tv Closing Bell CNBC July 19, 2019 3:00pm-5:00pm EDT
watching that story about the british tanker being seized in the strait of hormuz. >> oil stocks catching a little bit of a bid as we head into the final hour of trade on these headlines, with the energy sector up 0.7 of a percent thank you for watching "power lunch." >> "closing bell" starts right now. good afternoon, welcome to the "closing bell" i'm wilfred frost, at the boeing post today, soorg 4.5% after that $5 billion charge was announced last yesterday on "closing bell." we have much more on that story and everything you need to know about the broader markets which are trading lower with 59 minutes left of trade. and i'm courtney reagan in today for sara eisen let's get into what's driving the action today industrials are leading on the back of boeing's real that wilfred mentioned there and reports that iran captured a british oil tanker is moving the oil market, as well as uncertainty over the fed's interest rate decision in less than two weeks, those are your
main drivers for today's action. coming up, sara eisen will talk exclusively to boston fed president eric rosen gren. these will be his quiet moments before going into a decision joining us for the hour is jim lacamp, senior vice president of wealth management at uvs i feel like when you look at this market there is a little something for everybody. you can find a reason to be bullish, bearish, we are all awaiting the feds decision what do you make of today's action and ahead of the fed decision. >> we have seasonality coming up, too, late july to late october is usually our most volatile time period in the market risks are symmetrical right now. we have upside, corporations are doing fairly well if you break it down to individual stocks and companies and a few sectors, they're doing extremely well, and we have a ten-year treasury yield that is lower than the yield on the s&p 500 so rates are very friendly,
particularly if we get a rate cut, we think half a point based on what the fed governors are saying so i think the market is okay here, but i think we should -- we're too complacent, we should expect more volatility and the trade wars have not been settled yet, there will be headline risk as well. more volatility, keep it on the best companies only. >> jim is with us for the full hour markets right at session lows, s&p down a third of 1% and the dow is flat. josh lipton is covering microsoft's climbs to new nice, phil lebeau has the latest on boeing, steve east man new comments on the fed and mike santoli joins us with his market dashboard. let's begin with josh. >> microsoft hitting a record high today, it's now up 35% this year, up 280% since sattia nad la took the reins back in 2014 its cloud business taking center stage with azure growing in q4
a new multi-billion dollar cloud deal from at&t, cnbc reporting it's worth more than $2 billion. also strong growth in office 365 and dynamics 365 that indicates it's taking shares from rivals analysts said cloud momentum helping to offset the 10% decline we saw in gaming back to you. jim, does this stock get stretched when you see it fresh highs over a trillion dollar market capital or do you think that microsoft is kind of justifying the valuation. >> this is an area i love. when you have a slow economy and it's slow here and slow around the world what you want to do is enhance your productivity. so whether it's the cloud, whether it's all these payment system stocks, whether it's artificial intelligence, they are all productivity enhancers and there is a big need for that in kind of a stagnant economy. the economy is just plotting along in the u.s., around the
globe it's softer than that. these companies are proving they can make money in that environment. this is where you want to focus. i'm not saying you buy them at all time highs, i'm saying the market will be voluntarily time, buy them on the volatility. >> those cloud numbers interesting ahead of amazon. thank you to josh. turning now to boeing, trading higher today after announcing a multi-billion dollar charge related to its 737 max planes. that happened here on "closing bell" yesterday. phil lebeau has more in tustin, california hi, phil. >> hi, courtney. three reasons why boeing shares have rallied today, there is a little certainty about the cost impact of the 737 max, at the same time the company is saying, look, we expect this return to service for this plane in the fourth quarter not guaranteed but that's the assumption from boeing and they haven't cut production there was some concern they might say production needs to drop even further from 42 per month. to the contrary, as you take a look at monthly production boeing said yesterday it's going to stay at 42 and expects to
eventually get back up to 57 per month sometime next year don't forget as you take a look at shares of boeing it reports earnings before the bell on wednesday, will be interesting to see what kind of commentary we hear from ceo dennis nullen berg. >> phil, thank you new comments from fed officials giving investors more clues about the potential next clue. steve liesman has always the details. >> james bullard saying today that the fed needs to follow through on what he said was essentially a promise made in june to cut interest rates he said a 25 basis point cut was appropriate for july, not 50, but the fed could revisit more cuts in the months ahead he went on to defend new york fed president john williams saying he thought controversial comments that williams made yesterday were more about academic research than telegraphing current policy. williams said research shows,
quote, don't keep your powder dry, that is move more quickly to add monetary stimulus than you otherwise might. the new york ted came out with a comment saying the comments were not about potential policy actions at the upcoming meeting. 100% of rate cut in july divided by one-third of a chance for a 50 basis point rate cut. it had shot up to 60 yesterday the president in a tweet this morning said he liked the first take on williams' comments, not the second one. >> steve, what's your expectation for rosen gren coming up later in the show? >> i think it's a very important interview, he has the last word here i think at the close of business today the fed is in the ten-day blackout period until it comes out with its statement on wednesday. i think the center of the board seems to be coming down in the 25 basis point, maybe they surprise with 50, but i don't think that's what they telegraphed to markets here at the end of the day i think the 67% chance of a 25
is probably the right call here. >> all right steve, well, jim seems to think otherwise because you're looking for 50 why? >> because of what they said and who said it, not because of the data i don't think the data calls for 50, the data in my view calls for 25. >> i don't even know if the data calls for 25. >> you might be right about that two problems with it, first of all, you have the joey chestnut thing, he keeps doing something that seemingly isn't helpful to him, healthy, but it hasn't killed him yet >> the hotdog eating champion. >> that seems to be what the fed is doing, they will keep applying the medicine because it hadn't killed the economy yet. but i'm not sure that the medicine is actually working and i think we're getting to a point around the world where all these banks are having difficulty with spreads, particularly in europe with negative interest rates, negative rates on junk boards and you are turning these banks into zombie banks not only here but around the world and so we're kind of all turning japanese now, we're following that japanese experiment which
didn't work. but the vice chair, evans if you look at their comments it sure sounds to me like you could get half a point on the cut date. >> this debate will continue and we will talk about this much more as the show goes on coming up, sara eisen talks exclusively to a key voting member of the fed, boston fed president eric rosengren, you will want to stay tuned to that here on "closing bell." >> you don't want to miss it. >> you don't you can't miss it. you have to stay tuned. >> embargo until 4:30. definitely worth sticking around for. black rock reporting a miss on earnings and revenue for the quarter. larry fink appearing on cnbc earlier today partially attributing the results to people being underinvested in the stock market. >> we saw people derisking still and i still bloef as i said last quarter i think this is going to be a mistake, people are underinvested in equities and i do believe with now the changes the tone of central bank behavior and you're starting to
see corporate earnings are coming in pretty well, you know, we still are constructive on the world. >> let's send it over to mike for the first installment of today's market dashboard mike. >> thanks very much. yes, we're going to get to that in the bonds of earth, you know, fink saying still constructive on the world there has been a planetary rush into bonds as opposed to stocks. we will see if that can continue the louann testify fringe it's going to take a look at a couple mood indicators that might be getting out there. nearing exit velocity, some parts of this market reaching new heights and then small steps, giant leaps, this is about central bank moves and markets. first, though, the bonds of earth, larry fink has a point, there has been a huge rush of money into fixed income funds and out of equity funds. it's been a more dramatic version of what's going been on for years now. year to date more than $300 billion i think that says now into fixed income funds and about half, a little more than half that coming out of equities, yes, basically people
are not excitedly getting into the stock market but look at this other chart from bank of america and merrill lynch. it's showing you the equity allocation, equity exposure of their high net worth clients within a pretty broad sampling of wealthy retail investors what you see is something close to right here, about 59%, i think it is, in stocks that's actually above the historical average, it's really not that far below where it was here and a pretty significant market peak that we saw and obviously really only once in the last, you know, 12 years, 15 years has it been high why are the market has gone up, therefore, equity allocations have gone up i don't think you want to make the case that people are vastly underv underinvested in stocks. >> it's a crucial distinction and tells us a lot thank you. turning now to a developing story out of washington relating to the airlines ceo meeting yesterday at the white house
eamon javers has the details on that for us. eamon. >> phil lebeau of cnbc and i have been trying to figure out since yesterday what exactly happened in that airlines ceo meeting with president trump at the white house yesterday. here is what we've been able to figure out so far, the first thing is that the u.s. carriers didn't get the outcome that they were looking for here with the president. that is, the president did not intervene on their side in a dispute with the qatari carrier, the president ultimately telling the u.s. side to work it out through the federal regulatory process. i'm told by a person familiar with the meeting that people on the u.s. side of this were shocked that the qatari airlines ceo was invited to the white house to participate in this meeting with the president but as senior white house official tells me nobody should have been shocked about that because everybody was informed the qataris came and the senior official tells me the real story here is that the delta ceo refused a white house invitation delta says this was just due to a scheduling issue on their
ceo's travel, they weren't able to attend the meeting. i'm told that the president brought it up as many as five times during the meeting, his noting pointedly that the delta ceo was not at this meeting. the white house ultimately as i say telling those carriers to take it up with government officials in terms of how to proceed here the u.s. carriers walking out of this not getting what they wanted here, viewing this i'm told as the beginning of a long process ultimately, but some real consternation and controversy behind the scenes about this meeting officials leaving the meeting would only tell us it was a good and productive session in terms of on the record but behind the scenes you do hear grumbling on both sides about what happened in this meeting yesterday. >> eamon, thank you very much for that airlines stocks down over 1% today. after the break we will discuss the state of the regional banks with the ceo of citizens financial, fresh from his company's earnings release earlier today. plus sara eisen brings us a big exclusive interview with boston fed president eric
rosengren. his latest thinking on monetary policy and much, much more coming up. and as we head to break here is a check on our data tracker, the preliminary raergd on consumer sentiment 98.4. just below expectations. we will be right back. tell him we're flexible. don't worry. my dutch is ok. just ok? (in dutch) tell him we need this merger. (in dutch) it's happening..! just ok is not ok. especially when it comes to your network. at&t is america's best wireless network according to america's biggest test. now with 5g evolution. the first step to 5g. more for your thing. that's our thing.
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welcome back to the "closing bell." let's get a quick check on oil ticking higher after iran said it seized a british oil tanker in the strait of hormuz. a u.s. national security council spokesman saying, quote, the u.s. will continue to work with our allies and partners to defend our security and interest against iran's malign behavior president trump is expected to address the situation shortly. prices up about a percent, down 7.5% week to date, the worst week since may 31st. shares of citizens financial group are higher, significantly higher today following earnings this morning the regional bank beat on both earnings and revenue for the second quarter and pleased to say joining us now bruce van soren. thanks for joining us. >> my pleasure >> so talk us through the beat congratulations for it, at 5%
jump in the share price. what was the main reason behind that, less impact from the yield curve moves to the down side over the quarter than expected >> yeah, i think what we saw this quarter was a very nice pickup in our fee-based revenue. we've been investing in building out our capabilities, we have done a couple acquisitions and are getting a lot of traction there. so there's some pressure given the downward movement in rates on your net interest income, i think we managed that well plus passed the baton and had our fees kicked in, good expense control, clean credit book we announced another one of our top programs, tapping our potential, where we're going to put a lot of effort into transforming how we're running the bank it's supposed to deliver $300 million in benefits over the next couple years. i think the market liked that as well >> bruce, in terms of the net interest income, is there less flexibility if we do see rate cuts for you to offset it with
deposit rate adjustments because on the way up it's not like deposit rates soared. >> yeah, i think that's the challenge. if you look at banks net interest margins they were typically down mid single digits to high single digits. ours was on the light side of that, 4 basis points we got after it early and started to look at where do we take some pricing actions on deposits, we knew liber was coming down so our asset yields would be coming down our interest bearing deposit costs were only up 3 basis points this quarter. as the fed moves into its cut cycle you have to be reasonably aggressive in bringing down those deposit rates. i do think all banks will be after doing that, so i think we will see how fast we can go. there will be a competitive dynamic to that, but banks will be really working that equation hard. >> bruce, you said that credit was clean in the quarter what do you see in going forward for credit for both consumers and businesses as it seems in some cases we have two very separate camps where the
consumer feels strong but business executives are very unsure about this current environment. >> yeah, i think the consumer really is in good shape, unemployment is low, real wages are going up, confidence is high and so we're seeing consumers willing to take down revolving credit and borrow money and look to invest in their future. so that's all been really good lower rates cause refinancing of mortgages and other price-sensitive borrow wings like student loans so i think you're going to continue to see good loan demand on the consumer side and you really don't see any signs of migrations into delinquency buckets. on the commercial side as well there's really not a big increase in any particular industry segment or any movement up and criticize assets or nonperforming assets usually if a recession were coming you would start to see some migration either on the consumer side or on the commercial side. we're not seeing that so we think we have some nice running room here before we end up seeing a recession >> bruce, i want to ask you a
question, this is jim lacamp, you mentioned the commercial side, that's one of the areas i'm a little concerned about because the cap straights for commercial real estate are back down at or below levels they were before the financial crisis how much growth can we get out of that space from here given where cap rates are? >> well, i think that market is in a decent amount of equilibrium now. i think investors and developers are circumspect, they are just looking to start and initiate the highest quality projects and i think banks are looking to really just back their best quality borrowers and long standing relationships so i don't see a real kind of risk in that marketplace at this point. anything that's getting done more speculative tends to get financed away from the banks and so more right equity funds or other debt funds would be taking on that risk, but i think banks are being fairly disciplined. >> bruce, earlier in the week we
heard from both brian moynihan and jamie dimon about the state of the u.s. economy. let's take a listen. >> the core thing is the united states economy is growing. is it growing slower than it grew next year, not so that are reported by but expected to slow down and the consumer is driving it. >> the consumer of the united states is doing fine, business sentiment is a little bit worse, mostly probably driven by the trade war. i wouldn't get too pessimistic yet. obviously the fed will react to the data they see, it's more important what's going on than just what the fed does if the fed actually raises rates because we're booming, that's not so bad. >> bruce, they're both pretty optimistic about the economy, but particularly about the consumer is the data you're seeing in line with that >> yes, absolutely and i do think, you know, the fed has all the data, there's
certainly a lot of speculation about what they'll do next week. i personally think that it's likely that they'll cut, but i'd say it's 25, not 50. >> that seems to be what the market believes at this point as well thank you for joining us on your earnings day. look, here we go, just about 29 minutes to go before the closing bell sounds on wall street 39 minutes i should say. the dow we can see here is down but just slightly, by 20 points, slooep slooep down 14 points, nasdaq composite down 0.6% >> a number of beaten down names getting love on wall street today. we will get you the word on the street on those analyst calls next my experience with usaa
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another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today. welcome back to the "closing bell." just about 35 minutes to go. we are near the lows of the trading day. let's get to the word on the street a few beaten down stocks getting
positive notes da davidson upgrading weight watchers, ww, to a buy with a $32 price target, the firm citing inn proved recruit as well as improved sentiment towards the company's studio strategy. barclays increasing second quarter earnings investment for tesla to a loss of 16 cents from a previous estimated loss of 71 cents a share. the firm maintaining its underweight weighting on the stock but acknowledges tesla has likely raised enough cash to make it through 2020 overall it is not a resoundingly positive note despite tesla trading up today. >> credit suisse initiating amc as an outperform, $18 price target the recent selloff is an attractive entry point and looks ahead to box office growth for the next three quarters. jumped 9% off the back of this call jim, it is an upgrade based on a 46 -- 43% sale price decline since april as opposed to a long term bullish on the fundamentals.
>> you have to wonder about any company when you have a raging bull market and all areas of the market are moving and the institutions are saying i don't want that one. for this one, i don't know, you better call saul because it's been breaking bad. no, i'm kidding. the issue for these media companies is going to be content because you've got on the big streamers you have shows migrating, "the office" is leaving and going somewhere else, "friends" is leaving, going somewhere else and what we've seen is through subscriber growth isn't necessarily there anymore and margins will be squeezed for a content company i think they might show up as an acquisition target, but you better keep bringing good content. >> it's up 9.5% today at least still to come here on "closing bell" we have your last chance trade and jim is laying out to way to play the market if volatility returns. plus sara eisen sits down exclusively with eric rosengren just before the fed's blackout period begins. you have to see this his take on the upcoming interest re cionomg upatdesi cin
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that iran captured a british oil tanker, though down for the week as a whole uncertainty remains over the fed's interest rate decision in less than two weeks, at the moment we are near the lows of the sessions s&p, lower, dow just higher. >> it's time for a cnbc news update with bill griffith. >> here is what's happening at this hour. president trump says there is no doubt that a u.s. war ship destroyed an iranian drone despite iranian denials. he spoke about the incident and its ramifications at the white house. >> we have the greatest ships, most deadly ships, we don't want to have to use them but they are the most deadly ships ever conceived and we are not -- we hope for their sake that they don't do anything foolish. if they do they will pay a price like nobody has ever paid a price. >> meanwhile, a strong earthquake northwest of athens has shaken greece causing frightened residents to run into streets, damaging several buildings, no serious injuries were reported. the u.s. geological survey
reported a magnitude of 5.3. firefighters have been checking for people trapped in elevators. and more than 100 bearded men gathered at a bar in key west, florida, they do that every day, but this time they gathered for the annual ernest hemingway look alike contest it is a highlight of the island's celebration of the author's life and work the winner will be crowned tomorrow night if you take steve liesman, put a beard on him and face app him you may have a contender there i don't know. >> i like it. >> what do you think >> you also give the russians steve's facial data so it's a tradeoff. >> he does speak the language so i think it's okay. >> bill, thank you very much. >> i will see you next hour. >> see you next hour and then we will say have a lovely weekend. over to mike santelli for a second dashboard. >> mr. liesman also a freshishen there are some elements of
market activity that seem like they're getting a little bit overexcited. this is something called the dumb money confidence index, sentiment trader is a service, sentiment trader.com that tracks a multitude of market sentiment indicators, this one got to 80%. now, this is not a subjective determination of who is smart and who is dumb, it's looking at categories of traders and investors that have demonstrated good or bad market timing when they get too extreme this 80% level somewhat significant although we also were here back in april. so really only says that in the short term perhaps it's raising the risk that people have already gotten too much on the bullish side of the boat it's worth watching, especially given that we were talking just last segment about how maybe people are perceived to be underinvested. i think the people that are in the market have been riding this rally so this is one indicator that perhaps things have to cool off a little bit maybe it's what's been going on the last couple days. >> thank you so much for that significant move. let's check in as well to the broader markets with 27
minutes left of trade, near the session lows down about 0.3% on the s&p, the dow is still high, but just a fraction as you can see, the nasdaq down half of 1% the russell down a quarter of 1% jim, what's your take on this intraday selloff so far? is it iran related with the oil tanker or a little bit of running out of steam >> a little bit of running out of steam i think investors are too complacent here. if you look at the american association of individual inv t investors only shows 36% bullishness and etf and mutual fund flows have been negative on stocks, positive on bonds. i think we are too complacent and i think the market has gotten to a place that it's at an all time high where people are saying what's going to drive it up from here? i do think these risks are now somewhat symmetrical and less asymmetrical >> we have some comments, jim, coming from the president. >> we have a lot of potential, a
lot of way to go, we are the hottest economy now definitely actually for the last -- quite a bit, period of time. i think we have tremendous potential for a lot of growth. europe is not doing well, a lot of place right side not doing very well. we're doing very well. so i just want to let you know [ inaudible question ] >> well, as you know, we have a very close alliance with the uk and we always have we heard that. the united states has very few tankers going in because we're using our own energy now we've made a lot of progress offer the last two and a half years. so we don't have very many tankers going in, but we have a lot of ships there that are war ships and we will talk to the uk and we have no written agreement, but we have an
agreement. they've been a very great ally of ours. so we heard about it we heard it was one, we heard it was two, and we will be working with the uk. they will have a new prime minister soon, which is a good thing, and we will be working with the uk, but we have no written agreement, but i think we have an agreement which is long standing. [ inaudible question ] >> yeah, if you go back into the four congress women, the things they've said about our country are terrible what they've said about israel are just terrible. i don't know, i can't say for sure, but certainly a lot of people say they hate our country and i think it's a disgrace what they've said i think you can't talk that way
about the united states and i think, frankly, to say that about israel you know, we just gave the embassy in jerusalem making jerusalem the capital of israel. i just gave golan heights recognized golan heights for israel i have done all of this for israel and then you have these people -- i think that omar, i find it hard to believe, but i hear omar today put in -- or yesterday put in a sanctions bill against israel and other things beyond sanctions. so when i hear that, you just can't talk about our country that way and when people are angry at them, i fully understand it. [ inaudible question ] >> i don't know if it's good or bad politically. i don't care but when people are speaking so badly, when they call our
country garbage, think of that, that's worse than deplorable when they call our country garbage i don't tear about politics, i don't care if it's good or bad about politics many people say it's good. i don't know if it's good or bad. i can tell you this, you can't talk that way about our country. not when i'm the president so i think they've said horrible things, they're anti-semitic and you look at the kind of statements they've made about israel, it's a disgrace. >> they have first amendment rights to say what they want about our country. that's what the constitution guarantees do you see not agreeing with you as the same thing as hating the country, sir >> yeah, they have first amendment rights but that doesn't mean i'm happy about them saying -- when they say bad things about us, we can certainly feel -- and, again, we have first amendment rights also -- we can certainly feel and say what we want
[ inaudible question ] >> so we're going to be speaking with the uk and this only goes to show what i'm saying about iran trouble. nothing but trouble. and remember this, the agreement -- the ridiculous agreement made by president obama expires in a very short period of time it was a short-term agreement. when you're dealing in countries you have to deal in 50 years and 100 years. you don't deal in the short term that was a ridiculous agreement and it goes to show you i was right about iran and let's see what happens, but i know that it's not an american ship, it's uk, i guess it could be one, could be two and we will be speaking to them. they have a new prime minister coming soon and that's a good thing for the uk
>> in the past you said that america is the laughing stock of the world, that you don't believe in american exceptionalism why is it okay for you to criticize america but not democratic congresswoman. >> i believe all people are great people i believe everyone is great, but i love our country and i'm representing our country and people can't go around speaking about our country and saying garbage. this is the greatest country in the world, we now have the strongest military by far. we had a depleted military when i took over. we spent $716 billion last year. $700 billion the year before we have a great powerful military, more powerful than we have ever had before we have the greatest economy on earth, not even close. you can't speak about our country the way those four congressmen -- they said garbage. they say things about israel that's so bad i'm not even going to repeat them right now they can't get away with that
act [ inaudible question ] >> these women have said horrible things about our country and the people of our country. nobody should be able to do that and if they want to do that, that's up to them, but i can't imagine they're going to do very well at the polls and i say this, if the democrats want to embrace people that hate our country, people that are far -- so far left that nobody has ever seen anything like it, if they want to embrace people that are so anti-semitic and anti-israel, if they want to do that, that's up to them, but i don't have to do that. i think what they say and what they've said is a disgrace to them, to the democrats and frankly to our country [ inaudible ]. >> a long time ago yeah, 15 years ago i had a falling out.
well, i didn't get along with him. david. [ inaudible question ] >> i don't really know, i would have to look into it that's a long time ago. >> are you in favor of banning plastic straws >> i do think we have bigger problems than plastic straws it's interesting about plastic straws so you have a little straw, but what about the plates, the wrappers and everything else that are much bigger and they're made of the same material? so the straws are interesting, everybody focuses on the straws. there's a lot of other things to focus, but it's an interesting question [ inaudible question ] >> so secretary mnuchin did have
a call with the chinese counterpart, they had a very good talk, we will see what happens. we're dealing with china, we're doing very well, they are not doing very well. they had the worst year they have had in 27 years and we're having the best year we ever had. so we're doing well. but let's see what happens and our farmers are doing very well because i've taken some of the billions of dollars of tariffs that we collect interest china, we collect billions and billions of dollars of fees and tariffs and i gave it to our farmers. [ inaudible question ] >> false information it was fake news >> you never talked about it >> i talked about it but they didn't advice me. >> what did they say >> by the way, what you're saying, fake news. fake news. >> what does rand paul want to do -- >> well, rand is a friend of
mine, but i have really 53 very good friends and they are in the senate, i also have a lot of friends, you saw that the other day when they brought a ridiculous vote up and only four republicans out of hundreds voted against. so i have a lot of great friends. i'm 94% in the republican party approval rating. rand is a friend of mine and rand asked me if he could get involved, the answer is yes, and if other senators asked me to get involved i'd probably say yes depending on who they were we will see what happens, but i have many people involved and iran is going to work out very nicely iran is showing their colors, going to work out very nicely. iran is in big trouble right now, their economy is crashing, it's coming to a crash they're trying to bring soldiers back home because they can't pay them a lot of bad things are happening to them and it's very easy to straighten out or it's very easy for us to make it a
lot worse. >> all right we've been listening to comments here from president trump speaking about a variety of i wish ice, everything from plastic straws to rand paul to the four first term progressive congress women, the economy, iran and much more let's bring in iman javers biggest headlines there particularly about what the president had to say about what we basically don't know is happening in the strait of hormuz. >> that's the take away, the president saying it could be one, could be two tankers, not noosing precise language on what assets have been seized bity iranians in the persian gulf this afternoon the president underscoring the close relationship between the united states and the uk which has apparently had at least one tanker seized today. the president saying there is no written agreement between the united states and the uk in terms of how to handle this, but also emphasizing that there is a long standing relationship between the two nations and indicating that the uk does have the u.s.'s support here in all of this. the big question is what, if any, retaliatory action is the uk going to take here and will
the united states back their play in the persian guflt. the president seeming to signal support, we don't know support for what just yet, though. >> eamon, just to summarize, of course, it comes off a week where we had hoped that these tensions were easing based on some comments by the secretary of state pompeo earlier in the week. >> right but then we saw yesterday this incident involving the iranian drone which the president said was brought down by the uss baxter, the drone apparently straying too close to the u.s. navy ship and the navy deciding to simply spla sh it into the ocean. there has been a controversy about that, what exactly happened there the u.s. says it used jamming equipment to bring the drone down, the iranians said something different happened all together more flash points toward the end of the week on this iran situation. all of this relatively small, relatively contained so far, but it continues to be a drum beat of tension in the strait of hormuz. >> eamon, thanks very much for that
of course, the president also saying as is fact that there will be a new prime minister in the uk next tuesday. he's saying that will be a good thing for the uk so implied criticism there of theresa may. >> it did. >> we will find out the next prime minister on tuesday next week. the july fed meeting is less than two weeks away with the market pricing and a rate cut for the first time since 2008 as of the last hour 24.5% of the fed futures market is pricing in a half point cut while 75.5% is pricing in a quarter point cut. for more let's bring in david rosenberg, strategist at bleskin schiff it seems whether we get 25 or 50 this is about future fears and not really current conditions, is it not? >> well, it's not really about current conditions, it's about how the fed views the risks around its forecast. that's really what's changed i thought it was most important in the course of the past couple weeks were the fomc am ins from
the last meeting when the words "uncertainty" and "risk" showed up collectively 48 times in a 12-page document that doesn't happen every meeting. so the risks around the feds previously rosy view of the economy has shifted and the fed is much like a portfolio manager, they are risk managers and so that's why i think they started to guide the market towards a rate cut at the end of the month. the question is 25 or 50, and then the next question on top of that will be what is what does the forward guidance look like. >> david, we know that you're barrel bearish if we did see a 50 basis point cut do you think that would be enough to make you a little bit more bullish or at least less bearish? >> you know -- well, that's a great question, you know, if you go back to the front cover of the economist magazine, in april
of 2001 you're going to see a picture of alan greenspan, it's a comical picture of greenspan carrying a surf board in the water and the tag line is greenspan to the rescue. and he started cutting rates in 350 basis point increments starting on january 3rd of 2001 and that front cover came out in april. who knew back then that the recession actually started the month before so i actually think at this stage it's too late. i keep saying that there are lags in terms of fed policy and the ultimate impact on the real economy that are long variable and insidious. and we're still going to feed off the previous tightening. we haven't yet seen the impact of the tightening last september or the ridiculous tightening last december in the face of that market maelstrom.
so we've seen a lot of chatter out of the fed, they haven't done anything yet. and then you have the situation last week, the grant mea culpa of them all when jay powell told the senate in the second leg of his midyear testimony that the fed is overtightened this cycle. so the fed probably right now is actually doing more in terms of looking at where this so-called neutral fed funds rate is and for all we know, you know, they used to think it was 3% just last year. now it's 2.5 for all we know it's down to 2 or 1.5 the fact that he told you that the fed is overtight pd, the fact he has told you that core inflation below 2% is no longer transitory but seems to be a more permanent feature of the landscape is reason enough to cut interest rates it will be an impact 18 to 36 months down the road but we haven't stopped yet seeing the impact of what was an equivalent of 400 basis points of tightening by the fed this cycle
when you tack on the nine rate hikes and the balance sheet reduction, it was almost 400 basis points of tightening, but we haven't seen all that percolate through yet. that's going to hit home on the economy before any future easing is going to show up. that's going to show up down the road, much further down the road. >> david, thanks for joining us. great to see you as always shoo thank you. we've got nine minutes left of trade, jim, what's your last chance trade >> i think more volatility over the last few months, i think you buy software names, cloud names, i.t. names. >> more volatility so you don't want to buy just the vix itself? >> no, you know, the vix is really goofy, it doesn't really -- it's not a great hedge. i think what you do now is sell some names that you are not crazy about because i do think we will have that volatility, a lot of capital gains in the market, you might see a round of profit taking sometime between now and october. get rid of the names you don't like, wait for the profit taking by names you do. >> we have got 8 1/2 minutes left to trade.
we are at the session lows as we approach the close down 20 points on the dow, all of the indices in the red the s&p down closer to half of 1% up next we are covering all of the angles in the closing countdown. shares of cleveland cliffs jumping after reporting earnings this morning we will talk to the company's ceo after the closing bell could there be another around the corner? or could it turn out differently? i wanted to help protect myself. my doctor recommended eliquis. eliquis is proven to treat and help prevent another dvt or pe blood clot... almost 98 percent of patients on eliquis didn't experience another. ...and eliquis has significantly less major bleeding than the standard treatment. eliquis is fda approved and has both. don't stop eliquis unless your doctor tells you to. eliquis can cause serious and in rare cases fatal bleeding. don't take eliquis if you have an artificial heart valve or abnormal bleeding. if you had a spinal injection while on eliquis call your doctor right away if you have tingling, numbness, or muscle weakness.
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just about five minutes left to go. it is now time for the closing countdown. let's trade the close to with trading strategy manager at td ameritrade sean, thank you for being here with us, we are sitting here the lows of the session going into the last trading session of the week what are your moves and what are you thinking going into the close? >> i'm going to be watching what happens with iran moving forward because i think that escalation of hostilities it hasn't waned as much as we would like to think to now the u.s. having to shoot down an iranian drone. so i think, one, that's going to give a little bit of a bid here to oil and that could benefit some of the oil services sector because you might start to see that demand shift from brant over that comes out of the middle east and over to wti which comes here from the u.s. i think that relative shift as iran and the gulf becomes more of a riskier spot to source your
soil from, that can benefit some of the oil services companies here in the u.s. >> shawn, what's your take on the mic soft earnings and, in fact, the broader market reaction to it >> i think the market was really kind of keyed in on the growth out of their cloud computing business, it was certainly strong, it's continued to come in above analyst estimates driving the stock to all time highs but i think the read through is this could help clear up some of the supply and demand issues that had been an joerv hang for the semi-conductors so far this year you are seeing analysts adjust their price targets, one from bank of america was that they're starting to see a little bit of a rebound in pricing potential for micron coming ahead of their earnings report next week. that has been a pretty good leading indicator for performance on the sector. it is a good sign that that supply and demand overhang could be clearing up and that's being driven by demand from the cloud space that seems to be growing. >> very quickly, shawn,
transports looks like we will close here up about .75% of a percent. >> i think it's interesting what we heard interest transportation when we looked at j.b. hunt we got a read through from the trucking industry. when you looked at some of the railway transportation companies that was a little bit more of a mixed bag. i do think the ultimate story here is that as long as there's a little bit of an overhang from u.s./china trade talks, i don't think you're going to really see a big enough rebound in shipping that's going to help maybe move the railway companies much higher and i think that certainly impacts csx and impacted union pacific, not only for what we saw last quarter, there was also some weather effects that also weighed in there, but the outlooks that we got had to get brought down because we are not seeing a recovery anytime soon. i don't kmekt that until we get a little more cleared out of u.s./china trade discussions. >> let's send it over to mike for his third install president of the dashboard. >> thank you
obviously the overall market flagging a bit there was a lot of strength intraday the new highs and lows for the new york stock exchange. this has tightened up a little bit. over 200 is not a bad number look at some of the names that hit all time highs today, it's a very consistent picture, quality, traditional, branded growth mcdonald's, microsoft, starbucks, visa costco the not over thinking it portfolio mega cap growth against mega cap value continues to be a big breakout, a preference for the very largest growth stocks that's a big divide when you are all talking about mega cap stocks, 13 percentage points over two years is that going to continue and maybe is the fact that microsoft couldn't stay at it its highs a sign that some of that growth bid is getting a little bit tired. those are things we will have to watch into the weekend let's talk about bonds with rick santelli. >> it was all about fed induced volatility today
many traders on the floor didn't have kind words about the comments in the last 24 hours, whether it was john williams or even for that other fed officials. two day of two year you could see the volatility, a little less volatility in the ten year but you do see towards the end of the session how the markets were a bit choppy. down 8 on the week on a ten year the dollar index regained its footing, was very firm one area that isn't firm is equities and nasdaq seems to be leading the charge down. >> yeah, microsoft really giving up all the gains after hitting an all time high following its earnings, a lot of the earnings movers are falling along where they fell. j.b. hunt extending gains from earlier in the week after beating netflix as the week's worst performer after disappointing subscriber numbers. chips are the standoff after a snl's better an expected numbers. head on over to seema. >> an intraday reversal for the major averages, we started the session in positive territory on growing kpeb takes of a fed rate
cut. around 2:00 p.m. eastern reports of iran becoming a cause for concern that iran has seized a british oil tanker all averages closing up the lows of the session, the dow jones industrial down 76 points, s&p 500 down 19 points and there you have it, there is the closing bell welcome to the "closing bell," i'm courtney reagan in today for sara eisen. >> and i'm wilfred frost alongside mike santoli let's check in on our markets close, they were at the lows of the session down a full o.6% for the s&p, the dow was flatted by boeing's outperform ps a, the nasdaq down .75%, the rufls best performing sector, real estate and utilities down at the bottom
along with healthcare and communication services down more than 1%. >> everyone trying to play that game, 25 basis points, 50 bases pointsds we have a number of days to go. >> run out of steam as we approach the close, microsoft a great example of that, have been up sharply from the open did hit an intraday high but closed fractionally higher by the end of the close, end of the session. coming up, don't miss sara eisen's exclusive interview with boston fed president eric rosengren it will be the last comments we get from anybody at the fed before a quiet period. joining us now to talk about the market day jim lacamp is still with us, along with liz young, director of market strategy at bny mellon and mike anatoli. we had a number of new records today from really big names, microsoft, mcdonald's, visa, costco jim was talking about how
the markets feel so complacent what do you make of the action today? >> what i think is happening when we get late in the circle, you can argue what inning we are in, but when you get later in the cycle the market has a hard time deciding whether to go up or down and gets sensitive to all of these macro headlines, unfortunately i don't think the market is following fundamentals as much as we would like it to as professional investors, it's following sentiment, following things that are said minute to minute by the president or anything that happens from a macro perspective. >> mike, what's your take on the intraday moves >> softened up a little bit as you've been saying all week we have been in this pause mode, i think we are within the bounds of a mild standard pull back from an all time high. i do think you will have people fixated on one thing which was the week's high was 2995 that was the high july 3rd before we got the last pull back and push for record high. it looks like maybe it bumped up against that level, i don't want to make too much of it i don't think you can handicap the next 2% directionally from here but it does show you that i
think there is an underlying -- the trend is fine, rates are low, corporate yields are fine, but enough suspense about this fed meeting out there in terms of what happens, that i think is caution out there. >> jim, to pick up on liz's point about how the market may not be trading on fundamentals, trading on so many headlines not the least of which is what's going on overseas. we're hearing about some action in the strait of hormuz, again, and then we saw drift down lower. how much should we be putting that into our investing strategies when there's still so much uncertainty going on? >> i do think we're too complacent here, on the other hand this is an asset allocation decision the president is right, the u.s. is the strongest economy in the world right now, interest rates are very, very low, we're seeing the money flow to large listed names and what that tells me, yeah, i've got to be in because i don't have anywhere else to put my money, yields are negative in europe so i'm going to buy names that i can feel comfortable with, large listed liquid and the russell hasn't done that well, it's all been in the large caps
that being said, i do think we're too complacent and i think we will be very sensitive to the frayed news. we're going to get a fed cut, whether it's a quarter or half, but we don't have a deal and the longer this goes on the bigger chance we will have more tariffs and the market is not prepared for that. >> do you think we get the rate cut and do we need it. >> i think unfortunately it looks like we will get the cut i don't think we need 50 basis points, i don't think we're going to get 50 basis points the point that i would make and reiterate over and over again is that the fed would cut rates maybe because they are worried about inflation and inflation continues to be below target a 25 basis point in rates is probably not going to drive inflation up to where they want it to be a cut we would get next week or the week after, i'm sorry, would be, again, an insurance cut and first of all, since when do we do that? that's a new phenomenon to us in the market right now all it's going to do is drive some sentiment and keep us propped up until if and when we get a trade deal.
>> we may have an issue where the if ed is worried about an inverted yield curve this he want to bring that lower rate down because the ten year yield has gone well below what everybody thought it was going to do. >> as the fed and other central banks deliberate rate cuts black rock's ceo larry fink had a bullish take on the market when he appeared earlier today. >> markets are going to trend higher i do believe if you wanted to frame where the market is going to be for the next ten years, i would be betting on the rest of the world will catch up somewhat to the u.s. when you see these big shifts so many of the market gains have been u.s. which for good reason. we deserve it. >> we deserve it we have better companies, with he deserve it also because we did more fiscal policy than other countries. >> mike, what was your take on this i guess to be expected from the ceo of one of the biggest asset managers, but he was encouraged about the fundamentals in the medium term and the long term. >> sure, to some degree. larry has certainly been cautious at times, too, he is
not always universally saying buy my funds, particularly equity funds, i think it's a defensible case. we look around and you see that the economic data really fit in the slowdown mode as opposed to falling off a cliff. it makes a lot of sense. i think people do remember, though n april last time after black rock had earnings he said investors should be prepared for a melt up. they didn't really melt up from there, we didn't do terribly but you did have a pull back. >> larry fink also says he believes we are somewhat under invested in equities right now do you agree with that sentiment and do you think that's the right moves to be making >> after the fourth quarter -- first of all, it's easy for investors to go into cash when they're scared, it's difficult to come back out of cash in time or early enough. there probably hasn't been as much invested as should have been after that. the case to be made is there is easy central bank policy around the globe, we expect it to get easier particularly in international markets and it
probably will boost asset prices i don't think it needs to be that easy in the united states we are not on the precipice of disaster here and i don't want us to use up all our tools so when we finally do need them in the case of a disaster that we don't have anything left. >> i want to focus on a couple earnings stories of the week banks first, netflix second. jim, on the banks what's your take away from them as a group and do you want to be exposed to those stocks. >> we talked about the financials before. i'm not crazy about this group because the spreads aren't there, we're very late in the cycle. if you look at how big our credit structure now is in the united states, whether it's personal, corporate or government, there is an extraordinary amount of debt in the system, high yield spreads have started to widen, but the reality is where is the growth going to come from from here i just don't see it in the banks. you don't have the spreads consumer lending metrics are good, they're doing fine, but none of those stocks broke out to new highs this he all reported pretty strong earnings but none broke out to new highs.
>> on netflix a bit more under the radar today, but still sold off 2% or 3%. >> there is a major rethink going on about the pace at which it can grow global shrubs and really the business model feeds through that forecast, how fast they get to some kind of global saturation moment. i do think that makes sense. it hasn't really bled away into other high growth kind of high expectation stocks at least not too broadly. i do think it's its own animal but does cause people to say many at times we get too overconfident that these great businesses can just be like clockwork and growing at the rate we had hoped. >> to do that time and time again, at some point you're going to see some of that pull back. oil prices jumping amid heightened tensions with iran in the strait of hormuz as we've been discussing, eamon javers now has new details, eamon, what have you learned >> reporter: we're getting reaction now from the uk side on all this a statement from the foreign secretary jeremy hunt who says i'm extremely concerned by the seizure of two naval vessels by
iranian authorities in the strait of hormuz he says i will shortly attend a cobr meeting to review what we know and what we can do to swiftly secure the release of the two vessels a british sflagd vessel and a lie beerian flagged vessel he goes on to say that they believe that there are no british nationals on board either ship, the ships' cruise contain a mixture of a variety of nationalities, ultimately saying on the british side they are extremely concerned. we just saw the president leaving the white house here a short time ago on the south lawn, reiterating the strong relationship between the united states and the uk, suggesting that the united states is going to work closely with the uk on this, not clear at this moment what response, if any, might come to this action on the iranian side from the united states and the uk, but the president emphasizing that good relationship between the two countries. >> eamon, i think it's -- the further reports for why there is no brits on board is is it a scandinavian-owned vessel albeit
with a british flag. doesn't change the debate as to whether an allied vessel has been seized and what the likely response would be, but thank you very much for that, eamon. the typo in jeremy hunt's message there was missing the a on the end of cobra, cobra meeting is the emergency response meetings. jim, expect oil prices to leg up we have had a little bit of a leg up today, 1.5% off the back of a sharp decline week to date, so far as much as the tensions do elevate, we are not seeing much response in oil prices. >> we really aren't and if you look at the global demand it's not growing as fast as anybody expected it to so it's a global economy issue more than anything else. a lot of people expected the dollar to really sell off in here but the other central banks have been to aggressive that the dollar hadn't really sold off that much so oil prices this he really don't have any traction there. there is a lot of u.s. production so i think investors need to be pretty careful with this space. >> we will leave it there.
thank you both very much liz young, jim lacamp, i hope you have a lovely weekend. up next, the ceo of cleveland cliffs breaks down his company's stronger than expected earnings which helped the stock outperform the broader market today. and will the fed cut interest makes in two weeks, sara eisen speaks with eric be."ngren later on the "closing you do not want to miss that here, it all starts with a simple...
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welcome back the s&p 500 and nasdaq posting their worst weeks since late may, seema mody is having a look at the big movers on the stock exchange seema, let's start with you. >> we started the session higher but ended lower, major averages snapping a two week winning streak but investors did reward companies with strong earnings if you look at some of the big winners for the week, phillip morris gaining 8%, raised their four-year guidance, they are up about 8% notable weakness in oil-related names, all down about 7% to 8% coinciding with the sharp drop in energy prices despite the rise in geopolitical tensions
with iran. in ex week 133 s&p 500 companies will detail their financials, plus the european central bank policy meeting on thursday where some economists are now expecting a potential rate cut >> thank you, seema. very busy week of earnings ahead. let's get to bertha at the nasdaq you have had a lot of big movers. >> a lot of big movers tech overall kind of sat things out this week, except for the chip names the chip sector was the only thing that bucked the trend up about 2% thanks to a snl's better than expected report. we will hear from intel next week but the winners on earnings and best gainers were nontech firms, jb hunt, cintas, netflix was the worst. back over to you. now, iron ore mining company
cleveland clafs, the ceo saying prices have helped to offset low steel prices in the u.s. he joins us now in an exclusive interview. lorenzo, good morning to you thanks for joining us. >> thank you very much for having me. >> you talk about in the earnings call a new normal for your industry in terms of prices just tell us a little bit more about what you mean about i that. >> i have been talking actually in this show a few months ago i mentioned that after the events in brazil that there will be a big shortage of iron ore and particularly iron ore pellets. so it's materialized exactly like we predicted here in your closing bell show. >> but the prices in the u.s. haven't responded as much as internationally, is that right why is that the case >> well, we have different variables playing. here in the united states. steel prices here in the united
states are affected by a bunch of other things unrelated to iron oregr. in our case of cleveland we benefited from the iran orr and pellet prices and did not benefit from the steel prices. all in we beat the quarter beat in terms of revenues, earnings, everything. >> looking forward you say that steel prices in the u.s. are absurdly low but you think it's temporary. what's going to change >> the buyers, there are still consumers already got to a level of depleted inventories that there is only one way now and that way is up they will have to start buying actually -- they have already started buying and that will push prices up we already are actually seeing a trend up, upward in terms of the steel prices in the united states. >> talking about supply factors and inventories. what about the demand picture, where are we in terms of, you know, global growth, your end
customers around the world >> that's a great question, mike i believe that this is the underappreciated factor. everything is going well in the manufacturing world here in the united states. consumption is great the ones that were not buying steel, they are basically playing with fire because they are depleting their inventories even though the demand, the consumption of steel that they have in-house is good. so right now they have to buy. >> steel has been one of the big catalysts that led to the start of the trade war with china. have you seen chain alter its behavior in the process of china to reach a deal with the u.s. and any promises they make in this area do you believe they will keep long term? >> china pollutes, china cheats. china is a problem it's interesting that we don't recognize that their so-called cost advantage in china is all about polluting the environment,
all about paying workers outrageously low wages and getting a lot of subsidies from thegovernment. so china is a problem that needs to be addressed. >> do you have a direct line to the white house, to the administration, in discussion with what's going on with the steel tariffs and what what you believe china is doing when you say that they're lying and they're cheating >> look, i believe that the administration is doing a great job. i believe that what peter navarro and robert lighthizer are doing in terms of bringing good behavior from china is remarkable you will be remembered years from now it's a process it's not something that will happen overnight it's a process, but i believe that these two individuals have the wherewithal to continue to fight and getting support from the president of the united states, they will continue to perform. >> lor en zero, just coming back to your share price very quickly, clearly performing well today, you bought back a lot of stock in the last quarter.
going forward how are you seeing the balance between buy backs and paying down debt >> we will continue to pay down debt, but i can't escape a bargain. the stock price is still very low so in every single opportunity we will continue to buy back stock we bought at this point more than 10% of the float back, so we will continue to do that until i feel like it's no longer necessary. >> thank you for being here today. share price up about 4% on the back of those earnings. coming up next, with he will break down the charts to see if falling interest rates are always a bullish sign for stocks. plus sara speaks exclusively with boston fed president eric rosengren. for more clues on whether an interest rate cut is in the works. that's coming up in about ten minutes' time. you don't want to miss it. or
. let's send it over to mike santoli for his final dashboard of the day mike, it's out of this world >> i wasn't too subtle with the theme today? >> i liked it. >> i appreciate it morgan will appreciate that, that you recognized it small steps, giant leaps let's look at this chart that relates what global central banks are doing to what global stocks indexes are doing the bottom line is the net number of central banks that are cutting rates, that are easing policy, when this line is going up, this blue line it means more central banks are cutting rates. obviously it's gone from more tightening to more cutting but
modestly so. there is an expectation it will go higher with the fed potentially cutting rates here it resembles this year around 2011-2012, that's the bull case. you turn from tightening to cutting rates and all of a sudden global stock markets benefit, however, that's only if you don't get a global recession in the mix because it didn't really work here when you were doing it in the early 2000s. stock markets go down. clearly it's all about whether this is a proactive move that's going to force a recession and prolong the cycle or not obviously in the crisis it was -- it took a long time for markets to respond to massive central bank easing. >> and just by looking at that chart, mike, in the last seven or eight years you can see that it's not purely been whatever the interest rates have been doing because they've been up and down a little bit. >> excellent point you've seen this up friend in the index and yet right here you've been net tightening for most of that time. it just shows you that it's kind of why the fed is easing and what else is going on beyond the
tightening moves that matters a lot. >> even a slight upfriend, too, as we look here most recently, smaller harder to see of course. >> absolutely. >> mike, thank you time for a cnbc in us update with bill griffith. >> here is what's happening this here, as he left the white house for the weekend president trump responded to iran's seizure of those two oil tankers including one british flagged ship >> they've been a very great ally of ours, so we heard about t we heard it was one, with he heard it was two we will be working with the uk, they will have a new prime minister soon, which is a good thing, and we will be working with the uk, but we have no written agreement, but i think we have an agreement which is long standing. >> finally, while campaigning in new hampshire democratic presidential candidate julian castro called on puerto rico's governor to resign after days of street protests and violent clashes between police and citizens >> i stand with puerto ricans
who are protesting in the streets. his administration, we've seen comments that he and others in the administration have made, we've seen them using force against the people of puerto rico this governor can no longer be effective and i believe that he should resign. and that is our cnbc news update this hour now i wish you a good cool weekend. courtney, no marathon training this weekend. >> no. do you know what, i know, i think you're right, bill i think i'm going to sit it out. >> just do like wilf, go to only the air-conditioned pubs. >> there you go. no even indoor running track i think i'm going to sit it out. >> air conditioning is uls great in new york everywhere but the pubs this particular thank you, bill. have a great weekend coming up next, don't miss sara eisen's exclusive interview with boston fed president eric rosengren in what will be the last fed comments made before the central bank's quiet period.
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let's take a look at how we finished the day on wall street. lost some steam into the close with all the major averages closing lower on the day this he also closed lower for the week the nasdaq was the biggest drag down .7 of a percent. >> it is time for sara eisen's exclusive interview with boston fed president eric rosengren speaking about federal independence today in new york, sara sat down for the exclusive with him for his last comments before the fed goes into a quiet period >> i noticed that you don't mention president trump in your speech why is that? >> because it's not specific to individuals and central bank independence is really about how the central banker behaves and how they respond so the speech highlights that accountability is an important
part of independence and so we're very accountable to congress and we're not independent from congress, but what we do have is goals set out by congress, but independence on how we move those tools, the tools being things like our balance sheet and interest rates, and so it's very important this any kind of central bank that you have a clear goal that's set out by elected representatives, but nonetheless have the flexibility to do the more technical aspects of central banking. >> do you think his constant and very public attacks at rallies and in tweets influences the credibility and independence of the fed ultimately >> it has no affect on how i think about monetary policy and people are entitled to opinions. if we hear interesting and important facts that we haven't thought about we take that into consideration and unless it's data doctor i have been it doesn't have much of an influence on how i think about what we should be doing. >> there is a new tweet, i mean, he says the faulty thought process we have going for us at the federal reserve, we pay much
higher interest rates than countries that are no match for is economically. no thanks to the federal reserve. had they not acted so fast, so much, with he would be doing even better than we are right now. is he right that if we hadn't seen all the tightening we would see we would be more competitive? >> it's important to get back to what the goals of federal reserve are, it's price stability and maximum employment within we set interest rates it's not to focus on the exchange rate, not to focus on the stock market, it's to focus on in the medium to long term getting the right outcomes for inflation an unemployment. that's what we are focused on in the meeting. there are lots of collateral things that can happen when we raise or lower interest rates but really the attention is not to some of the things that sometimes you highlight on cnbc, we are not focused on investors in particular, with he really are focused on getting the right outcome for that congressionally mandated price stability and maximum employment over time. >> do the tweets get mentioned
during the meetings? >> they do not. >> at all? >> i can't recall them being mentioned at all. >> and you think that it actually has no impact psychologically in the back of your mind that the president is making it very clear what he wants to see in terms of policy? >> all i can say is it's not influencing how i think about monetary policy. >> i wanted to ask you about new york fed president john williams created quite some drama yesterday, a spike up in odds of a 50 basis point cut in the july meeting after saying that action should be taken swiftly to prevent an economic downturn they walked it back. what exactly do you think was the communication objective here >> so i can't speak to other members of the fomc. i really focus on how i'm seeing the economy and my own view on the economy is the economy is doing actually quite well. so in terms -- we are not really having an economic slowdown. if you take it back to the middle of june and think about where we were in the middle of june, most of the data has come
in pretty good so we had the g20 and while it wasn't a perfect outcome it was certainly a good outcome that we didn't have further disruption in trade if you look at the employment report, the june employment report was quite strong, much stronger than may if you average over the last three months a little bit over 170,000 payroll employment, that's a strong employment result for the economy. if you look at inflation, the cpi came in stronger than people expected my own expectation is when we get the gdp report at the end of this week that core inflation is going to look pretty good and very consistent with what we're seeing with the dallas trim mean which is right at 2% and finally if you look at consumption, consumption data has been quite strong, that's 70% of the economy and that's quite consistent, i think, with getting an overall gdp report, we'll see next friday what we actually get, but i'm expecting something around 2%, which is a pretty good outcome. >> so why are we talking about an interest rate cut in a few
weeks? >> so my own view is that unless the data actually starts showing some slowdown, that's what we should really be focused on and the data to date we still have -- >> so you are not in the cut camp >> so my focus is to see if there's any evidence we are seeing a slowdown and to date i'm not seeing that. that doesn't mean there is not uncertainty and there's certainly uncertainty in trade and a lot of focus with trade and there's certainly uncertainty about some of our foreign trading partners so there's no doubt that china has been weakened by the trade concerns and their economy has been slowing down. there's concerns in europe about a slowdown as well, particularly with the potential of a more disruptive brexit. there is certainly uncertainty in the world that we have to worry about and you don't just worry about how the current data is coming in, you do have to think about how the data will be going forward, but i would say most of the news we've been getting at least over the last month has been pretty good. >> so where are you on this idea of an insurance cut to cut
rates, preserve the downturn as the uncertaintiees and the outlook pile up? >> so i think we need to separate a couple ideas in that question one is uncertainty so uncertainty about what? if you look at the vix, the vix is not particularly elevated so that's telling you that the stock market is not particularly volatile relative to its history. if you look at credit spreads, credit spreads aren't particularly elevated. if you thought we were about to go into recession normally you see those spreads widen. if you look at forecaster uncertainty and look at the survey of professional forecasters, they are not particularly wide, they haven't changed dramatically showing a certain of a recession so by those measures of uncertainty, we're not seeing substantial uncertainty. in terms of insurance, and what you're taking insurance out against, i would say that insurance is something that we normally take out when the stock market declines very substantially. >> but record highs. >> so think of 9/11, think of
ltcm, think of october 87, no he is were all instances where we made the argument that we were taking out insurance they were all periods where financial markets moved very substantially, but we hadn't gotten economic data that indicated a slowdown and so we did take out insurance around those three instances as you just pointed out the stock market is close to highs, the unemployment rate is close to a 50-year low, so i think there are financial stability concerns, it's not costless to take out insurance, you pay a premium for the insurance and one of the ways that you think about that cost is what you're doing to financial stability so financial stability can come in many different respects, but certainly a period where asset prices are elevated you should be a little concerned about actually heating up those asset prices if you think about leveraged loans and think about the corporate sector, we have taken on a lot of leverage over the course of this recovery and there are some concerns that
when we have the next downturn that could result in an amplification of that downturn so we have to think about some of the collateral effects of taking out that insurance. so we need to think about the potential costs. i agree with the overall view that if we are going into what is clearly a downturn, you want to act aggressively and the reason for that is because we don't have that much room before we hit zero interest rates. >> but you are not convinced that's where we are. >> i'm not convinced that the data that we're seeing right now shows that, and the uncertainty is something that we have to live with by traditional measures of uncertainty i don't think they're particularly elevated certainly the trade concerns are a concern, certainly the foreign concerns are a concern. >> i was going to ask you 25 basis points or 50 basis points cut it sounds like you are not even in the camp that we should be cutting right now. >> wait and see how the additional data comes in we have a gdp report, i don't of to make a decision until the week -- >> the last had a three handle in front of it
so it under so like what you're saying is the cost of moving -- cutting while the economy is doing quite well is actually higher than the cost of not doing anything if we are headed into more uncertainty in a downturn. >> well, these are all judgment calls and so in order to determine whether the economy is -- the economy has definitely slowed down from where we were last year, we were growing around 3% last year. we are talking about more like 2% growth. 2% growth is definitely less than 3, but it's still a little bit stronger than what we think the potential for the economy is so given that the economy is quite strong, given that i do think that inflation is going to be very close to 2% and given that the growth in the economy is satisfactory, i think that's an environment where you don't have to take a lot of action now, should the economy change, if the trade situation changes dramatically, if we start getting surprised by how slow china or europe are, then that's
something we definitely should react to. >> there are pockets of weakness, though, manufacturing, industrial production, capital spending what story is that telling >> so we care about gdp overall, we don't target individual components of gdp. so consumption is quite strong how dugt with consumption strong a 2% growth rate when consumption is 70% of the economy? it's implying that business fixed investments will be a little bit weaker and i'm plagues that the -- is not going to provide a lot of automatic of to the economy when you blahness that out 70% is pretty strong, the other 30% is a bit weak, once of the reasons its weak is because of some of the trade issues we've been seeing but when you balance it out we get an economy growing about what you would expect at this stage of the cycle. >> what about the bond market it's now pricing in multiple interest rate cuts for this year what is the bond market seeing that you are not seeing? >> one of the this i think so that the bond market is showing, the ten year has come down quite
substantially gone from roughly 3.25 down to the low 2s. my interpretation of that is a lot of the easing that's occurred -- so that is an easing, it's a financial accommodation, it's less expensive now to borrow long than it was before i would argue that the main reason that's occurring is because the weakness in our trading partners so the ecb has made several announcements that they are likely to continue easing. if you look at the german ten-year bond it's negative right now. so the entire yield curve in germany is negative. rates in japan are very low as well so when global rates of many of our major trading partners are coming down, that has an influence on u.s. markets and so one of the ways that would manifest itself is downward pressure on our ten-year rate. so i don't take as much information from the ten-year bond being low right now in terms of what that means potentially for an economic downturn i know there are plenty of people who do focus on slope of the yield curve or focus on the
ten-year bond, but i think right now in the current environment where we're seeing such low rates around the world, it's not surprising at all to me that our rates have come down, they are still much higher than they are in japan or germ me. >> you mentioned trade as one of the uncertainties weighing on growth how much do you think the tariffs and the uncertainty that's created over the next move between the u.s. and china specifically is hurting the economy? >> i think right now it's probably tenths. if we had tariffs on the remaining amount of trade with china and presuming that china would respond to that as well, i think then you would be talking about products that affected consumers in a much more direct way. so in subpoena respects it hasn't been as obvious to consumers because most of the products that have been targeted have not been consumer products. so if there were another round i think it would be much more visible. i think it would be concerning particularly if that occurred in addition to additional tariffs on europe.
there has been talk about auto tariffs and other tariffs being imposed. that's not my expectation so when i'm making a forecast right now i'm assuming that there's not another round of tariffs that occur. >> then in similar lines, how much do you think the strong dollar which is overvalued by many measures including imf this week is weighing on the economy? >> so we care about the overall economy right now, so my forecast for the economy is roughly 2% growth for this quarter and continued around 2% growth over the rest of the year so is the trade sector slowing us down relative to where we otherwise would be it certainly is. is it slowing us down enough that i would be concerned? not if we're growing at 2% and that's because the consumer is also having a lot of good news the stock market is at a high, the unemployment rate is at a low. >> a lot of people think the stock market is at a record high and has taken this leg higher on expectation that the federal reserve is going to be cutting interest rates so do you factor that into your thinking when it sounds like
what you want is not a cut and that would be a disappointment to the markets. >> so one of the financial stability concerns is you want sustainable growth over time and if you push financial markets too much, if you look at the last two recessions, the recession with the dot-com bubble was that stock prices became too inflated and had to come down, and certainly the financial crisis it wasn't just the stock market but it was certainly a contributing if a k for in why the economy got so weak with he should care about financial stability, the last two recessions have a very large financial stability component and so we don't want interest rates to be so low that we push asset prices only temporarily up, only to be disappointed as time goes on and have more of a reaction on the negative side when the economy does slow. >> isn't that what's happening, though >> right now it's all on the upside, but i think as long as the economy is doing well, if that continues, we don't need accommodation. >> do you feel pressure by the
fact that other central banks have sort of kicked into easing year this year including some of the biggies like you mentioned that ecb >> well, the other country are in a very different place. so their unemployment rate is not at 50-year lows and their stock market is not at all-time highs. so each country has to decide for its own situation what appropriate monetary policy is the fact that other countries are in a much weaker situation it makes sense if i was in japan or if i was at the ecb that i would serious be thinking about easing the u.s. economy is not at that point. the economy is actually quite -- quite reasonable at this stage so if that were to change i would be happy to ease at that point, but i don't want to ease if the economy is doing perfectly well without that easing. >> so who is going to have a tougher job, christine lagarde or jay powell? >> i think everybody has a tough job in central banking. >> another question, there has been a nomination judy shelton for the federal reserve board of governors, obviously has to get
senate confirmation. she's been an advocate of the gold standard and this idea of sound money. do you think that's a healthy conversation to have right now inside the fed >> so we welcome diversity of views, my own personal view is that we are no the likely to go on the gold standard and that in the kind of economy we have right now that's an unlikely outcome, but i welcome a diverse opinion on the board. >> speaking of diverse opinions and options, libra, facebook's cryptocurrency has gotten a lot of attention threat or not a threat for central banks? >> we need to get more details about exactly what they're thinking about doing i do think there are a lot of things to be worked out. money laundering, bank secrecy act, those type of issues are issues that i think we have to be very thoughtful about so i think we will have to see how the conversation develops over time. >> that was eric rosengren outstanding interview, sara, if you are watching congrats on that let's bring in steve whiting at
citi private bank and mike santoli is with us a couple of the headlines from that quote, we don't need accommodation, quote, i think with he should wait. clearly making it apparent that an insurance cut is only in very extreme circumstances, one that's not warranted at the moment in his view. >> exactly citing stock market at all time highs in the u.s. as well as low unemployment very clearly articulated case for why the data themselves do not necessarily dictate a move here and i think more than anything for the market it doesn't necessarily tell us that much about ultimately how the committee is going to vote on july 31st. what it does suggest is there are three very plausible defensible positions going into this meeting which is no cut, quarter point, half point, that creates just a general fog of uncertainty. given the fact that the bond market is priced 100% chance of at least a quarter point cut at this point >> steve, what's your take and does this alter whether you want to be bullish on equities when you hear someone so clearly articulate a point that no cut is needed and we all know the equity market has priced one in.
>> well, look, our position on equities would have to take into account a great deal of policy uncertainty right now. and if we were entirely dependent on federal reserve rate cuts, with he probably would have a problem with our outlook for risk assets. so we're going into this with a little bit more caution perhaps than others, a little bit more caution in our asset allocation. perhaps versus what is warranted. but i do think that this particular speech is on the hawkish side, it's to be expected given that rosengren's position i think has been fairly clear about the stability of the american economy i think it's great, actually, that he brings up these issues of financial stability and the debate and quite openly the idea that they could have a large insurance cut for some of the voters that for them could mean that they would possibly not have to cut later, and you have rosengren essentially argue here that ultimately you can have
problems later if they ease when it is not parented i just point out that if you look at the last 20 years we've had plenty of fed easings, responses to negative financial shocks, but yet we have still had fundamental bubbles and busts and desell operation in inflation. if they are ultimately out to stabilize inflation and to get a little bit of a buffer in terms of higher inflation, they can't afford a deeper recession later on in order to live for today. >> i found it very interesting that he said at one point i'm not focused on investors in particular and then later said, look, with he take out insurance when we need to when we see the market is down shubs shael and right now the market is right. >> absolutely right by the highs. the other point of course he made clear there with the tweets and the president don't influence him personally couldn't obviously specifically comment for other members, but certainly implied they haven't been influenced by the president. steven, thanks for joining us. >> my pleasure up next, we will look ahead
...when a plan stops being a plan and gets set into motion. today's merrill can help you get there with the people, tools, and personalized advice to help turn your ambitions into action. what would you like the power to do? facebook is set to report earnings on wednesday. julia boorstin has a preview hi, julia. >> courtney, facebook is under fire for a range of regulatory issues and investors are watching to see how that will impact three parts of basic business, growth of its user base, advertising revenue and
cost to protect the platform as well as pay fines like the ftcs with the stock up over 50%, expectations are high that the company will shrug off its issues will, over to you. >> julia, thank you. still to come on "closing bell", find out what to expect when two other members of faang report their earnings, out next week. back in a couple o you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks.
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up a bit, amazon rounds out next week's faang stock earnings josh lipton will preview alphabet let's start with you, josh. >> when alphabet reports, i'm told to pay attention to the top line here. the company has to produce hypothetical teens growth, at least 17% you says for the stock to move higher
stock up about 9% so far this year that means it is badly lagging the tech sector and the market still, 86% of analysts think the stock is a buy heading into this print. guys, back to you. >> josh, thank you let's get a preview of amazon courtney has that for us. >> so there's a lot to watch here, of course, but investors want to know about the progress on that prime one-day shipping that was announced last quarter. we talked about it a lot then, of course, how it is impacting profit margins they say they're spending $800 million in one quarter speaking of the margins, it is the high margin aws cloud service performance and advertising growth we will watch carefully as always. both expected to increase. some wonder if microsoft's strong cloud numbers came at all at the expense of amazon maybe. we will have to see. earnings and total revenue expect to grow 10% and 18% respectively, so watch for those earnings growth trends to continue >> lots of big tech earnings, most of which come out, of course, on this show next week make sure to catch up, tune in for all of those mike, back to the border
markets. we closed at the session and futures in thin trading. >> yes. >> laying low. >> a little fatigue, sagging into the weekend ere i don't think we will be liberated from the fed debate because the fed owe fills are in a quiet period and we have a little bit of disagreement on exactly what happens so we are where we were going into this week i think. >> it has been great having you with us the last couple of days. we're out of town. that does it for "closing bell." >> "fast money" starts right now. live from the nasdaq market site, i'm million. traders on the desk, steve grasso, karen finerman, guy adami, dan nathan. facebook, amazon, google all reporting results flex week. how to pro situation yourself ahead of the big reports a major developing story in the oil market, crude shooting higher on news iran seized two tankers in the strait of hormuz. we are watching the reaction very, very carefully karen, you are not