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tv   Closing Bell  CNBC  August 28, 2019 3:00pm-5:00pm EDT

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just a point off the high. >> it's the shaq rally everyone feels better after listening to him. >> what a fun show "closing bell" starts right now. good afternoon, welcome to "closing bell. i'm wilfred post at the goldman sachs post today financials rallying despite the yield curve inversion dragging the market we're up 240 months, near session highs. >> i'm sarah eisen, welcome everyone the u.s. trade representative using confirming that additional tariffs will
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josh brown it's been a safe spot for august it's entirely to be expected where bond yields. i was asking people today, you can have a 30-year treasury, or and whatever up side you might get. yielding 4.17%, plus a buyback, which one do you want? i was amaze d you don't think tl
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is volatile? or look at the balance sheet, too much dead. they're supposed to have a lot of debt. the other pushback is the bond picture details something recessionary >> but there are some categories better than others companies that have a business that seems to be less reliant on discretionary consumer spending. it's that they will provide padding or cushioning. i don't know how much cushioning
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there is left at these prices. bo pisani is -- diving back into new controversial brexit headlines, and mike santoli nice rally. energy stocking keep going down okay, most of the stocks are down, and many are near lows routinely. they had very missioned everyone results. look at the months, and
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dillard's and khol's down, most of them down, their rally today, even with the yields down today, and finally same with the transports in the transports overall. the british pound following today. thank god wilfred is back. >> no, they didn't that was the only reason i actually really like the new look i september them let's get to the story, though, the chance of a no-deal brexit rose today, as prime minister johnson reduced the numbers of
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parliamentary business days remain between now october 31st. parliament will only sit about a week before being suspended before the 14th of october this so-called -- is not abnormal in itself, though the length of it under the current circumstances is extreme and has been labeled as, quote, constitutional outrage by the speaker john burko or change the prime minister, the lack of parliamentary time makes the former much harder, increasing the chance of a no-confidence motion in the prime minister early next week when parliament returns and is in session there you can see the pound 1.2216 deutsche bank put it a the about 50%, the pound is not at its
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lows of the past couple weeks. the other good news that came last week was slightly higher chance of a deal, so kind of offsetting each other. the one thing you would say is that it reduces the time mps has to act, but it crystallizes opposition therefore, if a table of no-cold front vote is tabled, he has a higher chance of losing it the focus will be on what will be a crazy week in parliament probably next week. >> i think it's funny he has to ask the queen officially -- >> he does the queen hasn't been drawn into it yet if she rejected it, she would have taken a stand she has no choice but is accept the wishes of the prime minister. >> whether do they use the sorting hat? >> in about ten days' time if he loses a vote of confidence >> so whimsical, all this procedure stuff. it is, and it has all been taken
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to the absolute extreme at the moment as people are correctly saying, you know, that's why the pound has been at or near they long-term lows of late. >> when does "the crown" come back >> later this year >> a tweet today was season 17 of "the crown" will be interesting. let's send it over mike santoli for the dashwe. >> we're going to call that tails and dogs who decide who is wagging who, also hit fight or flight, a bit of an emotional reaction, and prune ant plant, a look at the rebalancing activity we might be seeing even today, and then vaults versus volts that's a sector versus sector dinam nick first look at the interplay between the s&p 500, the ten-year treasury yield.
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you have seen and i pointed this out maybe last week when we got a bit of separation, when the s&p 500 attempted to escape the pull of lower bond yields. we're seeing again today, though i do think bob's point is well taken, we're seeing a lot of this through the mean reversion activity, a bit of a bid, tech doing nothing today, even utilities down so you don't -- obviously we've been kind of captive to this relationship to alternates while. job was talking about the 30-year treasury yield dipping below a lot of equity yields it's below the overall yield for the s&p 500, very, very long-term chart. and then we have the s&p 500 dividend yield that's a mislabel. it is in orange right here, and basically it's equivalent. let's just call it that. i don't think many investors are choosing between these two assets for a long-term allocation
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they're very desperately afraid or they have to for some reason or another, and there's no yield left in the world. at marker of just how relatively inexpensive equities have become the long-term trend very steady, around 2%. that's something you can almost counseled on, guys >> thank you very much for that. stocks trading as we said, near the session high for more on today's market josh brown is still with us as well just want to pick up quickly not only have we focused on yield so much, but banking in particular as the yield has continued to invert. >> i think there's some technical things in the market that cause what looks to be very counter-intuitive behavior on an hourly or daily basis that's not really overly important. it's not necessarily a linear one-to-one relationship on a daily basis, for example, what a
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credit bred does or a yield spread does, and the sector that could benefit or be hurt by it it's august 28th, right? a lot of people are just not involved, not engaged, and while they're away, their algorithm might be fishing out some weak shorts it could be anything i'm making that up. >> a lot of the underperformers do well today. it's energy. alisha -- >> one quick positive, though, to that point. we have done nothing since august 5th we're the april on the 17, so almost an entire month of thrashing to and fro maybe that's a positive. the faangs all-looking terrible. there isn't any sector that's done well this month away from the yield. maybe that's a good thing. >> i going to ask you, alisha, if you look at what actually
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worked in august, where there was leadership in a short of leaderless market, and utilities and reits are trading near record highs do you follow josh into those reit stocks? >> i want to reiterate something that josh said the stock market has also done nothing in a year. we've had a lot of indigestion in that 12 months, both to the up side and to the down side it's just an expression, but the market continues to stay within 5% to 6% of the all-time high because yields are so low. so you have to expect yields stay low, lower for longer to that extent you need exposure to the defensives for that reason having said that, they're not cheap, but they will work on a tactical basis you have to know why you're buying them. if you understand you now there's pressure on yields,
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you're fine, but you need some optionality. >> if we do see easing in the next few weeks, is that good for u.s. equities or conversely bad for them base odd what it might do to the dollar >> the dollar has a floor on it, but the interesting thing here is, for instance, why is the euro notats parity with the dollar in i think we have seen somewhat of a ceiling here as well any central bank cutting will be positive for equities, simply because itadds liquidity, so i think that's just very positive for markets. having said that, the real issue with the dollar is china, and it's let what's happen with europe it's clear where europe is going. it's been obvious the last year. >> alisha, thank for you joining us. still ahead, stocks stages a rebound today, but investment
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sentiment at a low plus one wall street firm out with a new note saying it's time for a change at tesla the analyst behind that call tells us the one thing the company needs to be doing right now. a quick check on our data tracker today. mortgage applications calling 6.2% led by an 8% drop in refi applications despite they are year over year on the lower rates. we have almost 45 anyones left to tradethe w , doup more than 2 hundred points
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welcome back to "closing bell." 45 minutes left of trade time now for "word on the streets. on e-sports calling it a high impact and investable sector with the 18 to 25 years old demographic. josh, that's you >> i suppose it is, yeah i don't know that anyone is making any money from this other than a handful of influencers i notice it's exciting >> but it's growing at 23%.
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>> it's just -- video game making are making a lot of money, there's an etf for that it doesn't even own -- it own. e-sports-letted company. it's not a big business. it might be one day. naming jetblue as a catal t catalyst, noting that it has attribute to negate trading impact, it's up 1.77% on the nuts jmp saying they need a stronger team at cities la let's bring in the analyst behind that note joe, you've been a bull on the stock for some time. says a new change for you to cried size the current level
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is musk one of those >> yeah. >> well, for starters, part of the challenge is the conversation has been too much along eelon. i'm trying to shift the conversation and say, lee at other companies, what britain and page did, what zuckerberg has done with sandberg evaluated against those companies, it's not unreasonable for elon to be asked to share power. you were talking about the sorting hate maybe we can't put the hat on elon maybe that would help. >> the only reason this company has the market cap it has and the ability to raise money is because of the public's infatuation with elon. he is a positive on that side of
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the ledgers. you've got to take what comes with the territory, don't you? >> well, it depends. it's a different needle to thread it's not true, if you look at other successful companies, a founder visionnary gets to be the captain of his own ship. i'm saying the board does neat to get better and do what other boards have done >> is this a serious board in real life, or his cousins and friends? >> i won't comment on that, but i will say this is less about me criticizing elon he's a visionary he is what he is i will say it's time for this board to get their heads up,
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look around add other successful companies, and learn from that saying elon is special, so we can't do anything. are you still at 337 for the price target and telling people to buy and it's governance? >> yeah, this is where it gets sticky, right? i'm obviously being a little critical here. i've test driven the audi, the i-pace, if there's a competitor to the model 3, i haven't found it i am buying the company because of that. and i'll tell you what, the day they bring in a strong operating partner for elon is the day i raise my price objective i will say that. >> thank you for joining us on the call, joe osha
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>> a number that matters, 180, $180 a share has been supportd for this stock for almost six years. it has never been below, save for -- >> would you buy the 180 >> no, if it breaks 180, i don't know how you can stay. six times the buyer have come in to reg could you that stock, but to me if you look at a long-term chart, that seems to be the line in the sand, where below that level tells a lot of big money have given much finally on the story. they may never do so it's too soon to know. this has always been in my "too hard" pile under 40 minutes to go
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it's a stock that for the month of august was down 12.5% today, but it's up today. pfizer and utx also among the gainers. peloton pedaling towards an ipo, a unicorn with huge losses that's set to hit the market. and we'll bring you results as soon as they hit. as we go to break, he's a check on how commodities are going today. gold still solving at six-year highs, silver higher once again. we're back in a couple minutes when i lost my sight, my biggest fear was losing my independence. mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind.
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welcome back let's see what wall street is buzzing about. peloton is filing to go public >> i think it's a great product, by the way there has neversh ever been a long-term successful fitness stock on wall street i'm really sorry to say that out loud i know nobody wants -- i was here with the fitbit ipo the one that's proving me wrong, planet fitness looks incredible.
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it'sent been a couple years. i'm not saying you can't trade names, but people are fat and lazy by nature they just are. you are the exception, i am the rule i'm going to tell you something, i do a fitness -- >> i don't know about the exception. >> you look phenomenal, even with the beard don't listen to her. >> it's fitness fad for every generation, whether we're talking about the food or the equipment or the hot gym, it never lasts, it has its moment i can reel off a list of bally's lalanne, even equinox may go through a recession for it will have shake weight, like these are not long-term things >> they're not even trying to
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make money. >> they sell happiness, i mean, come on. >> the people that use it, they really do love it. >> they're fanatical about it. >> that's great. >> the retention rate is incredible, and when you shelled out two grand. >> of course -- >> you're not going to cancel it, which is an interesting bonus point. the big reason they're increasing the losses is what they're paying to the music publishers that's a massive inanswered question it could be a bottomless pit. >> well, pandora is paying the same licensing, like -- and that is not a great business. i think the bottom line is the retention rate is high, because there's not another one. you can go do this, go to a class or actually ride a bike. >> people are really into the mirror now. >> i'm going to tell you, i hope i'm wrong. i root for companies like this
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to come along, go public, pay their employees a ton of money and do well. just for me as an investor, i can't get excited about this. another buzzy one, popeye's selling out of its new chicken sandwich two weeks avalanche the company provekted inventory would las through september, popeye's owned by restaurant brands international kfc tested out the plant-base sand wish, that sold on the in less than five hours. >> i'm going to tell you, the fried chicken sandwich trade, it's not popeye's, you don't have chick-fil-a public yet. it's twitter this whole thing took place on twitter, not on inns that, not on facebook. they put on -- they sarcastically quote tweeted a
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chick-fil-a tweet. that sparked the entire explosion of people running out to see what this popeye's hype was all about. it literally was not a promoted or paid tweet. it was a quoted tweet. they'll be studying this in business schools this stock wil not budge. i think it's primed for a launch >> and restaurants international has also had a very good year. a lot of fast-food names have great-looking charts. >> time for a news update with the one and only sue herera. >> hello, everyone here's what's happening at the hour dorian is now a category 1 hurricane with winds increasing to nearly 75 miles per hour with stronger gusts the storm is currently near the u.s. virgin islands. it is expected to continue to
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strengthen over the next few days as it heads toward puerto rico the ongoing measles outbreak is putting the u.s. at risk of losing the a zero measles status in october there have been more than 900 cases in new york alone, more than 1200 cases nation wide. still pictures and satellite images suggesting north korea may be constructing a ballistic missile submarine. the images show kim jong-un inspecting the vessel. it would be a significant step forward for north korea'sa nuclear ambitions. and apple is a -- in an effort to give users more control. it suspended the program, but will relaunch in fall and let users opt in so be careful what you say that's the news update this hour back downtown to you, sara.
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see you next hour. mike santoli has the second dashboard. >> the fight or flight hormones running through the market it seems like people are fleeing. it's a pretty commonly watched indicator so you're seeing -- obviously its on lace in this range, but this decline here is very telling i think it got below 20 yesterday. you had basically the lows in the single digits for a while last december, but remember in december you were on your way to an s&p 500 it was an accelerated steep correction, so you did see a welling up of concern, of anxiety out there. all else being equal, i think
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this is basically a tailwinter for stocks to eventually find their footing. this can last for a little while, but i think the sentiment is something that's start to round into favor for the bulls, perhaps along with relative valuation. you definitely look like the stock versus bond is tilting towards equities right now thanks, mike. after the break, ubs slashes its view on equities ten of its allocations about where it thinking you should be putting your money instead
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welcome back oil and energy stocks leading the market higher. tariff news continues to dominate the headlines, additional tariffs will go into
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effect in september and december yields slip against. >> they're making fun of you. >> i know. >> we have a clever group. >> that was in a break, so we'll have to do it again. >> you're going to have to deal with it a few hours. our next guest's firm just slash their equity exposure as trade tensions ramp up joining us to discuss is jason draho. how big of a shift is this for you guys at ubs as the world's largest wealth manager >> i would say this is a modest shift. we have gone from modest overweight in equities from a week ago to now just a modest underweight. we've gone a little more cautious, because these trade tensions continue to escalate, and then you look at the growth
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data, it's just enough uncertainties it's prudent to dial back risk-taking, but on a long-term basis, it hand changed that much. >> there's the debate about the relative yields, but they two. >> so just take the 30-years treasury bond. if you bot the 30-year when it was yields 2 po the 5%, the total is a pretty attractive return.
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the different yield, from our port are portfolio perspective at least it's a more cautious play the next three to six months. >> as a wealth manager, we get this question from so if there isent in stocks, you have somewhere to drawing cleat, or do a rebalance into bonds of almost every during aand aye that it will not be there, is centered around the bond mark.
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like having or credit rating slashed. i think u.s. treasury has been -- so. >> we know there's less liquidity in the market, so that had be bad for growth, those will widen it would take miscataclysmic for the yields to rise nothing that we see at least in the near-term horizon would suggest that even with yields low, it doesn't take much, given the long duration to get pretty good returns. and if things do improve, and we don't think it's the end of the cycle. we don't think a recession will
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happen in the next 12 to 18 months, but if it gets better, we look to reallocate back into equities >> within equities, it looks like -- it looks like you're somewhat defensive, but you also like consumer discretionary in communication services, which would suggest the non-recession call. >> that's right. say risk on in the secular -- and we've dialed that back to and the overweights that we have, consumer staple, quulter discretionary, those all play to the u.s. consumer. if you look at the u.s. economy, the strength is the u.s. consumer, the job market, so we want to be positioned where there's strength that's where this weakness is, we would rather take a -- versus
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the potentially for the weakness in the global cycle. >> jason is there any country or region in terms of equities, where you're significantly overweight >> there's a couple countries we like within emerging markets brazil is one of them. it's a idiosyncratic story based on issues of the reform that's of the legislation that's been passed, but over the long term should lift the growth also we still like china within emerging marks we think they'll do stimulus incrementally to offset the negative headwinds, but the stimulus has more beneficial for the domestic economy so those are two that we like. >> jason draho, thanks for joining us. >> my pleasure thank you. 19 minutes before the bell here is where we stand in the markets. hanging on to a more than
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200-point rally on the dow s&p is up more than half a percent, nasdaq bounces to the opportunity of 1%, the russell 200 index is an underperformer during the month with more than a 1% day treasury yields are lower, which is interesting that stocks can bounce, though they made new lows earlier today once they came off those lows, stocks rallied. >> people are like, honey, how did the market do today? i don't know, the yield curve situation got worse, and stocks rallied. i really don't know what happened. >> which is why the russell is one of the outperformers. >> mike santoli told me not to read too much into the action two days before the end of the month. when we come back we'll quantify the geopolitical risk that could impact your portfolio. and the key things to watch in the earnings reports, when we co bk.meac
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. some individual market movers, shares of tiffany are
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higher after an earnings beat this morning it also maintained the full-year sales outlook even though most of the comps in the americas, europe and japan were lower, the bottom line being definitely rewarded they're dealing with lower tourist activity in the u.s., and -- the software company also narrowed sales outlook that stock well off the lows, it was down double digits this morning. off to retail stocks after the choice, but also earnings from box, and josh has a preview? >> so, wilf, here's what we expect, a lot of two cents on revenue of 169.5 billion that would imply a jump of about 14%. stock is down nearly 20% this year it's down nearly 50% in the last
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12 months. the company's disappointed investors but lowering the guidance for fy 2020 that metric will again be in focus. the company guided between 688 and 692 million. sara, back to you. >> josh lippen, thank you. we'll also get a slew of retailers after the bell contessa brewer has what to watch. >> let's start with williams sonoma it's trying to insulate the impact of the trade war, moving a substantial amount of production you've china, hiking prices in some cases it may have raced the profit outlook for year in may, and annual it'ses except comp sales to be up let's turn to pbh, with brands like tommy hilfiger and
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calvin klein it also has been tariff challenges last year it imported about $400 million from china. this year it cut its annual profit forecast by ten cents a share. analysts look for an earnings decline of almost 14%. we have 12 minutes notice until the close. we're up about 235 points or so. up next your last-chance trade we're back in a couple minutes ty to extremely happy. there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.
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we have just eight minutes left of trade we're higher by 230 points utilities topping the list is energy followed by consumers discretionary, industrials and staples. green across most of the screen. russell, the small-cap index, leads the charge time for the last-chance trade josh >> so what if you could haved greatest investor of all time do the buy on the dip trade for you, assuming we get some kind of a nasty market event. that's exactly the setup in berkshire hathaway i'm not currently long i might be before the end of this week. i like the risk/reward it sounds silly. but hear me out. 195 has been support for the stock going back years the stock has been underperforming the market, but historically that's the best time to get involve. when he's crushing the market for a period of time, that's
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when hi strategy is most in favor. one of the main reasons i like it they a portfolio of u.s. stocks, primarily, but there's another $125 billion in cash that berkshire has allowed to build up it's not been allocated. it's not market timing per se, but holding it in reserve for a big opportunity. if you're a trader,ic like this trade for that reason as well. you have a defined down side you'll know if you're wrong for bothsh so for both people, this stock could work for the up side. >> lots of exposure to the banks. >> a lot of the negatives on berkshire, we all really understand, insurance and banks is the largest part of the portfolio. tech is second, obviously most of that being apple, but look, here's a company that's underperformed for a long time,
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but has an ocean of cash to do whatever they want with it i'm not saying it's a ledge, but a abu aye in a market environment that turns nasty six minutes left to go near the highs of the day. time for the closing countdown herb morgan senior managing director cio at official market advisers herb, what is driving the rally today? >> well, you have a rally, because i think people are realizing the recession just isn't imminent the data continues to come in good, and the excuses to call a recession just keep diminutishing. >> what about the end of the month coming up? are you watching that closely? >> i think the thing we're
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watching most closely is the three central bank meetings in september, all three are indicating they're going to continue to be easier and easier don't fight the fed. a year ago the recession was coming because debt to gdp was too high, that's not happening the yield curve is more inverted today and the market is up almost 300 points. at some point you have to accept we're in a bull market and it will continue. >> look, a lot of people are on vacation everybody was on vacation this month. there wasn't a whole lot of volume again, it just comes down to, look, this inverted yield curve, we talked about this two weeks ago. the inverted yield curve is not
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being caused by the fed raising short-term rates it's just the opposite they're about to get more accommodative. we can't take thinks idiosyncratic signals and then makes these conclusions. even brexit today, it looks like we're getting a hard brexit, the pound is off a little, but the uk markets will hold it up. >> if we get central bank easing, there a risk that the dollar strengthens and that could derail u.s. equities >> i think the drawer is overguyses, but it's about the relative level of easing, and i'm guessing we'll guess more robust easing, and out of the bank of japan. if we get a quarter point out of the fed, it's all about the relative rates remember, the rising dollar, sure, it has a bit of a negative impact on exports, but it's a
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sign of a -- and relative interest rates, with the dollar to keep going up, that's another indicator we're not likely to experience a recession in the beginning of 2020, like many are suggesting. >> morgan, thank you >> a pleasure. the dollar is flat, if you look at dxy for the month. yes, it's been a strong dollar story over 12 months, but nothing like some of the hype we're hearing certainly out of the president and others about how strong it is. >> yeah, so much more to come with those actions we'll have to indicate and see, but we only have three minutes left to the close. mike >> wilf, you prune what's overgrown and plant seeds for the future if you look at this estimate from wells fargo of likely or estimated rebalancing activity out of the bonds, by the way, first of all, look at december, that was a massive effect, because stocks have done so
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poorly here as the estimate for the monday end right now, about 11 billion. i look at this not as a mechanical, hey, wait for the money to move. it's more just a representation how it's stretched, and anything -- will probably need mean reserious as a tillwind it's a real indicator of just how stressed the relationship has gotten rick has a look at the bonds >> excellent, mike thank you. let's start off with the dallas index. the last day of july it made its high for 27 months we continue to stick up there. it keeps coming back, ten-year over a two-day period, and considering yields are a bit lower, we'll do it again look at this chart the month of august, it drops 60 basis points yes, the rebalancing will be
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huge, they're going to definitely be selling treasuries, and frankly, the nasdaq seems to be benefiting from that today. >> hey there, rick, apple having the biggest impact following the news it is consider moving parts of the supply chain outside of china, possibly following google's lead. american alliance shares have been the best day since june, after a summer of delays and disruptions following the grounding of the 737 max shares down almost 7% of autodesk about the continued concerns of exposure to china. adobe having the biggest impact. now over to bob pisani >> a rally in a vacuum look at energy, banks, retail, metal, all had a big day, real estate, even gold, a rally in a vacuum
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finally much was made of the fact that the yield is now higher than the yield, what do you make about this? this sounds ominous, what it implies is stocks may be a better deal than bonds, as one player said would you rather have a 30-year or s&p with the yield of 1.9%. maybe that played a part in today's rally. there's the closing bell the dow jones industrial average up exactly 1%, 258 points. welcome everyone the highs of the session was -- 260, that equates for the 1%, only one sector was lower there.
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sara, we mentioned how the rally had been underperformers month to day that's really a clear theme today. >> how about energy, that was the best performer today >> yes, oil has bullish inventory data, industrialing also had a good 1% day again them came off their lows >> up 1.5% for a week as a whole. only down 3% -- but it's on the wednesday on thursday last week, we were up for the week. friday was the tweet storm on the trade. let's see what happens over the next 48 hours.
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first, though,mike, can you read anything into the action? >> reinforces this trading range we've been in. i know that sounds like a bid of a bores hey, the market remains sideways remember at the end of may i had to pull back that month as well. the s&p finished almost exactly in the middle of where we traded i do think it's because a lot of the scary macro signals have gotten into people's heads nobody is staying in control
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having union these volatile periods to add to this exposure? [ inaudible question ] tesla, the stock is above 10% as it is, because it did appreciate from 170s up into the 230 range. we've been holding strong there. buying stratus, square, xylinx, some of the morse cyclical names here. >> as mike said, there's just so much anxiety we're just picking or spots and
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names. some of the them like swear may not have had perfect quarters, but we think they're gaining human square >> i see ear are you're in teledot. is this like the perfect wheelhouse where you think companies may be more cost-conscious they're going to sake -- if they can shift millions of people if they get used to tele-medicine and internet medicine. talk about what you see for that name >> i think millennial love it, but also elderly people love it. yes, all of our portfolios are about better, cheaper, faster, new products and services. they usually do very well during a downturn.
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>> did you buy it in the mid 50s in. >> yes >> 134is, they bounced today, they're 11.5% off the highs. who knows when the next one is coming >> what's really interesting, today ever corp isi, i believe, published a statistic that china is showing signs of live i remember in 2016 that all of the tax cuts and currency depreciation is actually stimulating that economies in ways that people are not appreciating now >> it has historically projected about the market, nears time to
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add respect. to position for a short -- he says that while the recession, investors should expect the up side first what's the best way to play that is there trust in that >> by the way, i would say the inverted yield curve has preceded all reser it's been part of the preconditions, because it says basically guess what the market says the fed is done tightening will it do it on time is the market argues that out for a long time. and stocks benefit from it, because people think, guess what?
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a i'm well to say it's part of the mosaic to be on the alert. may we have heightened rinks, but in itself, i don't see it -- >> because it doesn't tell you when. >> we have studied this intensively. >> like we're seeing now and the yield curve was inverted, with the steepest inversions occur this was the 50 years ended 1929 so through the roaring '20s.
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>> i think when the trade tensions clear or china powers through, that the unit growth will surprise on the high side and inflation will surprise on the low side all of these are deflationary. >> it's disinflationary. >> no, it's costs falling, falling 40% per year. >> do you think it's craze that if i said, close your eyes bnd is up, gold is up luge and stocks are up 16%, is everyone going to be talking recession all day? you would say no, why would they >> everybody is making money and all we talk about is.
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>> i think there's a bit of a travel this year. >> the fact that you had a major low right before the beginning of the year, i think it distorts the idea >> but the coronation that's broken down, is that going to kick down at some point. >> it's just if you pick point to point, it seems ago if -- >> negatively correlated with the s&p. they worked perfectly. >> i think the pushback on the argument might be the speed at which we have seen yields decline, especially lately i mean, yes, we're in a long-term secular kind of bull market here for bonds. >> this is hugely bullish, however, for equities.
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there's going to be a major rebalancing taking place at the end of this quarter. they have no choice. that speaks to the speed of the rebalancing should be pretty significant at well, in fact part of the turn today in the market was because of a rumor of the big rebalancing taking place before month's end >> do you have a quick comment on stephanie mislane's takedown of tesla it's pretty hard to argue with a lot of the facts you might now like the framing, but what would you say to the bulls and bears that read that. >> i'm going to be honest. i didn't read it i read michael murphy's piece today. i used to work with him at capital group on the west coast. he gave a brilliant, i thought, well-balanced point of view on tesla, arguing about the technology stock it is, not an
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auto stock yes, they are going to have to execute, ramp and they'll going to need cash, we have assumed $10 billion of dilution. >> and you this -- >> i think it's already had an ending it's done. it's moved into the solar room, you know >> did you not see the bear case article, or you just refused to read it? >> i w anything. i should have seen it, but i didn't i will certainly look for it >> it didn't hit the stock guys, thanks very much we've got an earnings alert on box >> break even for the quarter, the street was looking for a lot there, revenue of 16%, and
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analysts looking for -- in terms of guidance, q3, a lot of one cent >> when you talk to financial analysts who cover this company, one question is about the growth rate he said box does need to grow faster he's putting the strategy to do that, though, talking about advancing the portfolio, trying to sophomore customer issues, and simplifies the go-to market strategies
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coming up later, we will be discussing the other geopolitical risks that could threaten your portfolio. we're back in 90 seconds
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despite continued recession signals, bob pisani is having a look here.
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beaten up stocks don't kid yearself, even as oil has relatively stable oil stocks , same story went retail they had very mixed earnings results. tiffany saw comp-story sales both up, especially department stories, all generally down on the month, all of them rallies on oversold conditions same thing with banks, they've been down double digits, even though they're up today. transports another good example. they're down, 8%, 9% for the month. yesterday well a really,
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oversold conditions. sara, back to you. frank holland? >> going back to apple, the biggest positive impact on the ndx, that it's possibly diversifying supply chain following google's lead. speaking of all the faang names in the green today starbucks and booking holdings both finishing up more than a percent higher, u.s. tech a mixed day. adobe down more than 2%, also microsoft, nvidia, activision and ea, on a personal note, thinking about growing a beard. >> i like that, frank. some support thank you very much. global economic weakness headaching over the market, today brexit in the headlines.
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more on the negotiations in europe, plus deutsche bank out with a report saying we should settle in for a long, protracted trade war with china will they events tip the global economy into recession very good afternoon to you both. fred, i'll start with you. is china trade the biggest issue still? >> i think it's the biggest of all issues what is unusual is president trump set in motion four mega-geopolitical issues we're tracking, but china is the biggest. there's nothing short than trying to change the way china operates you have venezuela, iran changing the mall lined behavior, and north korea trying to negotiate a nuclear deal. very unusual to have four huge pieces of policy of this sort in
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play where the markets have gone wrong, they keep swaying back and forth, watches trump's tweets what they're starting to see is a generational era of major power competition. it's not about tariffs going one way or another we have to start thinking about the costs to individual companies and countries of a potential increasingly decoupling of the world's two most significant economies. >> how are you at the atlantic council thinking about how of this strategically will shake out for trump ahead of the election on one harsh, he has the ability to calm it down, get to the table, take tariffs off, ease some of the financial and economic pain you it seems to me
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we're in a down cycle. in a down cycle, you don't want to have a trade war that speeds that downward flow i think that's what's happening as part of the reason why he's so intent in getting more interest cuts from jay powell and from the fed so -- and -- we all talk about trump's politics, but sometimes we forget about president xi's politics he has the 7 onth an verse of the people's republic october 1st. he's in a trade war with trump and technology war as well he hayes protests in hong kong, a weaker minority -- muslim minority he's cracking down on there's no way that president xi ahead of that anniversary can look weak. i think he's shifted from looking for a deal with the u.s., to doing damage control, so don't do too much damage, but ride this out and start adjusting your economy for a long struggle and not for any
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deal in the near future. >> amanda, let's talk brexit what are the implications of his move today to reduce the number of active days of the parliamentary calendar between now and the 31st of october. >> on the one hand what we saw is a normal procedure within the parliamentary system it's the way of ending one legislative session, clearing the decks, having the queen clear out the new policies, and then moving into a new session what is unique today is the length of the suspension, which is five weeks. normally we just see it for about a week or so what it is most likely going to do is lead the parliamentary opposition to trigger a vote of no confidence in boris johnson's government the opposition will have two weeks to try to form a new government one is a hope to pull toes a national -- for an extension to
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brexit if that doesn't work, we could be facing early elections in the uk certainly boris johnson's hope is by removing parliamentary interference, he'll be able to negotiate a better deal with the european union and try to jam it through parliament at the end of orbit, but that's quite risky in terms of what he's asking of the eu and his limited parliamentary path back home. >> amanda, people expect the chances of a no-deal brexit to have risen do you think that's fair >> yes, but i also think the chances of an early election i think it's enjected more uncertainty in apolitical charged and contentious process. >> how do you, fred, see the economic and political ripple effects of a no-deal brexit in europe and all way here in the united states. >> i agree with everything amanda said. we're ending the longest session
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parliament has had since 1642, but this is also an extraordinary break. what he wants is to cut off the time that parliament has usually you call parliament together when you want to solve a crisis he has a crisis. he wants to get them out of the way, and wants to limit the vote and october 14th, you have only then between then and october 31st for parliament to do anything about the no-deal brexit what i'm watching for is whether you have some people break from him on the torrie side >> i really think the british voter has a right to take another look at whatever deal sums in through a referendum the gap of what could come up, everything from a no-deal brexit or new referendum, these are
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dramatic days in uk history. fred kempe, amanda sloan, thank you for joining us. up next we'll break down the charts to look at the two sectors most impacted, utilities and banks. and we'll discuss peloton's ipo. uber is hitting an all-time closing low. box they were flat when josh hit the earnings about five minutes ago, now done some 6% we'll have more on that move don't go anywhere.
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williams sonoma and pbh, contessa brewer has the details. >> let's start with williams sonoma with a beat on the top and bottom line. revenue at 1.37 billion, and the earnings at 87 cents per share versus the estimate of 84 cents per share. the overall comps were up 6.5% versus what antists had estimated especially the west
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e elm, which the company says the biggest growth opportunity, sales up 17.5% followed by pottery barn they say it's because of cross-brand initiatives, and improved customer initiatives. full-ee guidance you can see the stock now down by 3.5% to pbh, the tommy hill g-- hilfiger with a beat, with eps at 210 versus 1.88, as the estimated revenue at 2.36%, the very weak third quarter guidance ceo says we are pleased to report we saw continued outperformance by the european businesses. including the impact of protests
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resulting in a more promotional environment. thank you, contessa. williams sonoma selling off sharply despite what happened to be good number over to mike for his final dashboard of the day. >> this one vaults versus volts, bank s versus utilities they basically bray on opposites sides. this is a ratio of these kbw bank indecent. so it's banks divided by utilities. but back to 2015, so from this high to this low, it was approximately 35 percentage points of underperformance by the banks again the utilities. almost exactly the same as this high to this low very recently it doesn't mean it's going to
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end right here, but this low was almost to the day when the ten-year treasury yield bottomed, so that's just your context. of course all we've seen here is a tiny, tentative halting recovery against the utilities, but it's a pretty interesting relationship >> i would also say, mike, the basics have the ability to have a -- their relationship is the absolute level of yields and both the level and the shape have been so bad, of course it has been on the long end, presumably that's where you would sweet the bigger spring
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higher. >> mike, thank you very much up next on "closing bell", we'll get reaction to the day's after-hours retail earnings. and speaking of consumers, we will explain why a sudden slowdown in spending by yelty americans could be a recession red flag that story and much more coming up
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welcome back hi, sue. >> hello, everyone, here's
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what's happening a new study shows the teen girls on birth control may face a higher risk of mental health issues later in life after surveying data for more than 1200 women, canadian researchers found that those who used birth control as teens were more likely to face depression than those who did not. the queen prupd a suspension of parliament. hudson's bay is selling lord & taylor to a rental service. it gives the exceed control of the brand, intellectual property and 39 stores. and finally thinking of slacking off at work to play fantasy football a new study shows employers tend to lose about $9 billion due to
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the lack of product activity, but it might not be as bad as it seems. the morale boost can help keep employ aye around in this tight labor market so schedule your draft you are up to date sara, back downtown to you williams sonoma and pbh reportereners, the stock seeing some volatility. shares are weak are. gas beating estimates just now the only one that's up is guess. we were just looking through williams sonoma. what looks to be a pretty strong quarter. i guess the stock had run about 31% over the last three months what's the story here? it was pretty much a fabulous quarter, and west elm was
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fabulous, so it was even better than anyone expected they raised guidance for the year it's hard to find something wrong here other than the stock has run up yes, they had a great number they said things will be fine. we're seeing the growth we expected, i thought it was a great report i >> less's talk about the one that was up, guess, legitimately up in your eyes? >> they were pretty back in north america and great everywhere else. i didn't think they would be as good enter nationally. so maybe the street thought, maybe they're getting it right again, and it was surprisingly strong i thought they would be weaker than what they reported. >> jan, overall the argument from economists and from strategists from traders lately, at least the optimistic one,
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seems to be the u.s. consumer is in great shape we're getting that out of the all the economic data, out of the earnings report. do you agree after digging through and listening to all the conference calls >> well, you have to admit, walmart and target were good do it yourself was great tjx wasn't quite as good, but online was great there was nothing wrong with anything we got out of amazon or anybody else's join loon report. the only things that looked tough were full price retailer look at these guys today, they all turned in good numbers, so i think the consumer is really, really healthy i think it's simple that they all have a job, they're working in record numbers, the wages are going you have 3.5% the quiter has nothing to complain about.
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they're not watching the tariffs. business is good at home. >> would you be recommending a -- >> i'm a big fan of williams sonoma either way i would be owning the stock. they're doing all the right things the cross-marketing is working even though it's a tough, competitive space, they do a huge amount of big online and maybe about as much online as off-line sales like i field about costco or walmart, you should own williams sonoma. >> quickly, jan, you want the consumer is not watching the tariffs, but the retail executives are today we got confirmation from the u.s. trade rep that they're set to go into effect in september and december, the remaining chinese imports, which including apparel, footwear, a lot of the products made in china. so in your view, who is most
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exposed, who do you avoid? >> that's what pbh just said, right? we had this great quarter, but we're lacking forward and we're going to be more cautious so people who still have exposure, if you're five below, for instance, happen your business is coming out. on the other hand right now they're says tariffs will happen in september and december, but we never know exactly what's going to happen with also don't know how the plants will react and how the exchange rate will react. so a lot of it gets absorbed by the plant that doesn't want to lose the production. right now we're seeing cotton prices half of what they were last year. even shipping costs are down so some of it gets absorbed in the supply chain and the rest at the retailer almost nothing is guess passed through so far to the customer so that's why we're worried
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about the earnings we don't know how much can be absorbed in the system before it gets to the retailer >> pbh lowers guidance good to check in with you, jan >> thank you. up next, peloton filing for an ipo, but cautioning it may not achieve profitability in the future we'll discuss whether or not that's enough to scare off investors, straight ahead.
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welcome back peloton filing for an ipo saying it's a media company also. what exactly do they mean by that >> peloton saying it's a media company that engages to addictive original programs. the ride is in music and video services, a consumer trend working in its favor, but peloton warning, we may be unable to license a large amount of music or certain popular artists, and in our business, operating results could be materially harmed. peloton is currently fighting a $150 million lawsuit filed in
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march by the national might have been publishers association. it alleged copy right -- >> certainly a risk. julia, thank you let's bring in michael kawamoto for more first, michael, how do you define peloton is it a media company? it's an important question for wall street, right that determines the valuation. >> yeah, yeah, i think that's a valid point. if you look at the valuation they want, you know, that's over eight times trailing revenue if it is a media company, that valuation is obviously much more pala palatable if it is a consumer products company, that valuation could be steep i think that's part of the equation there, is how wall
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street perceives not only what this company is, but what it could become as well. >> what do you think, michael, of their retention rate of customers? there's been different takes on how it's been calculated. >> yeah. yeah, i think it's impressive to have a sub-1% monthly churn. i think some of that is you're buying a $2200 cycle, or a $4,000 treadmill, so i think that fixed-cost there anchors people to the platform on the flip side, they have proven time and time again that people love part of what they're doing, so that's a big part of why people stay with peloton >> michael, how big do you think the market is here the likely market that peloton can address, in terms of buying the hardware, staying with the service. i'm wondering how much exactly they have to displace, you know,
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fitness centers and all the other way that is people may exercise. >> yeah, yeah, so when you look at the industry data for treadmills and bikes, you know, they already have a meaningful share there. so one of my concerns around their domestic growth opportunity is they're rubbing up against that market size there. so that's concerning there, but i do think that they have a very ample opportunities abroad they still have relatively low brand awareness, so i think there's a big opportunity there. the question is, how much marketing will it cost them down the road >> how significant, michael, is the music licensing troubles they're facing at the moment >> yeah. somehow i'm still not a lawyer, i don't have a great answer for you there. obviously you want this to go away as quickly and quietly as possible, so you can -- there's no overhang on the shares when
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they begin trading we've see with companies like spotify and pandora, these have been ongoing issues. i don't have a great answer, but it's definitely something to keep an eye on. michael, thanks for joining us. >> yeah, thank you so much exposure as well on peloton, epps nbc universal is an investor in the company. up next we'll look add whether wealthy americans are sendg ina warning sign by cutting back on their spending, we're back in a couple minutes ♪♪ ♪♪ ♪♪
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welcome back let's check in on some of today's after hours earnings box falling a slight beat on the top and bottom line. telling josh lipton that the volatility of trade disputes and tariffs does not make for a stable macro environment both feeding on the bottom line. five below missing with guidance largely below expectations the only spot below, the guests reporting numbers and jumping after hours. >> the over-all-american consumer may be strong right now but spending by the wealthy is
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slowing down our robert frank looking at what it could mean from the broader economy. robert. >> hey, sarah. spending by the top 20% has fallen below 2017 levels economists worry about what they call a trickle down recession. luxury real estate is having the worse year since the sale of homes priced at 1.5 million falling by 5% in the second quarter. there's a three-year supply of mansions and luxury homes in aspen, the hamptons, miami, other high-end areas retailers are struggling with barny's filing for bankruptcy, nordstrom posting three-quarters of declines. the share of national spending of the top 10% of consumers is falli falling while the middle class consumer is picking up the slack. mark zandi writes, if high-income consumers pull back any further their spending will be a significant threat to economic expansion the lights have not gone out but
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dimmed a bit at the top as you could expect with market volatility and this group most susceptible to a global slowdown guys. >> the other thing i was wondering, robert, when i saw your story earlier, how much -- i don't know if you can quantify this, but you also have got issues like soft you have the chinese investor slowdown in the u.s. just more on the why and some of the factors that are contributing beyond just the stock market. >> so each of these sectors has its own i had jreasons for decl. you could argue the most exposed to the online onslaught from amazon since they have such high prices real estate market is salt driven in new york, new jersey, connecticut, california, but what is interesting is it is occurring in high-end areas of miami, in texas, areas that -- colorado, that are not subject to salt. then you have weird things like the collectible car market where the top has just collapsed and
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the bottom, the entry level, is doing the strongest. so what started in real estate, which is the top, the weakest, is spreading to the other areas. your why is the big question do they know something we don't or is this a signal that this is a group that internalizes the market anxiety first and then it could flow through to the rest. >> robert, luxury homes, presumably much less linked to where rates are as well. >> absolutely. in new york city half of all deals are cash at the very high end it is 80% or more. so, yeah, mortgage rates making it more attractive doesn't really help that market. >> robert frank, thank you very much. >> thank you, guys up next, your wall street look ahead the key things every investor needs to watch as we head into a w adg y ene me back ♪
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to retailers have been the big movers on earnings after hours tomorrow we will get a broad read across the sector as well before the bell, dollar general, dollar tree, best buy, abercrombie, dfw, now called designer brands, and after the bell ulta beauty as well as tech companies dell and workday, that will give us one more read on the state of consumer spending
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right now and also on how the retailers are preparing for tariffs, best buy in particular. last quarter, had a good quarter, and then started talking about tariff impact. i think the stock was reacting poorly. >> and this is the quarter you have to lay it out and have everything ready. >> because now the tariffs are confirmed. >> holiday crunch time basically is here for them. >> i think that's true interesting trade dynamics in this group though. you have waves of declines and then short squeezes and the positioning going into the number, like williams-sonoma you saw today, it seemed like a good report and guidance and the stock trades off. >> and tiffany this morning which missed across the top line. >> absolutely. >> and reacted positively on the bottom line beat. >> williams-sonoma the opposite after hours. mike, the other takeaway from today, what is underperforming, banks, russell. >> it seemed like that, yes. trying to sort of declare independence from yields and not quite fully successfully in terms of the stock market. tomorrow though we get gdp
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numbers. shouldn't be a market mover but it might change the conversation a little bit. >> a revision, another look. >> supposed to be 2.4% for the second quarter in terms of just thinking about whether the u.s. economy is really creaky or not right now. >> also, a reminder how much stronger it is than the rest of the world. >> for sure. >> does the beard come back tomorrow >> we will find out. >> maybe it will fill in tomorrow. >> i feel it was popular, got good reception. >> we're out of time, that does it for "closing bell." >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square, this is "fast money" i'm melissa lee. your traders on the desk are tim seymour, brian kelly, steve grals o grasso and guy adami one strategist says the countdown to recession is officially on. he will layout the timeline and when he sees the markets up and out. box and williams-sonoma moving lower after reporting. later, a royal rally


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