut rates the fed kept cutting rates and the recession started in december, three months after they cut the discount rate because we were still operating off the lags of the previous tightening conditioning. the temptation is that we can't look past the tip of our nose where everybody lives in the moment one thing that you notice in some of the recent speeches by powell, one of his recent speeches, they're talking more
about the lags between policy and the effect it has on the economy. by the way, i do expect that there will be another lag down on the markets. not because of expectations of what the economy will be doing but on the reality of what it does in the next few quarters. >> we're going to talk more about growth new health care joint venture between amazon, berkshire hathaway and jp morgan chase it will be called haven, to reduce health care costs, improve care for amazon, berkshire and jp morgan employees. it now has a name. >> progress is slow. that's the takeway for me. when did the ceo get appointed >> a while ago. >> no concrete progress. >> because the companies involved and how many employees would be affected. >> the name, haven business leaders meeting with the president fo the first
american workers policy board meeting. >> reporter: we're still waiting for that portion of the program where the president will meet with the leaders to begin. they took a break after two hours of question and answers about exactly what these two dozen corporate executives, state leaders and educational officials are doing, essentially to train the workforce of the future, newly advisory council that the white house assembled last month but it's an issue that the white house has taken an interest in since the beginning of the trump administration march 2017, remember, they had a bilateral discussion on this with german chancellor ainge la merkel's team. in june '17 workforce development and apprenticeships and last summer in july 2018 they put out an executive order, plnlg f pledge for the american worker at the time the white house said the companies participating in this would create 500,000 new
jobs, specifically out of that pledge and out of the white house's efforts. in october the white house announced there would be more than 6 million new, what they call, opportunities for training that these companies had actually pledged to put together some of the things we heard discussed in today's meetings were officials talking about how difficult it is for people on the sidelines of the economy, out of the workforce, to craft a resume that will slide to the top of the list that a robot or artificial intelligence or machine is reading instead of a human hr professional. so, that's something that -- to give you a flavor of what these officials and executives are discussing we are still awaiting the president's remarks to this group and we'll bring that to you in a few moments it was a lengthy discussion. they're taking a break we'll bring it back to you when we have that. >> keep us posted, kayla stay with us, if you would, david. this say big issue, labor shortage, tight labor market we hear about it from company after company. it was in the beige book today
from the federal reserve is there anything that can be done from the white house or group of high-level ceos like this when it comes to figuring out what to do about it? >> i have an easy solution it may not be a politically feasible solution. one thing i would do immediately is ease immigration guidelines, especially for skilled workers foreign students applications to universities way down. h1v work permits, which is what i had when i worked at merrill from '02 to '09. >> as a canadian -- >> i wouldn't be able to get that today there's an easy solution, ease up on immigration restrictions on skilled labor by the way, who is doing that is canada you see canada is advertising for silicon workers in california lead editorial by the way, you saw it in "the wall street journal. yesterday or the day before,
talking about how canada is attracting all this talent it's going to help increase the potential growth rate of the country. >> i think it's more politically palatable to change resumes. >> you're asking the solution. that is -- what's interesting is that we're getting the employment number on friday and everybody is going gaga out of these employment numbers we're really scraping -- i don't want to sound like an elitist but we're scraping the bottom of the barrel on labor quality and that will show up in some poor quality. >> no longer skilled or canada won't let you out. >> mike, to the point on the data for the jobs growth, what do you make of the january revision up today and the expectations going ahead friday? >> i thought the revision was maybe somewhat technical not necessarily -- really more
confirming what we got in the government data for january. i think it's as expected in terms of the zone, close to 200. really, a rare instance when it was spot on forecast for adp and so it seems like, you know, the market, interestingly, didn't really move in any particular direction as we said, treasury yields kind of sagged a bit. >> your take on the labor. you said that the strength wasn't all that it's cracked up to be. still the numbers we get on a monthly basis rim pressive number of jobs added people say how can we go into a recession if corporations are hiring like this if the unemployment rate is the lowest it's been in decades? >> well, companies separately still higher in the early end stages of recession and then they stop hiring it's a coincidence lag indicator. if employment was a leading indicator, it would be part of the conference boards leading economic indicator there's ten components but it's not jobless claims are part of that
index. manufacturing workweek is on the rise people are retentative maybe people don't agree we're at a turning point but if we are in the cycle, and this works in both direction, up and down, household survey turns more quickly than the payroll survey i'm taking a look friday at adult employment 25 to 54-year-olds on the household survey it has declined now three months in a row and that last happened summer 2007 that's a leading indicator something to pay attention to, as well as the u6 unemployment rate. >> as we're talking about jobs, i just want to show you a live shot inside the white house right now where we are waiting the president. as you can see, a lot of ceos
are there to talk about how to improve the workforce. there's ginnie rimetty, ceos from various industries and the president of the chamber of commerce, for instance, u.s. chamber of commerce representing different business groups there. ivanka trump helped lead this. the commerce department helped lead this. commerce secretary wilbur ross. >> vice president mike pence, of course we are awaiting the president to come n we'll take the sound or we have the sound, when they stop talking meantime we can see them gathering and continue the discussion of what could be on the agenda in terms of the age-old question of boosting productivity, are there any signs of developed market economyies with an aging population that have solved that problem yet? >> i haven't seen it the natural interest rate has gone down practically in every oecb country we've not had much of a capital
deepening cycle. capital spending has been unusually weak this cycle. the cash flows lent into stock buybacks stock buybacks so that the sheer count in the s&p 500 is down to a two-decade low. that give you a nice boost to the stock market, this cycle, right? one of the best bull markets of all time in the context of one of the -- we had a boom in stock buybacks how does that end up boosting productivity there's no link. we didn't have much of a capital spending cycle all the iphones and consumer gadgets, netflix and fang stocks don't provide productivity growth that's one of the principle problems it's not so much about the labor side we didn't have much of
a capital spending cycle the root of that will be -- >> david, we're getting the president, i think, entering this room of ceos. >> ivanka trump just took her seat as we said, it's the first
american workforce policy advisory board meeting let's listen in to the president who, no doubt, will be addressing the room in a minute. mr. president, on behalf it's an honor to have you here today. we spent the last several hours in excellent discussion with the objective of a national workforce strategy our collective aim is to ensure that all americans can benefit from the nation's historic economic boom and record low unemployment rates this board of industry,
education, government and nonprofit leaders are deeply passionate about bringing more americans off the sidelines and into the workforce we are seeking to increase the country's workforce participation rates by connecting workers with good-paying jobs we must also focus on helping those most vulnerable, to having their jobs misplaced due to the rapid place of technological change and work together to assist them in learning a new skill so they can continue to provide for themselves and their families today, we discussed, in detail, the four goals that are the mandate of this specific council. first is to develop a robust campaign to promote multiple pathways to good-paying jobs, dispelling the myth that there's only one path to a successful career second, improving the availability of high-quality, transparent and timely data to better inform students and educators as well as match american workers to american jobs third, modernizing candidate
recruitment and training practices to expand the pool of job applicants employers are looking to hire and foonlly measuring and encouraging employer led training and investments. we are championing and seeking to further private sector leadership and investment and workforce development. as we look to the future, this board will also influence our legislative agenda to mobilize our higher education system and help us be more responsive to today's students and job creators and this is something that we're optimistic can be done in this congress. i would like to thank you, mr. president, for being here, and for your steadfast commitment to a pro-growth economic agenda that is creating tremendous opportunity for all americans. just this past quarter, a remarkable 73% of people who started out work had been out of the workforce the previous month rather than being unemployed that's the highest share of
people entering the labor force from the sidelines since we started tracking this metric decades ago. with record low unemployment rates across all demographics, we will continue to focus on fostering inclusive growth that lifts up all of our citizens we have an extraordinary opportunity, and this extraordinary group around the table, titans of industry, education innovators and pillars of our community will help make a difference in the lives of millions of citizens we're taking advantage of this incredible moment to ensure that america retains its leadership role now, mr. president, i turn the floor over to you. >> she's so formal special person and she's worked so hard, as you all know i want to thank you, ivanka, for your devotion to the america workers, our great workers and nobody has workers like we do.
i want to thank you, honey great job. great job. she works very hard on this, i will say and she's created a lot of happy families, cause you're going to be up to close to 7 million people pretty soon you are very responsible, along with many of the people at this table. and i'm going to ask, i think, for you, maybe before i even speak, to go around the table. because this is such a distinguished group and just introduce yourself we have a few of the media back there. and just a small group tim, sometimes you have to see some of these groups it's pretty amazing what they do they break down the walls, windows and everything else in order to get in. but we have great representative media back and i thought you should really take some of the credit for what you've done. and maybe i would like to start with tim cook, who has done such an incredible job at apple, become a friend of mine. he's a friend because he does a great job. we want to get things done
employs so many people, brought a lot of money back into our country because of the new tax law. he's spending that money very wisely just done an incredible job. tim, maybe you could just start, please. >> sure. thank you, mr. president it's an honor to serve on this council. i've always thought that americans are special in so many ways at the heart of all its people, that, to me, is what this group is all about for our companies, you know, was founded by college dropout we never really thought that a college degree was the thing that you had to have to do well. we've always tried to expand our horizons and to that degree, about half of our u.s. employment last year were people that did not have a four-year degree and we're very proud of that but we want to go further. and so to that end, as we've looked at the -- sort of the tht
are coming out of colleges and what the skills are that we believe we need in the future and many other businesses do, we've identified coding as a very key one and we believe strongly that it should be requirement in the united states for every kid to have coding before they graduate from k-12. and become somewhat proficient at it. we've done a curriculum now and provide it to all schools in the united states. 4,000 have picked it up. we have a lot further to go because there's a lot more than 4,000 schools in america, but that is a start. we've done that with 80 community colleges and we're really proud of that, particularly with the work that we're doing in austin and providing coding education there. there's an enormous deficit in the number of jobs versus the number of candidates
and so we're -- we are proud to take part, and to help to get this alignment much better between education and private sector we realize that in something this large, it takes government, private sector all oaring in the same direction and we're very proud to be part of it. >> well, thank you, tim. >> thank you. >> great job thank you very much. kim? >> well i, too, want to echo my appreciation for having the opportunity to serve on this board. i'm excited about what's happening across this country. iowa has the lowest unemployment rate in the nation at 2.4% our economy is growing we've had four straight quarters of wage growth in iowa we are no different than other states we have jobs looking for people. i'm anxious to work -- public/private partnership is the answer that's how it's going to work. we have an initiative future ready iowa, a goal of having 70% of iowans to have education and
training beyond high school by the year 2025. we're at about 58% right now but set the goals high and work hard to get it. we're doing that through registered apprenticeship programs and we'll be launching an initiative computer sciences elementary that will launch six computer science elementaries in the state that will target high poverty, high-needs areas so we can help produce a capable ready workforce. most important ly, though, and then i'll pass it, is to make sure that our students and iowans know there are multiple paths to great careers and those careers exist in iowa. thank you. >> thank you kim just had a great victory, governor of iowa she just defeated somebody who spent unlimited money. it was unlimited and it's called talent you've done a great job. thank you very much. great job. >> mr. president, thank you for the opportunity to be here today. i'm vi laos from the city of charlotte. what i would like to say is that we're a city where we want everyone to have the ability to participate in the economic
opportunity. and we are the second largest banking center now in the country. that may be good or bad. but nonetheless when we look at that, we also have to weigh it against those that haven't had a chance and this opportunity, i think, will provide us pathways, innovations, collaborations to accomplish that so that people left out can get in a great home, a place -- safe place to live and a job that they can be proud of. >> thank you very much and we have our big convention in your city, as you know. >> that's true. >> you're working hard. >> we're getting ready. >> a lot of people wanted it you got t congratulations and i'll see you soon. thank you. >> sean mcgarvey i, too, want to thank you for the opportunity to work with terrific co-chairs and colleagues around this table on issues that are really important to the building trades and i want to let you know that we made a commitment to you last
year of 250,000 new apprentices over the next five years, and 56,000 of those last year were registered with the department of labor so, we're following through on our commitment thank you. >> thank you. >> mr. president, jay box from the great state, great common wealth of kentucky, representing 4.3 million people and more particularly representing the 16 comprehensive community colleges in our 73 campuses around the state. and in kentucky, we are committed to speeding the time to agree on a credential because we know the workforce needs us to turn out our workers faster and so we would like to say instead of a career pathway, a career freeway with many on-ramps and exit ramps. so the students can come into our institutions at any time and exit once they get a credential and right into the workforce and later on they can come right
back in for further skill trade. >> thank you. >> mr. president -- >> policy advisory board meeting. opening pleasantries from ivanka trump and from the president, going around the room now for introductions and initial
comments the ceo of apple there, of course, tim cook, saying that america is special in so many ways at the heart of it, though, is the people we will continue to onitor, of course, the developments in that workforce policy advisory group. >> it was a little bit of deja vu, mike we used to have these things more often when the president had a ceo strategic council, those disbanded after his controversial comments around charlottesville. >> early part of the administration, it was relatively common, rounding up the ceos what's interesting about this one, though, a lot of companies have been criticized over the last cycle or two, for giving up on training and workforce development and all this other
stuff because they would rather have the perfect candidate, perfect time or substitute that person with technology it's interesting this is the opportunity they decide yes, i would like to be in this forum and push this cause. >> and there were politicians there as well. >> yes. >> you heard from the governor of iowa. i thought cook did say some substantive ways that they are getting at some of these issues, like labor shortages, hiring people without a college degree. what did he say, half of the employment came it apple last year >> came without a degree. >> did not have a four-year college degree also talked about coding and how vital it was to get into america's schools. >> and they built a curriculum of what they felt children should be taught on that topic and rolled that out to some schools but, of course, not to all schools yet, not part of a national curriculum. we'll continue to monitor developments of that and bring them to you. up next, find out why new s.e.c. data to spark a new push for regulating buy backs on capitol hill you.
all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. at the white house, president trump welcoming an american held captive in yemen danny birch had been freed in
what the state department suggested was a rescue operation. the president called the meeting a very big moment. senator martha mcsally, first female fighter pilot to fly in combat says she was raped in the air force by a superior officer, on the armed services efforts to prevent sexual assaults. >> i stayed silent for many years but later in my career, as a military grappled with scandals and wholly inadequate responses i felt the lead to let some people know i, too, was a survivor pope francis led a procession to mark the start of the catholic church's lenten period in preparation for easter he said people need to free themselves from the clutches of consumerism and the snares of selfishness. and that is the news update at this hour. back to you. >> sue, thank you. the s.e.c. unveiling new
data today on how ceos are benefiting from stock buybacks could lead to new regulation in washington ylan mui has more. ylan >> reporter: from robert jackson, very skeptical of the value of buybacks. he took a look at the performance of a stock 90 days after a buyback is announced and found that when executives sell a lot of their shares around a buyback, the stock actually does worse over the long run. he said it underperforms by more than 8%. the upshot here is that jackson believes that executives are really interested in that one-time price pop and he connects that to the changes in ceo compensation he wrote this raises concern that insiders' stock-based pay gives them incentive to pursue buybacks that maximize that pay but do not make sense for long-term investors. he is pushing the s.e.c. to
revisit the rules of governing buybacks and says they haven't been looked at in a decade he has one sympathetic ear on capitol hill, democratic senator chris van hollen who said today he wants to figure out the appropriate time that executives should be banned from selling stocks around buybacks whether it's regulation, legislation, it's all part of the drumbeat trying to rein in this practice. >> this pressure on buybacks, do you think it is specifically only on buybacks or is it capital return in general? do you think if corporates shifted from buybacks towards dividends that there would be then a shift in the pressure and political rhetoric against them as well? >> i think the buybacks have become symbolic for the democratic party at the least. you know, since the passage of the republican tax law, since we saw so many companies engage in buybacks because they admit that $1 trillion level, i think that's why you have seen so much focus on this practice in
particular and i think it creates a really sort of important symbol for democrats as they try to galvanize support for these kinds of ideas amongst americans and in the run-up to the 20 2020 presidential election. >> ylan, thank you very much for that mike, very quickly, it is fair to say there is at least a small, potential altieulterior v for management. >> sure. >> if they favor buy backs over dividends. >> right. >> that's actually true. what that study tells me a little bit is that the signaling effect of an executive selling shares is a little bit more pronounced and kind of more reliable than the fact that the company is doing a buy back. if you take what ylan is saying about this push, it seems to go along with perhaps some restrictions on exactly what manner in which companies can buy back stock underfunded pension plan, maybe you shouldn't be able to buy back your on stock f you're doing a buy back, executives
can't sell stock under a discretionary basis. it seems around the edges there's maybe some actual proposals to come from the outreach. >> switching focus word yesterday that he would have negative industrial cash flow in 2019 sent ge stock down less yesterday after the words came from the ceo. morgan brennan joins us now with the latest on ge morgan >> another rough day for this stock today. it ended the day down about 8% biggest focus for this company has been, continues to be cash flow yesterday ceo larry culp said that would be negative for 2019. to put this in context, as rough as last year was for ge, industrial-free cash flow was $4.5 billion, was positive power continues to be a pinpoint you have culp warning a turn around is likely to take years still. also more questions about ge capital, which culp says will
need another $4 billion this year as it continues to work through liabilities, including legacy insurance business that investors are going to learn more about tomorrow morning. so, those comments really throwing cold water on a rally that, ahead of yesterday, did see ge stock jump more than 45% from the december low. keep in mind, though, still up about 20% year to date ge has been buying time, including the $21 billion sale, that's cash that's going to go toward paying down debt. guys, really, this news sort of highlighting that perhaps the stock had gotten ahead of itself because there is still so much work to do at this company in terms of the reaction from wall street today the bears got more ammo, more reasons to say look, there's much more pain ahead for this company. and the bulls, basically, more cautious you did see some price target cuts today on the heels of the disclosure basically saying you're not buying stock for 2019. you're buying it for the long term and for what is expected --
>> all the analysts, jp morgan has become such a big part of the story. his note says his $6 price target looks generous. >> yeah. >> how did he become so influential in the turnaround of this company >> and so larry culp sat down with him at the jp morgan conference and that's where all these headlines came from. he was really the first analyst on wall street before anybody else was doing it to say look, there's cash flow problems with this company there's issues ahead for this company and investors need to be taking a much closer look. and, unfortunately, as contrarian as his calls have been, they've largely been right. so he gets a lot of attention. >> debt repayments due, downgrade threats potentially from the agencies? >> you could potentially see some more ratings downgrades that's something that they were warning about in the last 24
hours. in terms of the debt piece of this, they are selling all of these assets, including biopharma, targeting $30 billion in divestures. that's a big part of why you have seen the stock rally as much as it has in the last couple of weeks. >> i think the balance sheet, which was the focus of everything a few months ago, that's calmed down because of the fact that they've pulled in this cash. to me it's more of an investor confusion story. if you dial back it would be under $1 earnings power, eps at $12 maybe the stock looks okay at a year ago at $1 earnings power. that's gone way. the announcement yesterday was okay, we have more of this noisy, messy, making up for past mistakes negative cash flow on top of an operating business we're really not sure how strong it is. >> you look at it, morgan and wonder why didn't mr. culp kitchen sink it better
>> i think there's been a lot of kitchen sinks. >> right. >> dividend cut twice. >> i agree but something can still come out and lead to double-digit tliens in the space of 24 hours is not a new development, just a new kind of communication. >> that's the thing. second ceo in less than two years. next thursday is the date to watch, the 14th. that is when we're getting the awaited, much awaited 2019 outlook, new outlook for this company. investors right now are expecting a lot more detail around all of that again it's the same two points we've been talking about, capital and power. >> morgan, thank you very much still to come, analyzed stocks struggling today. we'll talk to the number one airline analyst about what's impacting the sector. plus shares of all dergan a sinking after hours. ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power.
shares falling more than 4% after hours after one of its key anti-depressant drugs saying that the study showed the treatment did not produce different results from a placebo. allergan chief research officer saying in a statement we are deeply disappointed with these results and they are a vivid reminder that drug development is challenging especially in mental health. down more than 30% over the last six months back to you guys. >> thank you very much for that. we'll keep an eye on it down 4%
after hours. jobs report coming out on friday what does the unemployment rate indicate about what that might be coming. >> the blue line is a job sentiment measure from the conference board survey. it's basically the difference between those who say jobs are plentiful and easy to get and those who say jobs are hard to get. this is obviously very strong. all-time peak around the year 99, 2000 the other line is a broad measure for the unemployment rate, right? it's inverted. when it's going up, unemployment is going down and things are going better you see it curl down right here. it's open ed up this gap i'll get out of the way. between the two measures it's been tight for a while now. it suggests, perhaps, that the reported unemployment rate is lagging and maybe that means
that there's just been a lull in job growth and should pick up. the conference board measure does seem to give some sign of strength that's the optimistic interpretation that essentially you can see continued job growth and that we're at the end of the cycle might be wrong of course here before the 2000, 2001 recession, you saw this gap open up. it wasn't exactly very tight there either this one rolled over soon afterward this came down to meet it. i would say net optimistic take on what the jobs number -- might not be for friday but in coming months as well. >> does it speak at all to availability and skills mismatch >> it certainly could be the reason that we're seeing this uptick in the unemployment rate and essentially this includes people who are working part time for economic reasons and so it's essentially a labor market firmness or softness measure. and maybe we just got down to a level that it's the max that you'll get out of this cycle. >> thank you very much for that.
thanks also. concerns about slowing global growth n't emdose to be impacting airline stocks number one analyst explains next no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps. you done? a million steps ahead. servicenow. works for you. i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? 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. what's the hesitation?
while concerns over global economic slowdown have been hurting guidance for some sectors of the economy, u.s. airline ceos don't seem that worried. it was a theme at the jpmorgan aviation conference this week. listen to what delta, southwest and united executives all told us >> 2019 is not growing as fast as 2018 or 2017 grew, but it's still growing. i think the transatlantic is the one part of our business that has some of the most difficult headwinds. >> there seems to be a sentiment
that the economy is slowing here in the first quarter we had a strong 2018, a strong fourth quarter, and i think the expectations were pretty high coming into the year. >> though at united we've seen solid demand really through the end of the fourth quarter and as we've come into the start of the year. >> joining us now is jamie baker from jpmorgan, the number one airlines analyst according to institutional investor welcome, jamie, nice to see you. >> thank you very much it's been a long day. >> so what's with the action -- i'm sure, thanks for joining us after everything and you've got a pretty good window into these companies and what they're feeling transportation index down nine days in a row. that's like the longest losing streak in years. yes, it includes the shippers as well, but what does that signal? >> well, look, airline fundamentals, you heard it straight from the ceos, they're holding up quite well. concerns of the global economy of course are very important, but i think it's already two
things one, reflected in pretty cheap airline stocks at the moment but the u.s. economy continues to outperform and there's a point of sale bias united said as much yesterday. they don't sell a lot of tickets to the mainland chinese consumers coming here. they sell a lot of tickets to apple executives going there so fortunately for the larger u.s. airlines with global footprints, that point of sale skew to the u.s. is absolutely helping demand trends hold up well. >> jamie, the larger airlines who of course were some of the ceos that we had on the show yesterday, they all maintained their guidance some of the smaller airlines didn't, is that right? >> yeah, that was interesting. both alaska and jetblue used the jpmorgan conference as an opportunity to modestly lower expectations for the first quarter, although both management teams did speak
enthusiastically about the potential build into the second quarter. it is interesting that both delta and united affirmed their guidance so it is somewhat a tale of two cities or really two business models that the larger more global airlines, you know, are still seeing very strong trends and tracking well with the guides whereas some of the smaller, particularly domestic u. u.s.-centric carriers, it's not shaping up as they had hoped. >> jamie, obviously the market is rethinking how much they want to pay for these companies what are the questions you find yourself having to answer for clients? what are their main concerns in terms of putting new money in this sector? >> well, you know, part of the overhaul, really the revolution in the airline industry, is that profits are expected to hold up
pretty well in a downturn. i mean we've talked here on cnbc about the need and likelihood that airlines pass that test that they remain profitable in a downturn the question i'm getting probably most frequently is how do we actually value these stocks in a downturn or at the point of the cycle where it feels like we're inevitably closer to the conclusion than to start. the fact of the matter is there's not a lot of precedent the industry has never been this profitable for this many years it's never been this profitable or profitable at all at this point. if we are in fact trending towards the end of the economic cycle. part of the problem is we're in unchartered valuation territory, if you will. >> jamie, 20 seconds left. what's your top pick and why >> united airlines right now they probably sounded the most bullish. they're in the midst of a significant turn-around, it's a multi year effort. but they seem to have the wind
at their backs they seem to have nailed down their ability to guide and achieve those guides without the disappointment that some of the other airlines are if we were putting new money to work today, an investor was reaching out to me, that's the name i would tell them to do the most amount of work on, united. >> it's the one that's outperformed as well jamie, thank you. >> take care. >> jamie baker from jpmorgan after a big week. coming up, bristol myers speaking out after two major shareholders say they do not support the deal. tomorrow don't miss the interview with jeremy grantham with where he sees this market we're back in a couple minutes it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha
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welcome back the ceo of bristol-myers squibb just sat down with jim cramer after last week two major shareholders didn't approve the company's plans for a $75 billion takeover of celgene. he's what he said in defense of that deal. >> the transaction is strategically very strong. it creates the number one company in oncology, very strong presence in autoimmune diseases.
it generates value for shareholders from day one and provides a path to sustainable long-term growth for bristol-myers squibb. >> you can catch the rest of cramer's interview tonight "mad money"at 6:00 p.m it's going to be a good one. so, mike, we got a 130-point sell-off in the dow after what started like a good session with another report out there, according to people familiar, that president trump really wants to do a deal with china. that seems like it's losing its punch. >> exactly the gears are slipping on the whole idea that we rally because of encouraging generic trade talk news. i think you can look at the chart and say monday's high, we opened with a pop. we got to the high for this rally in the s&p 2816, couldn't hold. i keep going back to the fact that anybody who is looking for an opportunity to say finally we may have a pullback of some substance, it might be here. we're down a percent and a half from that level. it's not as if it's been aggressive selling, it's just been a lethargic response.
>> the other thing to look out for is the ecb meeting and whether we see a meaningful shift towards stimulus >> the euro has been weak into that. >> and a lot of sort of leaked reports to suggest they might see that, which would boost sentiment globally. >> this is still a market that likes easy policy. >> for now. >> that does it for "closing bell" today. thanks for watching. >> "fast money" begins right now. "fast money" starts right now. i'm melissa lee. tonight on "fast" it is the semis fall from grace. the group getting hit hard today. check out these names, all down nearly 50% from their 52-week highs. we'll tell you what that means for the market. plus biotech getting slammed today but a top analyst says more deals are coming. he'll give u his four take-out targets. we start off with high hopes. while the market is stalling, a number of mega cap stocks are going up, up and away. in the past week