tv Countdown to the Closing Bell With Liz Claman FOX Business December 31, 2018 3:00pm-4:00pm EST
these banks. most don't have nearly the oil exposure people think they do. charles: kevin, i love when folks come on and give us ideas. not wishy-washy stuff. don't tell me about countercyclical emerging markets. you guys delivered. thank you. now cheryl casone will do the same. cheryl: one hour to go for the entire year. we are looking at markets in the green as we enter the final hour of the final day of the quarter, the year, all of it, for 2018. those are up arrows. it's okay to look at your screen right now. we are helping to wipe away the pain of this year's historic swings in the market fueled by fed fears, worried about europe trade wars, all kinds of good stuff. tell you what, 2019 already, 13 hours old in hong kong. the chinese territory brought in the new year in style, as you can see. celebratory fireworks taking the place of trade tension fireworks across the pacific. something positive to show you
out of asia, right? both president trump and president xi are signaling at this point that cooler heads could prevail when it comes to tariff battles. we will be live on the ground in d.c. on what could be the making, we hope, of a true trade war cease-fire between the two countries. and two executives certainly watching with bated breath for any news on the trade wars, tim cook and elon musk. apple and tesla on some of the wildest roller coaster rides in the market this year. is 2019 going to bring even more twists and turns for two of the biggest names in silicon valley? we focus on both those companies and the key to success for both in the new year, could that be a deal no one sees coming? our panel will weigh in on that one. not to be outdone, netflix, looking to end the market's tumultuous year on a high note with new viewership numbers that
are unbelievable. they are stunning. consumers all kind of looking at this number going wow, this could be the most competitive year of the streaming wars yet. not just '18 but '19. we have one of the industry's top analysts who will tell us if netflix can continue to wear its crown with the king of streaming. plus democrats set to make an offer in the shutdown showdown. everything you need to know to prep your portfolio for 2019 as we forget 2018. i'm cheryl casone in for liz claman. less than an hour until the closing bell. let's start the "countdown." cheryl: breaking news that's not going to hurt your portfolio. happy new year from dubai. fireworks are erupting from the world's tallest tower. now, these fireworks you are seeing back by popular demand
after they were replaced by a light show last year. out with the new and the old. kind of like that. there's dubai for you. happy new year to folks there. while the markets are set to close out the final day of the year, at least today on a high note, 2018 was not kind overall to any of us, really. the dow, s&p 500, nasdaq, all losing ground for the year. the worst performance in particular versus the dow since 2008, the dow jones shaping up to be down almost 7%. s&p is going to be down a little more than 7% as we get towards the close. nasdaq lost a little more than 4.5%. we are watching all of this. those are the markets for the year. now let's look at the russ 2000 and dow transports, both down double digits for the year. but the russell is on pace for its worst year since 2008. the transports seeing the worst year they have seen since 2015. a lot of pressure on the markets this year. it was just one of those years. we started out super-hot, had a big selloff, we started off down, had a big record-jumping
summer, next thing you know, october hit and it was all kind of a negative story from there. there are six stocks that are responsible for all of the dow's point drop this year, and goldman sachs is the worst performer for the year. 3m and ibm right behind you. but again, goldman sachs really was the pressure stock of the year and there you go. goldman sachs down 35%. 3m down almost 20%. ibm in the red by 26%. again, it was the goldman sachs story. all right. along with caterpillar, united technologies and home depot, those are the other pressure stocks we're looking at and kind of giving you a sense of maybe this is a buy opportunity, take some positive out of what i'm showing you right now. cat down nearly 20%. united tech down 17. home depot also, that's kind of a housing sector story. we will talk about that later in the show. now let's talk about this. there is some good news. the top performing sector for the year, health care. take a look at this. there is the health care sector.
the spdr, anyway, up 4% for the year. we saw that as the top sector in the s&p 500 as well for 2018. health care was a big story. now let's take a look at some of the best names in that sector. biomed, they manufacture medical implant devices. they did well. boston scientific, hospital corporation of america, all of those stocks, biomed, 33%, heck of a year. now, let's look at something else that happened within the s&p 500, the energy sector. down for a second year in a row. this year, it is the worst performing sector, down more than 20% for the year. again, maybe it's a buying opportunity. i'll just report, you decide. but a lot of this as we're watching what these energy names, the big oil companies in particular, is the sharp decline in oil. crude down nearly 25% for the year. oil hit a high of $76.41 on october 3rd before it declined more than 40% since then.
in fact, just in december, oil lost 11%. that's really the last-ditch fall we saw for oil, if you will. also, a lot of you follow crypto currency. it's been a really tough year for crypto currency. let's look at bitcoin. opened the year trading at over $13,000 or excuse me, $13,000 per one u.s. dollar. it's fallen around 73%. now it's trading at just over $3700 per u.s. dollar. really rough year for bitcoin, as you can see on your screen. okay. i got the bad news out, got some good news in there. i will try for you for the last hour here. but while the markets are poised to close the year in the red, let's talk about 2019. let's forget 2018 already. we have first goldman sachs, they cut their u.s. growth forecast for the first half of 2019 to 2% from 2.4%. they also trimmed their fed rate hike expectations. there you go, after the meeting. but chief economic adviser
mohammed el-erian dismissed the suggestion the united states is facing a recession and says, you will love this, the economy will continue to grow 2.5%, maybe 3% in 2019. el-erian also said investors could see more than 1,000 point swings for the dow, several 1,000 point swings for the dow in 2019, is calling it the new reality for awhile. he's saying look, it will be volatile but the economy is strong and that's really i guess a positive note here. let's get our floor show going on all of this. i have given them plenty of stuff to chew on. traders at the new york stock exchange and cme group. scott, i will start with you. did you agree with el-erian or goldman sachs? because they are each saying two different things. as well, how do you prepare for 2019? >> so i'm a former goldman sachs trader but i do agree with el-erian. i think the economic fundamentals are really strong. they're not as strong as they
were six or nine months ago. they are still really, really solid. i think what we're going to see coming into the new year are the results, the earnings results that we're going to get starting in the next couple weeks. i think we will see some pretty decent numbers. yes, expectations have come down, as well they should have. they should have come off the lofty levels we saw. i think we will see some really good numbers. i think that we are very, very solid footing here and i actually think the fed is doing a great job managing somewhere we haven't been before, managing this risk that we've had. yes, people think that we're not, inflation is not right around the corner. goldman just lowered that expectation down to 2%. i think we're in a good place. i'm in el-erian's camp. cheryl: that would tell you the economy is strong. teddy, that's the question we heard so much, especially in the last two months of trading, really since october when things got really volatile, is the market's pushing the u.s. into a recession or is there really just a strong economy and the
markets are disconnected from the strong economy? what do you think? >> well, i think the markets are a forward looking indicator, not a trailing indicator, and not the reverse. clearly, cash has been king for the last three or four months. most people don't view cash as an asset class but clearly in this environment, it is an asset class. i tend to think that corporate america is doing fine and the u.s. economy will do fine, but there are so many other unknowns out there and the markets just have difficulty with all these unknowns. i think caution is still the byword going into the new year. i think we'll end up okay but we need to get a few issues resolved and that will take some time. until then, cash is still king. cheryl: i don't know, i would think the one thing that could really turn the markets around in a big way would be the china/u.s. trade war ending. i know it seems far-fetched, i know there's a lot of mixed
stories about whether or not the chinese are really coming to play and being frankly honest, they will meet their deadlines but that could be the game changer for 2019. >> well, i mean, if you're asking me that question, i absolutely agree with you, but that's one of the unknowns that needs to be resolved. but at the end of the day, it's going to be the fed and i guess backed up by these tariff issues. i think the given is that corporate america is in pretty good shape, the u.s. economy is in good shape, so that's not a problem. it's these two big unknowns. cheryl: one thing we do know, phil flynn, is what's going on with the oil contracts. forget any inflation when it comes to oil. you got happy drivers out there in 2018. oil losing 11% in december, down about 26% -- 25%, excuse me, for the year. so that's a good economic indicator, i would think. >> well, it's a mixed economic indicator. i mean, it's a good thing people are getting low gasoline prices. you can thank the u.s. refiners, you can thank the u.s. shale producers. that's definitely a positive for
the economy. on the flipside of that, of course, if you look at the entire energy sector, the worst performing sector of the year, that's a big part of our economy as well. we are the world's biggest oil producer. yay. that's another thing we did this year, right? so we don't want those prices to get too far down and sometimes, that drop in price like teddy said could be a forward looking indicator. it might be signaling lower demand in the future. guess what? we don't have lower demand now. demand right now is near record highs, still very strong. i think this market's going to turn around in the new year and i think energy's going to be a great sector in 2019. cheryl: you know what, i think that's interesting, because look, the energy sector was the worst performing sector of the s&p and -- the worst performing sector this year, what happens next year? it might turn things around. we'll see. teddy, scott, phil, happy new year, guys. >> happy new year. >> same to you.
cheryl: we will see all of you in 2019. all right. one thing certainly moving these markets today. when i was talking about it a couple moments ago with teddy, this possible progress, and i say possible progress, in u.s./china trade relations. president trump tweeted over the weekend that the u.s. and china were making progress in trade talks over the weekend. well, this is coming as a new report signals that trump's trade war might be taking a significant toll on the chinese economy. that could give us more bargaining power. according to china's bureau of statistics, manufacturing activity shrank in december for the first time in nearly two years while china's stock index suffered a double digit loss for 2018. the asia markets. as you can see, the shanghai and shenzhen are the markets we follow out of china. edward lawrence has been following all the trade action out of washington. edward, the president did
smournd sound more optimistic over the weekend but it's not just the president changing his tune. china seems to be coming to the table. is that your sense? reporter: exactly. those numbers you were just talking about, it is bringing china to the table. their concern about their economy going forward. we are looking for a meeting actually between the u.s. and chinese trade delegations in early january. the u.s. trade representative's office is working on those details right now. the chinese are talking about moving forward now when just a month and a half ago they were saying the u.s. needs to back down. so change in tone there. now, a spokesman for the chinese foreign ministry says the two sides should respect each other's sovereignty, security and develop interests and properly manage differences in an effort to avoid disturbing the general picture of bilateral ties. the two sides should expand people-to-people exchanges, to continuously submit the social foundation for u.s./china relations. possibly they are referring to trade. well, today in another address to china, their president xi jinping says china will continue reforms and open its doors wider
to the outside world. a new "the washington post" op-ed, jimmy carter said he normalized diplomatic relations with china 40 years ago and offered advice for working with the chinese to get a good trade deal, saying the force the property theft, stealing intellectual property of u.s. companies and trade imbalances must be addressed quickly and efficiently. neither country should use national security as an excuse to obstruct the other's legitimate commercial activities. china needs competition for its economy to innovate and grow, pursuing a fair and reciprocal relationship is only -- the only way forward for the countries to remain economically strong. the bottom line here is that he is urging the president to make a quick trade deal, but fight for american interests. the markets so far have liked the new tone they are hearing from china. we will see if it continues in 2019. cheryl: like i said a few moments ago, i have heard this from other sources that say you get a deal between the u.s. and
china, these markets are going to do a big about-face because that's one of the biggest worries that we have right now. there's so much money tied between the two countries. reporter: if they follow through. the point is valid. if they follow through. the chinese have been here before where they have talked and talked and talked right up to deadlines and missed it. we have to see if they actually follow through. it seems they're serious because of the market moves that are happening in china but we have to see if they follow through. cheryl: they are under pressure. edward lawrence, happy new year. reporter: you, too. sldz we cheryl: here we are with the markets, buying on the dip. the most battered and bruised blue chip leading the way, goldman sachs, down 35% year to date. the big winner on the dow 30 heat map as we head into the close, why didn't you look like that all year? come on. the headache, toll brothers, hovnanian, is dragging o the final hour of trading, rates are hiez i rising, housing prices are falling. will this be a buyer and
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cheryl: investors are not the only ones waiting on pins and needles for the fed's next rate move. home buyers and sellers are also watching, with a wary eye, as mortgage rates climb and home prices cool off, leaving both owners and hopeful buyers feeling a bit of a pinch. let's bring in our guest. great to have you on the show, sir. >> good afternoon. great to be with you. cheryl: so much to talk about. obviously the concern, you have interest rates going up. the 30-year is now above 4.5% and we are seeing pressure on home prices. do you think it's going to get much worse in 2019 or you think we will see stabilization in residential housing? >> first of all, the market is in really good shape, both residential real estate and commercial real estate have not been overbuilt in this expansion. lenders have been pretty disciplined. they haven't overlent, there's not a bunch of bad loans about to affect the market.
so the macro environment looks very promising and very well-balanced between supply and demand. on the for sale housing front, what really hit the market was the consumer preference to rent. they wanted to have a lot more flexibility. they wanted to be able to chase jobs and move around the country and like you said, the interest rate movement earlier in the year and price appreciation over the past couple years really priced out a lot of consumers who would normally have bought homes but have chosen to stay in the rental market both because of lifestyle preference and because of the lower affordability. interest rates have come back in in the last couple of months a bit so that might help a little, but structurally, we are seeing a big preference toward rentals. cheryl: let's talk about that. if i'm seeing a lot of rentals out there, i'm looking at commercial real estate as an investment. you don't have to buy a building to be in that market. you could buy a reit. is that the opposite story? is that the good news story of 2019? >> it really is.
commercial real estate, unlike most expansions, is not overbuilt and not over leveraged. all of a sudden, it shines in a volatile stock market environment, a questionable economic environment, even with the economy slowing next year we are creating plenty of jobs to create demand for office space, industrial warehouses, self-storage units, apartments, of course, even shopping centers. so as a yield on commercial real estate really stands out as a compelling alternative to a lot of investors. you mentioned a lot of private investo investors, high net worth individuals are pooling their money partnering with friends and family and buying more and more commercial real estate. cheryl: there's lots of ways to do that that don't involve going out and buying your own building on your own. i love the predictions we are showing. you say job growth will moderate, you like commercial real estate, and also, you say tax reform's going to come into play. how so? i thought a lot of tax reform bonuses at least on the corporate side are kind of playing out already.
>> well, they have from the standpoint of the effect on the economy. we saw corporate investments rise earlier in 2018 but for commercial real estate, the tax reform had a lot of favorable provisions. for example, the fact that pass-through entities, partnerships i was talking about, are able to deduct the first 20% of their income before taxes apply. accelerated appreciation, the continuation of the mortgage interest deduction and a variety of other favorable provisions make commercial real estate even stronger in terms of total return in this market environment. cheryl: i like it. i like that idea. i like the idea of the tax break. we all love that. great to have you on, sir. thank you. >> thanks for having me on. cheryl: did you notice it was the last hour of trading of the year, the entire year? closing bell's going to ring, it's all going to be over in 37 minutes. 2018 ended on a somber note for one of the auto industry's biggest names. carlos ghosn's jail time
extended for at least another 11 days. authorities in tokyo continue to probe multiple claims of financial misconduct by the former nissan chief. nissan shares down nearly 9% this month. they are continuing to grapple with the fallout of all of this and he's still in jail. back here at home, the shutdown showdown possibly coming to a head this thursday. democrats officially making their first move on the new congress. live at the white house coming up next. we'll be right back. one-millionth order. millionth order. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these.
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cheryl: well, the government shutdown enters its second week and house democrats are set to announce bills that will fund some departments for a full year, and the department of homeland security through the beginning of february. let's bring in fox business's blake burman. i'm curious what the reaction is to those that are still in washington of what we're hearing right now. reporter: i think the reaction is from the president's twitter feed. it's new year's eve and everyone has given in for the day but they will be busy come the end of the week as democrats will take control of the house of representatives on thursday, and today, they kind of laid out their game plan going forward, because on thursday, after
democrats do take control, they are going to try to advance some legislation that will really do a couple things. first, it would fund the 25% of the government that is currently shut down for the remainder of the year, but also second, fund the department of homeland security through february 8th, giving everyone kind of a little bit of a pause, little bit of a gap, time to breathe to figure out that aspect of it as it relates to the border wall. what the democrats are putting forward, though, does not include funding for a wall. >> i think the reason why the american people don't want a wall is in part because of what republican will hurd, who has knowledge of the border in his own district, says which is that it hurts the local economy, hurts private property owners and doesn't do what customs and border patrol agents want which is they want more manpower, they want more technology. reporter: the democrats' plan will put pressure on republicans and on this white house as well to sort of end the gridlock but it's probably not going to break up this stalemate at all,
because president trump has said he will not sign anything if it does not include funding for the border wall. today, he's taken to twitter today, one of the tweets is quote, i'm in the oval office, democrats come back from vacation now and give us the votes necessary for border security, including the wall. you voted yes in 2006 and 2013. one more yes but with me in office, i'll get it built and fast. the white house reiterating over the weekend that democrats in the past have supported a wall. >> i prefer chuck schumer 2006 and 2009 to chuck schumer 2018 and '19, where he had amnesia about how he voted for the secure fences act, how he said enhanced border security's a good way to keep out illegal immigration. reporter: speaking of the white house, a prominent senate democrat has moved closer to a 2020 bid. senator elizabeth warren announcing today that she is forming an exploratory
committee. the number of democrats jumping into the race for 2020 is about to begin and fast. cheryl: here we go. take the day off tomorrow, rest -- reporter: i got to work tomorrow. how about that? cheryl: i'm sorry. reporter: enjoy. happy new year. cheryl: happy new year. yeah, because it's not going to stop in 2019 in d.c. well, in 2018, it was the year of the megamedia merger. there was megaamedia fights as well. we are talking about that, because the closing bell will be ringing in 29 minutes. netflix, not holding its punches, canceling marvel's "daredevil" as the company looks to launch its own digital service in the new year. at & t not too far behind on its own service. they have time warner now. can the original streaming giant survive the coming binge
watching bliss? say that five times. okay. plus, they were two of the most talked-about stocks of the year. apple and tesla. they are at the center of multiple controversies and have been part of some of the market's wildest swings. the two coming together in what was an epic "countdown" moment when warren buffett told liz of any chatter of apple buying tesla was just a bad idea. up next, our all-star panel will see if elon musk and tim cook should still join forces somehow. we'll be right back. i've always looked forward to what's next. and i'm still going for my best even though i live with a higher risk of stroke due to afib not caused by a heart valve problem. so if there's a better treatment than warfarin, i'm up for that. eliquis. eliquis is proven to reduce stroke risk
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cheryl: okay. there are two of the most talked-about stocks in 2018, can you guess which ones i'm thinking of? apple and then tesla. but this is a tale of two very different stock performances. tesla gained 7% year to date, apple is down 7% year to date. its first annual loss, we should say, in three years, and what will 2019 look like for tesla, and could apple look to go from your screen to your driver's seat in 2019? here to weigh in is consumer edge research senior analyst jamie albertine who covers the auto sector extensively and web
bush managing director, dan ives. one of the crazier things that came up in 2018, and it was a pretty good moment, liz claman was speaking with warren buffett and asked him about these two companies. i want you to listen to what he said to her about, well, a buyout. listen. liz: would you suggest that apple get into, or would you support it? >> i would support what tim cook does. i think it would be a very poor idea to get into the auto business. it's not an easy business. incidentally, the auto business is different. you can win in autos one year and lose the next. cheryl: basically, the oracle says that's not really a good idea. apple should not be going out there trying to buy tesla but begs the question, can a partnership be something in the future for these two companies? >> yeah, look, right now apple definitely has a plateful in terms of the challenges, in terms of iphone demand, specifically out of china, and some of the tariffs. our opinion on the auto side, we do believe a partnership with a
tesla is something that's a real possibility in 2019. agreed 100% with warren, an acquisition is not something we would like but a partnership, especially next gen ev with tesla is something we continue to view as a real possibility. cheryl: it's not a bad idea considering tesla still continues to be such a fan favorite. people that own tesla love tesla. i'm not talking the stock, i'm talking the vehicle. >> that's true about the stock i think as well. first, happy holidays. thanks for having me. i would tell you that i agree, i think, in principle, in theory there could be a partnership but i have never seen elon really play nicely with others when it comes to managing a business that he's founded. so i don't think there's high likelihood here. i think tesla has enough on its plate with respect to trying to break into manufacturing to serve the far east, breaking into the model y, the crossover utility version of the model 3, and continuing to scale the
model 3 above and beyond the other corporate governance sort of issues that if you will have been self-inflicted throughout 2018. i think there's quite a bit tesla still has to figure out on its own in 2019. cheryl: that's why i was kind of thinking in the back of my mind, i don't know if i would love tesla stock this year. you had elon musk out there saying he's secured funding to go private, he didn't. got in a lot of trouble with the s.e.c., as you know, lost his chairman job. then you also have the pot smoking. these are just a couple of things that really ceos shouldn't do. >> wilook, that's why the musk factor has definitely been a risk in the stock and you saw that with the private tweetstorm but you have to separate it between what's happening on the transformational growth story that we compare in some ways to what we saw with apple and iphone going back a decade ago, because you look at the ev market, look where tesla is, especially now going into europe in the first quarter and china in 2019, i think that's why it continues to be a bull/bear fight in the stock because that musk factor's there and it's
definitely been an overhang, but fundamentally, the story, especially on profitability going forward, is i think about to hit an inflection point going into the second half of '19. cheryl: that's going to be interesting. the whole china section of this. jamie, that question is to you with the auto industry. elon musk obviously wants to build in china but we are in the middle of a trade war with china and i'm wondering what that does to his outlook or your outlook for tesla for 2019. >> yeah. it's interesting you bring up china, because they are the only manufacturer to date that really hasn't partnered with a chinese domiciled manufacturer to form a jv and build into the chinese market. they are going at it at a much higher degree of difficulty. look, from a trade perspective, i think expectations are very low that we are going to get line of sight on a conclusion in 2019 or certainly not in early 2019. so the stocks are maybe overly discounted. to the degree there is any incremental sort of progress made, we would see that as upside not only for tesla but for the auto industry broadly.
to go back to the prior point, look, larry ellison being a member of the board could be that bridge to potentially partnering with an apple. we see that as an incremental, albeit it is a sign elon is still mvp very much in control this company and the board. cheryl: larry ellisson, chairman and ceo of oracle, along with another key executive that joined the board, you are saying those are good things for the company, it shows maybe adults are in the room. i say that in all seriousness because of the behavior of elon musk. but i do want to go to one other thing. i will never forget how much we talked about a possible i-car when it came to apple. these things aren't so far-fetched to see these two companies partner up down the line. it's possible. but what about the i-car? i know we have a lot of things we are expecting from apple. a car's not one of them. they have been silent about that. they were never really vocal about it but we saw prototypes on the internet. >> yeah, look, i think cook and
cupertino have tried a number of projects in the labs there and i think when you look at an i-car, them getting into the automobile side, it's definitely something they played around with. right now, apple is definitely backs against the wall in terms of what that next growth driver's going to be outside of services. is it going to be content, do they buy a studio, do they partner with a company like tesla. right now, apple is definitely, there's a fork in the road situation. they have to make some tough decisions. when you look out the next five, ten years, to make sure they don't miss out on some of these key growth areas, which is why we have partnership with tesla, definitely something that could be on the table. cheryl: i would like to thank you for teeing up my next segment. that was perfect. it's exactly what we will be talking about in the next part of the show, what is next in the world of streaming. you're right about apple. that will come up as well, respecting the air pods and a new iphone, and blah, blah,
blah. we will have you back when we get more details on that. guys, thank you. happy new year to both of you. >> thank you. same to you. cheryl: here's a happy new year moment. we are up 231 on the dow. it's not negative. aren't you happy to see that? you can actually celebrate this. 17 minutes to go right now. the box office, is it really in your living room? think about what i'm saying here. do you think netflix's original content will be enough to push back against new tides in all the streaming wars and the theaters? one of the media industry's long-time watchers porter bibb is here with predictions. it is all about digital. please don't forget, tune in to fox business every morning 5:00 a.m. eastern time. get your day started off right with myself and lauren simonetti at 6:00 a.m. we'll be back with you wednesday morning to get you set for the first trading day of 2019. you don't want to miss it.
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cheryl: got some breaking news to bring to you right now. netflix ceo reid hastings and chief content officer ted sorandos will be getting $31.5 million each in 2019. that's a 20% increase for sorandos, definitely earning his keep. "bird box" has left the industry blindsided with incredible streaming numbers. the company said more than 45 million of its 137 million
subscribers watched at least 70% of the movie in the first week, in a week, and that's just a conservative estimate. netflix pouring billions into content this year. many of the rivals are now gearing up to unseat netflix from its streaming throne. there's a crown joke in there because i love that show, but let's just bring in media tech capital managing partner porter b bibb to talk about this. they don't release streaming numbers. we kind of have to guess. >> they told us christmas chronicles, the kurt russell movie that opened four weeks ago, did 20 million but they didn't back it up with any substance or breakdown or demographics. same thing with "bird box." we are guessing that it's 45 million. if those numbers are real, it would be -- and it opened in movie theaters, it would be the biggest box office success in history. cheryl: what does that say to you if you're disney or at & t with time warner content, or fox or comcast, you're trying to catch up to netflix?
>> first thing you say is i'm not giving you any of my disney or fox content, and they are pulling it all back. netflix is going to be on its own. they have been paying phenomenal fees to the top talent, but for 100 years, the movie industry, for every ten movies that are made, two break even and one makes a profit. the rest of them lose money. so who thinks that netflix is going to break those odds? they say it's all in the data, but the data, i think the secret of netflix is it costs so little to subscribe, $7.99 a month. most people maybe watch one or two or three movies, if that, a month, but $7.99 doesn't bother anybody. what's going to happen, though, is for the last quarter, they lost $3 billion negative cash flow.
they have $14 billion of off balance sheet debt and they can't keep putting the $8, $10, $12 billion into new productions they have been and stay competitive. cheryl: it sounds like a house of cards. pun intended. it does. you mentioned what they have been spending on content. $12 billion just on the crown which i love that show. black mirror, marco polo, they have had disappointments. >> they are hanging fire with "roma" which was not a multi billion dollar movie, one of the major contenders for best picture oscar. cheryl: what about facebook? i have seen ads now for a new facebook movie with catherine zeta-jones. apple, amazon. all of these other players and really, apple is the big one. they have all kinds of -- they really look like they want to -- i mean, they have already got the iphone -- >> i hate to go against some of your guests, but dan ives was talking about tesla and apple.
they will come together for a partnership, but apple is the most lodgical buyer of netflix. because they have got the iphone and all of the mobile devices and they don't have any content. content creates multiple revenue streams, not just selling the hardware, but you get advertising, you can repackage and resell the content to other distributors once you have used it. the way disney and fox and everybody else is doing right now. it makes -- and with the decline in netflix's share price, now it's down 40% from a year ago, if it continues to fall, look out. i think if apple doesn't buy them, google will. cheryl: netflix, i thought year to date, netflix has done okay. >> they went up 5% on the "bird
box." cheryl: there you go. you think they are overvalued? >> it's not a sustainable business model. they need somebody to partner with. apple is a really good one. google, if they decide to get behind pixel, their hardware, they can do it. microsoft, sitting there with xb xbox. no content. cheryl: so many possibilities. porter bibb, great to see you. thank you for coming in. great to have you here. a lot to talk about there. also, it's been a big year for stocks, leading to, well, it will be a stormy end of year for times square folks. the final closing bell of the year. this is it. seven and a half minutes away. finally, we will clear the skies for 2019. hopefully it will see you looking a little better. we hope we don't have to worry but there could be market concerns. we will bring this to you, next.
(sfx: orchestra warming up) where's tommy? (sfx: stage doors opening) i thought he was with you? no jack! (sfx: piano plays "twinkle twinkle little star" tommy? (sfx: audience laughing) go get him! don't stop. keep playing. (sfx: pianist playing masterful duet) here we go here's the fun part did you do this? great job! (sfx: audience applause)
♪ cheryl. four minutes to go till the trading year is over. we're okay with that. dow and s&p and nasdaq also in the green. let's bring in gerri willis on floor of the new york stock exchange. talk about us to winners and but probably a lot of losers, gerri. it was one of those years. >> you got that right. dow leader is merck, up 35%. cancer drug keytruda very big. pfizer higher. dow laggards, let's look at that. goldman sachs, self-inflicted wound here. doing business with a scandal-plagued investment fund in malaysia. that stock is down mightily, wow, 35%. dow dupont down. look at s&p winners and losers.
winners amd, the chipmaker. best performer in the s&p up 79%. do i have that right? yes i do. 79%. on the other side, laggards, coat at this, name you haven't heard a long time, beauty company, down 67%. general electric, we talked a lot about that stock. leaders and losers. lululemon much higher. hr software company, lululemon selling women's clothing for exercise. doing well. not a lot of discounts after christmas. analysts saying that the nasdaq laggards. western digital, jd.com, kraft heinz, did that all in 60 second is. pretty amazing. cheryl: doing well for a couple of weeks. >> happy new year to you. cheryl: we have 2 1/2 minutes. this is it until the end of the trading year, 2018 end of trading year.
brian kelley. we'll talk about next year. do you think the markets can come back next year? >> i think we're very good position. look at 2018 did for us. 22 times earnings. s&p 500 or the dow had a year of over 30% earnings growth. markets are down 7% or so on a price point basis sets up 2019, 14 times numbers. that is attractive place to be. there are a lot of risks out there, unknown with trade wars and rate increases but we still think there is very good economic backdrop. at long as people are employed. they're seeing wage growth. they're investing. they're spending we think that should show up in stocks going forward. cheryl: really quick, i want to talk about financials with you before we go. financial sector, goldman sachs,
worst performer on the dow in 2018. financial sector one of the worst performers in the s&p. sometimes that is the buying opportunity we're looking for. what do you say? >> i would say so. that is true. you can buy a basket of citigroup, jpmorgan, bank of america, all below, between seven and 10 times earnings. we haven't seen these type of valuations for quite some time. right now they're stable. we wish there was loan growth showing up. until we see actual asset quality deterioration, which we've seen none of, we think these are nice entry points for long term investors. cheryl: real quick, energy sector that was the worst-performing sector of the s&p, worst-performing sector. you like energy? >> particularly within energy, there are more utilities. there are natural gas utilities have done very well over the last few years. believe it or not they're up 53% over the last three years, double that of the s&p 500. these are companies that are benefiting from the growing
importance of natural gas in the united states. we're at record levels of production. cheryl: right. >> record levels of consumption. those are all benefits. cheryl: ryan kelly, here is end. year. [closing bell rings] wasn't a great a great year for all of us. head to kristina partsinevelos and susan li. susan: stocks climbing today after president trump touted trade progress between the u.s. and dow and nasdaq snapping a two year winning streak. i'm susan li in for melissa francis today. kristina: i'm kristina partsinevelo