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tv   Closing Bell  CNBC  March 20, 2019 3:00pm-5:00pm EDT

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>> wages have moved up in the last couple of years and are now running at healthier, higher levels and that's a good thing. and, in fact, a lot of the wage gains have been going to lower paid workers as can happen late in the cycle which is also a good thing but that's wage inflation. our mandate -- sorry, price inflation. i see inflation close to 2%, bumping up and then moving back down a little bit. and i don't feel we have convincingly achieved our 2% mandate in a symmetrical way that means we would look at -- we know inflation will move around on both sides of the target and what we say is that we would be equally concerned with inflation persistently above, persistently below the
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target that's really our framework. we're really ten years deep in this -- almost ten years in this expansion. and inflation is still kind of, i would say not meeting our target that's one of the reasons we're being patient. as i said before, inflation that is a little bit below our target, particularly headline inflation this year will be meaningfully below our target most of the year because of lower oil prices but we project that core will be, too that gives us the ability to be patient and not move until we see that our target goals are being achieved. >> i just wanted to press a little bit, what is the story, the committee when you get in the discussion today and yesterday about inflation, what kind of is the story that emerges? >> a bunch of different stories.
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there's no real easy answer. the natural unemployment rate is lower. there's still more slack in the economy. another is that expectations play -- inflation expectations play a very key role in our framework and other frameworks and, you know, there is the possibility that somepeople discuss expectations being anchored but below 2%. and so either way, inflation itself has kind of bounced around a little below 2% that's the record. >> chairman powell, thanks for the question paul kiernan i'm kind of curious. this below power inflation is a phenomenon across advanced economies and i just would like to hear your thoughts about what
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challenges that poses to lawmakers like yourself and economy in general. >> it's one of the major challenges of our time really, to have inflation, downward pressure on inflation, let's say. it gives us some room to cut when it's time to cut rates, when the economy weakens and, you know, that's something that central banks face all over the world. and we certainly face that problem, too it's one of the thingses we're looking into proximity calls for more creative thinking about ways we can, you know, uphold the
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credibility of our inflation target a and, you know, we're open minded about ways we can do that. >> everett lawrence from fox business network i counted five downgrades in the first paragraph of the statement. what conditions do you need to see in order for a rate cut or rate hike on the other side of that, then >> i think we wanted to be careful to go ahead and acknowledge the things that -- i think it's relatively little hard data so far this year we were careful to point out low retail sales, weak nef meeting and that was the right thing to do notwithstanding that, we do have a positive outlook for the year. solid, underlying economic fundamentals, et cetera. and in terms of what it would take, i would say, again, we don't see data coming in that
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suggests we should move in either direction it suggests we should remain patient and let the situation clarify itself when the time comes we'll act appropriately. >> hi. matthew bosert, bloomberg. the decline in labor share of income and the corresponding high profit margins might mean that lower unemployment, higher wage growth is not flowing through price inflation the way it used to but so far throughout this tightening psycycle the fed haso allowed wage growth to rise above interest rates until very recently i'm wondering if going forward, given these insights about the labor share in high profit margins and the linkage between raises and prices, would you be in favor of allowing wage growth to continue accelerating without matching that with higher interest rates >> let me say we've had a significant move in wages and compensation over the last few years and -- which does not
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trouble me from the standpoint of inflation in other cycles we've had situations where, you know, unit labor costs were moving up above inflation. and that didn't lead to price inflation. it does, in theory, it can squeeze corporate margins and that can't go on indefinitely. nonetheless, i don't see the current wage picture as concerning from a wage inflation standpoint. >> more generally, to the extent that wage growth in excess of interest rates allows households to pay down debt faster whereas interest rates in excess of wage growth risk of further build-up in debt, how do you account for the sort of financial stability consequences of bearing interest rates relative to wage growth? >> i don't think we look at -- i understand what you're asking but we're looking at -- our mandate is price inflation and maximum employment that's what we're looking at with setting interest rates and
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monitor financial stability very carefully across all meaningful asset categories i don't think we tie it particularly to the relationship you're talking about. >> nancy marshall again, sir, with marketplace just a quick follow-up on brexit you mentioned that you're making sure that u.s. financial institutions are ready for whatever outcome i'm wondering, can you be a little more specific about that? also, how are you preparing for any issues a hard brexit would put on the u.s. dollar >> as i mentioned with the stress test, the largest financial institutions -- those are the ones that tend to be active internationally, that they undergo every year, we put them through very large financial shocks with large losses and big changes in markets every year and we vary that every year. that's a pretty good -- having done that for a number of years now, and having them be required
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to have adequate capital and liquidity even after all that happens. that's a good thing to have done, knowing you're going into something that's quite unknown and which may prove stressful or may not, depending what the outcome is i think all of that has probably prepared our institutions well that said, nothing like this has happened in recent years and so it's really hard to be confident. so we're very watchful about what's go iing on you know, the dollar is really the business of the treasury department it's certainly a financial condition unto itself that plays into our models but we don't seek or model or attempt to affect the dollar directly with our policies. >> hi. john hilton. with american banker i have a question about the
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fed's proposal from last year regarding prudential standards for banks above 250 billion. merger and acquisition, upper end of the range i'm curious if the fed anticipated that outcome and whether you have any reservations or whether the fed cares about bank consolidation more generally. >> we're not motivated by a particular view of industry structure we're trying to achieve through our regulation i think we want to have banks with different business models carrying out their functions in the economy. i would also say when banks move into a larger asset category, they get a stronger regulation, not a weaker regulation. if you think about it, if you're
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a medium size bank and merge with another medium-sized bank you'll wind up being more than a medium-sized bank. the sense of our tapering is -- tailoring, sorry, tailoring policy, is that the highest expectations fall upon the largest, most systemically important, most complex institutions and at every step along the way, the expectations become more tailored to the risk that poses to the economy. >> thanks for taking my question as the fed remains on pause, does the central bank find the ownness on fiscal policy to fend off the slowdown is the fed positioning itself to take on a reactionary role to whatever fiscal policy is doing? i'm asking because we're seeing the waning effect of tax reform and no material news on
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infrastructur infrastructure. >> so we take fiscal policy as, you know, to what we do. in other words whatever happens with fiscal policy we take that. we don't evaluate it, criticize it we don't overreact to it either. so i think it's just a fact. it's just an external fact about the economy for us the reason we're on hold, our policy is in a good place, the economy is in a good place and we're watching carefully as we see events evolve aroundthe world and at home and we think that's what we need to be doing. >> steve >> steve beckner freelance journalist reporting for npr, mr. chairman the fed has been allowing the average maturity of securities in its bond portfolio to lengthen is this aimed at -- consciously
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aimed at flattening the yield curve? and is that going to be part of the fed's longer run balance sheet policy if flattening the yield curve is a conscience, long-term strategy, are you concerned about the side effect, heightening concerns about a flatter yield curve? >> the basic answer to your question is no the decision about the maturity composition in the longer run lies ahead of us we haven't made that discussion nor we have begun to have a series of discussions over a series of meetings to grapple that that will be something we'll tourn, i think, reasonably soon but it will take some time it's a consequential decision and needs some thought we've had aa lot of balance sheet discussions over the last
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four meetings but this is the next big decision we'll face i think we'll not be in a rush to resolve it but turn to it soon. >> how do you account for the fact that the average maturity has, in fact, been length and contributing to a flattening of the yield curve? what's causing that? >> i think isn't it just that as securities roll off, you wind up investing? as ten-year rolls off you wind up investing in a ten-year it's not at all a plan to lengthen the balance sheet we tried to have a practice that we don't deviate from and is transparent. no policy message in that. >> hi. genie. i'm with market news i wanted to ask at what point do you expect to begin to allow the balance sheet to grow slowly again? how will you make that decision?
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>> as i mentioned, the balance sheet run-off will stop september 30 and if it is our view at that time that we're still a ways away from a ways above a balance sheet that is what we need to efficiently and effectively affect monetary policy, we'll hold that and organically, very gradually, nonreserve liabilities will grow and reserves will shrink the question you're asking is how long will that go on the truth is, we don't really know and we don't know that we'll move past september 30th the level of reserve demand is something we've put a lot of effort and time into creating estimates based on market intelligence, surveys and that kind of thing. the truth is, we don't know. it may evolve over time. we'll just have to see i wouldn't want to put a time
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out there for that so i'll just leave it there. >> can you concerned at all what the market impact will be? the market listens to you very, very closely, i'm sure you know. >> we're in a good place right now. we don't see any data pushing us to make moves in one direction and we'll watch patiently as we allow events to evolve and when they do clarify, we will act appropriatel
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appropriately. >> thank you very much. >> you have been listening to fed chair jay powell, doing a lot of explaining about the new patient stance of the federal reserve. the news here is that this time the fed really backed up that patience stance, saying they project zero interest rate hikes in 2019. that's at least what we got from the famous dot plot. that was two interest rate hikes projected back in december big change there the other big change and news of the day is that they'll reduce -- they're going to stop reducing their balance sheet in september. both moves together, while seemingly subtle, were cause for celebration for stocks and sharply lower yields in the dollar. >> and forecast for gdp growth, according to the median estimates. rate hikes from the dot blocks 2020 and 2021, none for this career. >> taking them down. >> yields have slipped across
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all of the curve, 2.0, 2.59 earlier, one to seven years now inverted what does this mean for the dollar >> weaker. >> intra-day for that. >> lot weaker. >> there it is stocks, of course, in general, are higher off the back of this dovishness they've paired back a little bit of those gains the jump that we did see on the s&p 500 intra-day and the one to seven years of the yield curve now inverted likes of goldman down 2%. >> there was great expectation going in stocks trading at five-month highs into a fed meeting bond yields at the lows of the year for the fed to be on hold for the year it seems like there was still some risk that the fed was going to have a rate hike or two baked
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into the fact that they took up to where the market was is why you saw such a big reaction. it's gone from a scary prospect to a friend of the overall markets and risk sentiment and appetite and you're seeing that strongly. >> let's bring in our panel. chief market strategist in global investments our own rick santelli. very good afternoon to you all if i start with you, is this more dovish than you were expecting? >> i think at the margin but i was really looking for the fed to be very dovish and really spin everything that they did last year back the other way whether they came to one or zero, i don't think the market would have really had a huge impact at the margin. this is better ending of qt was well advertised the fact they're tapering immediately and it's done by the fall is somewhat better news this was going to be a dovish fed no matter how you sliced it and i think the markets reacted
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to it accordingly. as sarah pointed out in the opening to the segment, there was some risk that maybe jay would miscommunicate a little bit, as he has done in the past. and i think we're still hedging jay's communication skills a little bit probably what we got today was a really clear jay powell. that's the biggest message, that we've got a chair that seems to be better at communicating with the market and not making any of those errors that he made in q4 and i think that's where the markets hedge was and that's why yields were ten basis points. >> agreeing with the market, wouldn't you say i think it's an open question though as to which way the fed goes next, cut or hike powell did not give an inch on either he said the outlook was good but didn't really hint at the next policy action. >> i agree with that the market still has jitters when it comes to jay opening up. we have a lot of scars from last fall and last winter
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and so i would still say that it's not going to be easy for the market to run with him and treat him like a yellen or bernanke at this stage he has some work to do a great effort on his part to make repairs and i think it's consistent with what we always thought, which is this is going to be a fed stopping somewhere around 2.5%, watch and wait and see and look at the growth around the world and what the tighter financial conditions are bringing, not just to the u.s. but china and other dollars and borrowers. >> courtney, what's your take? >> you know what's interesting i actually applaud chairman powell today i think he did exactly what these markets need markets do not like uncertainty. he did everything right today. whether you agree with the stance that came out of the fed today or not is somewhat irrelevant what we have is complete transparency in the data we know exactly what he's thinking, how he's thinking about it, consistent with the data dependency.
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i think this was a phenomenal showing by our chair and gives incredible confidence to the market as to what we can get from the fed at any given point in time. >> steve liesman joins the conversation now he was, of course, in that news conference and asked the fed chairman about global growth. >> did that for you, sara. thought you might be interested in the global growth story david zervos and i forget the name of the other guest, sorry, has an interesting point here. first of all, powell was rock solid. we came at him four different ways to sunday, right, saying what's your next move? and he said we don't have it going either way listen to what he said, one of the four times he answered the same question. >> the data are not currently sending a signal that we need to move in one direction or another, in my view. in our s.e.p. projections,
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members see growth around 2%, unemployment remaining below 4%, inflation remaining close to target and they see growth, as i said, around 2%. that's a positive outlook, a favorable outlook. >> let's remember now what the fed chairman is selling here a downgrade on growth. he's selling a downgrade on employment, which is now seen a little bit higher this year and fewer rate hikes the idea that he can get out of that without causing panic, i think, gets to what david zervos is saying, this idea that he's coming along now, has a message, able to sell it. and a difficult one, by the way, in a way that didn't panic the markets. >> victoria, what's your take so far on the market reaction equities up but flat on the day. does this revitalize your outlook on u.s. equities >> doesn't change our outlook. we took such a jump lower when trump was speaking about leaving tariffs on the market was down about 160
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points we got all that back and went positive for a little bit with powell speaking. the fed maybe was a little bit more of a concern than the u.s./china trade, at least for today. it takes that uncertainty off, as courtney was saying, allows investors to take a broader look, see where they want to pick and choose. on the fixed income side, having yields go down that low we broke down below the 55-year low level. >> is that concerning or is that a reason to rejoice for stocks so far lower yields has been a positive for stocks. but if we're seeing these new lows and the fed is having to take down its economic forecast, is that really a cause for celebration in the equity market >> i don't think they should be celebrating. when you have the fed saying there's a strong economy yet we're not going to do anything and bring all those dot plots down to zero hikes, much more dovish than i thought they should be. we have these global growth
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concerns a lot of them are one-off, germany with the autos, italy with the political issues we're having there i think there's cause for concern and maybe take patience, their favorite word they've been using when it comes to the market moving forward. >> who are the most dovish i'm interested to see the euro, significant climb today and since the last ecb meeting, which we all said was incredibly dovish. >> you know, i'm not sure dovish is the word i would pick i certainly agree that it isn't a hawkish statement. but, once again, you know, the s.e.p., summary of economic projections, every meeting, every press conference, jay powell puts out a boiler plate beware of s.e.p. it's a bunch of opinions but pay attention to the statement i think what he's saying is that you can look at the snc.e.p., sy dovish, no rate hike at the end of the day where the
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gold is buried is how the markets are reacting in real time, the statement when the meeting is over that's what we're supposed to pay attention to having said that i agree with the other guests, violation in the fixed income space is serious. we don't know the counter factual. the stock market likes it. stock market rallied through the partial closure, too the counter factual is that maybe be it would have rallied much more if both of those conditions didn't exist. i personally think guns hot. two is 238 low established in early january, that's safe threes, fives, sevens and tens are below those levels you could be picky about this. if is with a manager of portfolio of equities, i would start to be concerned if we get most of the curve under the extreme set early in the year because we don't know how much rates are off between trying to anticipate domestically and globally versus a fed that is on hold but the stock market bounced
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back but it's squeamish here. >> rick, i was just wondering -- >> yes >> -- i asked that question about global growth and i was kind of hoping he would walk us through how it's all resolved. he didn't do that. i don't know if that makes a difference to you or other folks in the market but it's kind of a little bit open ended how this all works out. >> steve, do you really think he knows the answer to that, seriously? >> no, he doesn't. of course. >> do you think any human knows the answer to that no way. >> that's not the point. the point is you have an idea. >> that is the point. >> the fog is lifted. >> we think they know. they're holding back it's a dumb way to trade the markets. >> no, no. that's not how i'm thinking about trading the market, rick what i'm thichinging about is that you have a clue, you have an idea how this works out and you can trade whether or not that happens it's interesting to me -- >> and i agree, the most important aspect there is. >> either the tariff problem or the china problem or the europe
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problem, it doesn't necessarily -- to me, that all adds up to a negative is the point i'm making. >> i agree zblaes not a clear route for the fog to clear. >> i know how it works out, rick doesn't it work out to everyone shifting to easy monetary policies and has been the new story to 2019? >> no, no, if you move to europe and traded you would be trading easy money policies. we've had nine rate cuts to 2.25, 2.50 if they need to lock and load again they think there's room. to me, that means they think they've taken out enough insurance. we don't want to kill the economy trying to get back to a normal that is so far in the rear view mirror it looks like a mirage. >> do you use that weakness in the banks right now as a buying opportunity? >> i doubt that. i think the banks are going to be keying themselves off with rates and we heard most of the big senior bank executives
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opining about 3.5, 4% rates last year and wishful thinking because of their margins there's probably a difficult trade there. based on your last discussion, it's interesting that nobody has brought up when powell was talking about inflation. he had a couple of great questions on inflation i actually think a lot of this pullback from the fed is less about growth and a lot more about the disappointment with inflation. last year, we were all getting excited -- i wasn't but a lot of others were, about some big push in wage inflation, price inflation. the fed was behind the curve, the ten-year note was selling off at 3.25 and the bank executives were talking about 3.5 and 4% and here we are, heading back to two or below core pc hasn't been able to get above 2 consistently for almost the whole cycle for ten years. really if you break down what powell was saying today he's not
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that concerned about growth, global growth. concerned about inflation not meeting its target. >> earnings and productivity rising, wouldn't that be the answer to steer you away from thinking rates are dropping because of inflation or pricing pressures? >> i think you're right. your productivity story is dead on and clarita has been the leader on that story i'm pretty excited about it. we just hit 2% year over year on the last numbers, which isn't great but we could spend another hour sitting in front of the cameras talking about how productivity is mismeasured and probably higher and wages are probably higher than they are but we'll leave that for another day and say yes, one way out, to answer steve's question, is productivity that's part of the story i wanted to throw in that inflation plug it's been a big thing for us at jeffries over the last couple of years, that deflation risks are
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bigger than inflation risks. >> i'm glad you did. it's obviously the second part of the mandate kourtney, to bring it back to the stock market and the sort of lackluster reaction. after the last decade of the bull market it's been a big embrace of easing money policies when the fed pivots like this it's usually cause for celebration in the markets do you worry at all though about these lower yields we're seeing? rick warned about it, victoria warned about it, whether it's more ominous this time and won't be the case we've seen to embrace stocks as in the past? >> it is a little more ominous again, chairman powell, he traesed that a bit today he didn't want to scare the markets. clearly, he didn't, based on the reaction that we received. he said we're slowing relative to where we are.
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that clarity, if people break down and go through the actual words he used today he wanted to be clear on how he felt the economy was doing and how that actual actually should affect what they're doing. he said we're in neutral, we don't have anything that says go one way or another that's a good thing. we still have things that provide instability on a global basis, which he mentioned. today it gives us an opportunity pick stocks that are going to be successful if you don't like banks but have to invest maybe you're thinking about private equity, borrow money cheaply. buy assets, leverage up, et cetera there are opportunities in this market you have to think about where we a are. he could have chickened out and said i can can leave one dot plot on there. we could have seen the fed leave one point on there
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and say we may raise rates later. he said no, from march through december, i'm going to give clarity. whether you're in equities, bonds, private markets, based on that. >> victoria, how are you positioning? what would it take to be very bullish again on u.s. equities >> i know that kourtney is saying it give us clarity. it's not as much as people anticipate because the economy is doing so well, i don't want them to come back and say we're adding another rate hike in and take the market by surprise most of our equity products are indexed. we're looking at names that have pulled back, facebook, vmware because we were underweight in tech but not taking big bets on any particular sector. i think we'll have more volat e volatility at the end of the
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year if the fed has to pivot again. >> you said you would cut your hair when the fed cuts rates 50% by next january. >> we might have to get a studio at my hair sln at some point this year. maybe these guys in miami can do a remote and we'll do an online haircut. >> stock exchange. we'll bring a hairstylist in. >> all right i'll come do it on the stock exchange perfect. >> excellent okay we look forward to that if it does, indeed, materialize. thank you all very much. steve liesman, kourtney gibson and rick san telly much more reaction to the fed's reaction, interest rate observer and former trump economic adviser judy shelton will join us. >> one analyst has already slapped a buy rating on lyft and he will join us to explain why he's so bullish.
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rate it's 240 and that is higher flattish yield curve is meant to be something not good and suddenly the market is baking in the fed rate cut 50% of that by the end of the year the fed is meant to be patient it contends it is patient. there seems to be a certain jumpiness about its patience the fed has changed course in the course of the change 1.9 in december, today that number is 1.8. that was supposed to be the source of the chairman's malaise or uneasiness. >> financial conditions
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tightened, global growth. >> over the past six weeks, ten weeks maybe, financial conditions have certainly loosened it's a mystery to me. >> you said the fed getting too dovish >> we'll know more in ten years whether it's too dovish but certainly the fed has changed course for reasonses not too apparent from its own economic projections. >> will the president be happy, judy, with the change in course, though >> i think on the basis that chairman powell emphasized that this economy is in a good place and it now appears that the fed has adopted the creed of do no harm, i think everyone should be happy with it we've seen the rate increase in productivity. that's the best outcome we could be seeing. it's 1.8 from the prior four quarters compared to mostly flat for years before that. what you hate to see is a
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hawkish fed that would think about raising interest rates the scary thing to me today is the way we raise rate, basically paying banks on their reserves a higher rate of return to keep those reserves idle. the last thing you want to do is talk banks out of making loans to entrepreneurs, small business and the people who create the jobs it's the new pro-business environment with businesses feeling they can invest in capital equipment and hire workers that is giving you that productivity gain. it's the increase in real economic growth that is really what we should be most focused on we don't want to do anything to undercut that. >> jim, one of the points you made already, does it matter how much of it is inverted one to seven years currently
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inverted >> it matters because banks borrow short and long. they borrow short-term maturity and long-term maturity if they pay more for their loans than they are receiving on their credits, if their borrowing costs are greater, that is a restricting thing. i will disagree a little bit with my friend, judy, about the idea that very low rates are not a source for potential trouble you know, they used to say way back when that -- this is a city of london thing, can stand anything but he can't stand 2% meaning persistently ultra low rates instigate all manner of mischief they do things that are certainly pleasant in the short to medium term in the longer term they give us such events as 2008. >> when will we know if that's actually true this time?
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>> when the cycle turns. >> judy, what are the current expectations of other central banks and what it means for the dollar, clearly seeing dollar weakness today, euro strength despite a dovish turn from the ecb as well. >> well it was just a couple of weeks ago we saw the big european bank stimulus that had an instant effect on making the dollar stronger relatively so now we'll see that play out in the kobuki theater that is the daily turnover for foreign exchange markets as they dramatize the signals on these monetary policy decisions. i think that we're still better off doing nothing to prevent the
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growth that we're seeing the fed is really talking about being at a neutral right now and in a way, what we would want is the fed not to be stimulating, not to be contracting. i would rather have something much closer to what i would call market determined unless the fed can improve on markets and normally i believe markets are a better solution than a small committee deciding what should be the demand and supply of money and credit so i'm fairly happy thinking that it's the multiplier effect. i think that the real economy and the actors within it, they'll decide how much credit to create if we have an interest rate that is not trying to push them one way or another because it's steering them against what market signals would otherwise be telling them. >> jim and judy, thank you both
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eu hitting google with a $1.7 million fine for ad competition. this is the eu's third anti-trust fine against the tech giant totaling $9.39 billion this, wilfred, was the smallest of the three google brushing it right off we did speak with cnbc europe in brussels today they said google is taking advantage of its dominant position in the online ad market listen. >> if you have a travel website or a news website and you want to sell the advertising space next to the search that you can do on your site, you need a broker and google is one of the
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absolute biggest brokers in this market and they have misused their dominant position to make sure that no rivals were able to compete in this market for search advertising on news sites and travel sites. >> this is becoming all too familiar fining google a billion here, a billion there. there are two sides to it. some say it's protectionist, that europe continues to go after big u.s. tech companies and others say she is way out front of, say, regulators in the u.s., who are all now jumping on this band wagon of how to deal with the dominant, scandal-ridden technology companies actually imposing fines and doing these investigations into the anti-competitive behavior. for this one, they don't have to change their behavior as punishment, key for investors. the last one with android, they did. this was over in 2016. there's not much they could do except pay up. >> two factors could lead to the
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stock declining, shrugging off at the moment. regulation, which changes for behavior but secondly u.s. regulators reacting in the same way or global regulators, which is still not the case. >> not yet. >> i said earlier, warren and investigar should meet. >> the stock is up 2%. clearly not bothered at all. ubs saying, quote, one of the worst first quarter environments in recent history. their guiding fell about a third compared to q1 last year ubs ceo spoke with cnbc earlier about his views. >> i think that we are facing, first of all, geopolitical changes that we all know but in addition to that, you know, q1
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was lacking any elements of positive seasonality and last year was an exceptional first quarter. not only for the industry but if i look at ubs, was even more exceptional because we had a very outstanding quarter so, in that sense, there is an absolute assessment but also relative assessment, vis-a-vis a very good quarter last year. >> sara, a couple of things i point out. on the trading there is some overlap but we already had guidance on q1, bringing down their trading. investment banking, that negativity seems to be a europe factor, m & a not so much translation. main point, this is important, they're a much bigger wealth management operation than an investment bank. that's where he was saying in asia and in the u.s., cash is
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staying on the the sidelines and you could spin this almost as a bullish factor they haven't reinvested. in that sense yes it is negative and banks are down party because of the yield cut move here but this is more europe. >> u.s. banks have their own problems in terms of low yields and the fed today. >> right. nine minutes before the closing bell major averages, dow has moved south since that fed news conference got initial pop on the meeting and then conference sort of lost steam. down 118 points as we speak. s&p 500 down .2% also gone negative nasdaq stays positive. s tl see where that goeinhe next few moments up next, the biggest movers at the nasdaq
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bank stocks are getting hit hard following the fed's rate decision bob pisani joins us with more on the reaction. >> this is the downside. collapse in yields means banks are getting clobbered,
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particularly the regional banks. everything down 4%, 5% or so why are regional banks getting hit more than the big money banks? they don't have the trading prof profits that the big money center banks have, goldman sachs and wells fargo have there's the kre, sara, down two days in a row. >> bob, thank you very much. see you in a few minutes on the floor. let's send it up to the nasdaq and bertha. >> had been higher from the beginning. 100 at a five-month high, back to levels of october 9th, about 4% from that october 1st all-time high. big cats are moving things here. new highs from microsoft, paypal, charter and starbucks and that fine for google didn't really do anything to alphabet shares today, they're stronger communications sector is where the tech strength is today back over to you guys.
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we lost some of the positivity into the close yields ten-year moving from high 2.5 handle to the low 2.5 handle and dollar slipping a good half a percent or so as the fed struck that more dovish tone. sector view today, energy, oil prices up a little bit off the back of the fed decision financials out down 2% as bob was just talking about before the break that has dragged away that impetus we got in the last hour of trade. >> fars that announcement goes, this was exciting from expected two, expected to go to one and zero was a surprise. moving the balance sheet in your area of the world everyone is asking what theresa may going to say at 4:15 that may move the markets, too
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people were asking me if there was any relationship i don't know we didn't have any other news, though. >> we'll have to see what she says will she announce a new plan we'll see. 15 minutes until that. we are down half a percent on the dow, 3% on the s&p russell, the laggard, got a little more than 0.7%. sarah, back to you welcome to "closing bell." i'm sara eisen wilfred will rejoin me shortly it looked like initially there was going to be a pop on the news out of the fed, no more rate hikes for 2019. start reducing the balance sheet in september
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it closed lower by 141 points. s&p turned south down a third of one percent. didn't help earlier in the session president trump came out and said we're still looking at keeping tariffs on, even if we get a trade deal with china. that sort of fed into the narrative today. the nasdaq did remain positive as bertha coombs noted earlier, social media stocks did a little bit better, helping the overall nasdaq into positive territory netflix, twitter, facebook, alphabet all leading the charge. russell down .75%. and the dollar sinking honeywell ceo on committee and whether the grounding of boeing 737 max jets could impact his company's bottom line. he is a supplier to those planes here are the stories on our radar fofr investors fed says no more hikes this year ceo jamie dimon says tech giants
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are about to get hit with a full monte of regular oversight he has been there. and chip maker micron earnings in the flesh, for a change, henessy funds at post nine mike, the fed got more dovish than expected and yet sold off why? >> a bit of a soggy response i don't think it was an outright sell the news. i think almost all the weakness can be attributed to the financial sector it was more or less flattish and really the treasury that you mentioned, when you had this rally in treasuries, flattening action it refocused people on this concept of low rates, slow growth this old story but emerging markets rally on this, obviously, with the dollar going down and the nasdaq 100 was up .4% low and slow environment
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i don't want to excuse the weakness and say it was only banks but that was most of it. >> mike we've always discussed a cut would only likely come when the data gets worse and, therefore, would it be net positive for the markets or not? we got incremental dovishness. it did come with a downgrade in the growth outlook is the market starting to focus a little bit on that negative tone rather than the positive? >> i think it refocuses attention not so much on projecting two or three quarters down the road and how weak will the economy be and will we be closer to the end of the cycle or fed easing but refocuses on what we already knew, which is that we have global soft patch that's been ongoing for a while. earnings are a little bit bumpy. the market is probably due to get choppy for a bit i don't know that this is a matter of everyone bracing in advance of a slide toward a recession scare, the fed having to ease. it's more like, look, this is the world we have right now. the fed told you, it is steady as she goes.
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patience also means boredom. market s are about that as well >> micron and seema mody. >> micron bottom line versus the estimate of $1.67. beat for micron on its bottom line revenue at $5.84 billion that came in a bit higher than expected it compares with the 7.35 billion brought in for the same period last year the company did cite a challenging market environment the stock is up fractionally in extended trade analysts had been referencing the fact that selling prices had been weak but may bottom out in the second half of this year that will be a key question that analysts will look for an answer to in the conference call which begins 4:30 p.m. to see if investors can bet on that second half rebound looking at memory chips. micron shares up .6%, sara
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it's had a strong year, up 30% in 2019. >> seema, thank you. micron ceo will be joining us tomorrow morning, 9:00 a.m. eastern time strong backdrop and managed to -- >> yeah. little bit inclusive within semi conductors, micron has had a tougher time, off its highs. it doesn't seem as if the market is ready to say it's an all clear for this segment of semis. >> your takeaway specifically on what we heard from the fed >> i thichink we heard what we'e expected to hear good news is that there's no rate cut 5.5% prime, incremental cost to funds is 2%. that's a good place to be. the fed starts lowering rates that will be bad for margins and bad for the banks. hopefully, they'll stay where they are. >> do you buy the banks today?
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in particular, a bigger bank or some of the regionals were really slapped today >> there's a lot of good banks we're trying to buy the ones where the managements are paying attention to what's going on and they have a defensible position on the asterisk side or deposit side i wasn't following the market that closely but i think ultimately this is good news fo the banks, the economy if you travel a lot, like a lot of you guys do, the economy is good people are investing. >> the ten-year yield went from 2.59, 2.60 to the low 2.50s that doesn't signal that everything is good for the banks or the economy, does it >> the issue there is the markets reacting to the fact that the rates aren't going to go up. i don't thiching the ten-year is where the banks are lending. they're lending at something around prime they're not borrowing money at the ten-year rates have come council down but
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the bond market is big the fact that a bank can make loans at that rate and making investments, the economy is good, employment is good people will pay their debt i think we can't take one day like you were saying at the end of the day the structure of the mark is good in terms of rates i think the fed knees to lower rates. >> if we talk about what happened in the market today, whether it was the right move or not, you look at the big investment banks, declining 2%, regionals declining 5% it's because of the yield curve flattening. >> absolutely. that's the reflex move banks in general have not been able to get into an uptrend. it's a show-me sector. right now another excuse to knock them back down i don't think it's surprising. but i don't know that it's necessarily the markets way of saying okay, now the clock is ticking even louder for this cycle and credit costs are going to go up. >> so is your bottom line, mike, that if it was friendly for the
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markets to have a fed patient and on pause, the fed didn't do anything to change that today? >> that's right. that's exactly right except the big question, which was before today and after the position today, did we use up what we can get from that? in other words, beyond another catalyst, beyond some kind of a reason to look ahead, for some quickening or bouncing back, what's left? >> would the market rather see a quickening and therefore start to worry about a hike or softening? >> the market always wants easy fed and faster growth. right? it doesn't want to have to choose between the two, right? or at least growth that is not going to wobble into flat to down. >> that's what the president wants. >> let's be careful not to talk ourselves into a downturn. part of the problem that we're talking about it, not that we'll create the downturn but the fed needs to back off and say we're
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fine if we talk ourselves into a downturn it's our own fault. nobody wants to be responsible for the downturn the fed reversed i was on december 24th when the market made its low. the fed reversed from that day because they got the reality that they were going to create the downturn they backed off. now you need to let it happen. >> the other thing to keep this mind -- >> breaking news on boeing, my apologies. phil has the details phil >> wilf, a report from the seattle times that the fbi field office in seattle has joined an investigation by the department of justice and the department of transportation looking into the certification process of the 737 max. as we reported earlier this week, a grand jury based in washington has issued at least one subpoena for documents relating to the certification and the development of the 737 max. and now you have the "seattle
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times" saying the field office for the fbi in seattle has joined in that investigation guys, this shouldn't come as a complete surprise. the fbi clearly has the resources to assist in terms of any types of documentation that needs to be collected, et cetera but, again, the fbi is, according to the seattle times, the field office in seattle is assisting with this investigation now. guys, back to you. >> do we know, phil, exactly what they're looking into? >> no, we don't. we don't know who has been subpoenaed or what has been sought after in that subpoena. we do know that the grand jury in washington back -- i think even on march 11th or 12th -- issued a subpoena relative to the development of the 737 max. >> certainly not a market friendly headline for boeing as we can hek see it take a 1% spill after hours. >> it's certainly not. knowing that there were investigations by federal authorities before this, i don't know that it's that much of a
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surprise that the mechanism would be the local fbi office trying to get some evidence. i mean, not good, to your point. it's obviously a reminder that this is a long way from being sorted out. >> regulatory pile-on is happening. phil, thank you. now news alert on walmart. courtney reagan with the details. courtney >> chief technology officer jeremy king, is leaving the company effective march 29th a memo was sent to all walmart associates cnbc has obtained, by both the u.s. cfo and mark lorrie mr. king had been with the company about eight years and i'm told he will be looking at an opportunity at a nonxoeting company that will be announced in the coming days meantime an walmart labs fiona tam will be taking over that position walmart shares are unchanged at this time on that news back over to you.
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>> courtney, thank you very much for that. jp morgan ceo jamie dimon says tech giants should be prepared for regulatory oversight. kayla? >> jamie dimon became well educated on the gauntlet after the great recession. i asked him what the tech giants, who are now under fire, should expect. the approach to tech feels a lot like the approach to banks after the crisis multibillion dollar fines and proposals to break up these massive companies. do you sympathize with them? >> they haven't had the benefit of the full monte yet. if i were them, i would be getting prepared for it. >> what advice would you offer to mark zuckerberg >> prepare tore it privacy, robots and dem kras and who can advertise their platforms but it's a lot of work my experience has always been when you get attacked by someone, one group, it could be every country, every ag, every
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regulator, all at the same time. any company that is under attack like that or threat, they should really gear up and look at it as a very broad based type. there are sometimes legitimate complaints you can be very, very reactive, too. >> dimon made those remarks on the sidelines of an event hosted by round table where he and university president barwell and others were promoting a partnership to better prepare students for future jobs we had a wide-ranging discussion that warning for tech is what's reverberating. guys >> kayla, thank you very much for that the full monte, mike even as we were discussing earlier, in the eu there's been backward looking fines but we're not at the full monte yet. >> no, not at all. it remains to be seen whether
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we'll get there. jamie dimon is speaking from the other side of that process, having come through the crisis and being a decade into it i guess you have to brace for more or at least ongoing scrutiny that will try to get to the depths of the business models themselves. >> this is your specialty, right? you've been following financial firms for how long >> 30 years. >> how do you trade stocks if social media giants are head for what the -- >> the difference here, i'm thinking it through. at least the banks have the federal reserve as the person between them and the government or them and the congress the fed was there, orchestrating what's going to happen we agree with stuff there. there's no fed if congress comes out with a plan, there's nobody, there's no in between guy to manage or implement. i don't know how that's going to be implemented believe me i know what regulations can do and what it can't do. >> also big companies did not
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nearly bring down the world economy. therefore you may not have the same kind of public anger. >> interfered in elections. >> there are multiple regulators that all wanted their slice of the big banks. and that also really doesn't apply to the tech companies. >> right but i don't think there will be $50 billion fines or anything like that but you never know seems like fwoogle gets fined every other week in some european commission. but there's going to be some complicated setup, which will be worse for the companies. you'll be hit by all these different types -- once it comes they'll all pile on. they all will want a piece of the action and be part of the deal. >> i think it affects how they, longer term, pursue their next act, through acquisitions, extending into other new markets. everything will be met with suspicion or maybe they'll have to limit their own ambitions. >> interestingly, communication
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services was one of the best performing groups today, nasdaq closed positive. >> it's the flavor of stock. big, secular disruptive stocks that have cash flows it's almost like perpetual bonds. >> in a slowing economy, smaller companies growing fast are less attractive now you want to circle the wagons around the big companies who survived the downturn and keep investing in the downturn. >> which of these big companies do you like? >> of the big tech stocks? i think google is well positioned i don't like facebook for the obvious reasons but everybody seems to don't like it microsoft is in a position you want to own the companies that aren't in social media or that are around it or making money but not in it. facebook, they're in it. they have to correct all those problems if you're microsoft, you're providing the information. if you're in the cloud like amazon is, but you're not in the
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game but you're providing the engine for it so that's what i think is -- >> we didn't even talk about the fact that the president came out today and said tariffs are going to stay in place even if we get a trade deal logically for a market that was banking on a trade deal and hoping that tariffs go away as part of that -- >> i think the market is finished with overreacting to offhand comments, to be honest with you it was really, if you don't look at the context, it's an offhand comment, doesn't seem to have the weight of here is the current pulse of the negotiatings as they're going on right now. yes, they would like to have tariffs as a threat. i think that's been the u.s. position for a while to me it wasn't a big surprise that the market didn't really run far with that. >> if tariffs stay on even when a trade deal gets done, is that the kind of stimulus that the economy needs to help boost the economy? >> it would not be great but i don't think the market will panic in advance, not just yet. >> david, thank you for joining
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us good to see you, particularly in the flesh. lyft, one analyst is slapping a $75 price target on the stock above the big pricing range. he will join us next to explain why he has that buy rating. >> plus don't miss an exclusive interview with the ceo of honeywell and whether his aerospace business is being impacted by the ground of boeing 737 max jets coming up this 737 max jets coming up this hour who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at therightquestion.org
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reports suggesting lyft's highly anticipated ipos, two days after the company kicked off its ipo road show. could exceed expectation of $23 billion when it prices its ipo march 28th shares are currently expected to price between $62 and $68 per share. >> senior analyst from d.a. davidson lyft with a buy rating. thank you for joining us. >> thank you for having me. >> talk us through this. >> sure. a few things to keep in mind will lyft, one they have all the
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momentum in the u.s. ride sharing market,steadily grown their market share in the u.s. the last couple of years they've been very focused on the u.s. market. they're not distracted by trying to expand internationally or with other products and have benefited a little bit from disruption at one of their competitors over the past couple of years as well and have capitalized on that. >> the price range of $62 to $68, you have a price target of $75. how did you get tho that >> $62, $68 range, $65 implies a valuation of 5.4 times 2019 eb to sales estimate. relative to a lot of other high growth stocks, open-ended tam type opportunities, even ones that are similarly as unprofitable as lyft are trading north of that. when we saw the initial range we thought it represented a pretty good opportunity and rolled out the buy rating. >> do you see profitability for
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lyft and uber? >> i do. in the ride sharing business it's unlikely to be in the near term we're at a period of very heightened competition the north american market for ride sharing, the oldest and most mature market but in a lot of ways the most competitive in that there are two large-scaled places places like china, southeast asia uber's departure has left those markets to one big player. near-term we're seeing signs that there is leverage to lyft's model when it comes to incentives and long term for oug autonomous vehicles to basically reduce the amount or times that lyft has to pay a driver that could be a big lever to profitability. >> that's the shorthand version of this is going to be such an enormous market that it will be a quasi duopoly. how pervasive does ride sharing
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have to become to realize those as an investor >> s15, lyft talking about this $1.2 trillion tam, buying cars, owning and maintaining cars. it's possible that eventually that is the real addressable market opportunity for these companies. as you say a lot has to change americans basically have to get over the idea of car ownership and get comfortable with subscribing to a car service the way they subscribe to netflix. the cost for ride sharing has to come down significantly for it to represent a compelling alternative to car ownership but near term, you know, even if you put aside that $1.2 trillion, it's a big market. >> revenue growth fast but slowing. loss widening. it's not like it's a one or two-year-old company >> yeah. >> that's not concerning >> it's concerning some of the recent losses had to
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do with lyft really deciding that they need to be more of a primary player and autonomous. we're starting to see leverage in some more traditional places in the business. but lyft decided they needed to invest in their own proprietary autonomous driving technology. and i think that's a big driver of why recently the losses have not moderated. >> according to leslie picker's reporting, trying to portray itself as the pure play versus uber, which has uber eats, so much more global. >> yep. >> is that where you want to be or do you want to be in a more diversified company? >> look, i think both have benefits and opportunities, and both have risks. one thing we like about lift being smaller than uber is the fact that they are more focused. they did expand in canada.
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that will expand the tam for them a little bit. we like the fact that they're focused and not trying to battle multiple countryies. >> would it be higher if the share structure were such. >> it might be a little bit. i think it resulted in a little bit haircut of the value ace this management team, i would say the fact that it is founder led and led by these founders who are very focused on corporate responsibility and corporate culture. courtney reagan has numbers from williams sonoma and guess. >> 210 adjusted. analysts were looking for $1.96
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on stronger than expected revenues, 1.84 billion compared to 1.8 billion expected. comps about in line for expectations for those to grow 2.5% there's also a $500 million buyback, an increase in the dividend by 12%. that makes it 48 cents and strong guidance for the full year if we can flip and look at guess for the fourth quarter, you'll see the stock move down about 8% here this was a mixed result for guess with an earnings missed, 70 cents adjusted compared to 75 cents expected revenues did beat, though, 137 million and it does look like the guidance for both the quarter and the year for revenues is about in line as well as for earnings but a sharp drop on those shares
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back over to you. >> courtney, thank you for both of those. >> find out if the recent decline in stock buyback activity could be a warning sign for the market with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.
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stock buybacks are cooling down mike >> bank of america corporate clients, four-week average of the annual rate of change in buyback activity you see how it sort of dips down
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below zero obviously, less than a year ago. but look at the high bases after last year, all high tax cuts, average annual gains were largely in the 100% to 200% range. buybacks are very active but it could just be a waning tailwind for demand for stocks in the market one other thing i would point out is i think the role in buybacks has been overstated if you look right in here, 2016, '17 the market was doing fine and you did not have huge gains in buyback activity. remember back to last fall in november people say the buyback window is opening up companies will be able to buy their shares again the market went straight down. so it's one of these things to keep an eye on people are focused along with investor flows a little less help than it was but probably nothing to worry about. >> maybe the politicians succeeded in scaring companies away. >> i would be surprised if, in
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fact, you get a bit of a chilling effect. >> there's a lot of heat on buyback. >> for sure. >> the other point, mike, which is broad but company ceos and management don't necessarily -- >> it's more about just a source of cash into investment portfolios and them buying stock. >> or the tax cut impact. >> was so dramatic, yes. exactly. >> thank you very much for that, mike time for a cnbc news update with sue herera. >> hi, wilf. hi, everyone senator lindsey graham, close friend of the late john mccain says president trump's attacks against mccain will end up hurting him more than the legacy of the late arizona senator. he was speaking to reporters in south carolina before attending a rotary club meeting. gucci is selling distressed sneakers for a mere $870. the shoe design was inspired by vicini vintage sports wear from the
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'70s even though they look worn and dirty, gucci provides very specific cleaning instructions. check this out at&t's ceo randall stephenson was at an economic event when this happened on stage. >> i'm getting a robo call now, too. it's literally a robo call. >> president trump or somebody >> he doesn't call me. >> he doesn't call you >> stephenson ultimately declining the call, as you saw, on his apple watch apparently no one is safe from the spam epidemic. that's the news this hour. >> i wonder if he has technology we don't have. i never know if it is one. >> if it's an area code -- >> can you kind of tell. >> if it's an area code that you know you don't know anyone from. >> or your own area code. >> there are some of those. >> it could be the bosses at work so i have to take it in
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case. >> just don't. >> you're too gullible. >> if it was the president calling wouldn't you say it was a robo call? >> or take it and see what happens. >> you never know. >> put him on loud speaker in front of a packed room and say this is a private call, mr. president. see what happens thank you. >> you got it. >> we'll hear exclusively next from the ceo of honeywell. find out what global event he is watching closer than anything else hint, it's not the china trade talks. levi could price its ipo any levi could price its ipo any your retail business.rt of so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer.
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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. as you can see by the intra-day action there, it was down most of the day, got a leg down when president trump came out. >> let's listen to british prime minister theresa may. >> it was the biggest democratic exercise in our country's history. i came to office on a promise to deliver on that verdict. in march 2017, i triggered the
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article 50 process with the uk to exit the eu and parliament supported it overwhelmingly. two years on, mps have been unable to agree on a way to implement the uk's withdrawal. as a result, we will now not leave on time with a deal on the 29th of march. this delay is a matter of great personal regret for me and of this, i am absolutely sure you, the public, have had enough you're tired of the infighting you're tired of the political games and archean procedural rows, tired of the mps talking about nothing else than brexit when you have real concerns about our children's schools, health process and knife crime you want this process to be over and done with. i agree. i am on your side.
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it is now time for mps to decide so today i have written to donald tusk, the president of the european council, to discuss a short extension up until the 30th of june to give mps the time to make a final choice. do they want to leave the eu with a deal which delivers on the result of the referendum, that takes back control of our money, borders and laws while protecting jobs and our national security do they want to leave without a deal or do they not want to leave at all, causing potentially irreparable damage to public trust, not just in this generation of politicians, but to our entire democratic process. it is high time we made a decision so far, parliament has done everything possible to avoid make i making a choice. motion after motion and amendment after amendment has
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been tabled without parliament ever deciding what it wants. all mps have been willing to say is what they do not want i passionately hope mps will find a way to back the deal i've negotiated with the eu a deal that delivers on the result of the referendum and is the very best deal negotiable. and i will continue to work night and day to secure the support of my colleagues, the dup and others for this deal but i am not prepared to delay brexit any further than the 30th of june. some argue that i'm making the wrong choice and i should ask for a longer extension, till th end of the year or beyond to give time for politicians to argue the way forward. that would mean you vote in european elections nearly three years after our country decided to leave what kind of message would that
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send and just how bitter and divisive would that election campaign be at a time when the country desperately needs bringing back together some have suggested holding a second referendum. i don't believe that's what you want and it is not what i want we asked you the question already, and you gave us your answer now, you want us to get on with it and that is what i am determined to do. >> theresa may there we should say the british pound not really flinching off the back of that down about 0.5% on a day when you've got the dollar itself annexed down to 0.4 it does hide, i guess, the level of weakness today, down .6% we can analyze what she said about it's time for mps to make
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a choice the real key thing for the markets is that she's seeking a short extension till the 30th of june she refuses to even consider a longer extension and donald tusk, president of the eu council, saying they wouldn't accept a short extension like that unless her deal had already passed parliament, which it hasn't prime minister theresa may will go to the eu tomorrow, to brussels and say that's what she wants. from the murmurs we've had from europe it doesn't seem they would be that receptive without any change. >> the biggest news here is that she didn't resign and she didn't call for an election, which has always been an uncertainty, because her deals keep getting rejected and rejected and she started out saying i came to office to deliver brexit and then said we have not delivered brexit and then put it on the other lawmakers. she said she doesn't want
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another re-election. >> with eight, nine days left, it was difficult seeing her resigning there and then because of the unbelievable turmoil it would put the country in with no time to hold an election but the pressure on her has increased today, as it always has been she has done something that's not really pleasing either side. and if the eu does, indeed, reject her timeline extension to june 30th tomorrow, we're in unchartered waters with eight days left and the clock ticking. but we are down 0.6% on the british pound. what the eu says to her request of june 30th she has made promises and slightly backtracked on them but june 30th is the only extension i seek and it's rejected then we only have eight days left unless she changes tact once again. >> not much clarity. weak for the british pound unclear it's anything for fwloebl marks at this point. >> it is unclear. >> though she's taking them
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closer to the brink. >> perhaps it's coming to a head at this point, right you would have to do a vote in the eight or nine days. >> there will be a vote next week on her deal again and parliament will try to take control. it's high stakes with eight days left that's the point really. default remains no deal. majority exists in parliament to avoid that there's less time to make sure that, you know, the disaster scenario is now avoided. >> more news on boeing phil has that for us. >> faa is out with an updated notification to the international community, basically talking about what's going on with the 737 max investigation and efforts by boeing to develop software in this notification, not a whole lot of news here one note is that the faa says boeing is developing a service bulletin that would specify the installation of program software, software fix we talked
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about. boeing has also developed flight crew training related to this software the faa's ongoing review of this installation and training is an agency priority as will be the rollout of any software, training or other measures to operators of the 737 max one other thing to keep in mind, guys, once boeing has this new software, which they're hoping to have by next week, and get it approved by the faa, that doesn't mean the grounding is lifted the faa is still looking separately at whether or not the 737 max should go back up and they should lift the grounding you shouldn't look at this software update as the end all it's one step in terms of whether or not this plane gets back in the air. >> boeing shares off the after-hour lows at least, after that report that the fbi is now looking into that approval phil, thanks fedex stock plunged after posting weaker earnings and guidance, raising real questions about the state of the fwloebl
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econo global economy darius adamcyzk, ceo of honeywell. he has a very different take on the global environment listen. >> our environment is pretty strong i talked a little bit about it on our last earnings call. long cycle, 60% short cycle. overall what we're seeing in the first quarter is actually a pretty strong business environment. not just in the u.s. where it's been strong for a while but we're seeing our high growth regions, rate of growth in europe so, overall, the business environment that we're seeing in q1 has been relatively strong and it's been across all four of our business platforms as well as more or less across all of geographies that we participate in, which is more or less everywhere. >> why do you think that is? why do you think there's a disconnect between what you're seeing and what we're seeing in
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the economic data, frankly, in europe, and the kind of results we got from fedex? >> when i took over ceo as honeywell it's to drive growth and despite what maybe some others are seeing in terms of challenged economic environment, customers seek a value in the honeywell products and offerings, whether it's our software solutions, our products, services customers are interested in buying it. and value still sells in whatever economy that you happen to be exhibiting in. we're seeing that across the board. >> had an about the u.s. specifically how does the outlook like for 2019 versus the strength you saw in 2018? >> what we had been planning on was a slightly weaker environment in 2019 versus 2018 in the u.s. but overall still relatively strong. frankly, so far at least, that's actually exceeding our expectations, whether you look
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at aerospace segment, extremely strong, more oil and gas and chemicals related, also has been doing quite well, as well as our honeywell buildings technologies business, which is doing really well i'm actually pretty bullish on the year, at least based on what i'm seeing in q1 we've got a couple more weeks to go overall i'm relatively pleased and the u.s. had s been leading the charge. >> i want to ask about china you did warn that growth would slow a bit in that market. have you been seeing that? and how much of it is related to the trade war with the u.s.? >> overall, china has been quite strong overall we're seeing high single digit growth, so no kind of a slowdown i think it's probably unfair to say any kind of slowdown is tied to what's going on with the u.s.
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trade. >> you mentioned that the aerospace business has been particularly strong for you. is there any impact on your business with the boeing max jet crashes and the grounding of those planes >> we've not seen any impact on our business yet at all. we're working with the ntsb and boeing to do what we really need to do, investigate and find the root cause of the issue. honeywell is trying to be helpful in any way we can. our most important thing is that our hearts go out to the victims as well as really finding the root cause of the issue. and anything that honey well can do to help boeing, to help the ntsb is obviously what we'll do. that's our number one focus. in terms of business slowing, we haven't seen that. at least not yet. >> just to be clear, honeywell does supply parts that go into these planes >> we do we provide the mechanical systems. we don't provide the flight
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controls, management systems for that particular aircraft. >> yief got he through a number of different situations, acquisitions, sell-offs. >> continue to add to the portfolio but also potentially subtract from the portfolio as well and most importantly bring tremendous value to our customers and shareholders. >> a number of analysts that we talked to want to know what's taking so long for you to make your, quote, signature acquisition. what would you tell them >> well, i'm not sure that i'm looking for any one signature acquisition. i think whenever you look for a signature acquisition, you may get that wrong i think we'd rather have a lot of good acquisitions that's been the overall primary strategy. >> just since the global growth slowdown story has been so major for us and you've given a really optimistic view on the picture, what's the biggest risk you see
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on the horizon to that rosy picture you painted? >> well, i think the biggest near-term unknown for us, although we were prepared for it because we started working on this about nine months ago, is brexit brexit is right around the corner we're literally days or weeks away there's still a lot of certainty around the extension and that's probably the single biggest unknown. do i think it's going to impact our miss in a dramatic way i don't because we've prepared for it, a lot of certifications around products, around markets. but i think near term brexit, given how close it is to actually the exit date as well as the uncertainty around what's going to happen, that's probably the one that we're watching closer than anything else. >> the ceo and chairman of honeywell painting a very different picture of the global economic environment i thought from fedex i mean really distinguishing himself. yes, they are in better business strength in china, better than
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expected in the u.s. and growing in all geographies, even europe. >> i think the end markets say it the aerospace cycle is very strong, building controls. a lot of companies say they are a software company honeywell is closer than most to being that and that's a strong part of the economy. >> interesting that he highlighted brexit more because of how close it is, eight, nine days, rather than specifically a huge part of their market in the uk usually it's played down u.s. companies certainly, they're not too concerned about what happens with brexit but interesting comments on that. coming up on the show, two retailers moving in opposite directions after hou 'll recap the earnings straight ahead
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let's get a rapid recap of the news making news after hours. micron reporting better than expected earnings for the second quarter. the ceo says micron continues t do well. shares of guess plunging though revenues did beat expectations the stock is down 15%. williams sonoma beat on the top and bottom line. also announced a new $500 million buyback and 12% dividend hike it's pared some of its gains. we've got more news now on boeing phil lebeau with the latest. >> sara, we knew this was coming the first of the congressional hearings will be next wednesday, according to reuters the senate commerce committee plans to hold a hearing to discuss the certification process for the 737 max. among those expected to be there, the current head of the faa as well as the head of the
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ntsb no indication who from boeing will be there, whether it's ceo dennis mullen berg or other executives as well but the first hearing on capitol hill expected to begin next wednesday. guys, back to you. >> that's the hearing on whether or not to ground the planes post the recent crashes >> they're going to say it's about the process. it's supposed to be about the process, at least that's the indication from this reuters report >> a dovish statement, initial jump, banks pulled it back down again. >> the reaction after a fed decision is not representative of how the market will assess it
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on the next day and weeks to come, but you do have to keep in mind the market was coming in this from the high of the year. >> now we go back to waiting news headlines on china trade talks. >> and the fed. >> that does it for "closing bell" today. thanks for watching. >> "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking times square, i'm melissa lee. check out shares of micron that stock is volatile after reporting earnings moments ago that conference call is under way. we'll bring you the latest details. plus tony dwyer says almost nothing will bring this rally to a screeching halt as stocks reach for all-time highs but we start off with the market, stocks sinking as the federal reserve says rate hikes are off the table for the rest of the year. the dow was down 150 points. take a look at some of the big

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