Josh, great to see you. Glad to be here a tight trading range for the major averages this week. Yeah. How would you sum it up so far. I think whats interesting is there seems to be this rotating cast of stocks that are working against the averaging, so today is transport i think three out of the worst stocks are railroads, some of the big ones being hit hard. Theyre not very important in terms of waiting, but very important in terms of people paying attention, either because theyre technically inclined and because they think thats a important technical indicator, or theyre people that think its an economic story that needs to be understood, and theres some skinned of bowling pin effect but i think the bigger story is that some very important stocks to the market cap weighting of the s p, netflix being a reasonable story as well theyve gotten smacked down where they could have broken out. And netflix having a tough week. And thats got an impact on psychology and on the construction of the big tech etfs, et cetera. Theres a lot of flowthrough with that story. How important is it to our i think it will always be important psychologically, where its the faang names considered to be tech or at the end of the day theyre very big caps. People look at it for sentiment, what the biggest, most wellrun 25 of the it s p, and its the reason we are where we are, the big value stocks have not done much a lot of people if the momentum will continue, you need the leadership i dont think thats controversial. You know, your story is one of the important stories, which is csx down 10 . A wild move trying to understand whats going on you talked to the ceo earlier, but not a lot of answers really. Yeah. I think what they had said is what we have been seeing, a softening in the industrial part of the economy manufacturing have been softer, some of the commodities, the intermodal side of the big, more consumer facing is already really sort of falling off the cliff. Thats been industrywise. For csx, some of that is tied to the but overall, i think the real, and this is based on my conversation can jimfoot, is its hard to get your arms around it, and i think those types of comments and whats thats meant is part of the reason youre seeing such wall streetness right now there are these question marks. Its a huge split between the companies that people who have been around for a long time traditionally looked at railroads, and they have taken their economic cues from whatsing happen, but the consumer economic is on fire dimon said it yesterday, can you look at discretionary giants, university of michigan surveys until the cows come home you wont find ago indicate art that the consumer is anywhere near spending and enjoying frankly from the boom in the stock market those two third are highly correlated and it seems like that story has at least temporarily shrink in importance to investors they dont care as much about those stocks as they might have in prior generations. Certainly csx has said regard lets drill down on the base stories were watching. Leslie picker has details on bank of american, bob pisani has the retail banks leslie, lets star with you. Bank of america shares get a boost today. The bank delivered record firsthalf profitss. And it may by dented by the yield curve, and if the fed funds rate is cut later this year, he cut lower guidance from 3 to 2 can you see when he made those comments, the stock ticked down slightly, but has since recovered, guys. We have a slew of regional banks out with earnings this week bob pisani has more on that group. I love regional banks, because you get a read on loan growth i like what im seeing u. S. Bang comp, we were talking 2 , 2. 5 a couple years. Comerica, pnc also in the 3 rage u. S. Bank corps, credit cards, josh was talking about the consumer, up limb 8 these are terrific numbers overall. Lets look at the prices of the stocks here, all doing all right. Theres no tolerance on missing earnings and no tolerance for poor guidance. Bob, thank you. For more on all of this, lets bring in scott rand. Scott, what is your take on the banks . This Earnings Reporting season is all about nim, about lone growth, about expense cutting, those types of things, so really the regionals thats going to kick in next week, but what we have heard so far is, you know, some of these larger bank these guys are we going to have two . Three . I think in the bigger banks, thats just one of many, many moving parts, but certainly its important. I think youre coming back to the bank sures, certainly what the fed does will have a big impact on the financials and loan growth, as well as just economic activity. As we come down the pipe here. The banks are the other big indicator of where were at right now, right its hard to say that and then not consider how many lending activity is happening in shadow markets not captured by regional banks then you look at they deposit institutions that dont have a lot of things that Consumers Want i think Construction Loans are absolutely important, thats a different generation, so i think you said to think about Financial Services in its totality a lot of big banks are dipping down into more consumer bit. How would you rank things so far . You know, david, if you look at the consensus, consensus was down 2 , 3 , Something Like that who think it will bless closer to flat. So really the way we are looking at it is the market is looking well beyond this lets face it, whether earnings are down 2 or up 2 , its not a good earnings season i think theyre trying for trade positives. Theyre pricing in the fed having the markets back oy think ear stewarting to see some chasing here. Valuations are not stretched if we can keeped economy growing at a modest rate, you know, you could see surprises to the up side, but the 800pound gorilla in the room is they trade negotiations fall apart, everybody walks, you know, the market is not going to go up on that the risk is to the down side certainly would seem to be. Thanks, guys. Lets go over to mike santoli to the dashboard he likes this time of day. Were going to keep it real day. Not Much Movement. Wait until later this about patterns and how stocks are traded, more skewing later in the day, and then hard to get excited, and some emonth, so were waiting for netflix well comb through it in about at hour, here as the big picture, though. This is movie tickets sold since 2002, and number the film releases both heading down, both down more than 20 . We focus more on paid tv subscribers, and of course thats down more than 10 in the last lets call it six or seven years. Not claiming its all coming from the box office losses, but its very start exactly how this has gone right now, this is a summer where there is a lot of panic out there. This is real depressing, what is up with your theme . I did a personal growth selfhelp theme one time and that seemed fake youre saying millennial ruined hollywood is that the big yes, no offense to davids presence here. Yeah, i think ill just take not Much Movement for 500. I caught that reference from hemingway. Hes a literary guy. There you go. Were counting it down were going to bring you those numbers, and expert analysis. And speaking of tech, the battle in the beltway is raging on after the break were going to ask Silicon Valley congressman rho khanna Housing Starts fell in june, and Building Permits plunged 6. 1 so far below estimates of a 0. 3 drop is. Big hearing in washington this week, and any antitrust investigation of its own into amazon aditi roy has the details. Reporter hi, david european regulators will examine whether amazon is breaking in the antitrust rules about the way it uses daughter it says the investigation will look at dual role as both a retailer and a marketplace the regulator began questions merchants about practices last year in a statement amazon says we will cooperate fully with the european commission. If the investigation finds amazon broke competition rules, it is company could be fined up to 10 of Global Annual revenues aditi, thank you. Facebook facing another hears today, this time before the house financial committee. Ylan mui has more. Reporter lawmakers wanted the company to commit to a moratorium on libra, or at least start with a Pilot Program facebook said no, so congressman brad sherman says hes taking it to the top. Zuckerberg cant print money, yet. And problem number two, zuckerberg is under attack, because he invades the privacy of ordinary americans and sells it to the highest bidders. We need zuckerberg here. Reporter guys, chairwoman of the Committee Maxine Waters said today was just the first step. For more on the growing calls to regulate big tech lets bring in representative rho khanna amazon not in your direct, but im curious to get your thoughts on the eu taking seemingly a more aggressive stance on much of our Large Technology companies than we as yes have, and specific to amazon and the latest that may be having to deal with in the eu. Theres no doubt we need stronger antitrust enforcement we shouldnt allow amazon to privilege its own product on its plate form we should maybe issue its not using sellers data, but the eu is not a model for america to copy its been a disaster when it comes to Tech Innovation they dont have the biggest success has been spotify or s. A. P. S enkts thats a good point. Look at the wireless industry, too. Thats a separate conversation, but they overregulated that and you cant make any money at all. With our own department of justice, and ftc, sort of splitting up amazon, going the, facebook, apple, do you have expectations those investigations are going to lead anywhere i think it needs to be done in a thoughtful and nuanced way. I think we need to be far more scrutiny placed on future mergers. We should not have companies be allowed to make horizontal mergers. Second, we should make sure companies arent privileging their own platforms but what i oppose is just a reflexive call to break up companies, or a call to Fine Companies without going through the Due Diligence of a process, and looking at our law, which is about consumer welfare. Europes law is about protecting competitors, our is all about consumers. Congressman, we have seen some legislate introduced in congress to regulate big tech. Are any of the proposed bills ones you would support what is the right way to basically govern this sector, this industry . We definitely need Privacy ProtectionSpeaker Pelosi asked me theres ten provisions i wont go through all ten, but two of the main ones, we should have companies required to get the consent of individuals before collecting their data, and we should have as individuals the right to know whats happening to our data and whether its being transferred i think thats something that should get bipartisan consensus, even they companies have said we need better wellregulated calls on privacy and more regulation congressman, i want to shift gears for a moment youre on the Armed Services committee. The house passed its version of the fiscal 2020 defense bill in terms of tech huawei has been swept up in the trade talk between the u. S. And china, but from a legislative standpoint, is it going away as a National Security threat i dont think its going away i challenge for us is, as you know, huawei produces most of the 5g technology, and so i do believe we need to do more in the United States to make sure that we are prepared to have 5g in this country, and we need to make sure were doing more in developing Artificial Intelligence and developing v official intelligence that can be used from our military. In china, they can use all of the companies for their National Security fortunately in our country, we dont have the government appropriate the private sector, but that does put a greater burden on us to develop some of the cuttingedge technology. Finally, congressman, with you you surprised at the skepticism, or cynicism that david marcus was met with in front of the your colleagues today and the senate yesterday i was not, especially in light of the Cambridge Analytica scandal, but i think we need less political slogan deering. And let grandstanding. They are developing lib would overseas, because we dont have regulatory certainty or clarity, and we want to make sure we dont lute out to china, and its not just facebook, theres bit counsel, theres ripple. Instead of just scoring appoints consequence it may challenge the wall street oligopoly, and help reduce financely financial costs. Representative rho khanna, thanks for joining us today. Thank you for having me on. Where to begin with all of that lets focus on facebook. Still printing money in many ways, does any of this end up making a big difference. It could, but it has not yet. That 5 billion fine was one of the most obvious upside catalysts. Isnt that amazing youre saying that right now. I could give you theres nothing wall street likes more than hearing a huge dollar amount fine, because then theres finality first of all, the shareholders pay the fine, nobody running the company does and second of all, its over its over. So lets put that aside. I heard the phrase we dont want to lose out to china in cryptocurrency i dont know how to process that china will not allow that to take root without total control. Im not sure theres a competition for creating cryptocurrencies its more a question of whether they actually be used. He made the comments it eases transactions on what planet who is doing transactions easy it would be easier to have a block of gold and chip off of it hopefully that changes, but the reality is we need rules before theres mad adoption the stuff with amazon and google im a shareholder of both, google with a straight face told congress that it has competent itition in search. They cited binge and duck duck go, okay duck duck go is a major competit competitor. No other comment there. I understand its unsavory, they say, wow, this Company Makes a holder for your cell phone, were going to make our own doesnt this super market do that at merchants know thats a risk they run. Doesnt costco do that . They have a kirkland version of whatever youre about do buy that a supplier has. You think theyre not using Customer Data . I do agree with mr. Khanna about the rhetoric and grandstanding does this affect the stocks . No, not really talk to me when the rubber meets the road that could be years from now i think these Technology Companies are way ahead of congress they have been planning for this bezos already set up shopping. Hes probably thinking three steps ahead. Josh, thank you okay, so we have 35 minutes before the bell. Right now major averaging are trading lower. The dow is down 76 points right now, and the s p is trading below 3,000. After the break, Goldman Sachs out with a note on a number of stocks well get the word on the street on the names they say to avoid. Shares of qualcomm after the Justice Department is weighing Justice Department is weighing in on that important ftcst trac, antitrust ruling against qual y qualcomm antitrust ruling against qual y give me a quality fund that helps me get clients closer to their goals. Flexshares etfs 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. Welcome back time to get the word on the street Goldman Sachs downgrading to sell this morning. The firm sees risk for power brands with high exposures to Department Stores and to the north american market. The mall as well they expect headwinds to intensify. Expecting homebuilder management to. The china team returning from a visit of local suppliers, based on those chex, they expect it may be able to ramp china production faster than anticipated. That stock is up 1. 5 right now. Josh, what do you think of any of these names i think we sometimes forget how hard retail is they rally sometimes on short cover, but its a relentlessly difficult business for everyone. If you need sellthrough from someone elses story unrequited love affairs we never know, do you love or hail them . Now it seems like he as its not a Good Business i would be bronc if this turns into it says its batteries, logistics. I would love for it to if they downgrade no matter what happens with the stock price, all of the other automakers into the fray, probably ten years earlier, but i dont want to be a shareholder, because its a good cause, and so i always have it in my too hard pile. Im pretty humble. Got it. Speaking of 30 minutes left or so in the trading session, three things are driving the action. And we are, of course, awaiting netflix and ibm, ebay as well. Csx, as we said at the top of the show, and todays beige book says it sees the economy as generally positive time now for a cnbc news update with Contessa Brewer. Congress is examining the troubles with the boeing 737 max plane. The subcommittee heard from a man who lost his wife and children if the conduct continues, another plain will dive to the crown, killing my, all of your members, all the members of your family, it is you who must be the leaders in this final for the ceiling of notre dame is still torn apart, and the site is correspond in burned debris. The number of people dying from drug overdoses that is fell, according to a preliminary report by the cdc. Thats the cnbc news update this hour, back to you. Thank you, contessa over to mike santoli he second dashboor of the afternoon. Talking about not too Much Movement here. You guys were discussing how some of these supposed bellwether groups have been his or miss. Its a yeartodate chart. Thats right in the middle the other cyclical or generally riskseeking groups have been on either side. Theyre bolstering the case, but then you see the transports, the ioit etf which had this other nasty sharp downturn in the last day, actually just today, and kbwb, it hasnt been able to get out of its own way. Coming up we have your last chance trade, and coming with it a commodity for a well reveal that trade, just ahead. We have about 24 minutes or so left. Major averages down led by the s p, csx certainly pressuring that. And it looks like were moving back toward the lows of the day. We have more details, next thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything 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. indistthat was awful. Tering why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at td ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom mad skills. Education to take your trading to the next level. Only with td ameritrade. Welcome back to closing bell. Qualcomm getting support from the department of justice, the doj asking for a federal apeals court to pause the antitrust ruling against the chip maker. The District Court judge had ruled in favor of the federal trade commission in may, saying qualcomm had engaged in patent licensing practices to keep a monopoly on the market qualcomms ceo addressing this at the tech conference just earlier today. The writing entity is not some random person, this is actually the department of justice, you know, the person that the entity that holds the sway here at least in antitrust law. We were happy to see that. We think we will prevail these disputes take a long time, and, again, the important component of that is really for us, is 5g is happening, were launching it, well get through this. Qualcomm shares had been shapingly higher this morning, but lost steam throughout the session. Its also d. O. D. And department of energy as well, and theyre kind of pulling out the big guns as a National Security issue, but i know youve been follows this for quite some time. There was a report directive after she heard the testimony, there was a thought that the government might try to at least weigh in then with her, maybe even good, on National Security concerns or try to change whatever opinion she was coming to she obviously issued a very negative ruling for qualcomm at that time, and many people think perhaps had not really paid any attention to the testimony they gave or had from their witnesses in the courtroom during the course of the trial itself in front of her theyre seeking a stay it certainly helps to have thes this is going to go on for a long time. The biggest beneficiary of her ruling, strangely, might be huawei, which is in the midst of negotiating a new deal with qualcomm apple has got theirs, so its a weird situation, where we may have helped huawei in terms of the pricing. But all of it remains in stasis while they wait for the stay. It speaks to just how much is riding on this conversion, and the way the government is thinking about it. We know nat security is front and center yesterday, this morning microsoft and azure did a big deal with at t, but it sort of covers the gamut its a big spending cycle and very important to component suppliers. But im with trump hes more excited about 6g, so im waiting for that okay. Up next, weve got your last chance trade. Oh, boy. 6g perhaps. Before that were going to tell you the key things to what much when we get netflix earnings, just a few moments earnings, just a few moments from now 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 under 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. Mno kidding. Rd. 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. 14 minutes before we wrap things up on what we like to call humped day. Its wednesday, right . A last chance trade from josh. I want to talk about the gold miners, which i think all of the traders are talking about now. This is a technical breakout ive never heard this term used before, but a double breakout, in that the initial break was actually june 19th so within one months, it consolidated its breaking out here again the etf for gdx is at the highest level since september 2016 there is a lot of room if this is going to be the real thing. This is the trade i would put on here very defined down side 24 1 2 would be reasonably just in that gap. Thats where you would want to say, okay, im wrong, marked got ahead of itself. For as long as it stays above there, though, i think the breakout is legitimate again, they thing is not challenging highs, sixyear highs. If it keeps going, the momentum will built these are not cheap stocks if youre looking at intrinsic value, you have to ignore that with mining companies. They will have the highest p. E. At the worth points in the cycle. By the time they have an 8 p. E. , thats when you want to be selling them o focus on the technicals instead, gdx is beasting right now. The fact that gold is at 1427 right now, are you surprised its up 200 an ounce this year theres a lot of controversy about why its up, nobody agrees i think ma that matters less you dont have to have the thesis right you see wade dalles i dont do a thing on and the conclusion was buy gold people getting positioned. You dont have to agree with ray. I just this is whats working right now, you have a defined down side. Youre risking three points. This was a 50 etf five years ago. I like the risk reward if youre a trader if youre a investor, forget everything i just said, like men in black. So far 43 companies have reported earnings, 84 beat earnings estimates, 16 missed lets preview what we can expect today. Josh lipton has and eaditi roy. Niv million is the number of subscribers expected to add, and the company will add in the third quarter. Now, these numbers will indicate whether the streamers investment is paying off the guidance will indicate any concerns about competition from Upcoming Services from dis anybody, nbc university, among others which are pulling back popular shows like the office and friends from netflix to josh lipton for a preview of ibm josh david, ibm stock up 25 so far this year, bounced about 12 off that today the street is looking for eps of 3. 07 on retch of about 19. 2 billion that would imply i talked to a member of wedbush, so focused on newer technologies and he wants to be margin improvement. Guys, back to you. Josh, thank you. Lets go over to aditi roy for a preview of ebay. Ebay shares are up 40 year to date. The street will be looking for revenues of 2. 68 billion on earns of 62 cents, a key metric is gross merchandise volume or the sum of all the stuff sold on the platform analysts think that number will come in at 23. 4 billion. Well also be looking for any color on web traffic, comments on potential headwinds, finally any update on the companys Strategic Review, and david will well look on the for any potentially sale of stubhub. Yeah, well see they may just decline to comment on that. Be sure to watch squawk on the street tomorrow, i will be tacking to devin wenig, the ceo. Starboard and elliott will also be watching i love the set up. This is 17 times forward earnings estimates, the stock, its had a big year, but still below the january 2018 highs the Strategic Review is a great setup for whatever they end up doing. This is a huge player in ecommerce it doesnt have to be amazon, and its got a Great International business, too. I actually like the stock. I dont know what the earnings will be, but if its a disappointment, that might be a Good Opportunity to build the position and not run from it Courtney Reagan was reporti ini earlier arier in the week 6 of commerce in america they are distant, but number two. The stocks been lower for most of todays session. Up next covering all the angles in our closing countdown you should be mad they gave this guy a promotion. You should be mad at forced camaraderie. And you should be mad at tech that makes things worse. But youre not mad, because you have e trade, whos tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. Dont get mad. Get e trades simplified technical analysis. Welcome back weve got five minutes left to go major averages are lower right now. Its time for the closing countdown. Lets trade with herb morgan whatever you watching in the final minutes of trade well, were watching a lot of things, but mostly for accumulation in the last 30 minutes of trade to confirm our view, you know, its time to stay long risk assets as we go into the fed meeting on july 31st and in terms of the fed meeting on july 31st, what are you expecting . And how does that lead us into the rest of the half with equities. From an invest ore standpoints likely a 25point base account the odds of 50 are still low, but up to 30 . I think it depends on the gdp number on july 26th and the rest of the Earnings Report we get in the next two weeks so how data dependent is the fed . Yeah, retail sales yesterday at 0. 4 , a rebound in jobs after a weak adp and we had philly fed or empire rebound strongly, philly fed coming next i think it all comes down to the gdp number on the 26th were either getting 25 or 50. If that is weak at all i think the fed moves toward 50. Herb, thank you herb morgan with a quick update about. Mike oy thought i would look at data about why we pay so much attention to the close this is from a report from jeffries about Market Structure and trading dynamic. What you are looking here, the close has always been important. This is Trading Volume 2007, yeah it was busy what it is right now, 2018, a lot more at the close. Thats not including the closing option right here. One third of all activity on a given day happens in the last half hour, including the closing auction. A lot of systematic strategies, and thats why you have the most information, the most data is being built up look at this chart from bespoke. You want to see strength later in the day but the pattern lately in july has been that buying has happened on net basis. As i said, not occurring today lets go down to chicago, Rick Santelli has a look at bonds hey, rick. If you look at the yield curve today, it obviously flattened. Notes were down a couple basiss points getting ever closer to 20. Believe me, the central bank, especially after advertising what its going to do at the end of the month, they certainly dont want to see a flattening yield curve. We did have a 25month low today in housing permits bertha, after early gains, it certainly seems as though nasdaq could not get above the water. We might as well talk about basis points here. Biotech is up about a quarter of a percent, chips up about half a percent, and thats the strength were see. Some of the coming from the earnings movers, also asml helping out the chips, the uniform maker with an alltime high, but csx the worst performer in the nasdaq 100 after warning of lower demand. Meantime communications are lower overall, with amazon not really getting any pop the antitrust situation in eu weighing on it a bit no tolerance for earnings misses today we saw that with tech strong, night swift transportation, elsewhere among the builders we sea some weakness, the Housing Starts were week gold mining etf strong, as gold nears new highs. Theres the closing be ibm afte, eternally struggling with flat earnings we are closing near the low of the the day. S p 500 back below 3,000 thats closing at the low. Welcome to closing bell. Im Morgan Brennan in for carol. And im in for wilfred frost. The dow, s p, nasdaq, russell 2000, always lower of the days the s p down 0. 6 closing below that 3,000 marked it was industrial stocks, transportation stocks led lower by csx other railroad names falling in simp think also tech strong with earnings that disappointed the street in terms of what outperformed. It was utilities and the health care sector. Investors now waving a trio of big earnings we have julia watching for float flicks, aditi roy is awaiting ebay we have an allstar panel and results from netflix josh brown, ceo of wealth manage, z still with us. Along with the cofounder of bespock, mike santoli, lets first start with you. It was kind of a paw turning into a mild pullback the obvious push pull was more of a drag. Also, the market didnt seem to love the beige book. Right now with the market at highs, slowing down a bit as we got into this week, it seems that the market almost doesnt want to hear either ambiguous Economic News or pockets of strength, anything that makes it doubt. I wouldnt make too much of it i think the market was primed to cool off for a few days a bit. Josh, what is the readthrough here . I think we have to be honest with ourselves and look at the calendar and the temperature, and just say maybe the activit were seeing right before our eyes today isnt representative of what Everyone Wants to do its a very, very small slice of trading, a paul will tell you, probably 10 of what we see like a day like today, people enacting their opinions on stocks, the other 90 is rulesbased strategies, etfs, rebalances, 401 k contributions. Just accept that netflix sharing plummeting in afterhours on subscription memberships that grew far less than expected, the company says it added only 2. 7 million paid memberships in the quarter. They expect to grow, but the stock is now down almost 8 . Revenues missed estimates by just a hair. Earnings Beat Estimates by four cents coming in at versus the 56 cents estimated you do see the stock down over 8 well continue to dig into the results here. As julia has ted, its just come out. They this is not great news, but a little known fact that the Second Quarter earnings has historically the worse it averages when it Fourth Quarter is the best. 1 in 3 are pretty flat i think its seasonalities for pacing hold on, but dont the analysts put that into their forecast so the estimates are based on just what the company said they thought that they were going to have, what you 5 million forecast year over year down sharply. By the way and friends in the office and disney plus lets get more voices on this as well. Whats your quick take thats a big deal for the company. N. R increasingly its more of a profitdriven story. And thats going to be a tough situation. It seems like they missed the market this quarter. Julia has morgue. Morgue like the office and friends, and theyre losing those both get ready to launch that are services saying catalogs, and other licensed content will wind down over the coming years, freeing a budget for more original content. He says we dont have material viewing concentration as even or largest titles account for only a low singledigit so hes stressing theyre not too aligned. Our so theyre saying they are as they talk about why their he they say theyre already off to a strong start. Sew they say thats why their forecast for subscriber is stronger than expected real really stressing its across all regions in terms of missing their forecast. They dont think competition was a factor, russ, let me go to you. When warner is out there, when even our own Parent Company is, free product is out there. I think this proves that competition is something that netflix needs to worry about is the bottom line is the entire world was watching that show last quarter, and this is a very illuminating quarter for netflix. We think the future will be way tougher than the past. The easy days are over if you have competition, netflix will not grow as quickly thats coming in a big way you know, certainly jim and karl and i talk about it in the morning, what will that competition mean will will it just depress their ability to add subscribers . Give me your take. One thing i said to point out. It shall rank game of thrones. I think ross is right i think game of thrones is a huge factor. What a lot of people do with streaming services, they cut it, buy at one, cut that one, go back to the other one, as hits come around. Exactly. Chances you are if you didnt have hbo, you you went to hbo, and probably stunned it back on in july with Stranger Things. You dont want to see that kind of churn. This is aen outlier. This is a really big point. The other thing to note is they upyard we revised the q3 forecast its more of a function of how they time their more than it is that netflix or im not going to see friends anymore you can argue to the point you were just making about how the Second Quarter tends to fare vertebra other ones. In our survey work we have done, we interviewed consumers about this so its very sticky. Competition, theyre looking at disney plus as more of a complement, and low Single Digits view the office or friends as a requirement for netflix. When you can reasonably produce 23 episodes for eight seasons, that is a lot of shows. The new netflix shows are six episodes, like an hour apiece, and cost five times as much. We all do as long as theyre growing as rapidly as they have, the enormous content costs seem to be in the background do they get more focus you know, tlurp reports that they were saying weve got to level things off we have 15 billion of content costs, only expensing about half of that. This is a hitdriven business. And thats going with comedy specials, movies, documentaries, but to the point made earlier about game of thrones you need those kinds of shows its hard having 12 of those a year also with netflix increasing encouraging bing watching, you need 52 of those a year. So netflix made a difficult game for streaming and media companies, but now they need to play in that sandbox. We know the office and friends are hugely popular, there was an auction, and netflix didnt go above that that tells you theyre going to spend 1 million on something else, maybe original or some other licensed thing between that and netflix theres extra that they would have spent. They hope its not that easy what josh said is very, very true. Ive been in hollywood my whole life theres like five iconic shows that have ever been made like friends or cheers or m. A. S. H. A lot of it is luck. But they will put it interest else it could be garbage, too. Theyll spend it on some. It may not even be close to a friends, but theyll spend the money. Yeah, but josh is right, five episodes for 50 millions versus 25 mill i dont thiion for some nobody was saying its easy to replace franchises, but its always been part of the plan so what the market is now digesting is the idea that the pacing, where the office and friends maybe its cyclical. Maybe its lumpier than we thought, just exactly the speed of getting to whatever number of global subs you think is required to make this Business Model profitable, everyone has that number this their head. I dont know what it is. But its slower now. The elephant is in the region where they raise prices finally the demand curve kicked in this has not been a problem for netflix ever they were 7, then 9, then 10, now were hearing all of a sudden, hey, you know what maybe there is a ceiling that people are willing to pay for this maybe theres a limit. Thats why roku is down, the common carrier for all the streaming services sorry, i interrupted you, ross. I think joshs point is very valid. They have never had to compete on price, and all of a sudden people push back at 15, 16 for a subscription. Disney is 6. 99. So they turn off the service and turn it back on. This is not good for their Business Model at all. I agree with all of whats being said here. I dont think netflix will revise its estimates i think theyre still thinking its 60, 80 million there. So its going to slow, its going to creep i am surprised that they shrank. International is where the yeah, exactly. You know, the bottom line is netflix ads on the platform and derive revenue from somewhere else they cant justify the multiple at 130 times earnings. Its just, you know, thats reality. Yeah. The stock down over 10 , off its lowing it dropped last july, too where he obvious see volatility one way or the other with netflix. And its a bad quarter for the stock, too, typically. How long does it take for it to recover i dont have those number its right near new highs, every time its blown up, its recovered. It will be interesting to watch. Well keep you updated on whatever is said on the call and everything else. Guys, thank you so much for all your input ross, ed, vern as well josh has the results. Eps of 3. 17 versus the expectations of 3. 07, so a beat on the bottom. Revenue comes in line at 19. 16 billion. Gross margins better than expected at 47. 4 . For the full year they are reiterating the targets of 13. 90, and calling for Free Cash Flow of about 12 billion. Segments, revenue mostly in line the street was at 7 billion there. Remember in august 2nd, ibm will provide that updated guidance on reflected contribution this Conference Calls starts at 5 00 p. M. And well be on it guys, back to you. Josh, thank you. Also josh brown, and paul are here a quick comment. Any thoughts at all . On ibm . Yeah. Kind of the opposite of netflix. 10 Free Cash Flow its bizarro day. Ibm is typically weak, so this is a big change you dont norm ate see a netflix disappointment netflix was so down theyre approaching that direction down about 16, billion well see. Santoli, any other thoughts just that its, you know, i think as expected is fine. The stock has been a business of a confused state they closed the red hat deal, a bit of controversy whether they overpaid for it, but if you can reiteration and sash cash flow is coming in as planned, theres a lot of it, and thats basically just a cushion shareholders would rather see them overpay for red hat than keep doing buybacks and no answers for the future i think thats reflected in the share price. Its not like other oldtech companies that learned a new dance. I think people have a newfound respect for people turn cash into a business. Act like youre going to be around in ten years. When i sees lie the Services Backlog and more than 30 in cloud engagement before you get the red hat numbers factored in, that certainly sounds pretty strong, too. The margin was 37. 4 . Guys, thank you. Josh brown, paul hickey joining us thanks. Up next ibm shares are higher we just told you about that. Find out if you should be buying or selling stock on these results, straight ahead. Later well have more on the netflix big miss as rivals, of course, continue to pull popular shows with oerth services ramping up. Dont forget results from ebay as well. Is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. The big story was a huge miss on subscribers. Versus guidian of 5 million. And in the afterhours trade, beating on eps, and that stock is trading higher after hours. And ebay results beating on the top and bottom lines on revenue, the q3 revenues and fullyear revenues were a bit light, hour the fullyear 2019 eps were above estimates, and another keep metric, some of it that sold on the platform, versus 23. 0 billion, and also the company saying in its release, a Portfolio Update is that ebay that is taken two actions in the least and first the company has reached a commercial agree with ptm maul second ebay has reached another agreement to flash sail the german business, saying that the company issings taking a look at review the role and value of stubhub to determine the best path forward. Well look for more color on though topics in just a bit. Back to you guys no changes there in terms of comments about stubhub, but they are moving forward aggressively with the sale. Aditi, on outlook, ike looking at fullyear 2019, any change there . Or was it more or less the same as its been yes, as far as we know, more or less the same as its been. The upside surprise, a lot of exposure in europe, and sometimes that bites them a bit. So it seems like an ontarget number with the value option in terms of how the stock is valued weve been hearing about it for a couple quarters now. Wanting the ceo of ebay, and shell join me tomorrow morning, at 10 00 a. M. For a exclusive . I think so i got it exclusively mustwatch tv, folks mustwatch tv. Yeah, there you go. Looking forward to that. Ibm just out with earnings as well. Lets bring in leighta ellis the stock is trading higher right now, but on anualized basis, looks like a fourth straight quarter of revenue declines. Well probably see the stock bounce around. The hairline number clearly a bear looking like its up 5. 4 , that beat consays, expectations. The real weak spot is the cloud revenues, which came in at 19. 5 billion in the quarter, inline with last quarter thats a fee sell race. In addition, the big outsourcing business was weaker than expected so theres some pluses and minuses. The numbers, would any of it change year thesis in terms of your investment rating on the stock . No were sell rated with little, if any with or without a red hat, and these results are pretty consistent with that. There are some bright spots in the portfolio, particularly the consulting business, but we continue to see the weakness and declines and underperformance relative to some peers both in cloud as well as in their Service Businesses all right thank you for joining us always a key, of course, as well stocks fell for a second straight day, well break wndo stacks to explain wise recent economic date could be a bullish signal for the market. A half hour after the close, we with gives a check on the scorecard. Netflix sharing plunging after subscribers numbers came in wait off the map. Ibm trading higher and ebay, it had a beat on both earnings and revenue those shares also higher after hours. Lets get to two more records. Kate rogers has more dates . Kicking it off with United Rentals after the company beat on top and bottom lines. Ceo Matthew Flannery pointed to historically bad weather in several key regions, but also said the Company Remains confident, ands kinder morgan, those shares down nearly 2 , posting inlined revenues back over to you thank you, kate time for a news update lets get to Contessa Brewer for that. Heres whats happening right now. The house will vote on a resolution to impeach president trump. The vote was forced by reading the articles of impeachment on the house floor tuesday night. He told reporters the house will vote to proceed forward with the measure. Therios founder Elizabeth Holmes left a court, with the trial to begin in august of 2020 if weathero rico is teenages a big protest, demanding a recently leaked pages of online chats between the governor and members of his administration as well as outsiders have revealed the men mocking women, people who are disabled, even victims of Hurricane Maria and a fireball erupted from the base of space exs prototype rocket minutes after a key test. Its known as star hopper. The rocket is the early version of the starship rocket which is being built to transport as much as 100 people to outer space destinations. This is the next big nextgeneration rocket star hopper is the prototype certainly some fiery video there. Contessa brewer, thank glue still ahead, we will have much more reaction to the netflix sello selloff, and whether the streaming giant can replace the content its losing to rivals. Morgan stanley will ckki offer another big day tomorrow find on what to expect later welcome back netflix plunging on a big subscriber miss. Matching revenue estimates and beating on eps, thats up 2 ebay higher after beating on the top and bottom lines we have cara swrisher, and cynthia littleton. Thanks to you both cynthia, let me start with you give me your take on this number many people may have been anticipating future competition eating away tess ability to grow subscribers, but few expected this decline this quarter. What i see with the miss, particularly with the domestic subscribers, sigh see that its a hitdriven business. It is comfort food, it is the utilities you turn on and want to surf, but in terms of jerch rating new subscribers and with retention, they need a Stranger Things. They have Stranger Things 3 right now, but in the quarter were talking about, they didnt have a big tent pole its interesting to see theyre becoming vulnerable on this churn. Its not the first typhoon wean sues this, but investors always seem to come back stronger than ever does it mean something more than in the past . Theyre facing new challenges from the bigger incumbents who are pulling stuff off the platform that shouldnt matter here yet like the office or friends, which got a lot of attention in recent weeks netflix tends to be innovative in terms of programming and ideas, but it does matter 3 4 things like Stranger Thingso whatever the hit just like with hbo and all the other. Do people want to use it as something that is a regular things in or something that just Appointment Television where they want to binge on whatever they want to do cynthia, that sort of raises the question netflix is coming out saying were not paying for the rights for friends or the office or some of the legacy franchises anymore and thats money to put toward new and original content, but one of the question questions earlier is also what would it take to make one of those types of programs in terms of how series are being developed, and how long they are, how engaged people will be in watches thor seesies . Right, we have seen netflix in the last year or so become very selective about the shows that they renew, and, you know, shows on netflix may last two or three seasons. Thats a difficult proposition for the content makers, because thats the worstcase scenario, youre in for a fair amount of money, but you dont have enough episodes to really have a lasting library play, and then you gets canceled, and netflix, you have difficulty in taking a show to another platform so i think they are really and anytime were talking about original content youre talking about not only very highend production, because they have set the bar very high for themselves were talking about a lot of marketing, a lot of promotion. It costs money to let people know about a new original property just like with Stranger Things a couple years ago, you can plan all you want, but you never know what will catch lightning in a bottle and take off. Theyre still talking about a negative 3. 5 billion Free Cash Flow at some point does that start to scare people theyve never been able to borrow or sell equity. I dont know, does it start to get scarer it feels like amazon in that regard thats what you and i have discussed, and this feels more like that, but i think one of the things thats interesting, i interviewed natasha, and that runs programming they got emmy nominations for russian doll. They certainly have in the creative area theyre certainly excelling. Cindy talked a lot about throwing shows off that werent working, but not giving why. So i think what they have to face in the future is theyve attracted creatives, but can they keep an ongoing series of hits or things that keep subscribers coming to the platform, and then adding to them certainly one of the most innovative and forwardleaning can they keep those creatives . Keep them happy . Particularly when they cancel shows and dont really tell you why . Its going to be challenging for them especially in the coming year. They have done some enormous deals with very, very top creatives. Shona rhymes, theyll have very hungry mouths to feed there. I think that will make it challenging to attract the rest of strong creatives, because theres a feeling already that netflix is becoming a bit of a warehouse, and only if you get lucky or only if you are Stranger Things or when they see us the limited series that grabbed a number of emmys you could be one of a dozen shows that drops on any given day. Thats challenging for the creative community. In a way its reassuring that the algorithm isnt as magic and predictive as people seem to think it is. Clearly they dont know how to exactly calibrate it. I dont know about that i got to say just because disney and nbc and others are joining in, that he will do well necessarily. You do have to mix with just basket create activity so i think its whatever company can do both those things, its critical. Thats not the way the future of entertainment is at all. All right ladies, thanks for joining us. Stocks down 11 after hours right now. Well, still ahead, could the first Quarterly Results as a Public Company end up biting investors . Somebody wrote that. Very clever tomorrow dont miss the interviews with steve mnuchin. Ats 00 a. M. This is hal. This is hals heart. Oits been broken. And put back together. This is also hals heart. And this is hals relief, knowing hes covered. This is hals heart. And its beating better than ever. Box. Cross blue shield does for. And with easy access to quality healthcare, imagine what we can do for you. This is the benefit of blue. You still have service . Call the Insurance Company sfx [phone ringing] its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool welcome back mike as his final dashboard of the day. Yes, you wont get another one after this, no matter how much you ask hard to get excited. Heres a chart that compares the hard economic data, inert, actual production and activity which would be more surveybased data what you see is the hard data, improved a fair bit, while its diverged from the surveybased data, so maybe its a trade overhang, a lot of talk about how the fed neither to cut rates. Netnet, this is probably a positive thing what you saw here the survey stuff was off the charts people were very excited, very optimistic, because it was not quite matched by sustained strength so something to keep an eye on, guys. Mike, thanks. Up next, facebook under fire for its the new cryptocurrency libra. Of course it hasnt introduced s yet it just a white paper, but well hear from the Independence Group behind libba, straight ahead. Xfinity mobile is a Wireless Network 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. Wrap up two days of questioning on the hill. Marcus facing answering questions regarding the cryptocurrency efforts lets bring in dante departe dante, thank you for joining us today. You make the argument that libra is a tool for Financial Empowerment and not a threat based on what we heard from lawmakers and their grilling of marcus, how do you make that case you have to think about the Financial Networks of statistic world are very much in the same place that the Telephone Networks of the world might have been 50 years ago. So people who are access to se the right zip code the Financial Markets have left people on the margins of finance. We can extend the finance without sacrificing financial oversight. Bear in mind libra is one month old tomorrow in the course of four weeks we have had an impressive 24 hours of conversations in washington that will continue around the world and have made a big commitment to say that Financial Inclusion and financial oversight and Regulatory Oversight are not competing ontoives aonto objectives and we aim to comply with those types of norms. Dante, how do you convince lawmakers that libra is not a threat, especially when it is facebook that is really essentially spearheading this right now . And as we saw just in testimony today, the fact that this is a company that has already been plagued by privacy concerns, data concerns, there does seem to be a connotation attached to this well, at one level and i think it is an important point of clarification, libra the association initially has 28 founding members including Facebook Facebook has effectively put itself in a position which i think is extraordinary for Large Technology companies to effectively have the same power and privileges as social Impact Partners such as womens world banking that are part of this effort as well number one number two, this is very much an open, transparent process to develop a technology that would serve the world and serve a very competitive ecosystem of Financial Solutions and responsible financial innovation and then the final piece of the puzzle is the charter process that forms this association is also being done transparently. One of the reasons we have announced so far in advance is to be able to incorporate the type of feedback we have received and incorporate the type of concerns that have been voiced over the last two days here in d. C. Dante, let me ask one quick did you hear anything encouraging over the last two days in terms of the questions at all for the future of this potential currency absolutely. I think if you parse through a lot of the headlines and i imglim glad you asked the question. You heard from chairman powell about the goals for responsible finances you heard from the goals that we aim to adhere to on the Senate Hearing and congressional hearing today, you heard a lot of principled conversations about what it means to be innovative and so behind that, what underpins that is exactly the spirit we are espousing with this effort, and that i found today a lot of alignment and a lot of important questions that should be asked have been asked and will be answered to the best of our abilities to ensure that when libra goes live it conforms with the prevailing norms for these issues dante, you mentioned that this is an open process. You have made this public early. What are the core things you could not surrender in this process as it develops well, i think, you know, if you think about what we are really trying to achieve, a lot of people think of this as if it is in competition with the dollar or in competition with finance and banking. But what we havent said enough of is the fact that in so many levels theres 1. 7 billion people on the planet who are on the margins of finance because in part Digital Transformation has been slow. We havent yet made it to a point where we could offer low cost, high quality payment instruments and other types of instruments to the world thats not just to developing and emerging market problem, it is very much a problem here in the United States and in many advanced economies so i think the thing we cannot sacrifice as we move forward is that we have to stay true to the goal of Financial Inclusion and we have to hold up a mirror against the Current System to say, where does it not work, both from a policy, regulatory and operating point of view, and how do we ensure that these two priorities move together in lock step. Dante disparte, thanks for joining us today. Thank you up next, we have your wall up next, we have your wall street loo it was a mom and her kids. Everything they had had been washed away. The only thing that brought any kind of solace was the ability to hand her a device we will when you switch. O 650 thats verizon. Is where people first gathered toto invest in all the thingsror that move us forward. Every day, invesco combines ideas with technology, data with inspiration, investors with solutions. Because the possibilities of life and investing are greater when we come together. Wake up theres a lot that needs to get done today. Small things. Big things. Too hard to do alone things. Day after day, you need to get it all done. And here to listen and help you through it all is bank of america. With the expertise and knowhow you need to reach that blissful state of doneness. So lets get after it. Everything is all right what would you like the power to do . ® all right prpharmacist recommendedne memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Netflix sitting at its post market lows right now. It is down about 13 after that big subscriber miss. The earnings webcast kicks off in just about an hour at 6 00 p. M. Eastern thats a big decline. It is time for our wall street look ahead we have more earnings of course coming your way tomorrow josh lipton looks ahead to microsoft. Seema mody is covering chewys first report as a Public Company. Lets get to you first, josh. Reporter david, microsoft is up more than 35 so far this year, so that does best the tech secretarior and the market and i will say their checks indicate that during the Quarter Business momentum remains strong. That said, how much of the good news is now priced in . Analysts note that looking ahead to the companys q1 comps are tougher, specifically for the intelligent cloud and more personal computing divisions investors will be focused on growth in microsofts key cloud drivers, thats office 365, azure, and dynamics 365. Just today microsoft announced that marquese deal for its new business, aligned with at t using the azure infrastructure that deal is worth more than 2 billion back to you. Thank you chewy is set to report its first result as a Public Company seema mody is going to tell us what to expect seema. Reporter amazon in response to prime day, the Company Launched a summer sale with discount for customers as sign ups for subscriptions to pet food it is roughly twothirds of its sales, so the questions is how much are promotions eating into chewys bottom line. The Company ProvidedFirst Quarter preliminary numbers during the roadshow, so the focus will be on guidance and how it is managing competition from amazon. Chewy went public last month, raising about a billion dollars since its ipo, shares are up about 43 . David. Thank you, seema. Youre not going the want to miss an exclusive interview with chewys ceo. Of course, we will talk about the results tomorrow at 4 30 p. M. Right here on closing bell. Mike santoli, we had quite a flurry of tech earnings after the bell. Yes. In addition to netflix, ibm, ebay your takeaways as we wait for the calls in. I think the big question is obviously, you know, netflix will be pounded. A big gut check there. See if it spills into the other big nasdaq stocks. After hours amazon is bid down a bit, less than 1 , not that the business has read through to others but more of a sentiment, who else owns netflix and what they might sell in response. The other two were positive, lower expectations going in. Seems like ibm and microsoft on course. It seems ibm is giving up earlier gains. Still positive now but maybe the softness in cloud, the fact that revenue did decline for a fourth consecutive quarter. Conviction is always thin in ibm. People dont feel as if from one quarter to the next it has been a decisive, you know, gain of momentum or anything like that got to watch out closely. Even for warren buffett, somewhat thin. Exactly reversal, a rare one that does it for us here on the closing bell fast money will get started. Right now fast money starts right now. Live from the Nasdaq Market site overlooking new york citys time square im million traders on the desk are mark tepper, Karen Finerman and mark grasso we have full Team Coverage on netflix, less than an hour to go until its call gene munser is getting ready to fire up the red phone in minneapolis. Mark is here to break down the after hours moves on the charts. We start with the big move the stocks at after hours session lows, plunging double digits after adding 2. 7 million subscribers, lowest amount in three years. Are the best