Transcripts For CNBC Closing Bell 20240714

Spiking over those concerns over iran also coming up on the show, House Financial Services chair Maxine Waters on why she wants a hearing over facebooks crypto play, libra. Join us, stephanie link, from levine, welcome. Are you doing buying today little bit. Little bit like what little Semiconductors Semis little broadcom i started a position last week when it fell 8 on the day and i just kind of think that the valuation makes a lot of sense and well see. Its a china proxy for sure, so something good has to happen on trade but i think the valuation is discounting a lot stephanie i was talking to one senior trader who said that the threat of a cut on Interest Rates is more powerful than the cut itself and that therefore its harder to get this same good news again. Likely be dialing back the promise of a cut or it will be the cut itself youre coming from a much lower base than historical levels but it was good news that we got i think the commentary yesterday was exactly what was needed. Now we watch the dollar and now we watch the consumer, right santa fe lower rates will have an impact and those are big, powerful items. Lets get to the reporters we have covering the action today bob pisani is here at the stock exchange, eamon javers has detailed on the iran briefing, bertha, Rick Santelli and mike santoli here with his market dashboard but bob, lets start with you iran and trade headlines dominating the markets we did hit an intraday high, well see if we close 3 points above that right now you see the comments in the middle of the day, president making comments on iran then sort of came back a little bit, some hope for trade talks in the middle of the day risk on throughout the day i mean, all throughout the day metals, semiconductors, industrial stocks, energy stocks, all doing really well. Thats what you want to see when you see risk on. New highs over 300 at the New York Stock Exchange, big dow names, honey well, travelers, mx, merck and visa all at highs. Going public rather than ipo, its technically a direct listing. Theres slack. Remember something reference price, 26, open, 38. 50 right now trading at 40 doesnt matter, folks, up 55, i think weve settled where the direct listings work or not in the ipo market, lets just call it that in general, certainly still red hot. Back to you. Great work covering that earlier as it did begin its trade. Lets turn focus to the middle east, rising tensions with iran. Eamon javers has the latest from d. C. Weve seen some arrivals as some of the Administration Officials arrive here at the white house for this 3 00 p. M. Briefing weve seen the acting secretary of defense arrive, the cia director, the secretary of state all just within the past couple of minutes all apparently getting a briefing here. We dont know exactly what the content of the briefing is going to be about this situation involving iran shooting down a u. S. Drone in the gulf region late yesterday what we dont know is what the u. S. Response to that is going to be but the president gave us a little bit of a hint here as to how he sees all of this earlier today in the oval office when he said this. I find it hard to believe it was intentional, if you want to know the truth i think that it could have been somebody who was loose and stupid that did it well be able to report back and youll understand exactly what happened but it was a very foolish move. Reporter so the president there saying it was a very foolish move by the iranians but also suggesting that it might have been an accident. It might have been a rogue iranian general and not authorized by the iranian government that apparently gives the iranian side a diplomatic and military out here if they want to take it well wait and see what intelligence we can get from this briefing as we expect congressional leaders and those key Administration Officials i just mentioned all to be here at the white house receiving some information over the next hour or so. Well see if we can get any indication of what that information is when they emerge from the meeting eamon, thank you. Oil is rising today amid some of those tensions with iran dom chu has more. Reporter everything that he just told us is manifesting itself wti crude up 6 , a massive move higher, world benchmark crude, 64. 57, 4. 5 to the upside and that means energy, one of the best performs sectors today, that sector up about 2 , one of the major etfs that tracks it is having a good day. As to put things in context and permit, we are watching crude oil prices because they have been trending higher just very near term. You can see this little bottoming process and we are up, by the way, about 12 since the lows that we saw in early june here but still significantly below where we were in october of last year so watching crude prices, wilfred, sara, on all that uncertainty, throw in a possibly weaker dollar and fed Interest Rate cuts and you get that supportive environment for the commodities prices, back to you. Very supportive indeed. Dom, thank you very much for that the nasdaq higher for its tenth time in 13 sessions. Lets get to bertha uptown the risk on trade helping the nasdaq composite and nasdaq 100. Both within about 2 of their early may closing highs. Chips have helped drive tech gains all this month but today its really software thats the real leader, strong gains on the back of oracles strong earnings and adobes results, thats sending adobe and microsoft to alltime highs while tech tops the list, about 1. 5 dozen historic highs in the nasdaq 100, costco, mondelez, ross are among the consumer names hitting alltime highs sara yeah, a lot of love for all groups today, bertha, thanks ten year treasury yields falling below 2 for the First Time Since 2016 Rick Santelli joins us all treasury yields undeed all global sovereign yields are under pressure, a two year note as you see on this chart hasnt settled at these levels since october of 2017. It was down to 169 earlier, 24 hour chart of ten year note yields you could see we clipped off 197 early, we bounced a little bit, this is the sixth day in a row weve seen drops on the closing basis for ten year note yields. Finally open it up to november 16 last time we closed under 2 , its a real horse race at this point as we are sitting on 2 there may be some significance to this close. Pay close attention. Sara, back to you. Back to mike santoli for the market dashboards. Mike thanks very much. Going to start with triple b, buy, buy, buy . A little bit of bond stock valuation work, feeding off the fear, lot of anxiety built up in the market before that fed meeting. Well see what that means and initial pricey offerings, great ipo market also getting a little bit expensive and ahead of the leaders looking at the leading Economic Indicators and what that implies for the fed as well so first, bbb, take a look at the s p 500s forward price earnings multiple. This goes back five years. So what you see right here is this peak was near 19. That was in january of 2018. Now, that was handicapping a 20 increase in earnings so the actual earnings in 2018 meant that this was a lower valuation multiple, it was more like 17. 7. Here we are now at 16. 7 so still below where we were at that point and around where we were at the market highs of last year now take a look at the bbb Corporate Bond yield this is the index of bbb, thats the lowest Investment Grade case so around 3. 7 is where you got to right here because theyve been tracking treasury yields lower and that, by the way, right where it was pretty much in september of last year as well as in january of 2018 so basically, you have a similar level of Corporate Bond yields and a lower valuation, that means, to me, that equities cant get you in too much trouble unless that changes. The cost of corporate debt is down that supports price, so no matter how we got here, this is a reality in terms of how equities get valued over time, guys mike, is there a sense with the bond market, then, that people are looking at the level which is 2 and thats relatively supportive of these valuations as opposed to the direction of yields which might be a little bit more scary well, the direction in itself is scary but its more scary if Corporate Bond yields are not tracking lower as well in other words, if people are saying, look, this is a risk off environment, we think theres a recession, if the Corporate Bond market thought that Corporate Cash flows were going to be compromised in a quick way, in a big way, then you would see the Corporate Bond yields drifting higher and i think that thats a little bit of comfort right here now, look, this can change quickly and it did change quickly a couple of times when the market was at privacy highs but right now this helps explain, i think, why the equity market has managed to stay supported through all this noise. Mike, thank you very much we will see you again for the rest of the market dashboard to come during the show still to come, much more on this record setting day on wall street well discuss what the next market catalyst could be we have, of course, got were watching whether we can get an s p record close as well up next, a big exclusive interview with House Financial Services chair Maxine Waters, why she says facebook should pause its crypto project until congress has a chance to hear more and as we head to break, heres a check on our closing bell data tracker, the philadelphia feds Manufacturing Index plunging to june to a reading of just 0. 3, down from 16. 6 in may. It was the lowest reading since february also weekly jobless claims today, fell more than expected by 6,000 to 216,000 last week. Dow is up about 200 points, 50 minutes to go until e osthcle. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Xfinity mobile is a designed to save you money. Whether you use your phone to get fit or to find the perfect gift, youll use less data with a network that automatically connects to millions of wifi hotspots and the best lte everywhere else. So you save hundreds of dollars a year on your wireless bill. Xfinity mobile has the best network. Best devices. Best value. Simple. Easy. Awesome. Click, call or visit a store today. The s p 500 hitting a record high today and heres the sector heat map everybody is higher at the moment, led by energy. That sector up 2. 3 , Oil Prices Surging on these renewed tensions with iran industrials are having a good day, though, information technology, materials, all of those groups up 1 or more financials are doing the worst and they are up about 0. 33 . Getting a boost with those lower treasury even with everything. Facebook getting bipartisan attention in washington, House Financial Services Committee Chair Maxine Waters calling for the social media giant to halt work on its cryptocurrency, libra, and Maxine Waters joins us now good afternoon to you, chair waters, thank you for joining us thank you very much im delighted to be here as we just mentioned youve called for facebook to stop work on libra are you opposed to the idea of libra itself or to the fact that facebook is the Company Behind it well, ive asked them to place a moratorium on moving forward with libra we dont have a Regulatory Agency to oversee who they are and what theyre doing this is like starting a bank without having to go through any steps to do it and of course, we have some questions about facebook and some of the ways that it has conducted itself in the past, but theyre creating their own cryptocurrency theyre going to be located in switzerland. Its going to be an alternative to the dollar and so yes, i think its very important for them to stop right now what theyre doing so that we can get a handle on this we have not held any hearings. We have got to protect consumers. We dont know who alls involved in this. We know that theyre about 27 other companies in this network and we are talking about Big Companies that are involved with them where they will all be, you know, an alternative to the dollar, so this is serious and we must ask them for a moratorium so, chair waters, i mean, cryptocurrencies have now for a while been somewhat of an enigma for regulators the s. E. C. Has sort of taken charge of them as an investment security, weve seen some work from the cftc, antimoney laundering but really nobody from a regulatory perspective has a handle on this so whats taken so long on that front . Why now . Well, i dont know, but the fact of the matter is youre absolutely correct theres a Consent Order from the ftc, hud, you know, has had them under investigation about what they have done in dealing with discrimination in housing is what it amounts to, and so you have just basically identified what is wrong with not having a Regulatory Agency overseeing them weve got to protect our consumers. We just cant allow them to go to switzerland with all of its associates and began to, you know, compete with the dollar without having any Regulatory Regime thats dealing with them and so were asking them to please place a moratorium on their actions until we have an opportunity to hold our hearings both on the house side and the senate side and of course theyve got to deal with some of the other issues that have been identified about them. Theyre in control of huge data and how are they using that data one of the things we understand is that they have allowed that to be used with the russians in the latest, you know, campaign that we had in this country and so there are a lot of issues with facebook and facebook is, you know, under investigation, h. U. D. , again, is concerned about the way that they have conducted themselves on the internet that basically redlined out whole communities that they did not want to see their advertising so we need to get a handle on this and no matter what has not been done, now is the time weve got to do it and we should ask them as we are doing or force them in any way that we can to place a moratorium on this new cryptocurrency that they are putting into place. I was actually asking about cryptocurrency regulation but you bring up that facebook hasnt been properly regulated seems like both of these issues have been complex for congress to get a handle on well, i do know that they were before the senate and that a lot of questions were raised about them and perhaps there was not a lot of understanding but regardless to what has not happened, we have got to get a handle, facebook now is under scrutiny theres a Consent Order out from ftc, and so we are looking at their practices, were looking at the way that they do business, and while we are doing that, they have moved on to develop this cryptocurrency and to organize in switzerland out from any scrutinies that perhaps we should be having on them and so we are now going to move and were going to move aggressively and very quickly to deal with what is going on with this new cryptocurrency that they are creating chair waters, we have the Bank Stress Test taking place over the next week in the capital return programs to be announced next thursday. It is widely expected by the Analyst Community that all of the 18 banks being tested will pass the stress test and go on to announce capital return plans that could see buybacks and dividends as much as 100 of their earnings do you think thats the right use of their earnings . No, i dont, and you know that were concerned about that. We had a hearing this year which we had not had in ten years with, you know, the ten ceos of all of the large banks, and we are asking them about their practices and we are trying to make sure that they conform with some of what we require in doddfrank and all that and so were working aggressively to deal with oversight and our own responsibility for our banks and our big Financial Institutions and no, we dont think the buybacks are in the best interest of the investors, so we are taking a look at that. Well, i mean, it is of the interest of the investors, though, chair waters, to see those stock buybacks but you said youre working with them to make sure they conform to doddfrank these are the doddfrank stress tests, so if they passed them, are they not permitted to do as they like with their capital no. We do have requirements for stress testing and for almost five years most of them had not passed their stress test but they corrected themselves and they have done better and i think most of them now have passed the stress test but and there are some who would like us to get rid of the dress test altogether but were not going to do that the stress test as we put together in doddfrank reforms will still be in place and we still expect them to be able to pass the stress test wanted to ask you, congresswoman, about someone who regularly testifies before your committee, jay powell, the fed chairman recently, President Trump has really upped his attacks against him, called for lower Interest Rates, called for him to go for easier money and stimulus. The fed chairman indicated hes going that direction but didnt do to and there have been reports that hes looking at demoting him in your view, would that be legal and would that be appropriate . Well, first of all, the president of the United States is totally inappropriate there should be no interference with the feds at all the feds have tremendous data, they have a lot of information, and they are very, very focused on what to do about Monetary Policy the president has no business interfering, but this is typical of the president he doesnt respect the laws. He thinks hes above the laws. He doesnt respect the constitution, and so he is trying to take control of the feds and tell them how to conduct their business it is outrageous, it should not be done, and i think so far, powell is holding his own and hes resisting what the president is attempting to do. And the congress of the United States needs to continually say to the president of the United States, get out of this. This is none of your business. You cannot run the fed chair waters, we spoke before, you and i, about wells fargo shortly after tim sloan announced his departure. They still havent filled the ceo role since then. Is that something that concerns you and are there any particular characteristics youd like to see in the next leader of wells fargo . Well, absolutely, we should be concerned about it. And it would be in the best interest of everyone if they could have filled that position quickly. However, i think there may be some reticence by those who could perhaps, you know, fill that position because of the culture that have been developed inside of wells fargo. And so, its not easy, and wells fargo, of course, is just too big to manage and so i think that this is getting in the way of them being able to find a ceo whos willing to step into it but theyre going to keep looking and they will eventually get someone. I would like it to be done sooner than later, but it is taking some time of course, yes, wells fargo still presents us a problem, because until a new ceo perhaps gets in there, and is able to undo the culture that has developed over the years, we may be presented with some of the same problems that they presented to us such as making out, you know, accounts and peoples names that they didnt know about, forced insurance, some of those things we are looking at that, we are trying to monitor that as closely as we can but wells fargo emerged as the very kind of bank that we have to be sure that we regulate and that we do not allow to develop in the way that they have done. We have fined them over and over again and it has just been the cost of doing business and we cannot allow that to continue to happen in the banking community. Representative Maxine Waters, thank you very much for joining us well, youre certainly welcome. Thank you. Representative Maxine Waters there. Steph, whats your takeaway, first of all, on the facebook side of things do you think they are going to be slowed down ormuch like their core business, do you think this is just going to be hearings at most and no legal action i think its going to be hearings, a lot of hearings, but like the last hearings when zuckerberg was interviewed, it was very obvious that there was such a learning curve that congress had to go to and go through to understand exactly what facebook is all about look, i think this news on crypto cryptocurrencies at them. Yeah. Right. But i actually think facebook validated cryptocurrency now, if they want to do hearings and they want to have the regulatory bodies really be involved, set it up already, get it going, make it a high priority, make it happen quickly so that we can get these answers. I think the priority for congress otherwise ten cent might launch something absolutely. Others will. Or how about those 27 other companies that are part of this whole partnership . I mean, at the end of the day, i mean, these are really they all validated this situation and i think that that obviously is Alarming Congress and i understand it. I do im not saying they shouldnt do hearings but i mean, it was very clear that shes also very facebook regulation over cryptocurrency regulation. Both of them seem to be very tricky theres no doubt that she was focused on facebook in general too, right and the regulation shares of hershey under pressure today after one firm downgraded the stock and former New York Stock Exchange president tom farley will be here to break down slacks first day of trade and whether other unicorns will come to the market with a direct listing like slack has, which is rgg day. Back in a couple minutes dont go anywhere. It has to keep up with sales, supply chain, inventory it needs to track it all, from cincinnati to singapore. Ooo and protect it all. Customer records, our financials, they better be secured. But i also need easy access, to manage data across my clouds no matter where it lives. So if an auditor shows up, i can be a step ahead. Thats the cloud i want. Is that to much to ask . Expect more from your cloud. Ibm cloud. The exus es. Every curve, every innovation, every feeling. A product of mastery. Lease the 2019 es 350 for 379 month for 36 months. Experience amazing at your lexus dealer. Welcome back to the closing bell time for word on the street, goldmansachs lowering its price target on tesla to 158 from 200 the Firm Maintains a sell rating on the stock, citing high volume estimates and unsustainable demand Piper Jaffray downgrading hershey today, saying valuation is at peak premium to its peers and Wolfe Research giving netflix an outplatform rating, citing the companys unparalleled global scale. Steph, which do you want to hit . I think the hershey one is actually interesting because all of these stocks have been bid up so high and some of the food stocks are actually doing better in terms of the sales turn around than the others and hershey is not one of them its also not every day you get a sell 24 times forward estimates, the stock is up 28 year to date, i think you take your money and run and say, i got what i wanted from this. Absolutely staples are so expensive right now. This is one of the reasons why i like walmart because its trading at a discount to kind of ali like the staples peers its not that cheap but its a lot cheaper. Its also staples like Proctor Gamble and mondelez that are growing i have sellers remorse on p g, what a great job theyve done but its trading at 24 times and thats a very hard when youre going to see only about 2 or 5 organic growth. On the netflix score, the sup sub heading of the wolfe quote is you can buy netflix and disney if you do go through their bear case, if disney plus does take from netflix, then youve got some downside on the stock they just think that disney plus is going to offer a Different Service and not cannibalize netflix. Thats the risk, though. I think they both can coexist but i think disney does get much more content rich and that will be much more competitive to netflix and then you have to decide, do you want what kind of multiple are you willing to pay for that and netflix is obviously trading at a much higher multiple and disney is getting rerated higher lot of upside for them. So we have just under 30 minutes left of trade here are the three key things driving the Market Action today dovish fed driving stocks to record levels, treasury yields falling and oil spiking on concerns over iran we are up 228 points on the dow. Time now to get a cnbc news update with sue herera hello, sara hello, everyone, heres whats happening at this hour a bus fell into a deep gorge on a mountainous road in northern india killing at least 25 people 35 others were injured and hospitalized the cause of the accident is currently been investigated. The humanitarian crisis at the southern border is taking a toll on Border Agents the head of the Border Patrol speaking to house lawmakers saying her agency is overworked and overwhelmed. I have been forced to divert 40 to 60 of Border Patrols manpower away from the border as we process and care for families and children that have flooded across our southern border so far this year. And the Tampa Bay Rays have received permission from Major League Baseball to explore a plan in which the team would split its home games between tampa bay and montreal under the plan, the rays would play in new stadiums in both cities the number of games in each city has not yet been determined youre up to date. Thats the news update this hour, guys, ill send it back downtown to you. Sue, thank you very much. We will see you next hour. Lets send it to mike santoli for the second dashboard. Hey, make. Hey, wilf we keep getting fresh evidence that investors got up in a defensive crouch today we got the American Association of individual investors survey and we saw more people saying they were bearish about stocks than bullish. This represents six weeks, six straight weeks, in which more bears than bulls have come through on this survey now, there was a little bit of a bounce but still negative and the last time we had six straight weeks below the flatline here was in early 2016 so what you see is when you see these extremes instead of by the way, this is reflected in the Merrill Lynch fund manager survey, today rbc had its own survey of Fund Managers all saying they really had gotten quite defensive and it helps explain how the market has continued to lift even with the data being bad and yes, of course, people relying on the fed so usually when you have kind of a real kind of giddy breakout and people love the market, and you see many more bulls than bears, thats more the time to start worrying that the markets gotten a little bit frothy and stretched to the upside and so we see thats not really the case right now. We can burn off some more of this pessimism i think the Consensus Forecast is 2,950 usually thats not how rallies end, when everybody says, aha, we reached our target and now were done mike, thank you maybe thats how the year ends it could be we could go all over the place and settle back here, sara, thats true. 2950. 83 as things stand thank you very much for that despite the rally and hopes of a rate cut, one top Portfolio Manager says its hard to see upside in equities from here take a look at shares of slack on their first day of trade. Heres what the ceo told cnbc earlier today. I think theres a lot of investors who are used to a model where they get a small allocation, eyanth wted a big one, in detectiirect listing att they have the opportunity. Call j. G. Wentworth phone ringing j. G. Wentworth, how can i help you get cash . I want to pay off my debt and move into my own place. But i need cash now to do it. Do you get regular payments from an Insurance Company . Yes. In exchange for some or all of your future payments, we give you a lump sum of cash now. Call now, and youll also get 25 for receiving a quote. announcer call 877cashnow. 877cashnow. Thats 877cashnow. Welcome back to the closing bell, 24 minutes left of trade, as you can see the dow is up by 0. 9 , as is the s p, nasdaq up 0. 7 , record all time intraday high earlier in the session for a record all time close we need to be above 2,945 which we are at the moment on the s p 500 lets discuss markets more manny and kristen from Citi Private Bank join us now maddie, whats your take on where we stand with these equities here . Are you buying further at the moment were taking a little bit more of a cautious approach so weve seen an overabundance of corporate caution here, despite the fact that we do know that the fed is likely going to move potentially in july. We still think that we need to see some deescalation in the trade rhetoric and some good oldfashioned Earnings Growth to actually be able to sustain a rally above 3,000 so were feeling a little bit cautious here moving more towards the credit complex than we are in equities. Kristen, did the fed change anything for you no. So at this point in time, were actually the same as maddi mentioned. Were a little bit more cautious, looking at u. S. Equities hitting alltime highs. We want to go into next week with the g20 summit being a little bit more cautious simply because theres still no resolution on trade. And so the market is behaving as though the fed is going to be the savior here but until we get more information about trade and the outcome on trade, that does have the impact to affect corporate earnings and to potentially see a pullback so were sitting tight until next week theres some options strategies that you think are good ways to protect your portfolios at the moment talk us through those. Absolutely. One of the things, instead of simply adding to your portfolio or making these tough decisions, between staying invested or going into cash, we love options strategies in this market so one interesting thing thats happened is that weve seen this rally in the s p 500 weve seen the collapse of volatility if you are someone who believes that were going to see a rally in u. S. Equities on the back of good news next week, you can buy very cheap upside to participate over the next two months so dont go long. Actually go long via options and on the flip side if youre someone whos fully invested you can also take advantage of that low volatility to buy protection over the next couple of months and really kind of insure your portfolio such that youre immune regardless of the outcome. And you said you like some opportunities right now in credit, maddi. Were feeling much more constructive in the credit complex versus equities. We just want to go for a lower beta approach. We do believe in the upside potentially of equities at this point but its somewhat capped given the escalation in trade so in credit, we prefer more of the high quality approaches, some of the securetized credit market that leverages the burgeon and really resilient u. S. Consumer stephanie, we talk a lot about the way bonds have moved since the last s p 500 record closing high on april 30th the yield on the ten year has gone from 2. 5 to 2 , 21 fall in the yield and people saying thats a relatively bearish move alongside equities hitting a high when you factor in the golds up nearly 10 over that period of time and oil is down 10 , even after todays move, does that not worry you . Oh a lot worries me because theres so much uncertainty, right . But i think that we have to just get through next week. One way or the other we will have more certainty, right . And we will know which sectors and which stocks to own within the equity complex right now, as you guys know, ive been doing more of a barbell, i own a lot of defensives but i also own a lot of cyclicals because i didnt know at this point and you cant be too extended on sectors and being overweight on sectors because you just dont know and you dont want to get hit so hard that you cant make a comeback when we get that certainty but when we get the certainty one way or the other i think the multiple can expand basis thats what weve seen all yearlong as we chip away at these uncertainties weve gone from 13. 9 times forward estimates on the s p 500 to as high as 17. 3 times, weve pulled back to 16 times maddi and kristen, thank you very much. We have 20 minutes left of trade. Still to come, an exclusive interview with former New York Stock Exchange president tom farley well talk about slacks debut and how investors could get involved in direct listings. The leaders in the s p 500 today, plenty of them to go around, the market, the s p on pace for a record closing high stay with us here on closing bell. Welcome back were right near session highs, up a full percent now on the dow and the s p. Shares of kroger trading low, down 1. 7 after the Supermarket Chain reported earnings this morning. And sara has more on those results. Wall street not super impressed with kroger. Krogers earning did manage to top expectations, also they kept their guidance intact but still this is a company struggling to gain traction with the market. Same store sales were up 1. 5 . Overall sales fell 0. 7 and another highlight in a good way is Digital Sales which were up 42 . I did talk this morning to rodney mcmullen, the ceo, ahead of his Earnings Call he said on a positive note the first three weeks of this Current Quarter are actually tracking better than q1 which they just reported he also said during the quarter we saw highlighted like simple truth, their organic brand, double digit sales increases there. And they are making progress with controlling costs as for the headwinds in the quarter, mcmullen cited pharmacy in particular really weighing on margins as an industry issue and so far, as far as the macroenvironment, he says hes not seeing any impact on Consumer Confidence from all the tariff drama local shoppers are actually buying more Premium Products like cheese and wine but this company is in the middle of a transformation they call it the restock kroger program. I asked mcmullen, where are we in that, he said were about fourth or fifth thing of the turn around. Many more to go. Look, here are the issues. Sales overall have slowed and competition has grown. If you take out some of the fuel help from the quarter and you also take out some asset sales they managed to do, the quarter would have looked worse. Thats according to some of the analysts and investors i talked to grocery business in general is lousy and when youre two biggest competitors are amazon and walmart, both on top of their game when it comes to low prices, massive Digital Investments and also getting a lot more love on wall street, its going to be tough what do you do with a stock like this i mean,its cheap its trading at ten times earnings the yield is over 2 so i get why people could be kind of interested in it relative to those other names youre talking about but they have a long way to go and in the meantime, you do have walmart, you have target, you have costco, amazon, they just are better growth stories. They have better momentum at this point they have already invested substantially and so theyre probably in the seventh or eighth inning, not amazon, but these others, in terms of improving their stories and their company. Walmart, though, 23 times to krogers 10. Its an enormous gap yeah. Target managed to turn around it was a little bit later in the story than walmart was is that an opportunity with that level of p. E. Difference the gap between the two i think that targets doing all the right things but its been a good stock too and there is still, i mean, its not all is going right for target at this very moment but yeah, i think that if you wanted to choose between the two, i mean, i just think that the momentum at walmart is so goodat this poin and it acts more like a staple target actually has little bit more beta, little bit more juice. The other thing you could say for a company like kroger is they really are largely unaffected by the tariffs. I mean, if food is their only business, unlike a walmart, for instance, which does import apparel from china if the next tranche of tariffs go through, they dont see it necessarily in the fresh food business or in the consumer i just dont know if you need to be there. Right i think you maybe move on to a different sector or different group. We have 30 minutes left of trade and we are session highs just moments ago which was up a full percent for the s p and the dow, the nasdaq just a little bit behind we are on track for a record alltime closing high for the s p. Well have your last chance trade coming up. You should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. I felt completely helpless. Trashed online. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. Intand ux f sport,rst of its kind lexus ux also available in hybrid allwheel drive. Lease the 2019 ux 200 for 329 month for 36 months. Experience amazing at your lexus dealer. Welcome back we are on track to hit a record closing high with ten minutes to go in the session. Lets check in on individual market movers. Shares of carnival not partying, down 7. 6 . The cruise line cutting its full year earnings outlook due to new travel restrictions to cuba. That stock, a loser on earnings which has been somewhat of a pattern for carnival lately. Lets get to our last chance trade. Weve got just under ten minutes in the session to go stephanie, a little outside choice today yeah, i thought id bring you something different. Zimmer they have a fairly new Management Team and theyre rebuilding the culture in fact, they Just Announced a new cfo today which initially caused some consternation, skok recovered as this new ceo is doing all the right things, putting in better people, upgrading the quality. They have new products coming down the pipeline. Thats the most important. Hips, knees, robotics, they havent been anywhere in robotics and thats where the growth is. This should lead to better than expected Revenue Growth and i think youre going to see an acceleration throughout the year and better margin upside as well happens to be the cheapest med tech stock out there and i think with a Free Cash Flow yield of about 6. 4 i think thats pretty attractive does it trade like the typical healthcare sector has or not really it trades with the med tech names but it has been a laggert. This new team is generating a lot more buzz within the company and theyre executing better healthcare is the worst performing sector now taking the place of financials in todays overall rally, just a lagger for the whole year its politics its the whole thing but i think med tech is kind of insulated to that so i want to get a laggard within med tech that doesnt have the political headwinds. Healthcare might be bottom but its still up 0. 5 in the s p 500 at session highs of a full percent, set for a record alltime closing high, were going to keep an eye on that as we approach the close but canny breath will report earnings and aditi has a few key things to watch. The key thing to watch on canby growth earnings is production capacity. Revenues are dictated by the companys ability to scale up and meet demand. If canopy misses on the top line it could be an indication of weakness canopy is the current Market Leader in canada with 20 share. Analysts will also be looking out for any numbers of canopys runes outside canada and finally well approximabe looking for gn how its prepping for canadas market expanding to edibles and ben beverages in december. We have seven minutes left to go and we are in territory for a record all time closing high on the s p intraday weve got highs if the dow and the s p both up over 1 . Lets trade the close with mike gibbs. Mike, hows this sort of setup for shortterm momentum . Is this going to continue for the next couple of days or weeks . It may carry for another day or two but i mean, you have to realize the markets up 8. 4 in the last 13 trading days, look at the internal technical indicators, things like rsi, theyre up in the 90 range, theyre not going to 100 , by the way. 23 y if you look at 8 of 11 s p gig sectors the percentage of stocks above the tenday moving average are 80 or better. Those are all extreme readings so you get a situation where the market needs to cool off just a little bit you look at the valuation, were getting close to 17 times next 12 months earnings, thats where we peaked in the last 5 years at least for shortterm periods thats where we peaked last september as a matter of fact so youve got that. The market got its good news, the fed did everything but cut yesterday. The news on the g20s gotten better on trade and although the backdrop of this markets fantastic, you look at the technical indicators, theyre good, break out to a new high, thats fabulous but for the shortterm markets just dont move in Straight Lines so we need to consolidate this move and thats probably coming here pretty soon. I think the market will get a little cautious above as we come into the g20 meeting because no one really knows whats going tohappen in that meeting or what will come out of it we think well get some okay news, not going to get a deal or anything like that but the markets in good shape for but shortterm weve got our move, we need to cool off a little bit. I mean, the other thing is the fed, mike. I get that the fed gave a pretty strong signal yesterday but theyre looking at cutting Interest Rates but the market at this point is pricing in 100 chance of july and more than a 50 chance that this is a 50 basis point cut. Thats sort of double what you might normally see is the market getting too aggressive with the expectations for the fed . Maybe, maybe not. I mean, the markets been doing that, the markets sort of pushing the fed in that direction and as far as the feds concerned, they probably have room. They may have gone too far last fa fall, youve got inflation, pci is under control, manufacturing here in the u. S. And its slipping if you look at the trends there, theyre slipping if you look at the Economic Data weve had recently, its okay. The Services Side is great, which is fine, the consumers okay jobs are still great but there is enough room for them to do that, and i think that theyre probably going to take their cue from the markets and may get that insurance cut that the markets been hoping for, as far as the timing goes, im not quite sure, you know they have told us theyre going to be data dependent so a lot of it will depend on what comes out of the g20 meeting on is it positive is it a big negative . Well probably do it weve got Economic Data that well have to follow on a monthly basis in a weekly basis that will influence their opinion, so the market may be ahead of themselves as far as the timing goes, but i think the markets going to get their cuts all right, thank you, mike gibbs. Under four minutes to go before the session looking at a record closing high for this market lets go to mike santoli for the third dashboard of the session calling this initial pricey offerings obviously the new issue market is one of those areas that seems like its running a little bit hot obviously the slack ipo very well received that direct listing were going to talk about. This is the renaissance ipo, its a basket of relatively recent etfs, thats a 40 move, obviously well outperforming the s p and also the s p 500 growth sector, this ic is an offshoot, an exaggerated version of the Growth Stocks that are not already in any index so you have a ready kind of audience of investors who want to play something now that theyre in it look at the forward valuation of that same etf, its at 46 times forward earnings a lot of talk about how unprofitable ipos are in there, ubers in here, that has a infinite pe ratio so you see right here, theyre starting to get a little bit stretched and i wonder how thats going to play across the overall market as we get to new highs and figure out what areas maybe have gone a little bit too far in a hurry. Lets get a look up at the nasdaq with bertha one of the reasons, mike, that the s p today is at an all time high is that the s p tech sector today also hitting an all time high. Oracles earnings certainly helping to move things, that comes on the back adobes great earnings, along with microsoft today, thats really the strong point. But we also had a strong ipo here as well and that was grocery outlet, the Retail Grocery outlet company, priced at 22 above the range, opened up about 40 , its going to close off a little bit off the days highs but still a very Strong Performance bob . And bertha were going to do it, take a look at the s p 500, not only in intraday historic high but a closing high. Remember, 2,945, we needed to get over to do that. Energy, metals, semiconductors, industrials, all stuff that moves on trade was strong here today and of course we have central bank euphoria generally across the world these two things moving us to new highs. 300 more than 300, the New York Stock Exchange, some big names, merck and visa and honeywell, american express, traveler insurance stocks have been strong as well. Just want to remind you whats gotten us here to the new highs, sector leaders that have been sitting at new highs so, Real Estate Investment trusts, utilities, tech just shy of a new high, Consumer Staples have also been very strong, Consumer Discretionary also just shy of historic highs, lets not push it too much but theres a lot of laggards out there and i dont want to tell you everybodys doing great. We see the energy stocks, were 20 below the old 52 week highs in energy, the russell 2,000 is also lagging and thats about 10 below its old highs. The dow transport similar situation, also about 10 below the highs. Weve had some tough times for a number of sectors, metals and mining just got killed on the tariffs issue. Theyre still about 20 below. Fa pharmaceuticals, theyre lagging 15 or so. Medicare for all, thats prevented them from really participating dramatically in the rally. Retail stocks and other sector, about 20 below their highs, they obviously got hit on the tariff concerns and the relentless move up of amazon overall. Semiconductors aresurprised they were the poster child for the trade wars theyre about 11 off and theres slack, by the way, folks, remember, 26 was the reference price, opened at 38. 50, looked like thats going to be a win ener as well and theres the Dow Jones Industrial average, the closing bell, closing up, more importantly, s p 500 closes at an historic high yep, thatll do it all time record close. Welcome, everyone, to closing bell, im sara eisen. And im wilfred along with mike santoli, Senior Market commentator, lets check in on that record alltime closing high for the markets the s p, 2,954, surpassing 2,945 its last closing high on april 30th, about 1 gains, the nasdaq up, the russell up, every sector higher yields, though, slipping significantly, also Oil Prices Surging on that geopolitical concern. One thing i would point out in terms of what did best today, in the overall market, energy, no question, the iranian tensions affecting the price of oil but also industrials and materials really cyclically oriented sectors which is a switch from what we saw yesterday after the fed celebration, it was all a low Interest Rate play so you saw the bond proxies like the staples and utilities and reits do better. Well see which one wins out they continue to see the market go higher. Dollar down as well has helped some of those exporters which is lipged to trade, yields down, dollar down, all of that playing into it. Fed, its trade hopes, we have got a lot to talk about today on this record market day. Stephanie link still here, Portfolio Manager, along with tom farley, former New York Stock Exchange president and chairman and ceo of far Point Advisors tom thanks for having me back you got into the cheers and the applause there as if you were still out there in the podium it feels good it is like old home week coming around and seeing all my great friends. It feels good because were at a record close, we had a direct listing, this is a tom farley kind of day cnbc has been mustwatch tv all day. I havent figured out which headline to dive into but the direct listing is big news, airbnb, if they were watching this, they need to have their heads examined if they too dont direct list. This was a home run, ended up closing 1 from the price, slack ended up closing 1 from the price at which it opened the average ipo is 14 away from the opening price. It was a home run. This is an innovation in the Capital Markets thats here to stay we are going to dive into that in much more detail with tom and stephanie in a moment. Mike, lets go to the broader markets, though. Record alltime closing high since april 30 td, the last one, weve been down, weve been up but whats changed since then to take us through that i think the fed gave investors permission to stop worrying about the message of low treasury yields. Because the fed is potentially and now signaling that in a month and a half or a little less than that, theyre going to reduce shortterm rates likely, in which case no longer will we have an inverted yield curve, no longer will the fed be considered to be maybe behind things if things are worsening the markets also banking on the idea that if we get rate cuts it will be a temporary targeted measure and then maybe we can either go on hold after that because the economy does not need rescue, it just needs protection against something these are all the hopes that are building in. I think the other piece of it is, positioning and sentiment, it was negative, it was too cautious, youre seeing some relaxation of that in the form of higher stock prices i wouldnt be surprised we get this new high, tomorrow you have this big expiration, this quarterly expiration and then maybe we wait and see if this was more than just all that. I wonder also, stephanie, if this makes the setup that much harder for another key event risk next week weve got g20, highly anticipated sideline meeting between trump and xi with stocks at a record high its really challenging, but mikes point, and to your point about cyclicals leading, theyve actually lagged all year so actually the expect takes are not that high. Theyre quite high for the defensive sector in my opinion, meaning staples, utilities, reits and that sort of thing then, sara, we get past the g20 and we have earnings and earnings are really going to be the driver, the next driver im not sure its going to be the catalyst to get us another leg up because we know the Second Quarter wasnt so good and numbers are going to have to get recalibrated a bit may make it up but Second Quarter numbers have to come in. With the Oil Price Spike is it rare to see such a big move in the oil price because of geopolitics and it not affect things like equity markets as well i would say probably is rare when its strictly a geopolitical move in oil but it really matters what oil is coming off of which is a pretty decent slide so you have the prices not at a worrisome level already. So therefore, higher prices are almost considered to be, you know, yet another risk on indicator as opposed to something thats going to be disruptive to the economy. Also since we have become such a major oil producer, isnt higher prices dont they have a better effect on the overall market and the economy exactly its not all subtraction when you get a higher price oil mike, can i ask you a question something i had trouble wrapping my head around, stock market are alltime highs, Economic News is generally good and the story still is were going to be cutting rates not just once but three times. Is this possible that this is putting adding fuel to the fire, a la greenspan half a generation ago i have to consider that within the range of the risks, yeah, i mean, again, were at all time highs but really havent gone too far in a year and a half so i just i dont think that the fed is necessarily focused on the level of the stock market right now but credit even looks fine right everything looks fine thats why i feel like they have to position it almost as a little bit of a its a cliche already, the insurance policy, but just a little bit of a cut to just restore Business Confidence and maybe give a little bit of a spark to inflation. I mean, the idea that they could fine tune inflation after years of missing the target with a half point cut is a little bit farfetched but i think thats what theyre going to have to try to do. On the flip side, tom, would you rather see a Federal Reserve remain too tight in a slowing economy . I think i would im in the deals business and im very close to the debt market and im struck by leverage levels. And if you look at them on a coverage ratio basis, they look fine because Interest Rates are so low the bigger were i have is that a lot of these private businesses are leverages five, six, seven, eight, nine times ebitd. When rates go up, it could be cataclysmic so i see that as the single biggest risk longterm to the economy. Thats why further rate reduction at this time gives me some concern does that suggest the private markets have been overvalued then if these companies are being financed by just too much debt and rather appropriately valued when you contemplate you can get seven times leverage at, you know, 500 basis points all in cost of debt mike, before we move on to slack very quickly, just want to come back to the broader markets, will equity traders be worried . I dont think worried, no i think these things can coexist. You have, you know, 0 real yields just about across the world. Thats compatible with higher stock valuations as well as gold doing what it did. Remember, in the first half or the first few years of this bull market, gold was making new all time highs this is the low Interest Rate playbook Paul Tudor Jones talked about this, buy stocks, buy gold, buy treasuries, sell the dollar, look whats working this ye. Also a geopolitical bit in the gold prices as well. Lets move on to slack, having a successful first day on the public markets, shares finishing the session high, slack opting for an untraditional process by going public through a direct listing. Tom, lets start with you. Talk us through why you are so positive on the idea of a direct listing and why this embodies that i am so positive and for a while i felt like the lone voice in the wilderness, it was great to see bob griefld equally supportive of direct listings. I saw oversaw 500 ipos, bob, several thousand the way this started was Barry Mccarthy of spotify invited me up to his office in summer of 17 and he said, could we just list that was his question. We dont want to raise dough the rules werent situated such that we could do it, we worked together and deid it and the voices all said this will never work and we looked and said, why . Why would it fail . You need a big retail component. Then they had their direct listing, massive success, uchb what the retail contribution was on the opening trade of spotify . None retail was not a factor. I thought people knew this name and they were able to get in just as early not on the opening trade. The retail component was de minimus at most, that billion and a half initial trade that they had and they had a very successful direct listing the next narrative was, oh, this will only work for consumer based businesses with big brands slack is kind of an insider brand, people dont know it. Today was it just was an absolute home run, the stock was listed at 38. 50, closed at 38. 90, contrast this with the chewy ipo where the cost of capital was Something Like 70 for the money they raised. Today, this company has no cost of capital because they didnt raise capital, paid only 22 million in fees and now they can turn around and do a follow on and raise a godly amount of money at a very very low cost of capital. Whats the disadvantage, mike, the pushback to that for a direct listing first of all you have to not want to raise money up front thats the key and be or at least be secure in your ability to get money elsewhere if you have to and i think thats where so to your point, tom, i also thought that you needed at least to have some kind of recognition to where you dont need an ipo road show to introduce yourself to the world and you probably have to have a certain amount of heft to make it worth the sides wild to trade on the open so all those things together, i agree. I wonder, tom, though, this obviously puts the exchanges at a privileged spot closer to the issuer, thats where the action is, theres no mediating by the street whats to stop the world from going one step beyond that and lets say Second Market is just perfectly as liquid as anything else, and why do they even need the public listing in the first place if that world is so is to functional . So, as you know, im no longer with big changes. I actually think for the exchanges, its neutral to slightly positive as you point out. I want to point out, these business would come to the New York Stock Exchange even if it were not for a direct listing. Id ask another question, mike, which is, could it also start to look like an ipo looks like a direct listing in other words, slack chose not to raise money, they only did a direct listing you could contemplate a direct listing with a primary raise all of which occurs on the opening trade much like happened today again, that would require a change in rule set but thats not inconceivable. That could be ipo 2. 0 as well. I think you have to step back and have good fundamentals to be able to do any of these things and this Company Actually does it may be expensive at 18 times ebitda but actually it has first move advantage, sticky customer base, superior margins, growth is slowing but youre in double digits and its in a space where people are starving for kind of whats not the obvious everybody owns sales force and service now and these new names with real growth and Addressable Market in the double, triple digits, is very appealing. The same thing, you know, with spotify. It has good fundamentals as well so i think thats really important to keep in mind. Tom, do you think this one sparks now lots of the potential ipos to do this instead and which names do you watch i do, however i thought spotify would and it did not not. When i left the New York Stock Exchange i had a conversation with an Insurance Company to your point, good fundamentals but certainly not a sexy business and i told them i absolutely think it will work for you. The Investment Bankers did get paid 22 million on this transaction. They have a role their role is to go out and find the buy side it might not look like a typical road show but they pull together investor meetings, analyst day as appropriate, theyre on the phones, Morgan Stanley, goldmansachs werent sitting on their hands during that capital. I dont think it needs to be a spotify or even a Enterprise Software darling like slack for this to work tom, thanks for joining us. You are kind of the father of these direct listings. Im a little bit Barry Mccarthy and spotify had the kernel of the idea i walked out of that meeting and i said i think this is going to change the way ipos work in this country. It hasnt hand that quickly. She told us today she doesnt think its going to become the norm just saying. Ill take that up with her. Tom farley and stephanie link, thank you so much for joining us s p 500 closed at a record all time high today. Well break down what led us to this point and whether its too late to get into the equity market at this stage plus well drill down on todays big move in oil and what middle east tensions would mean for the Energy Complex going forward. Big jump in crude oil today. Moving is hard. No kidding. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Stocks closing at a record high, lets get to our closing bell market roundup, bob history here at the nyse Bertha Coombs standing by at the nasdaq we hit historic high, 2,945, we did it on some trade euphoria and central bank euphoria as well we had a number of sectors move us forward throughout the last couple of weeks here, insurance stocks, travelers, for example, Consumer Staples narmz were really important and although its a small group, Real Estate Investment trust and utilities also moved up, of course we had lower rates moving them forward even as the banks fluttered, Consumer Discretionary also just shy of a 52week high. Big stock of the day, slack and the ipo market not really an ipo but lets call it going public for the first time, 26 reference price, opens at 38. 50 and closes just above that which is perfect for everybody who wants to be negative on that particular stock ipo lollapalooza continues lets get to the nasdaq, bertha has whats been moving there today for us tech continues to be strong, the nasdaq itself is about 1. 5 away from its may 3rd closing high chips have been a real reason that weve seen the move up in tech here during this month but theyre not the real strength today and the f. A. N. G. Names, although they were strong day and did contribute, also are still below those may 3rd highs before we started getting the trade and the regulatory concerns really kicking in during may what really helped move things higher today in terms of tech are the software and cloud names. Those names are heading hitting alltime highs here, including adobe for a second day, following on its strong earnings on the back of oracles strong earnings and microsoft continues to be a juggernaut back to you. All right, bertha, thank you. The u. S. Ten year treasury yield dipping below 2 today noted investor nomega advisor ceo leon cooperman wagd in on squawk box earlier the ten year government is slightly under 2 and the multiple on the market is 17, the markets not expensive, if theres a double out there, the bubble the fixed income. Lets bring in tony, chief Market Strategist and tony, Portfolio Manager at pimco is leon right . Is there a bubble in bond markets . No. And we would say it would be a mistake to try to market time diversification benefits of bonds. Investors were worried last year about rising Interest Rates and if they forgot that principle, they lost out and didnt have the hedge against risk assets. Its been a fabulous year for the bond market and there still is value when youre looking to hedge against credit and equity risks in a portfolio so, we would say, no to that and we would expect that Interest Rates globally will stay low for at least the next three to five years if not beyond because of some very powerful influences. Tony, what is the forecast on the amount of fed rate cuts this year and then how big they will be well, there are a lot of different outcomes youd expect me potentially to say that and when we think of where Interest Rates are, call it between 1. 75 and 2 for most treasuries out to ten years, one might say thats roughly fair value for the insurance variety of rate cuts which is the most likely scenario now, our base case, that the rate cuts that come will not be the rhesustory type that are needed to prevent or address a recession but to simply let the fed engage in opportunistic reflags to enable it to take advantage of strength, if you will, in the economy relative to growth potential, strength in financial conditions to pull up Inflation Expectations because its been so difficult to do so. And so this will probably keep yields in the zone one final point. One factor that influence yield tremendously, the u. S. Expansion reaches its longest ever year dating back to 1854. This means in factors wivestors looking for a recession, constantly assigning the fed with rates back to zero where treasury yields could collapse to zero on a commitment to keeping rates low for some time. Tony dwyer here with us, whats your take on what the low yields mean . I think its a really important point. The markets basically with the ten year trading below at the lower bound of what the feds target would be if they lowered rates, the two year and five year trading below, basically 50 basis points and i agree with tony that its an insurance cut not necessarily for an economic catastrophe or some kind of event like longterm Capital Management heres what in the bond market, when we come on here and we say the bond markets telling us something, it is really important to define which bond market the treasury bond market is telling you theres no inflation versus theres a coming recession and mow do we know that because every other area of credits doing very well Investment Grade credit made a new high on its main etf, the lqd today, so you cant say that agency credit, mortgage credit, corporate credit, corporate stress in any fed measurement is doing poorly theyre at their best cycle levels of the cycle. Upshot, how much more juice can we get from this equity move into next year i think were going to 3350, your average multiple in the core inflation is 19 times, it traded there between 2016 and 2018. I dont even have to make up for past cycles. That happened recently so our target is based on next years numbers but think about this money is Still Available as seen by all other areas of credit youve got 100 basis point drop at least in Mortgage Rates because of the way that the treasury markets moved the slowdown in Economic Activity is the bull story we keep portraying it like thats the negative. Thats the bull story. The worst thing that can happen is you get aggressive growth, the fed doesnt cut rates and all of a sudden you got a problem with credit. All right, tony and tony, thank you very much. Thank you thank you, sara when we come back, the fed still in focus after todays record close obviously, we are breaking down oniccharts to see what a key ecom indicator says about a ecom indicator says about a potential rate cut next. Verythig yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. I felt completely helpless. Trashed online. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. Welcome become, stocks closing at record highs today and now weve got a market flash on pg e, aditi roy tracking that story. Shares of pg e were up sharply, nearly 15 . Upon a report by bloomberg saying that California Governor Gavin Newsom is working with lawmakers to create a liquidity fund, a Wild Fire Fund for utilities to deal with wild fire liabilities. This is something we have heard from the governor just a couple of months ago, for instance, in the findings of his strike force on the topic i did talk to a source whos familiar with the matter who does say that the governor is working with california lawmakers, both in the senate and the assembly to come up with a bill and that we can expect a bill coming out any time as soon as a week to maybe even ten days pg e has, of course, said that its liabilities related to wildfires could exceed 30 billion. The utility is holding a Shareholder Meeting tomorrow and we are looking for any new details on this proposed plan tomorrow at that shareholders meeting. Back to you guys okay, aditi, thank you very much up 15 , of course, from relatively low levels. Lets head over to mike santoli for his final market dashboard calling this ahead of the leader, specifically is the fed actually getting ahead of what the leading Economic Indicators are suggesting is required of Monetary Policy. Weve been talking about this, that the economy itself does not scream out for rescue from the fed and here is an example of that we had the leading Economic Indicators from the Conference Board reported this morning basically they were flat month on month but theyre still pretty much at a peak and they have not turned lower. What you see here is just the flatlining near record levels. What weve seen here, ive marked some initial fed rate cuts in the past and past cycles and what had happened before in 95, you did not have a big dropoff in the leading Economic Indicators beforehand but here you did in 01 and 07 if you go back in the 80s, you had a pretty good dropoff before the fed cut, in fact, from 7 to 20 months so this supports the idea that with the fed, if they do cut rates next month, its really trying to execute Something Like this from the mid 90s when you did have a slowdown, it was pronounced but it was not yet something that was foretelling of inflation imminently and yet they decided to get out in front of it. That is the insurance cut that is the dearest hope of the stock market right now well see if it plays that way all right, time to get a cnbc news update. Heres whats happening at this hour. President trump welcomes canadian Prime Minister Justin Trudeau to the white house as the two leaders worked to get a replacement for nafta over the finish line. Its the largest trade deal, by far, ever entered into and were very close to having it finalized. It means a lot of jobs for our country, a lot of wealth for all three countries and were really competing against the world. A navy s. E. A. L. Called by prosecutors to testify at the murder trial of a colleague has acknowledged killing a wounded prisoner in iraq in what he said was an act of mercy. Corey scott said he asphyxiated the teenage fighter after Edward Gallagher unexpectedly stabbed him. Gallagher is on trial facing a cou courtmartial on charges of murder and attempted murder. Roy moore announcing that he is running for the senate again in 2020 after failing to win the seat two years ago amid Sexual Misconduct accusations last month, President Trump urged moore not to run, tweeting that moore cant win you are up to date thats the news update this hour, guys, back downtown to you. Sue, thank you. Still ahead, oil on deck prices surging after iran shot down a u. S. Military drone the full bredo aakwnnd what it means for oil prices up next experience the style, craftsmanship and technology that have made the rx the leading luxury suv of all time. Lease the 2019 rx 350 for 399 month for 36 months. Experience amazing at your lexus dealer. Lets get to our closing bell sector spotlight, were taking a look at some of the best and worst performing sectors since the markets last record high. Lets start with the top performer, real estate diana has that for us. Yeah, the S P Real Estate sector is made up entirely of reets, low Interest Rate play because of their very high dividends, low rates also reduce their cost of capital for development but not all reets are alike. Top performers, Single Family rental reits then in industrial warehouse which is reaping the rewards of ecommerce returns there 34. 5 then infrastructure, mostly made up of Cell Tower Companies returning 33. 97 year to date all according to nareit. Regional malls, theyre in the negative and lodging and healthcare are underperforming back to you. Yeah, diana, huge move in yields, in the space of just six weeks or so. Now to the second best performer since the last all time high, healthcare meg tirrell has more on that medical Device Companies are among the best performers. Boston scientific is also trading at a 15 year high. The space took a hit in mid april on concerns around the prospect of medicare for all also among top performers in health, Animal Health focused companies as that space offers revenue and Earnings Growth. Now what you dont see outperforms are specialty pharmaceutical and Generics Companies like allergen and m russell wils ylan energy, the worst performing sector since the markets last highs. Rahel is tracking that trade we actually saw a gains of more than 5 because of renewed concerns over u. S. Iran tensions, despite that bounce, the Energy Sector as a whole is still down 2. 5 since the s ps last intraday high on may 1st. Crude has fallen more than 10 and energy is one of only three sectors trading in the red since may 1. Among the worst performers in the group, noble energy, halliburton and marathon oil all down suggesting that its really demand concerns that are taking center stage in this area and playing the lead role on that stage . The u. S. China trade war wilf, back to you. Rahel, thank you very much. Were going to stick with energy and oil, as she said, closed high today after President Trump said iran made a very big mistake shooting down a u. S. Drone over the straits of hormuz for more, lets bring in kent moores executive chairman of Energy Capital Research Group and dj peters, president of long view Global Advisors ken, up until today, i mean, the move in oil has been fairly subdued on these building tensions with iran what changed well, sara, i think what essentially changed was we had a market that was trading on the assumption that these events had no great impact on the overall price. That changed as of overnight now we have a situation in which the ability to move vessels through the strait of hormuz for the first time is genuinely at issue and thats whats caused these prices to spike. To what extent do you think this is related to supply and demand of oil or more broadly just a wild card geopolitical fear that were going to have significant military escalation . Well, i dont know if significant military escalation is yet on the table. Neither side seems to want it. The problem is were getting close to a fail safe point in which unanticipated consequences may take over and something that neither side intended may take place. What we have here right now is the first genuine trading concern that supply may be interdicted and once that takes place, youve got a ringer in the equation that we havent had previously and thats whats spiking the prices dj, how likely do you think that is . Actually blocking the strait of hormuz and affecting oil supply. Well, i think its irans intention to show oil consuming countries that their supplies are at risk, especially those countries in asia. It was very interesting that obviously that was not an attack against a United States ship or United States interest it was a clear message to china and other Asian Countries that if they dont rein in the United States, they could be affect and had their supplies could be constrained. D. J. , where are Americas International allies now on this topic . Of course, they disagreed with the decision initially to break away from the Iran Nuclear Deal but are they coming round to the u. S. Position now . They have no options, really. Theyve tried to convince washington to stick with the deal that hasnt worked the iranians have had tried to put pressure on the europeans. Obviously theyve worked with their friends in moscow and in beijing to try and do something, but clearly, none of these parties have much leverage over the Trump Administration and President Trump has said hes going to play put maximum pressure on iran regardless of what happens from our allies so, ken, how much of all is all of this worth to the oil market if we continue to see an escalation at the same time where, you know, u. S. Inventories and also u. S. Production have sent bearish signals to the market . Well, sara, i think there are a couple of things going on here if this continues for another 24 to 48 hours and im talking here about uncertainty, not even new events, just the uncertainty surrounding the existing events, were easily going to see wti at 58, were going to see brent at 56 for that matter, brent closed today virtually at 65. So, these prices are going to be going up based on the uncertainty factor the iranians really have no longterm ability to physically close the strait of hormuz, especially in the face of American Naval power its the uncertainty of whats happening next thats likely to drive the prices higher. Thank you for joining us. Kent moores and d. J. Peterson. Up next, teaming up and hitting the streets, two major car makers partnering with google on driveless Car Technology well share those details straight ahead and later, todays big winners, all the early investors that are cashing in on slacks that are cashing in on slacks public debut when we come back osamah cancer is. The ugliest disease manker faced. henry i thought it was unfair. When when you hear those words that you get diagnosed with cancer. osamah successfully treating it still remains one of the most enormous challenges facing us today. We realized that, if we developed the technology that could take 2dimensional patient imaging and convert it into 3dimensional holographic renderings, we could enable surgeons to dissect around the cancer so we can precisely remove it. When we first started, we felt like this might just not be possible because Computing Power just wasnt there, but verizon 5g ultra wideband will give us the ability to do this. We wont rest until we see this technology being able to change lives. As your life grows, so do your needs. And with bank of america and merrill, the benefits you get can grow, too. As a preferred rewards member, you can enjoy Priority Service and exclusive discounts. So your growing life can be more rewarding, too. What would you like the power to do . Renault and nissan are partnering with google and phil lebeau joins us with that story. This is a significant deal because this is the first auto manufacturers that waymo is working with where theyre actually working with their technology, their expertise, putting their basic knowledge and everything into a vehicle for those manufacturers. Now, waymo has been testing Autonomous Vehicles in a Ride Share Program out in the phoenix area for some time but this deal with renault and nissan would be renault and nissan cars in france and japan and possibly other countries, the only exclusion would be in china. So where do things stand on the Autonomous Vehicle race . Waymo is already testing driverless ride share vehicles in arizona gm cruise will launch its own Autonomous Vehicle later this year elon musk has said tesla will have a million robo taxi capable vehicles and ford plans to launch in 2021 were going to see a lot of this, where the partnerships will go beyond, oh, lets Work Together and explore things to actually building vehicles that will be out on the road and tested phil, is this exclusive to renault and nissan in terms of, you know for waymo its exclusive in other words, renault and nissan are not going to turn around and say, hey, you know what . Were going to work with aurora. Its exclusive in that regard. Waymo likely probably could work with other auto manufacturers as well, but for now, this is an exclusive relationship between these three companies. And to what extent does this assign, phil, the Renault Nissan relationship is Getting Better again, if theyre making forward looking deals like this. You take this report along with the fact that they are reworking the Board Structure of the Renaultnissan Alliance and then potentially and there have been some reports, im sure youve seen these, that they might want to try to reproach fiat chrysler. Theres an indication that they can get past the issues that cropped up once they had the arrest of carlos late last year and really made for a bumpy relationship and its still a bumpy relationship to a certain extents over the last six months phil, thank you we are just getting in some video of congressional leaders leaving that white house meeting following meeting with the president on iran. It started around 3 00 p. M well bring you any headlines as we get them. Were just getting first shots and pictures remember, the white house, the administration called in leadership to brief them on the plans after a drone was shot down and the president tweeted, that was a mistake significant move in oil today as we just discussed isnt the last block still ahead here on the closing bell, cashing in on slack, the Online Services Company Making its public debut today well bring you the big name investors making big money on the back of that coming up on fast money, a top strategist has one chart that he says will tell you what low rates actually means for low rates actually means for stocks its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. Flexsh are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Welcome back to closing bell. Slack making its debut on the New York Stock Exchange today and some investors made big money on the direct listing. Josh lipton has more of those details for us hi, josh so, wilf, slack closing at 38. 62 so whos making money excel, remember, is the biggest investor, its shares now worth 4. 6 billion and it was also the big shareholder in crowdstrike so thats two big venture outcomes for that firm in just about a week and horowitz has a stake, social capital has a 10 stake worth 2 billion soft bank, 7 stake is now worth 1. 4 billion thats interesting because were used to seeing them write big checks for more like capital intensive Companies Like uber and we work and stewart butter field himself an 8 stake now worth 1. 6 billion back to you. Josh, thank you. Joining us to talk about more about slacks debut is santosh, Manhattan Venture Partners head of research, they invest in preipo companies, chose not to invest in slack. Why not . Well, we make a choice. I mean, we dont invest in everything at that point in time in our investment window, we had other investments, we had pinterest, spotify, see, in general, we invest about one or two years before an ipo that we expect, before they get rich in valuation so this was very expensive at that time and it still is expensive today so, i think we made the right choice and we had other opportunities, primary and secondary, like i said, pinterest, spotify, draft kings, docusign, and lyft. Still 10 below its ipo price. For the ipo investors but we came in much earlier so were fine and were doing very well in lyft. Lets keep going on slack for a moment if we can. Lot of people wondering how many more companies, corporate customers they can sign up you optimistic that this can continue to grow as fast as it has recently no. That is our big risk factor, and that we farkctored that when we did the investment analysis. Fremium models look good but its not easy converting the free users to paid users we saw that with dropbox, we did not invest in dropbox either for the same reason so theyre not easy to do plus, slack has tremendous competition. You have microsoft, you have google, you have amazon wanting to buy them as well so you have these big guys right behind them, theyre not going to wait around on the sidelines so they are going to bundle services, compete on price, compete on features so there is competition, its not going to be easy, yes its a great product, we use it also, but its not mission critical. Mission critical communication is still email and i think that will continue for a while. I was wondering what theyll need to do to show customers that its a productivity enhancer because it doesnt seem as if theres a lot of companies that are eager to spend more on anything that looks like email, necessarily. Right its going to take a lot of conviction i think the ceo said in one of the forums that its going to take at least seven years to convert people from email to slack so i think thats the time it takes a long time people are used to emails, it works, so it almost feels like a solution for a problem that doesnt exist. So, its one of those situations so, its a good product, great product, for maybe new companies coming into market, who can start from groundup, they can go into slack but well entrenched companies, Legacy Companies are fine with email, so its not going to be easy to replace that you said it was expensive but if you look at some of easy to e that. You said it is expensive, but if you look at some of the other companies, relative to those it doesnt look expensive. Yes, but it is expensive overall in terms of their revenue. Right now what you have is a perfect setup. You have the macro marketdoing very well, you have a good tail wind behind them these companies are growing their top lines very well, but the profitability is a big issue still. So i think at this point getting these big multiples is understandable, that all of this momentum behind them but the dust is going to settle. Theyre going to come back quite a bit and i would be wary of that even this, slack i expect to pull back a little bit, quite a bit actually, come back to, you know, in the 15, 10 to 15 billion evaluation that was our fair evaluation for the company. Thats where we think it will settle. I guess lyft stands out relative to the successful ipos and postipos share price performances of the likes of sliek beyond meet, crowd strike and zoom it stands out as failing are you disappointed no, i think lyft was a longterm story for us transportation is here to stay, it is disruptive and transformational it is going to take time to play out. Uber and lyft are going to do fine, plus lyft has a nice defined strategy i think the battle for ridesharing one will be lost in ridesharing in north america and lyft is well positioned in north america. We will have ancillary businesses take off why do you think wall street doesnt get that i think they will get it. At this point theres a lot of cross currents going on, a lot of negative feeling, the profitability and all of that. At some point people will realize these two companies are here to say and theyre here to saosraay nth o, thank you for coming by. We will tell you what to watch when closing bell returns. I don coverage of the slack coverage of the slack listing is sponsored by sounds like a case of analysis paralysis. Is there a cure . Td ameritrades trade desk. They can help gut check your strategies and answer all your toughest questions. Sounds perfect. Ameritra. Feel that . Thats the beat of global markets, the rhythm of the world. But to us, its the pace of tomorrow. With ingenuity, technologies, and markets expertise we create the possible. And when you do that, you dont chase the pace of tomorrow. You set it. Nasdaq. Rewrite tomorrow. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Tthis is where i trades. And manage my portfolio. Since i added futures, i have access to the oil markets. And gold markets. Ok. Im plugged into equities. Trade confirmed. And i have Global Access 24 7. Meaning, i can do what i need to do. Then i can focus on what i want to do. Visit your Online Broker today, to learn more. Welcome back lets have a look at the s p 500. As you can see, up a healthy 1 , 2,95 had where we closed above the last record of 2,945 on april 30th another record alltime closing. All sectors higher 2. 2 higher for health care. Time for a wall street look ahead at the annual Bank Stress Tests due out tomorrow after the bell existing home sales on the docket lets start with the banks wilfred, what do we watch . Stress test results come out tomorrow 4 30 p. M. Eastern time with approval or rejection of the capital plans coming next thursday so tomorrow the banks will get a pass or fail, but only on quantitative terms theres no longer a qualitative part of the test there are also only 18 banks facing the test this year, banks under 100 million in assets no longer face the test and those under are only tested every two years but not this year. The severely tested scenario includes a 5 fall in gdp, equity prices halving, property prices down 25 to 35 that said, all of the banks firmly expect to pass due to Strong Capital liquidity positions and no wild card tax reform effect this year like last year. Unless theres a surprise failure, we dont expect share prices to move severely this week next week with the capital return plans, if analysts numbers are right it could act to highlight the relatively cheap prices around 10 average cash back yield, dividends plus buy backs expected for the sector mike, some pretty standouts one there, wells fargo, citi getting close to 15 if the plans are approved. That could be more market moving. It wont be on the day necessarily, because, again, these things are sort of priced in already, people expect these to be approved if you start to see that, people start to wonder, okay, maybe theyre cheap enough even if i dont like the kind of yield existing home sales due out tomorrow diana oli diana olick is all over that. These are based on closing. Important to note Mortgage Rates were significantly higher then than today the 30year fixed was around 4. 5 in march, took a momentary dive and settled just about 4. 25 for all of april it is now well below 4 . We will be watching inventory, of course. The supply of homes for sale had been gaining slightly but not enough on a low end. A new report out today says investors are more active in sales than they were even during the housing crash, and that eats away at supply as well lower Mortgage Rates and increased competition are already having an impact on prices those big gains had been cooling but they now seem to be heating up again back to you guys diana, thank you. In case you missed it last hour, House Financial Services change Maxine Waters joined us we asked about reports President Trump is looking to demote fed chair jay powell because he is not happy with the policy. Here is what she had to say about that. It is outrageous. It should not be done. I think so far powell is holding his own and he is resisting what the president is attempting to do, and the congress of the United States needs to continually say to the president of the United States, get out of this, this is none of your business, you cannot run the fed. Pretty pretty strong on that point. Sure. Mike, you know, we are all wondering, wall street is wondering what the fed is going to do next, pricing in a cut, how big, how many. Another question is what is the president going to do next he explicitly told eamon javers ahead of the fed meeting when he was asked, are you going to demote powell, he said, well see. Well see the president likes to use these phrases and reserve optality on these decisions. With the fed seemingly moving, unless theres a big surprise toward a cut in july, it would seem that powell is maybe belatedly going in a direction, you know, on his own light, by his own lights that the president would have set out for him. I also believed all along it serves the president s purpose to have kind of a foil in the form of powell as opposed to actually going through the trouble and legal flap of trying to replace him. And the pivot and rhetoric we got in january and this month is at least halfway towards what the president is wanting. And a record high stock market. And the Market Reaction is kind of probably meaning the president is not as concerned with that. Right, and the president can continue to say that the dow would be 10,000 points higher if not for qf, which is unprovable and unlikely, but he can still saying, right, without having to show it . Exactly record alltime closing high on the s p 500 today. That does it for closing bel bell. Fast money picks it up right now. Fast money starts right now. Live from the Nasdaq Market side overlooking new york citys time square im melissa stocks hitting a record high today with energy and tech leading the way and a top technician will tell you how to catch the rally. Plus one name sitting out the party, tesla golden sac slashing it we will tell you what has an analyst worried. We are back, the s p 500 surging to an alltime high and the dow on track for the best mont since october 2015 less than 1 away from