Transcripts For CNBC Closing Bell 20240714

And possibly easing sanctions on iran. Josh, kind of a quiet market day here interesting rotations going on what do you make of the action today . This week its just been incredible for anything of value versus growth, anything small over large and theres a tend densy when we see these outside moves. For example, russell up 5. 5 over the last week theres a tendency to look at that and say ive missed it or that has to be the top of something. When you actually go back and find examples of this sort of thing happening in the recent past, actually that always had taken place at notable bottoms in the russell 2000. For example, we had three versions of this in the year 2016 where you have just this incredible week for small cap, for value and it wasnt the end of something or a blip it lully was the end of the selling. You can stay with this trade if youre on and. Portfolio tilt for smallend value. After a really long drought of good news. So a lot of people are happy about that take a look at Home Builders absolutely on fire well talk about my favorite one later in the show. Itb. Xhb. New alltime highs for these indices. And thats important for the consumer. Looking for the tease later in the show. Like youve done this before zblie thought you were going to reveal the stock but no. Lots with josh over the next hour big stories were watching today, bob pisani is digging into major rotations, plus watching three stories of intersection of government and business eamon javers has the latest. Californias gig worker bill and probe into amazon. Bob, lets start with you. Wilf, rotating out of defensive groups like staples and value today, economically sensitive groups take a look, for example, energy and disaster still 20 off its historic highs nice move up for some of these big Energy Stocks today. Industrials, banks and retail, generically called value stocks but economically sensitive, too. Some of the big energy names out there all on the upside today. Even though oil is down the middle of the day. Industrials like caterpillar is up 10 , boeing is up 5 or 6 its been good overall for them. Retailers rally. Theyve been badly beaten up throughout the year. Lot of internal situations regarding some of the Big Department stores as well. They have also been rallying in the last several days as well. Banks all up, 4 to 8 so far this week. Again, thats somewhat of an Interest Rate play as Interest Rates have moved up. Weve seen utilities do a little bit better, as josh mentioned, Home Builders also doing a bit better as well the laggard has been economically sensitive stocks, Consumer Staples, for example, that we call defensive stocks, more accurately. So, weve seen costco, can roger, hershey, general mills, all down in the last several days guys, back to you. Thank you very much, bob. The Trump Administration is readying a ban on flavored ecigarettes eamon javers has more in washington on this breaking news. Reporter hi, courtney. Im told this came together very rapidly this afternoon the president had a meeting with hhs and the fda not on the public schedule, in the oval office during that meeting im told he was briefed on the situation and made the decision to authorize his administration to take some action and decided to call the pool in. Reporters are coming, tumbling into the oval office, not knowing necessarily what the announcement was going to be it was about this idea that the president says he wants to target those flavored tobacco products, vaping and ecigarette products that are going, he says, too much, too often to children here is how the president put it in the oval office. We have a problem in our country. Its a new problem its a problem of nobody really thought about too much a few years ago. Its called vaping especially vaping as it pertains to innocent children were going to have to do something about it. Now the fda says the details of the plan here are going to be released in coming days. We dont have a lot in terms of the specifics, but ultimately, the Administration Says what they want to do is allow that to be alcoholo flavor vaping to be on the market for adults transitioning from cigarettes to vaping and hopefully, in theory, on to no nicotine at all they want to go after the flavored products that they say are going, too often, to children well get details from the fda in coming weeks. Keep an eye on that. As always for the Companies Involved here, the devil is in the details. This particular unscheduled or unannounced meeting, the president s wife, first lady, has made some comments on the topic of late. Yes, she has been tweeting about this Melania Trump view this is very personally the president said in the oval office that because of their son, barron, melania is particularly attuned to this barron is, i believe, now a middle schooler, who is in this world where young people are being exposed to this. This is something that the first lady, im told, views very personally and clearly she has the president s ear and the president was willing to move ahead with this recommendation from hhs and fda well see the policy details come after that. Eamon, thank you very much for that. Lets move forward on to uber and lyft gig worker bill makes its way through californias government. Deidre bosa is in california with more. The bill just passed assembly before it goes to governor newsoms desk for signature. This is far from a done deal take a lock at the shares of uber and lyft, ubers chief officer, tony west, has just kicked off a media call, going through how uber will lobby for an exemption for this bill it is fair to ask, could markets be complacent here could the Ride Sharing Companies have to classify contractors in the future that will raise their cost as much as 35 , setting a very important precedent for states with their own gig economy loss. We had a guest on yesterday that said this law, whether there are exemptions or not, would play into the bigger players hands like uber and lyft as opposed to smaller startups, because theyre the likes that will be able to afford offering new benefits. Reporter if you take a look at uber and lyft, its a duopoly. They already dominate this market they would have to adjust their whole Business Model to account for these increased costs. The problem for investors is that this stretches that path to profitability that so many are already questioning. For ride sharing, i feel like that is pretty clear some of the other gig economy sectors, thats true that are more fragmented, it could give the bigger players an upside advantage. No adjustment of Business Model. Lyft and uber are zeros if this becomes something in all 50 states instant zero they cannot happen for those companies to survive no chance. Its great for wemo if they actually go ahead, deidre, im listening. Dont they just pass the cost on to consumers . You might have argued the same thing. Whats happened is they passed along those costs and continue to exist. Yeah. That wouldnt go well. If you think about the market share that Companies Like uber have been buying with subsidized ride share, imagine theyre paying health care for employees, social security, payroll tax, things that people like me have to pay, none of the numbers work, none of wall streets assumptions work if that becomes something they have to do across the board im not saying i think it will happen but adjustment of Business Model is a very politen california the result of this bill is much higher prices for consumers or uber anlyft leaving the state, then no other state will enact a similar type of law. That is probably the saving grace, is that people love uber. People love lyft i dont think it would be popular politically to make it a situation where uber ride doubles, even if its better for the workers. That is what saves these stocks from that happening. You make a very important point. California is a very big state, pretty big economy, pretty big precedent shares are off the high even though they are positive on the session. Still high at the moment. Amazon also facing regulatory scrutiny, according to new reports. Courtney has more on the potential new ftc probe in that area court . We talk about this one a lot. Now the federal trade commission is reportedly looking into amazons competitive practices as it relates to merchants on its sites. Questions aimed at sort of determining amazons power over these type of merchants like what percent of revenue a merchant might make compared to others amazon itself has no comment on this report today. Third Party Sellers do account for 58 of all goods sold on the site, according to bezos annual shareholder letter when you look at the market share, ecommerce sales market share first and third Party Together nearly 38 . Thats up from 32 in 2016, but far, far higher than the second place player here, ebay, with just over 6 , walmart third at under 5 we know they have a decent market share the question is how dominant are they, what do their practices really mean if youre a marketplace seller, can you still do that in a competitive way . At the moment its not been in the cross hairs as much as some of the others. Its true we always look at this and think in general amazon has brought pricing down in a lot ofhat you look at when youre looking at an antitrust area. This is potentially a different kind of probe. Right now if this report is accurate amazon gave us no comment on this theyre sort of fishing around. Shopify getting a nice boost by this controversy because if you are a vendor and you dislike anything thats going on on the amazon platform and the way they might prioritize knockoffs of your products, shopify at this point is the alternative of that. To build your own website i wont have amazons customers i wont have the advantages of them doing fulf l fulfillme fulfillment. However, i do have an alternative and that stock, forget it, has gone from 100 to 400, up 3 today, i think in part of this news. Get back to border markets. Small caps rallying once again well ahead of the rest of the market up 2 today, 4. 6 this week. Its on pace for its best year since 2016 this recent outperformances have been playing catchup before that lets bring in steven desanctis. To what extent is that simply small caps catching up with big caps and to what extent is it the sectors that dominate within the russell . Its absolutely a game of catchups. Underperforming by 1400 basis points over the last 12 months valuations got to a level weve not seen since june 2003 so, youre getting a little bit of the catch up from that. As youre pointing out, a little bit more on the cyclical side of things higher rates couldnt be better for small caps feels like the economy is going to be maybe slower, but certainly not in a recession higher rates definitely help the banks, thats a bigger part of small cap. I think you have a lot of momentum building, yet were only unwinding really whats happened over the course of the summer. Steve, its josh brown. You raise an important point hunl movein rates over the last eight days, weve seen the tenyear go from one spot, up to 1. 72 and weve seen an almost equivalent move in the 20year as we know, the russell is 20 financials or Something Like that so things like the kre are big, regional banks moving, thrift banks. Weve been faked out by this before if were going to ascribe most of the rally in the russell to rates, then what is someone to do who says were still trending toward zero in rates this is a head fake. No, no. Answer that question. I dont think you want to put it all on just rates the fact that were not going into recession, thats become clearer where august it felt a little bit more like small cap, we go into recession, small cap would definitely suffer. The Earnings Growth picture for 2020 gets alittle bit better i think youre probably talking about, you know, 10 Earnings Growth versus down here in 19. So i think youre going to be you know, youre going to get the earnings probe that maybe not spectacular, but will drive performance and the valuation gap, again, has been so wide, whether its small versus large, growth versus value, momentum versus Everything Else i think you start to look at that as okay, we play a little game of catchup we get some Earnings Growth behind it. The economy starts to show signs of improvement third, fourth quarter. Youre going to get the earnings coming through and youve got more of the run for small caps to continue to outperform here. You know, steven, earlier this year we were looking at the rest of 2000 as potentially a play if you were afraid of the trade war impacts. Is that still something that you would be looking at as a possible investment thesis if you do believe that the russell 2000 might be a place to continue putting your money Going Forward . I would be careful with that just because a lot of times the dollar strengthening because of global weakness, small caps is not going to hold up in that environment. Really, small cap is a risk on type trade usually when the dollar is weakening, thats going to be better for small cap i do want to be more doc domestically focused if im looking inside a small cap, more domestically focused so industrials on the u. S. Economy, consumer and discretionary, domestically oriented. Thats the way were thinking about positioning. In the past, you know, the weaker dollar and, you know, where we want to be domestically focused small cap out performer. You would make that argument in 15 and 16 and that didnt work so well for the first couple of month months of 16. Steven desanctis. Thank you for your thoughts. 34 minutes left in trade Mike Santelli has todays market dashboard. I do. Grin about bear it, first of all. Promise a good smile then over the hedge tracking some of the footprints of this huge rush, shakeout and hedge fund that weve been talking about in these rotations s p tries to extend past its alltime range basically, scenarios around a second fed rate cut so first, grin and bear it smile and direct ipo on tap, looking at the price on market today, existing dental related stocks have actually struggled seems to be a great growth subsector for years and years, the overall market was expanding. Henry schein leading in that area and invisalign people well off their highs and have underperformed a lot going on here. One of which, china has not been a good market for align and theyve been disrupted to some degree by online suppliers smile direct, of course, is a disrupter, trying to be the lower cost, more efficient provider of teeth straightening Technology Well see how thats received by investors. Okay, mike. Thanks very much mike santoli there President Trump making his case for negative Interest Rates on twitter today, calling federal officials boneheads for their decisions. Well discuss the impact that ultra low rate koss have on the banks. Ben silverman of the office fame about apples streaming strategy and what it means for ot csi bl. Net flicks coming upn helongel do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. And now for their service to the community, we present limu emu doug with this key to the city. [ applause ] its an honor to tell you that Liberty Mutual customizes your Car Insurance so you only pay for what you need. And now we need to get back to work. [ applause and band playing ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. Welcome back t. Boone pickens has died at the age of 91. Cnbcs robert frank had one of the last oncamera interviews with pickens in february 2018. Can you believe the success that youve had in this world . No. No no, i cant. You still cant you know, it is a little bit unbelievable, but, you know, its been great. And ive loved every minute of it. Lets bring in robert frank sort of a larger than life figure. He really was ive been lucky to meet a lot of successful people, but he really was special. He was one of these guys that truly lived life to the fullest. Everything he did, he did with a full heart he was warm. He was funny he loved being engage in the world. I was there last year to profile the ranch, his 64,000acre ranch. And on that ranch he has his childhood home that he was born in, holdenville, oklahoma. In that home in the closet of his bedroom theres a little trap door where he used to keep all the money he was making from his paper routes to hide from his mom and even at a young age, he was so much more successful than other kids on his paper route and, you know, to see that house, that little clapboard house from holdenville, oklahoma, where he grew up in and became this titan of wall street, it was hard for me to manual that life and it was great for him to have that on his property to remind him where he came from. Robert for someone of his level of success and wealth, very gracious and down to earth and welcoming when you were there . Its funny. We hadnt planned to interview him because he was going through some Health Problems i went in just to say hello and he perked up, was sitting by the fireplace and said where is the camera where are the crews . Bring them n i said we didnt want to really trouble you. He wanted to be interviewed. We brought in the cameras. He lit up and was the old boone again. He loved to be involved. He loved cnbc. He loved to be involved in the world and those cameras went on and he was the old boone again. We had him on the air many times over the years because he played his hand in a lot of different ways in the energy markets. It wasnt just oil. The Way Investors should remember him is that he was right. So, whatever your opinions are about fracing, its way better than coal. T. Boone was one of the first to come along and tell wall street and politicians we are the sawed a arabia of natural gas, 200year supply beneath our feet it burns cleaner, more efficient to get at and is way better for the environment and a lot of money was made in doing that so he should get a lot of the credit i dont know who else you would give that credit to more so than t. Boone pickens from an investor perspective, the guy nailed it and fortunes were made. Off his living room he had a giant board room on that board room wall was the map of his ranch, 64,000 acres with all the various gas rights and oil rights and he said every day he meets with his people to figure out where the gas rights could be best exploited. Even up to the end, he loved oil and gas prices and had it affect that market. Without net exporter of natural gas. You can thank largely mr. Pickens. Robert also he shared a great amount of his fortune as well. Gave away hundreds of millions of dollars. I expect more charitable gifts from his estate. University of oklahoma owes a huge debt to him, especially the sports part of that university, the Football Team, embraced and loved charity. Fwav a lot to politics, both sides, very involved in texas politics but gave with his heart and his money. Thank you for being with us, robert, to share some of those memories of mr. Pickens. May he rest in peace. Up next on closing bell, apple crossing the 1 trillion cap level. Wall street analysts are split on tim cooks announcements. How the major firms are reacting thats coming up next. Time to get word on the street product event. Among them bullish analysts, jp morgan saying, quote, largely positive following the event citigroup saying announcement was, overall, quite positive more traattractive for first ti buyers and bank of america raising its price target from 2. 50 to 2. 40 per share. A bit of a different take Goldman Sachs seeing the, quote, lower iphone price point period of slight negatives credit suisse, another lackluster cycle and margins will come under more pressure. What did you make of yesterdays announcement incremental changes to the iphone, crazylooking camera i dont like the three camera holes aesthetically. I dont think youre alone. Let me talk about the stock, though my comment on apple, understanding youre selling to one of three people, index fund that is buying it hand over fist every single day, selling it to Warren Buffett or back to the company which is rapidly shrinking its share count. I think they spent 60 billion on buybacks. Youre welcome to do that. Youre welcome to sell it to one of those three buyers. If you think theyre going to stop what theyre doing, i think thats really the way to think about it from an investing standpoint. From all of those notes, whether theyre positive or negative from yesterdays launch, none of them have drastically changed their forecast yesterdays event underwhelmed whether youre positive or negative on the stock. And finally switching to a services company, they all focus much more on the price cut on the iphone than they do on the impact Goldman Sachs, for example, saying it will have 0. 4 impact on eps in the next year and a half maybe theyre switching to services but no time soon and most of the focus in most of these analysts notes have been the impact of the iphone. Luxury consumer staple stock is what it is. Theres not another billion people about to buy an iphone. We all understand that i think its actually a positive setup to have no one looking for big Revenue Growth and its selling, i think, 18 times earnings, a slight premium to the market its an incredible, Incredible Company and theres a lot of investors as i mentioned before. Last thing on this, i love what theyre doing with the pricing of the content app i think its brilliant to bundle it in and give it away for free on new device buyers i think thats a great idea, too. And if they can get to tens of millions of paying subs after six months to a year, theyll be bigger than the new disney app and it will take time for them to ramp up the content thats okay. Netflix only had 13 shows in 2013 its okay to start slow and build from there. Were not going to be done talking about that were going to stick with apple. Bank of americas netflix doesnt think apple tv plus is likely to rub netflix as Subscription Service of choice joining us now to talk more about it, ben silverman, which produced apples first show, planet of the apps, former e. P. Of the office. Ben, price point of apples tv plus service, that was a surprise to some. It seems smart to me, you know, to undercut the pricing, plus timing of coming out ahead of the new launch around the corner mark just said im not in any way a financial analyst. Im a concentrator i think doing it with the content, the sale of the product and the one that everyone expected the assumption that they have advantage, this is not their Main Business and they can bundle it with their screens where you watch this content and it works perfectly in connection with it in the same way they offered the free trial on apple music for three months i think that they then get hooked with it and people unsubscribe to something once theyre on it. Thank you for joining us, by the way. Is that directly comparable, though, to apple music clearly most of their hardware sales are phones and clearly apple music links very well to a phone, but will it work and be so transferrable to try to get people to watch tv if they bought an iphone or an imac . I know that plane was filled with people who have been downloading content from their netflix or their amazon subscriptions on to their pad so that they can watch on the go. And i think you do see more and more people consuming content in different locations. I think it is something that is applicable i do worry my biggest worry, and youre seeing it impact netflix right now, is that they ha library product. They dont have an office or friends in their repertoire. You cant charge 4. 99 a month if youre only putting one show a month on the air you could easily be buying individual shows for less money. Visavis the price proposition and what you get for it, it feels to me it has its struggles at first until they ramp up their content offering and either have a robust amount of originals, much more than they currently have invested or they get into the library game and go after catalyst context when they started launching their original its not an apples to apples its a very different comparison. And that does seem to be key bank of america, Merrill Lynch counts nine titles that apple would go with that launch. Netflix is 400plus originals, some with multiseasons and that doesnt count movies if youre apple, what would it take to go after the content that youll yule need to grab a Subscriber Base that has gravitas here . I think theyre smartly going after the biggest names in the business whether that will translate to the quality of content, we shall see. So going with the tried and true may end up actually something that hopefully still feel the original could easily fall into becoming derivative. And i think hope fful double, triple or quadruple down and buy more and more. The ability to buy Library Content the way netflix did at the beginning, over. I dont think it fits anymore because of the competition of big suppliers like universal to comcast, like whats happening with cbs and all access and all of those offerings that have been clearly hbo and Warner Brothers will be doing you couldnt even reassemble that if you wanted to today. Has the price of content now peaked interesting you mean what a consumer will play on a monthly basis . No. I actually meant what the likes of apple and netflix and disney will pay per hour for shows like the crown or whatever the new shows are that are coming out. I think that theres always something so compelling that could drive its own marketplace and whether that was 260 million deal that amazon pays or star warrings that disney is investing in heavily there are going to be titles and projects and talent that create their own market and there will always be an outlier that can drive a price that will quantify a result and not just to you know, an individualrating point. Its going to be such a direct Value Proposition and correlation that i could still see prices increasing. Youre going to start to see what i think netflix has really intelligently done, which is buy showed like nailed it, reality shows and the like that could help fill out the lost Library Content. Ben, thanks for joining us. Great to speak. Wilfred and courtney, thank you. 20 minutes left to trade here optimism as china extends an olive branch and stocks like apple continue to rally. Yields bounce. President trump calling the fed boneheads, saying they should take rates down to zero or less and oil plunges as the administration is considering easing sanctions on iran time for cnbc news update with sue herera. Hi, sue. Mike pence honoring victims of 9 11 at flight 93 memorial in shanksville, pennsylvania. The whole generation of americans has come of age with no personal memory of 9 11 so the rest of us, my fellow americans, must tell the story. New video shows the damage done to a south dakota city that was struck by a massive ef2 tornado. The tornado carried wind speeds of up to 125 Miles Per Hour and left nearly 25,000 homes and buildings without power. This was the first tornado to hit that area since 1996 and president george w. Bush releasing a statement on the death of t. Boone pickens saying, quote, boone became a household name across the country because he was bold, imaginative and daring he was successful and, most importantly, he generously shared his success you are uptodate thats the news update this hour back ill send it back downtown to you. Sue, thank you very much for that. Still to come here on closing bell, last chance trade. Well be back in a couple of minutes with that. And very much more as we head to break, lets check out the move in bonds, continuing their reversal and marching higher. Yields on the tenyear have seen a big run the past week. Closing bell will be right back will it feel like the wheend of a journey . P working, or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. 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. Classical Music playing throughout officially kicking off its ipo, peloton no, were going to talk 15 minutes left before the close. Well get over to mike santoli hi, mike. Whats going over the hedge, rotations weve been talking about all week theyre going across several different vectors, right, large cap to small cap, growth to value, momentum to laggards and crowded to neglected thats whats going on here. People overpaid for the sure thing, Long Duration assets, bonds. But also these global bulletproof perpetual brands that yes overlap in momentum but the last five days theyve underperformed purple line at the s p 500, disney, coca cola, nike, mcdonalds, no brainer type stocks have struggled. Theyve pulled back a little bit. Now look whats beneficiary on the other end of them. These are five of the ten most heavily shorted stocks in the market they, of course, have been flying hedge funds along the great stuff that nobody could argue with, short perceived junk like nordstrom, under armour, gap and snap on, you can see really killing the s p. How long it goes theres an economic basis, too yields are doing what theyre doing. At least in the moment its also a liquidation of some crowded popular trades well see how that plays out from here, guys. Mike, thank you for that. President trump blasting the fed again today, saying policymakers should cut Interest Rates down to zeer or less. He also said usa should always be paying the lowest rate. No inflation its only the naivety of jay powell and the Federal Reserve that doesnt allow us to do what other countries are doing, once in a lifetime opportunity we are missing bous of boneheads. Joining us to discuss, former senior adviser, head of england, and Morgan Stanley as well thanks for joining us. Is this a case of be careful of what you wish for, mr. President . Thanks, wilfred my focus has been very much looking at europe, japan ahead of whats a really huge day in europe with the ecbs and Mario Draghis last day. At what point were cutting Interest Rates in europe potentially do more harm than good thats a hunl ll lly hugely difl debate theyre weighing. The challenge for many of your listeners in the states theres not really good Academic Work in this area because weve not gone through this Looking Glass type territory before. Your take of your recent oped was that further cuts for the ecb from here started to do more harm than good. Is that right . Yeah. No, very much, wilfred my bottom line is im beginning to worry about what the impact is we can learn from japan that take japanese regional banks they are some of the least profitable banks on the planet because of a Long Duration of negative rates whats special about the eurozone is about 70 of lending to companies comes from the banks. We really need to focus with a laser on what it means for the banks and the bottom line for us was unconventional policy like negative rates is a bit like taking steroids. Theyre great in short dosages, but longterm usage starts to weaken your bones and makes you more prone to an accident. In the same way im worried about the Financial System and what that means for the transition of credit in europe we come out of it very cautious and hope the ecb is weighing these difficult decisions incredibly carefully. So what do you think that the ecb will do when they make their decision and what should they do, when you put all of this together look, in market expectations, as you know, courtney, are in the order of 10 to 20 basis points for tomorrow with another ten in december. And i think the median is looking for another 35 basis points going from minus 40 to minus 75 by q on next year, you know. The basis of the work ive done with the professor is thats not a great move if what youre trying to do is jump and kick start the economy with more flow of credit to try and offset that, we think that they might introduce a scheme to offset some of the challenges that really does play back into this debate about the currency when the danes and swedes did this, it was explicitly to try to protect their banks and obviously weaken their currency. Thats something we should see in this current environment politically challenging. And third is a move, potential move to change guidance and although i think its a finely balanced call to restock qe. In my view, its probably better not to cut at this stage but certainly i think 100 of the market are expecting a cut they would be very surprised if they dont. Thank you for joining us. From uvs. Owf s oton is kicking ofit sh today 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. Hour 36 in the stakeout. As soon as the homeowners arrive, well inform them that Liberty Mutual customizes home insurance, so theyll only pay for what they need. Your turn to keep watch, limu. Wake me up if you see anything. [ snoring ] [ loud squawking and siren blaring ] only pay for what you need. Liberty. Liberty. Liberty. Liberty. With sofi, get your credit cards right by consolidating your Credit Card Debt into one monthly payment. And get your Interest Rate right. So you can save big. Get a nofee personal loan up to 100k. Servicenow put our this changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. Uber reacting to the passage of a california bill that would decree classify contract workers as employees that bill threatening ubers Business Model, saying the company will not reclassify its drivers as employees, saying it believes its employees to be essentially exempt from the terms of the new bill, ab5, saying they plan to put that to the test operating under the assumption there will be no implications of that bill but if there is litigation and theyre forced to classify, there could be costs as a result of the bill. Uber shares ending the day or closing in to end the day up more than 1. 5 wilf julia, thanks off the highs of the session up next, last chance trade stksrelo toc a cseo session highs up 193 points on the dow [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Only about three minutes left to go in session highs. Josh, what is your last chance trade . You have to move fast here zblie mentioned Home Builders. One times earnings, 1. 2 times book attempted twice this summer to get above 54, may and june this one looks like its the charm. I get long right now. 1. 4 today. Free range is lowvolume levitation in the bulls favor, underlying advances declining stocks each day has been improving, definitely been supportive this bounce we have in mid august, 21. Take a look at the vix its down into a neutral zone right now, which says that traders and investors are feeling less on edge, feeling a little more uncomfortable. Not down to the point where you could say theyre over optimistic or complacent just yet. Kind of in a happy zone right there. Lets get to bertha at the nasdaq. Thanks, mike. The happy zone is really in small caps where weve seen the big move nasdaq composite set to break a threeday losing streak. Small caps are up for the fifth day in six and really leading this month in terms of gains today a lot of that being propelled by small cap biotechs and in tech, of course, its all about apple, unveiling apple plus tv. The real winner today, along with apple itself, is roku roku is the only one who has all these streaming services on its platform apple and amazon for now are also carrying their competitors. Youve got to wonder, bob, as things move forward and some of these frenemies get a little more fierce on content whether youll still see that. Its been a nice little run here point out here 27,000, bertha, were back up here, hit 3,000 on the s p 500 but fell back a little bit around 3,025 closing to the highs on the very nice buy programs. Psy cyclical rotation continues the last two days. Maybe not as strong monday and tuesday. Good day for the industrial. Caterpillar, United Technology the banks. Regional banks have had a very, very nice run. Zions, bb t, last five trading days bottom on the yields last wednesday. Basically its been up since then cyclical group, retailers have had an excellent run gaps up probably 20 or so getting a little review on the other side when we get into the first few minutes of the close here Dow Jones Industrial average closing just off the highs today, up 226 points s p closing at 3,000 it looks like theres the closing bell welcome back fotoclosing bell. Im wilfred frost. Im Courtney Reagan in for sara eisen today s p, nasdaq, dow closing up higher nasdaq higher by more than a percent. Russell 2000, logging more than 2 of a gain on the session here today. How impressive that rally in the close of the final hour was. It really was. All sectors ended higher. Even energy with oil prices down 2. 4 highlights how that rally brought it down in the final hour of trade. Energy sector, in fact, is the best performing sector on the s p week to date as you mentioned, courtney, the best performer week to date is the russell. Weve charted that for you last three trading days up a massive 4. 7 as that rotation into what happens underperformed has continued to play out during the course of the week. Thats right. Joining us to talk about the market day, josh brown, ceo and cnbc contributor and vice chairman of ariel investments. Mike santoli, of course, with us as well. What a day here. Charlie, what do you make of the action, especially in the close here got a nice little lift on all the major averages. Not just a great day, a great week Value Investing versus the s p in ten years ariel fund outperformed the s p and that doesnt happen very often. This was a crowded trade people were betting taxes were going to go higher, interests were go lower. When everybody tries to get out of the trade at the same time, theres pressure we are delighted that valuation seems to be met. That said, mike, its not as clooes clear a rotation as the first two days of this week. You have both fundamental drivers, stocks versus bonds and mechanical drivers, which is people feeling trapped in positions that got stretched and reversed that probably worked its way through and its really been the last couple of weeks, a collective exhale. To charlies point, bond yields got too lo low and remained too low. Thats the basic equation people are trying to come to. S p record high back in july at that record high, tenyear treasury was at 2 credit in good shape this trade will continue to work for a while. The question is when it requires a next act, Something Else beyond a fed rate to go higher still. Josh, i know you think is th is not the end well go higher here based on history when we look at these markers for the russell . How could you hate a tape where the mtum, momentum etf has this drastic twoday move down and Everything Else explodes higher and now you have regional banks rallying with semi conductors. What is to not like . Im going to tell you, i have this conversation with smart people every week, clients, potential clients. These are multimillionaires, people who have been squesful in their life but they dont get it the market is not here to reward you for linear thinking. The market is here to torture you and drive you crazy. Thats what it does. It does it to all of us. Just when you think youve got it all figured out, highest momentum stocks in utilities, my bar bell look at xli right now, industrials. A group of stocks that could not get arrested all summer. Nobody would even talk about them they look like theyre about to have a massive breakout. Combine that with small caps, value stocks, semis. This is a market that is torturing you just when you thought you figured it out, no one is going to figure it out permanently. Great reminder of that. If youre up another 3 or 4 and you think you have it figured out because everything is okay and guess what, its too bullish, they then it will zblrchlts alltime highs as a headline spook the market again, have we tested it enough times in essence, no, it does not spook the market usually theres not turn on a dime that way. But i think ultimately at some point, at some level it becomes a reminder that it might take a little bit more. Youre going to get back into earnings season. So i think the wheel turns constantly and the market needs to be fed at some point, something more than hey, everyone got too bearish in august. The rates thing is big, though, if it holds. I dont think you need to see rates go higher. Equilibrium here, like emotionally, thats important. Charlie, financials have been a big outperformer this last week or so as the rotation has kicked off whats your topic in that sector well, the financials have been beta related. Banks dont tend to do real well in a recession everything was bad for banks two weeks ago and now we have a much better situation it is all tied to the economy. The reason we got where we got with the tenyear was everybody was sure we were going to have a recession. The fact of the matter is if we are going to get some kind of trade deal were going to get an extremely strong consumer. If we get a trade deal this market is going to go up a lot. Charlie, are you staying away from some of these trades that you say were crowded for a while . Tech trade, is that something youre not interested in at this point . Absolutely. This is just the start when the dotcom bubble burst, we had value stocks outperform s p by 33, 35 we have just had the beginnings of this, with this reversal today. We had inflated relations, people think the market, value indexes trading at 13 times earnings, Goldman Sachs, warner trading at nine times earnings trading very attractive prices here. Also in the last week or so weve seen gold come down, yields go up, the vicks also fall. Yeah. Its been a tension release dynamic across the board whatever basically you felt forced into, in august, youve now been prompted to get out of right now. Thats the tactical backdrop i do think were in more normal footing trying to figure out not so much are we going into recession tomorrow, is the yield curve screaming at us . Were out of that mode but i still think that nothing has liberated us from that Bigger Picture debate of how much longer is left in this expansion, are profits really going to reaction el rate the way the forecasts say and all the routine questions we always have the fundamentals remain largely the same. Josh, charlie, well leave it there. Thank you very much. Still ahead the white house moving toward a ban of ecigarette flavored products. How that will paimct stocks when we return in 90 seconds. Bob, lets start with you. Great rally going into the close. A lot on the buy side here s p 3000, wilf 20, 23 points away from new highs in the s p get a sense of this rotation weve been talking about its been a cyclical rotation. Big moves in the industrials the last week, in the past five days caterpillar, boeing technologies, 11 in the last trading sessions banks have had a nice run as Interest Rates have started moving up, banks have moved up, most of the big names up 4, 6, 7 the last five trading sessions retail, another cyclical badly beaten up group on the year, big moves in some of these names, macys, gap, nordstrom 20 for macys and gap its been defensive names like Consumer Staples that have been momentum stocks all throughout the year that have been the ones that have been weaker in the last five days, kimberly clark, mccormick, hersheys you get the idea rotation out of the more consumer staple names and into the cyclicals. Back to you. Rotation seems to be the word of the day thank you, bob nasdaq outperforming the other major averages of the day. Bertha coombs has those. Hi, courtney. Apple regaining that 1 trillion mark for the first time in 2019 and seeing its best day and at the highest levels weve seen for the stock since back in november when it was near alltime highs now its only 4 from alltime high thats helping to boost the nasdaq composite and the nasdaq 100. Whats stunning here in terms of that rotation has been the move into the beaten up small cap stocks, russell 2000 now up over 5 for the month much better than the rest of the other indexes. Still just coming out of correction now over the last couple of sessions here and some of the big movers have been really beaten down, retail stocks, as bob was talking about some of these small caps have really seen some major moves here since september 1st over to you. Bertha, thanks very much for that now the food and Drug Administration announcing today that its developing plans to ban certain ecigarettes, including flavored products. President trump speaking to reporters earlier today, explaining the administrations rationale for the ban. We are looking at vaping very strongly its very dangerous. Children have died people have died and the acting commissioner is somebody that is an expert on it, as much as you can be an expert on a brand new subject. Were going to have some very strong rules, regulations and, more importantly, i think were going to have some very Important Information come out very shortly. Joining us now, assistant professor at John Hopkins School of medicine and voluntary spokesperson and joining us by phone, analyst at lieberman. In terms of your take here, whether this announcement that seems to be focused mainly on the flavored ecigarettes, ie those most favored by children, is the right approach or whether it should be broader. Thanks for having me. Ramifications in the hospital, clinic and our communities. Nico, i believe some states and cities have tried to look at this ban how damaging is this to a company that sells these flavors . Can they move more easily just into the areas that maybe can escape some of these i think they have remedies to address this but also tobacco in combustible cigarettes, long term theres question of sustainability around these products and yes the industry would like to have products it can sell that are lower harm i found the general news today quite straennge. Where im from in the uk, we talk about how these cigarettes are 95 less harmful yes, theyre not good for you and no one should start using cigarettes if they dont already smoke or anything like that. Theres a relative harm here that picture here that the fda needs to strike. So, nico, is it your belief that when the dust settles with all of this that the only action that should be taken is towards those types of ecigarettes for children i agree with the doctor frankly, one in every four, more than one in every four High School Students using cigarettes is not a good picture. I can appreciate why theyre doing this stocks are up today because if youre potentially bringing forward that date before 2020, that will potentially accelerate the consolidation of the ecigarette industry on top of that, the to be alcoholo flav tobacco ecigarettes dont taste that great thats a good thing for to bacc stocks and thats why theyre up today. Ecigarettes and vaping trend. What is it exactly thats more dangerous about this or seems to be, perhaps, proving more fatal more quickly im sorry, doctor i just asked you a question. We have some breaking news if youll hang on for one quick second its oracle numbers which have come out a day early. Josh has got them. News from oracle. Ceo mark hurd has requested a leave of absence to address some healthrelated issues. He does have a statement here addressed to his friends and colleagues, says that at his request the board has granted him a medical leave of absence as you all know, he says, Larry Ellison and i have worked together as a strong team and i have great confidence, hurd says, that they and the entire executive Management Team will do a terrific job executing exciting plans we will showcase at the upcoming world. I wish you all success during my absence. As you noted, wilf, oracle was scheduled to release results tomorrow q1 results 81 cents on 9. 22 billion. The street had expected 81 cents on 9. 21. In line on the bottom, miss on the top. Cloud services and license support, biggest segment, that comes in at 6. 81 billion expectation was 6. 17 billion they raised their buy back by 15 billion. The news here, mark hurd, ceo, has requested a leave of absence from oracle to address healthrelated issues. Guys, back to you. Only the bigger news there. I should mention that as opposed to the earnings coming out any insight, were we expecting any updates like this in and around his health, josh . No, that was not expected, wilf we did not expect this news or Earnings Results until tomorrow. We have a call into the company, guys looking for some more inside information well bring you those headlines when we get them. We see the shares down 5 in response earnings in line, revenues missed. I think so. The stock did just have a bit of a run into this unexpected report revenue miss would not have been taken well you have this news about mark hurd taking a leave, which seemed to perhaps accelerate the earnings report. I dont want to speculate, obviously, on anyones health but the market is saying management is going to be at least a little bit in aggregate distracted it has an unorthodoxed ceo structure with the chairman still around in a coceo setup. Thank you very much, mike and thank you, josh, for bringing us that breaking news. Up next, after the second fed rate cut find out whether investors should be worried ouabt widening losses at peloton. What do advisors look for in an etf . Dont just track an index, help me meet a clients need. Is the fund built to sell or built to last . Etfs are only part of a portfolio. So make it easy to explain. 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. Oracle with with a statement, mark hurd will take a leave of absence for healthrelated reasons and broadly in line on the revenue line, but eps up around about 4 in u. S. Dollar terms fraction behind down 4 in the aftermarket. Extend over to mark santoli for final dashboard of the day. For better or worse, which, of course, is two of the outcomes of this second fed rate cut, universally expect ed history of how the Dow Jones Industrial average has performed before and after a second rate cut in a cycle it goes way back, 100 or so years. It includes all the history. The blue line is those instances when it had been an eventual recession after a second fed rate cut what you see is the market typically has been down about 10 in advance of that second rate cut this is the timing of the second rate cut it did pretty well from there, on average 15 had there not been a recession, you actually did pretty well after, at least for a year typically had done better on the way up you have been up more than 10 essentially heading into it. And this is the current path, right . Basically flat to the last year, up slightly, actually, 12 months however, are up way 20 from that december low. Interestingly right here, it says the stakes arent that high, if history is any judge. However, this does include a second rate cut in 2007, second rate cut in 2002 other instances where you did actually have a bad market outcome. Its something that the averages have more or less made it out to a positive. And most of the rate cuts in the analysis would have started at higher levels where the ammunition delivers more than perhaps it will. Without a doubt, especially looking at prerecessionary times a lot more to come. Mike, thanks for that pelotons road show under way. Well hear from an early investor about his expectations. Back in a couple of minutes. Keeping the night interesting, is all about setting the right tone. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. Thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. For farmers here, this is our lifes work. But when a recall happens, perfectly good food goes to waste. Now, weve got away around that. Looks good. Were on target. Blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. Its used by some of the biggest retailers everywhere. A nice wedge. So more food ends up on your table, is that daddys lettuce . Yeah. And less food goes to waste. Kevin, meet yourkeviner. And less food goes to waste. Kevin Kevin Kevin Kevin Kevin Kevin Kevin kevin kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Time for a cnbc news update with sue herera. Good afternoon, sue. Good afternoon, courtney. Vice preside president bush at a ceremony honoring 9 11 victims. Filling 3,000 to 5,000 cartridges a day federal judge in San Francisco ordering starkist, fining them 100 million in a price fixing conspiracy, which also involved three other companies, pleading guilty to the charges and asking for a reduced fine the judge denying that request, saying they have the funds and the ability to borrow money. An Iranian Ambassador to the Iranian Atomic Agency saying the country will enrich as much uranium as the country needs to. Iran removed all restrekss after President Trump pulled out of the 2015 nuclear deal. Youre uptodate. Thats the news update this hour wilf, down to you. Thank you so much for that, s sue. T. Boone pickens, known as the oracle of oil, has died. Brian sullivan takes a look at his life. I think the reason why i dont view myself as a workaholic is because i love to work. In the media he was known as trchlts Boone Pickens, from amarillo, texas. To friends, just boone. To everyone, he was a master of reinvention, both personally and professionally fwhorn oklahoma in 1928, Thomas Boone Pickens was a businessman from the start. When i was 12 i got my first job, newspaper job i was a paperboy i always had money after that in my pocket. And it was a good feeling. Reporter graduated from Oklahoma State university with a degree in geology and went to work for phillips petroleum. The corporate life was not for him. Before long, he started his own company, with just 2500 pickens spent years out in the desert, personally drilling for oil, buying up land, collecting valuable assets. He took mesa public and quickly realized what the power of stock can do turning from geology to finance, he became one of the first socalled corporate raiders, successfully launched takeover bids for gulf oil, phillips, creating a playbook that would be followed by others, pressure to sell itself and become very rich in the process. I would be foolish to sit here and tell you we lost in a deal or made 500 million. Despite his reputation as a stockholding swaush buckler, he was also an early advocate for shareholder rights, insisting executives be compensated with stock. The stockholder owns the company. That line of thichinging informed a new generation of shareholder activists. In 1997, at the age of 68, pickens started his investment firm, bp capital, one of the first energy focused hedge fund, nearly total flop at first but a huge bet on natural gas in the year 2000 set off a run to a billion dollar fortune in july 2008 he self funded a 100 Million Campaign and ended up making America Energy independent. We havent done a thing to lower our dependency on foreign oil. The pickens plan never reached the scale he wanted, he has been instrumental in creating natural gaspowered vehicles. Pickens plan, booyah. It became as important as profit donating 500 million to his alma mater, the Football Team now plays in Boone Pickens stadium. 65,000ranch he owned in the texas panhandle. He even bought and moved his childhood home from oklahoma ton to the ranch, started to drill an oil hole there in 2018. I say ill retire in a box is the way ill go out, feet first. Lasting memorial perhaps to a full life lived. Boone pickens was 91. Carl icahn telling cnbc, woet, i will sorely miss his friend shep and his great wit. He was a standup guy from the old school i wish there were more like him today. This outpouring continues. Such a warmly adored character from all walks of business. He was. And carl icahns statements about he wishes there were more, there wont be more. He came at this time where basically he was very unique in that he combined these two paragon types, the wild cater, which in the days of the wild cat are kind of over and that early generation of acknowledge at a timer of Corporate Board rooms. This is a time in the 70s and 80s where you have these outsiders thinking more and getting lean very much a maverick personality. I thiching itnk its ironic eveo now is embracing him as n elder statesman and back then zblrchlts. Good memories of t. Boone pickens from all sorts today up next, well discuss much more on the breaking oracle news this hour shares are down 4 in afterhours trade. Closing bell will be right back. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. So servicenow put your workflows immhm. Cloud, huh . Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Welcome back to the closing bell opioid maker purdue. A tentative settlement from thousands of cities and counties in some states that sued it over its alleged role in the Opioid Epidemic arizona coming out and saying they are on board with this potential settlement they can confirm it, along with 25 other bipartisan states and territories have reached a tentative settlement with Purdue Pharma and the satler family other states, pennsylvania, rhode island, new jersey, washington, new york, north carolina, connecticut and massachusetts have said theyre not on board sbom of those states saying theyve brought in their suits to include the family itself, saying they plan to sue the Sackler Family eminently. Purdue says essentially they continue to work with all plaintiffs on reaching a comprehensive resolution to litigation and theyre trying to work with everyone to come to a comprehensive settlement where they would file for bankruptcy essentially before that federal trial in october is set to begin, but a clear divide becoming obvious this afternoon from some states over this proposed settlement. Wilf, back to you. Meg, thank you. Now some breaking news in the last few minutes oracle put out its earnings a day early. Slight miss on the top line, perhaps overshadowed by the news ceo mark hurd is taking a leave of absence due to health reasons. Oracle cofounder Larry Ellison saying he will cover his responsibilities during his absence. Stock down 4 in after hours john forte at hq and Jeffrey Sonnenfeld dean of the yale school of management your take on this news of course we all wish mark hurd well. Its an odd situation where you have two ceos now of oracle, mark hurd and cats, focusing on the sales and customerfacing on the end of things. Cfo, among other roles its not hard to imagine how she and Larry Ellison will move forward. Larry ellison never went away despite his other interests, he has headed up the technical side and while his direct reports have come and gone, now running google cloud over at google, the Company Continues to perform in a way that investors would like. You see its near its alltime highs and continues to move along in the process of continuing to reorganize itself in the cloud era, whether that has to do with acquisitions its made, including net sweep a few years back to fill out its applications business or the latest thing it talks a lot about the autonomous database, putting together its database in a way it argues will allow it to keep ahead of others who are challenging it the bench here is deep this isnt the first change theyve had. Its the most significant theyve had in a while, wilf. Jeff, jon brings up a good point, names we all know very well still the stock falling 4 in reaction i dont thichink thats on that early Earnings Release does this sort of suggest to you its uncertainty, makes investors unnerved to hear this news they didnt expect from a ceo or Management Team in general . I think youve got that exactly right, courtney. I think jon has nailed it. 4 drop is a way overreaction. Im not suggesting that anybody wants to profiteer at the misery, suffering of another person we hope mark hurd, as jon said, we hope hes doing well. I should also mention merely senior associate dean not the dean, but but i do want to emphasize that ive known mark hurd for quite some time as he left ncr, following up on the fiasco of Carly Fiorinas run at hewlett packard, he came in to be a great cleanup guy there in 2005 and did a remarkable job of bringing stability in there and trying to make sense out of the ridiculously pathological contact merger he built things dramatically they were soaring in desktop sales again, falling precipitously there. They did well with him at hp some argued he was too much of a cost cutter but he did a great job there until there was an ethics scandal and he was caught up with misconduct with an outside vendor theres no violation of companys harassment policy but in the middle, just before all that happened, we had the problem with pretexting, if you remember that situation. Mark, his first year on the job, he had to deal with the fact that he was Running Board meetings, in the middle of the meeting he would find out acquisitions they were talking about buying was already discussed in the trades midway through the afternoon. And someone was obviously leaking in that room they eventually discovered who it was its a shame, the whole scandal. He wound up becoming chairman out of all that. He did absolutely nothing wrong. One guy involved in that scandal, he triumphed that and sadly this ethics scandal that hit him. It was a personal conduct issue. Basically he lied to the hp board even though he didnt violate the harassment policy apparently his expense reports were an issue. He wasnt transparent to the board. So he got canned Larry Ellison loves to argue, of course, the legendary founder of oracle, that that was the dumbest firing outside of apple firing steve jobs. Frankly, both moves were right and both of them deserved a Second Chance to prove themselves mark hurd has been hugely successful but its the weirdest thing, courtney, what he and safra catz have, just about everybody in my line of work, including me, what wouldnt work have this reigning monarch stay on the job, Larry Ellison and have he and catz elevated to ceo. Not coceo the corporate document that says theyre coceo theyre both ceo theyve made it work which inic safra catz will still be there, Larry Ellison never left. Shes extremely talented. Larry ellison is 75, going on 45, maybe 35, a brilliant, feisty person. He has all the energy. Safra catz has incredible trust. I hope its something they can nail pretty soon they have great bench strength. Thank you for joining us on this breaking news coming up next, peloton is breaking up its road show. One analyst that just released its rating on the stock. Welcome back. Fitness Company Peloton pricing its shares between a range of 26 and 29, looking to raise as much as 1. 2 billion in total. Joining us to discuss, Research Analyst at da davidson, a neutral rating and spencer mcclaire, partner at g squared, investor in pelloton spencer, ill start with you relatively recent investor in terms of the privatefunding realm. When you invested, how did you value the stock . What particular multiples did you focus on i think we focused a large part on the story. What drove us to peloton is how well theyre executing against the mind, body, soul, getting momentum across not just millennial dem dprasks but the broader population second piece to the story that resonated with us is we love products that are addictive and have a positive impact on the lives of their consumers in the case of peloton, you not only have an enthusiastic base, have you an eveng allileisteven. We look at peloton as a new media brand. We think its possible they can plug and play different offerings on the product suite in the same way disney acquired star wars or other Third Party Content and really allow their instructors to become, to some extent, celebrities. Spencer, the valuations are irrelevant then . No. The valuation is highly relevant we just think theres a terrific growth story that goes along with all of that given the fact that theyre seeing year over year accelerating growth with a nice margin profile and you look at the Customer Union economic the, which is where we focused on financial analysis, as you package that together, this is really a price to sell story that will continue to be exciting to the public markets. Michael, i see that you have a rating of a neutral on this stock. Certainly its popular right now. We talk about fitness fads all the time do you think that peloton can continue its growth rates it put up recently . Thanks for having me on exercise trends are notoriously faddish. Its going to work on peloton, introducing new modalities if they can continue to do that, you kn runway for growth a little too much for me to initiate with the buy rating. To Cancel Subscription once theyve had that but does it limit the Growth Profile in the years ahead, saturation in certain cities like new york thats part of my analysis. If you look at overall exercise bike and treadmill sales throughout the united states, you know, peloton has done a great job of taking very meaningful share, going from 6 and very well celebrated thank you, kait for that up next, the ecb decision poised to dominate tomorrow and what skob a lalevoti session. Everything you need to know when we return. Sing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. I mean, if you havent thought abfrankly, youre missing out. Uh. The mobile app makes it easy to manage your policy, even way out here. Your marshmallows. Get digital id cards, emergency roadside service, even file a. Whoa. Whoa. Whoa. Whoa. Whoa. Whoa oops, that cheeky little thing got away from me. My bad. Geico. Its easy to manage your policy whenever, wherever. Can i trouble you for another marshmallow . Keeping the night interesting, is all about setting the right tone. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Corona premier. Narrator cart gindtia morgan brennan. Squawk alley on cnbc. Welcome back the European Central bank meeting kicking off tomorrow the bank reportedly krpg cutting rates. As well as the growth forecast for this year and next year. Lets bring in head of research for global research. Thank you for joining us thank you. What are you expecting from the ecb. Our forecast is 20 basis points and tiering on the deposit facility and reactivation of quantitative easing 30 billion at the bare minimum. Quite a full section of action there and what about the fact that its mario drag ys final meeting and just indicate this could come rather than actually pull the trigger on the action i think thats an important element of what we are forking the ecb needs to send a strong message. Obviously there is speculation about the lower band but if they want to reinforce the prospect of being able to do more while implement a tiering on the deposit facility. They have to be more aggressive. Thats the number one message. We have gone more aggressively than you expected. Therefore we are not worried about the lower bound and we can do more if required. Thats having a bigger Market Impact than being cautious doing the 10 basis points thats fully priced that would lead us to disappointment. As we continue to watcher the brexit headlines, whats your forecast for what we see in coming days and weeks how that plays into the currency market for the pound. As femg we have a 60 probability of no deal we have a cable forecast weve got a shift that out a little bit because its now possibly extending to 2020. But cable forecast of 110. We think essentially the number one strategy of Boris Johnson is a general election the population of the uk have become sick and tired of brexit. And i think theyre seeing the polls that suggest exactly that. And thats why he is being so aggressive and forceful. You are saying 1. 10 on the pound considerly lower than now. You also say the ecb is loosens more than the market expects dollar go goes where from here. Short term dollar strengthens 1. 07, 1. 08 on the euro on cable as i said for President Trump, he is not going to be happy. And the whole idea of intervention could very well come back into the markets and you know what about a Nodeal Brexit in january 31st and trump coming in and interveeng in the markets . He would do it independently but twab are it would be a perfect opportunity and on the g20 platform you are allowed when you are in disorderly financial markets. Thats exactly what would be the case after the no deal breks zbliet next week Federal Reserve if they do as expected qb a quarter point cut that doesnt move the needle either direction. Is doesnt really, no again, the criticism of President Trump of the fed is just reinforcing the perceptions of a fed nas ultimately pretty cautious on a 25 basis points next week would be consistent. Quick final point that ecb action you expects does it save the outlook for the euro zone economy or not enough. Not enough. Another reason to go aggressive on negative rates they need to force governments to reconsider the inappropriate fiscal policy. When you have negative rates like in germany and then running a Budget Surplus of 1. 7 of gdp. Its crazy that needs to change and deeper negative rates could put more and more pressure on the policy dynamic changing from Central Banks to governments and thats perhaps what will happen under christine lagarde. Thank you for joining us. Some final thoughts, mike in terms of the market, quite a strong final hour or so that took all sectors into positive territory. Strong final hour a bit of levitation low drama, not news driven unlike august. Where we are, 3,000 in the s p 500. About 1 below where the alltime high was july 26th. Were still sitting here looking at low government and Corporate Bond yields than we had back then and the earnings picture hasnt change much i do think is made investors professional investors feel underexposed to stocks because we did start to make up so much ground well see how long that sort of dynamic can work in favor of the market for now. The dow had a sixday winning strategic today. Tomorrow you dont want to miss the interview with kevin plank and chief operating officer patrick frisk. Thats tomorrow morning on squawk box tune in for that. Definitely dont miss that. Market strong today all much the major indices higher led by the russell up 2 . That does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new york city time limit square this is melissa lee. Dan nathan deny adami. Breaking a while ago mushing hurd taking a leave of absence due to health. The stock selling off after hours. The Conference Call expected within the hour. Well keep you updated as the story develops then if you didnt know sass stands for software as a source but could stand for software as source of pain Hong Kong Stock Exchange launches the 3