Joining us for the entire hour is dan nathan, founder of risk reversal advisers. Welcome back to you. Sara. So theres something youre looking at about the s p 3000 level and fed meetings if you go pack to july 31st, the last time that the fed met, they cut a quarter basis points Interest Rates the first cut in ten years and the stock market was above 3,000. And and it wasnt until the trump tweet the next day that we broke down and stayed down all of augusts here we are now, expectations are for another cut, and it seems like the s p has really paused again at the same level, about 3,000. Weve got lots to discuss with dan, but lets drill down on the big stories were watching today bob pisani is tracking the big reversal leslie picker has details. Mike santoli has a special market dashboard ahead of fedexs earnings which hit after the bell and well have for you here on closing bell. A big day in oil. Oil dropped right after the open on a reuters story that saudis oil output would be fully back online in the next two to three weeks. Saudis Energy Minister said that supply would indeed be back online by the end of september bottom line is this. Big energy names that were up big yesterday. Some of them double digits like apache and marathon, they had given back about half of their gains today. But elsewhere, the market overall, its back to a more defensive tone all the cyclicals that rallied last week. Metals, banks and industrials all trending down again today. Bob, thank you. What do you do with Energy Stocks at the bottom of the happy todheap today so it doesnt matter about the Energy Stocks. Theyre less than 5 of the weight of the s p 500. In a lot of ways, crude down 5 is welcome to Equity Investors and the stocks dont matter so much we want to see them participate, they are going to be involved as far as s p Earnings Growth if we get that in that space but i think crude was testing the low 50s prior to this global macro event over the weekend and i feel a feeling its going back that way and that really has to do with maybe deflation and maybe has to do with the dollar assuming that doesnt happen, if we stayed around 60 bucks for the rest of the year, does that hurt the rest of the consumer or be 80, 90 . I think it does ive heard a lot of strategists say, i think it doesnt, but you think about, what are the headwinds to the consumer right now. We had this quick rise back in rates. We know that the dollar is decently bid we know there are some consumer tariffs that could increase as we get into the end of the year. So at the end of the day, i dont think you really want Higher Oil Prices right now. Meantime, wework postponing it ipo amid growing questions about the companys valuation and leadership former twitter coo adam bain weighed in on the Company Earlier in the halftime report. It is interesting this is probably one name where the investors and the customers are so far in disagreement when you talk to commerce at wework, they actually love the product. So to jamals point, they do have Product Market fit from a customer standpoint. The investors, the Public Market investors so far have begun to speak out, both around things like governance and the like lets bring in our own leslie picker right now with more on weworks decision and what comes next i would actually add another constituency to adam bains list that is, wework employees. The company incentivizes through stockbased compensation, so punting the ipo could also impact employee moral. Wework had an allhands meeting this morning to address its workforce amid all the ipo controversy. The meeting was private, but those in the room said executives reiterated plans to go public by the year by the end of the year without delving too much into the details. The question, though, becomes how much patience do employees have for the ipo delays and lower valuation discussions . The last thing this Company Needs at a time like this is a defection of the wework workforce. Gu guys whats the latest on softbank before they can get this ipo back on the road so as one person close to this deal explained it to me, picture a boat with a bunch of holes on either side and if youve got adam newman in there and the advisers in there and the bankers who are underwriting these Credit Facilities everybody is trying to plug the holes to keep the both from sinking. Everybodys incentives are aligned on that front. Now, of course, everybody has alternative incentives, as well. For example, softbank and massa do not want to see their vision fund suffer as a result of a big writedown in its wework position that said, its unclear that necessarily delaying the deal gives them any kind of step up that they might have otherwise gotten at this point in time so softbank, its been reported, weve been reporting it, that theyre willing to come in and provide some sort of anchor investment into an ipo but the question is how much and whether that makes a big difference now, earlier today on the halftime report, social capital founder also discussed wework heres what he said when asked whether softbank had been a force for good or evil in Silicon Valley well, i think its generally been a force for good, because the reality is founders have been able to find a ready source of capital and from the perspective of innovating on things, they have been there the question is really more about whether it is going to leave a great Lasting Impact in the ecosystem once its 100 billion is put into the ground and i think there, theres a huge question mark the problem its going to create is we have created a whole class of capitalhungry companies who because they could have raised, you know, 200 million did when they should have just raised 50. And they will find a way to spend that extra 150 million, but i suspect the product will not be 150 million better how much can you blame newman for taking the money if people are willing to give it to him. You blame some of the execution, but not the fundraising itself. He has great points wework is not a technology company, its a raeeal estate company. Especially as they move around the world and expand geographically, but i think chamaths point about whether or not its a force of good, theyve moved markets. Just the size of the checks they were willing to write and the valuations they were willing to pay. So wework would not have had the round that it did at 47 billion if softbank wasnt forcing that a year ago and ill just make one point if this comes public, it will come at a price where its going to work for public investors and this is great news if this is the sort of Business Model you want to invest in as a public investor. Its not great news if you invested in that last round with wework at 47 million. It will take an awful long time to get back to these levels. How much, leslie, do you think this has hurt the reputation and the hype around softbank and massa san it depends what they ipo at it needs a liquidation event before we can see what the softbank, especially at a 47 billion valuation, as well as the valuation in the 20s that they also invested in. They have kind of this blended valuation. So if it comes below 20 billion, there was this bernstein note that said, yes, they would be underwater if this ipo comes in at a significantly lower valuation than that. It appears it might be, but it all depends on timing and when it would go public in terms of your earlier question about softbank and what it means for its reputation, i think a lot of this has to do with habits and the fact that, yes, if an investor is giving you money, you may be inclined to take it you may be kin clied to take it to fund your growth. But the yes then becomes, what does that mean for the zmin of the company and the ability once you do transition into a Public Market company to apply that discipline and transition to becoming, say, profitable to, you know, figuring out how you can grow while also not spending money like its water . I think those are some of the key questions that people in Silicon Valley are asking when it comes to softbank and other investors. Theyre not the only ones who are really doing this right now. Yeah, softbank poured about 7. 6 billion into uber and also hasnt been performing very well lets send it over to mike santoli for a look at todays market dashboards. Overnight guaranteed, well, thats fedexs promise for packages well see what they can deliver tonight with their numbers and overnight uncertainty. Thats a little bit of a look at this chaotic overnight funding market weve been experiencing and then seven nights journey, thats about how long weve had this massive rotation among styles in the market well get a checkup on that near the close. And goes buck in the night one investment factor that might have some folks being a little bit on the defensive relating to the buck overnight guaranteed heres a look at fedexs valuation over the past 20 years and its at an historic low. On an absolute basis, its trading about 11 times forward earnings, a little bit over 11 times. Relative to the s p 500, though, it has essentially never been this inexpensive its at about 0. 7 0. 6 times, 0. 6 or 7 times the s ps overall valuation. Back here when it was really cheap on a relative basis in 2000, it was really just because Growth Stocks and the overall market were so expensive that it was flattering the valuation, even though it wasnt all that cheap. The question is, has something structurally changed for fedex, is it just a global macro story. The loss of amazon customers, is it really a big hit or not so i do think expectations in terms of implied by the price of fedex shares and the valuations are relatively low going into tonights numbers, guys. Well have those numbers live in the second half of the show dan, whats your take as to whether this cheap valuation for them is for cyclical reasons or structural reasons i think its a little bit of both fedex has the double whammy of this Amazon Effect but they also have issues with china and issues with global trade we know that the chinese have actually brought up some very specific issues about the way packages are delivered by fedex over the last few months they are on a list of u. S. Companies that theyre going to target when things when were going back tit for tat so at 11 times, this thing has been banging around at levels over the last year, which we havent seen in a couple of years. And it really has to hold. Its just rallied 10 into this report i think if you get a beat and a raise and just a cautiously optimistic view about trade, this stock probably holds those lows fedex essentially flat ahead of its earnings coming in less than an hour still ahead, the Federal Reserve kicking off its twoday policy meeting in Washington Well discuss what tomorrows Rate Decision means for your money with former fed governor sarah bloomraskin. And later, the man who cofounded netflix. Well talk with the companys first ceo, Marc Randolph and as we head to break, a quick take on our data tracker today. Industrial production higher, climbing 0. 6 in august, peating estimates of 0. 2 . Home builder estimates came in higher as well lbeig bwn 25. Wel rhtac orlando isnt just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. The world is customized to you. Built for you. So why isnt it all about you, when it comes to your money . So. Whats on your mind . We are edward jones, a 97yearold firm built for right now. With one Financial Advisor per office, were all about knowing whats important to you the one who matters. Edward jones. Its time for investing to feel individual. 45 minutes left of trade heres a check on shares of chipotle winning today, getting a pop on news its adding carne asada to its menu for a limited time it says chipotles first new protein since it added chorizo back in 2016 carne asada will be available starting thursday. Chipotle trading up 3 thats not an alt meat, a fake meat, its a real meat, but investors think maybe theres a limit stimulus boost there its already been on a monster run this year for that stock now the fed will be kicking off or has kicked off its twoday meeting in washington today with most investors expecting the central bank to cut Interest Rates for the second time this year. The Carlyle Group is out with a new report looking at the complications of a low Interest Rate environment, arguing that investors have focused too much on Central Banks, ignoring other factors that are depressing rates like demographics, technology, and rising corporate savings. Joining us now is the author of that report, jason thomas director of research at the Carlyle Group. Thank you for joining us thank you for having me what are the investment implications of what you found here so rates are cycling down in the United States. But the permanent long run equilibrium Interest Rate is low and its staying there its not going back up so investors have to get out of their head the notion that were going to go back to 4 , 5 longer data yields in the United States or much above 1 growth ever . I think that over any conceivable investment horizon, that should be the outlook its a way now to new reorient your portfolio in that environment. If you look at a portfolio that would generate 8 to 9 returns on average, normally your base rates would generate 4 to 500 basis points of that your risk premium would be the rest today, the risk premium, the risks that youre taking in your portfolio has to increase to hit those sorts of returns what about the kind of broader Global Growth environment and the amount that were focusing on Central Bank Action and whether or not that going to be the crucial factor to change the direction and momentum of growth i think we focus too much on Central Banks, of course and i think that were in a structural malaise where this period of low growth is going to persist. Theres really not much that Central Banks can do about it. We have a fiscal policy lever. And i think that one of the key implications of a lower for longer environment is that theres more fiscal space than we thought so in in places like europe, you have a very odd policy mix where you have negative Interest Rates at the same time where you have roughly budgets and balance. And a i think a much more appropriate mix would be budget deficits of 3 to 4 , similar to what we have in the United States, and that could change savings and investment relations in ways that actually allow for rates to move up somewhat and have somewhat faster trend growth but would it, though, when you think about we had that fiscal stimulus, that huge tax cut at the end of 2017 so we had one year of a bump in growth, hacked on 1 trillion to the deficit, and now here we are coming back right to trend for all intents and purposes how do we continue to do that . Im really not talking about a fiscal stimulus or a cyclical move im suggesting on a longer term basis we can have longer budget deficits than weve had previously because rates will always stay low what happens when they go back up again he doesnt think theyre going up thats precisely the point. Once you incorporate the notion that rates will remain lower for a much longer period of time, because of structural factors. Demographics, thats not switching anytime soon you have this enormous grease in savings in the corporate sector where you have the ten largest businesses by market cap in the United States that generate 2. 5 times as much cash from operations as they reinvest from the business so you have savings and investment relations that have moved in ways. And once you incorporate that, you can incorporate larger deficits the ipos that weve seen of late, thats concerning you or you think its a bullish sign when you see money going into these lossmaking companies . Thats the thing, you have a banner year for ipos that are loss making. In fact, if you look, theres been 130 ipos through the end of august only 22 involve profitable businesses 17 , thats the lowest share in history. The only time that we had shares this low, close to it, were 99, 2000, we know thow that turned out. I would be very correspond some of these companies will do very well and theyll grow out of these issues into profits, but on average, i think you have to be concerned. But even though the market has basically rejected wework, uber and lyft havent exactly been successful. I mean, its in a market that its imposing discipline to some extent, but until recently, the ipos were up about 30 . There was a lot of enthusiasm. Is wework a sign is it idiosyncratic or a sign of changing perspectives on these lossmaking businesses these losses are not small the average ipo this year, negative ebitda of 85 million so an annualized rate of negative 100 million on average. These arent trivially small losses these are very deep lossmaking businesses i think its something to be concerned about. Low rates forever, not low rates for longer as long as any of us in any of our time horizons from an investment perspective i plan to live a very long time, but there we go. Well see. Jason, thank you thank you now, cnbc has some breaking news on facebook and Sal Rodriguez has the details for us in San Francisco hey, sal hey, wilf, hows it going good, thanks. Whats the latest . Break it down for us what have you uncovered . Yeah, my sources are telling me that facebook has hundreds of people working on smart glasses out of its redmond, washington, office this is a top priority for the compa company. So i guess theyve developed some form of glasses in the past whats new here . Who are the partners and what more can you tell us well, theyve struggled to develop these glasses. Theyve been at it for a couple of years now so what theyve done is theyve enlisted the maker of ray band to partner up and make these glasses. Theyre now aiming for a release somewhere between 2023 and 2025. Wlas the competition look like in this space has anyone actually had big success here not yet you might remember google. They struggled with google glass a few years back microsoft came into this space the startup magic leap has taken steps here lots of players that are trying to go into this space. They see it as a replacement for the smartphone, but no one has had success just yet Sal Rodriguez, nice scoop thanks for joining us. Thank you after the break, shares of zynga have been on a tear this year, up more than 50 and one firm just named it its best idea. Well get word on the street next on that call. So servicenow put your workflows in the cloud, huh . Mmhm. 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 closing bell. Time now for word on the street. Jeffreys and bank of america back out with new notes on alternative meat jeffries saying the industry could reach 240 billion by 2040 and bank of america says beyond meat is the best position to disrupt the traditional Protein Market citi initiating match group as a buy with a 95 price target the firm calling it the leading Online Dating provider, kricitig compelling international opportunity. And stephens naming zynga its best idea. Stephens maintaining its app perform rating and 8. 25 price target zynga up more than 50 so far this year. Dan, which one do you want to dive into. Lets talk about match. I Love Companies like that are going up against Companies Like facebook that have these massive moteats. Match is a company that has 2 billion in sales growing about 20 a year expected to grow that next year. And assets like tinder and when you start hearing analysts getting all geeked out about international expansion, you say to yourself, thats a great brand and theyre doing well in north america, this thing has some legs. But then i get concerned when Facebook Says they could turn a switch on. To many, this trades about ten times sales. Really expensive no one can really buy them at this point up 80 on the year im not a buyer of this stock. Well, the note getting traction today, its up 4 still to come, shares of chewie soared, but the stock has trended lower ever since the latest read on the company after earnings hit after the bell ande sak wllpe with the ceo right after the numbers drop 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. Just under 30 minutes left of trade and we are just below the flat line on the dow here are the key things driving the action oil prices sinking after saudi arabia says production will be fully back online by the end of the month. The president claims a trade deal could come soon with meetings scheduled for this week in washington. And an overnight spike in yields in the repo market put investors on edge, ahead of tomorrows fed Rate Decision. Time now to get a cnbc news update with sue herrera. Hi, sue. Hi, sara. Hello, everyone. Heres whats happening at this hour former Trump Campaign manager Corey Lewandowski testifying before the House Judiciary Committee as part of a congressional investigation of the Trump Presidency frustrated democrats complaining that lewandowski was giving no answers and instead was filibustering. Hillary clinton had harsh words for President Trump during a speech at George Washington university she delivered the keynote address at an event called in defense of american democracy. President trump went to North Carolina on the eve of a special election, an election that had to be redone as a direct result of republican cheating he didnt condemn that, of course instead, he claimed again that voter fraud was rampant in 2016. The winless new york giants have named daniel jones as their starting quarterback for sundays game against tampa bay. He will take over for eli manning, who has been the giants starting qb since 2004 that moon comes sooner than the giants had hoped its a tough season for new york teams so far that is the news update. Guys, back downtown to you sue, thank you very much. Well see you again next hour. Meantime, lets send it over to mike for the second installment of the dashboard hi, mike hello, wilf calling this one overnight uncertainty. And this is about the overnight funding market, the repo market, where we saw rates blow out over the past couple of days. This is a chart showing the overnight repo rate. This is very shortterm cash loans, collateralized by treasury and other securities. Its a very mundane piece of the overnight funding market, between banks, Money Market Funds, other institutions. And you see this big spike, up toward 10 10 for secured overnight money. Obviously, something was wrong there was a technical clog in the system tremendous draws of cash out of the system, because companies were making their quarterly tax payments, and there was a huge influx of huge treasury influence that was kind of packing bank Balance Sheets. There was an abundance of treasuries looking for cash to essentially be exchanged with and there was a shortage of cash the fed came in this morning, injected some cash on the other side of it thats why its kind of showing a zero rate right now. Normally this race kind of hovers around the fed funds rate, over 2 right now. The reason its interesting, we did put upward pressure on the federal funds rate, which went up toward the upper band of the feds target and probably feeds into some discussions tomorrow at the fed meeting about tomorrow how to rectify some of this, technical tools that might be necessary some of this, also, guys, is a result of Bank Regulations that limits what banks can do in terms of providing liquidity in some situations. Theres all sorts of notes out this morning about what it means. Is there credit tightening or credit sweegz queezing up, or ar shortage where do you stand we did see this type of thing during the crisis, but also saw it in other situations like libor. It did not really, sara, spread beyond the repo market, so it seems not to be any kind of solvency issue or any kind of creditworthiness issues. Its not about institutions being reluctant to deal with other ones, which is what we saw in the lead up to the crisis and in the crisis. This is much more about simply a mismatch between the demand for very shortterm overnight cash and those willing and able to supply it in that market so it seems not to be something and i guess, understandably, the overall market, whether the credit markets or the stock market did not take much notice of this activity today yeah, good point. Mike, thanks the Federal Reserve is kicking off its twoday meeting today in washington with a Group Expected to cut rates for a second time this year tomorrow lets bring in krishna goohab and sarah raskin, former Deputy Reserve treasury secretary is this the type of thing that would get discussed at the meeting today . The repo rate, yeah, for sure that is going to get looked at because as you pointed out, sara, wholesale funding market liquidity veil something that did rear its head during the financial crisis theres a question, really of liquidity uncertainty, this bounce up actually reflects. I agree that technical factors could be at play but as you know, that rate has really hovered quite low, really only moving within hundredths of a percentage point now and then. So to see this kind of upward pressure, this is something the new york fed has its eye on, but the fmoc will be looking at it, as well. So what are you implying there . Theres something more concerning underneath that we perhaps havent yet uncovered or discussed that might have led to this spike no, i dont want to indicate any kind of crisis underway, but i would probe those technical reasons. I mean, our system, our wholesale funding repo markets should be capable of being able to, for example, have an irs tax payment thats due or the end of a treasury auction these were all some of the factors that have been said to be at play and i would think our markets should be, our wholesale funding markets should be a little bit more robust. I would keep our eye on this can i jump in as well i very much agree with what sara is saying. Yes, there are technical factors here, but we need to look at the deeper question. Why has this system suddenly turned out to be not resilient to a tax shift, a settlement it strikes me that there are several things going on here, that the fed may have lowered the amount of reserves in the system far enough, possibly even too far, but also that we may need to put some backstops in place, maybe a repo facility, so we automatically supply liquidity back into the market, when you hit one of these. I think that the fed is going to have to take some Medium Term Solutions here not just the oneday market operation fixed. Start growing the Balance Sheet again, so that the reserve supply on a secular basis starts to move back up, rather than still moving down. And also reform the operational structure of how they put liquidity into the market, to make sure this doesnt happen on a regular basis. But, krishna, growing the Balance Sheet again, thats not a likeforlike solution for the repo rate spiking, is it well, the underlying question is, do we have enough reserves in the system, right so on the day today, the fed can throw a whole bunch of Federal Reserves in, as they did, through this open market operation, and they can also, as i suggested, put in place a kind of standing facility that would inject reserves when you came into moments of stress but the path part Balance Sheet essentially determines the underlying trajectory for the base line levels of reserve. And it makes little sense to me to be injecting reserves with your left hand and still draining them with your right. So youre talking about qe, expansion of Balance Sheet im not talking about qe. What im saying is that the fed Balance Sheet in precrisis times grew naturally it grew with natural growth in their liabilities, including cash, including other liabilities like the treasuries bank account at the fed and also reserve. Im saying that i think the time has come to resume that National Growth again you know, youve got this, sara, and youve got an economy which is still looking pretty healthy. And in fact, the latest evidence is that actually that manufacturing has rebounded in august Industrial Production up 0. 6 . So what does the fed do with sort of some of these worrisome signals that its getting . But at the same time, a pretty decent underlying growth mode . Right, so the fed obviously is going to keep its eye on the longterm, on its dual mandate, on both what the health of the labor market looks like as well as what price stability is looking like youre right, sara, the other piece that i think is looking better is the inflation rate that the fed likes to keep its eye on is inching up ever so closely to 3 , which is the number that the fed likes to hit. I think thats looking good and youre going to hear in tomorrows decision, were going to see the extent to which the some of these indicators could be doing Different Things since the last meeting and of course, we still have with us the possibility of two, if not more, dissents coming dan, has the feds job been made easier by the spike in rates weve seen over the last couple of weeks, that it means they dont have to worry about what theyre going to do or arent going to do quite as aggressivelily you talk about the data in the u. S. That was good i dont think we should be looking at whos winning this trade war. We know if china slowsdown, thats going to have a Ripple Effect all around here i think feds job is harder now that there seems to be a little bit of a freeze on the rhetoric being ramped up, because now its really a waitandsee situation. Finally, krishna, what do we expect from the fed in terms of the language around a cut that it market is expecting tomorrow . Look, i think, of course, they go ahead and cut. I think that they also want to signal that theyre open to doing more not precommitted, but open to doing more its not two and done. I think they can possibly do that with a little tweak, a little slight dovish tweak to the statement. At least seven officials, quite possibly more writing down one more rate cut after september in the dot plot and powell coming to that press conference, not talking about limited midcycle judgments, but talking about an openended recalibration of rates to offset the headwinds from weak Global Growth and sustain this ongoing expansion. Sarah, a quick final thought on oil prices, how concerned will powell be about that price in oil prices . I think there will be, obviously, some discussion about them my sense is that given the entire Global Supply of crude, that this is going to prove to be a blip. That its not going to amount to a major supply shock but the fed will want to look at that and analyze that. Guys, well leave it there. Thank you both very much krishna and sara thank you be sure, by the way, to catch Sarah Bloom Raskin at this years delivering alpha summit back in new york city this thursday september 19th. Dan, one group youre watching closely linked to the rate cuts is the banks when you think about it in august, the banks didnt like it globally so our banks really underperformed and i think its really interesting that as soon as rates started rising to your point, we had a bank here in the u. S. , the biggest bank, jpmorgan making a new alltime high whens the last time youve been able to call that on cnbc that weve had that weve had this massive break out and its going to fail with jpmorgan, youre saying thats a bearish signal. I think that traders got really excited about this last week and theyre saying, one of the groups that we have not had participate in this rally have been the banks they really outperformed the s p 500. Wouldnt you like to see the banks lead to a new high in the s p . And jpmorgan was the one to do it its pulled back a little bit. So i think youll want to keep an eye on the Big Money Center banks in the u. S. And and we know that europe banks do not like negative Interest Rates they do not like what seems to be a rolling financial crisis in the region and if you look at the European Bank index, the xx7e, it has just made a series of lower lows for the last two years here. Its down about 38 from its 2018 highs it just rallied back to that downtrend than been in place after that ecb cut last week, lets see if the European Banks can break out of this downtrend. I think thats another one to keep an eye on coming up, well talk about the evolution of streaming with netflix cofounder and former ceo, Marc Randolph and a warning from cniorng the details on why the Glass Company is falling sharply in todays session. [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. And now for their service to the community, we present limu emu doug with this key to the city. [ applause ]ouhat 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. [spokesman] if youve tried colleg group cheering shed, snhu lets you transfer up to 90 credits toward you bachelors degree. [woman] it doesnt matter how old you are, you can do it, you can finish. [spokesman] finish your degree at snhu. Edu under 15 minutes left to trade. Some individual Market Movers for you at this hour kraft heinz falling again today on news private equity firm 3g global is selling 25. 1 million shares, according to an s. E. C. Filing and now owns a total of 245 million shares kraft lower by 4 . Its been one disaster after another for this company for the entire year. 3g is the number two biggest shareholder. Shares of corning are also falling together after they cut their growth forecast. The company citing Capital Spending cutbacks by several Major Telecom companies. Separately, apple has announced its investing 250 million into corning to help develop or in corning to develop Class Technology corning is trading lower they specifically cited macro headwinds for the reasons behind the concerns of the tv set makers not a bad tradeoff for them. 250 million from apple, to offset 6 decline. Now, news out of saudi arabia has oil plunging today, reversing yesterdays even larger rally now the latest headlines on whats been driving the market this week. Hey, hadley hey, wilfred, you know, with at the end of the day, this was all about getting some kind of confirmation from saudi aramco and saudi arabias new oil minister that this was a company that was going to get back to full capacity and back on track as quickly as possible and it seems as if thats what we heard some of the headlines was that the company, saudi aramco, is going to be back to full capacity as quickly as possible. Were talking about 11 Million Barrels per day and 12 Million Barrels per day by the end of november i had the chance to ask the chairman of aramco about the aramco ipo hey, listen, how can you expect people want to invest their money in the country given the size and scope of these attacks . Listen in. As it was demonstrated, its so resilient that in a matter of 48 hours, we went back to operations by the end of september. We will store the whole capacity and if you want to put all of these into perspective, this is one of the most Resilient Companies in oil business. Reporter now, he did put some caveats on that, of course. He did say that the ipo is going to have a lot to do with market conditions, but also mentioned at the end of the day that this is something that he does expect to continue in that 12month time frame that weve talked so much about so no real news on the ipo there in terms of a potential easing or a potential pushing off of this ipo it seems as if, you know, were going to see what we were going to see anyway prior to these attacks. But i will say this, the Energy Minister essentially telling us on the that they dont know exactly who perpetrated these attacks. And thats something that all eyes will be on as mike pompeo, the u. S. Secretary of state, arrives in jeddah tomorrow and is expected to present a host of evidence that points directly at tehran oil continuing its slide, down 6 now. Hadley, with thank you weve got ten minutes left of trade here is where we stand in the market weve got a nice little spike higher here in the dow doesnt look like much, up 25 points, but has been lower most of the day s p 500 also positive, about a quarter of a percentage point. Its a mixed picture energy, lower off the back of that decline in crude oil. Real estate utilities and materials are higher up next, well get your last chance trade with dan nathan. 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. When i lost my sight, my biggest fear was losing 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. 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 we have got just six and a half minutes left to trade. Were near session highs little spike in the last 20 minutes or so, up 22 points on the dow. Dan, last chance trade time. What have you got for me you asked me whether it makes the feds job easier the fact that rates have bounced now over the last couple of weeks the answer is no. I think you want to look at u. S. Treasuries as we head into tomorrows meeting because when the tenyear treasury yield broke 2 , it went straight down to 1. 5 or a little lower but its gotten back up now. We have a oneyear chart of that tenyear treasury yield. It just kind of paused at that downtrend. I think thats kind of an interesting level. We also have a 20year chart of this and if you see, its been in a massive downtrend. It did bounce off of the last year or so that huge support level at 1. 5 i think theres tremendous demand for u. S. Treasure is, a flight to quality, as weve seen just this week its also a race to the bottom by global Central Banks to lower banks. I think tlt, the ishares 20year treasury etf, thats what you want to own in this environment. It might have a little room to the downside we have a oneyear chart of that if you look at that uptrend, you probably want to catch it a little below these levels, but thats something i would be picking on is that a bet on weaker growth i just dont see growth accelerating and i see Central Banks, as weve seen in the last couple of weeks tripping over ooemp to lower rates so me, you want to buy do you sell as well no. Its a relatively strength trade. Its the dollar. The dixey is bid up here at 98 bucks. The s p will continue to outperform they want our bonds, our stocks its that simple. And our iphones. Five minutes left in todays session. Time now for the closing countdown. Lets trade the close. Bill baruch, bill, whats driving the strength here into the close . Im echoing the same narrative that dan just spoke about. Im watching the treasuries into the close today and into the fed tomorrow that 30year bond has rallied from 1. 9 to 2. 4 in just about two weeks. Skbrus like that, were seeing 50 odds that the fed cuts tomorrow i think they do cut given some of the geopolitical concerns, some of the overnight repo, rise in rates looking at the futures, im looking at the futures in the 30year bond theres a lot of support buying at 1583 you want to look to be a buyer at 158 and the chart shows a breakout above 158, a trend line as well that has tested and held and i expect a lot of volatility and if the fed doesnt cut rates tomorrow, youre going to see volatility and equities, but that in turn would would rise the yield and suppress prices, the volatility in equities would pressure the yields back down. I think were going to see support. I would be ready to buy again at 155. 5, 156 theres a good trend line there. And at that point, too, youre talking about a 30year bond above th2. 5 and i would fade nothose yields and buy those prices lets get over to mike for the third installment of the dashboard. Going to call this a seven nights journey. First, take a look at the New York Stock Exchange breadth. Even at the morning lows, a fair number of stocks ahead here. Slightly positive breadth, even yesterday, we did have positive breadth. This rally has been fairly inclusive over the last few weeks and i think that lends some credence to it. Then, look at this a relationship between the momentum etf and whats called the pure value etf assist probati its a proxy for this very dramatic valuation weve seen out of crowded Growth Stocks into unloved cheap stocks. You see some backsliding today the momentum etf bouncing a little bit today and the pure value rolling a little bit that has something to do with bank stocks being weak i dont think we have a verdict whether this is an enduring Inflection Point a mechanical forced repositioning. Well have to watch that lets first get out to Rick Santelli in chicago. Thanks, mike. How would you like to wake up to this chart this is the general collateral, overnight repo normally around t2 lately. Basically, it doubled. Or you can look at overnight bond repo over two days and see the way thats shot down the bottom line is, this is a big deal we saw august where rates plummeted, september where they rallied. We basically got rid of 3 trillion of negative rates on that big rally and tomorrow the fed meeting, remember, lowering rates doesnt address liquidity. Bertha, what a wild half hour in the nasdaq it looks like were going to close out here on the highs and largecap tech is really whats moving things. A little bit of a rotation from what we saw yesterday, when it was really small caps moving higher among the biggest movers today, a lot of them getting some analyst love match and iac, citi initiating them at a buy. Also over at citi, they like Oreilly Automotive parts, seeing that recovering the big rotation is out of the airlines which cut half of their losses while the oil names cut half of their gains. Bob, over to you nice little buy program in the last 15 minutes. Eightpoint move in the s p 500, largely driven by tech but whats interesting is that cyclical rally is so big last week, its kind of faded today not just with Energy Stocks, but bank stocks not doing much, metals and mining that did really well last week, not doing much the retailers are just getting slammed again today, nordstrom, were back to where we were in early september. Look at that, big moves to the downside in that group and the defensive stocks, again, this looks like early september. Your reits, your Consumer Staples and your utilities all are the ones that are driving the market forward theres the closing belclosingl were ending at the highs today. Comfortably back over 3,000 on the s p. Welcome to the closing bell, im wilfred frost and im sara eisen. Take a look at how we finished the session on wall street highs of the day for the dow got a little bit of a boost for the close. 27,106 check out the s p, closing above that 3,000 level, up a quarter of 1 . Most groups actually were higher those were the Winners Energy and industrials were lower. The russell 2,000, a big laggard. What stood out to you . That recent rotation, which has seen the russell lead, didnt play out today, but nonetheless, a nice little runup into the close. That runup into the close also happened when oil took a little bit of a leg lower so that was another theme. Weve got oil prices over the last couple of days, of course, spiked significantly yesterday, coming down today. And that further dropped there, as you can see, toward the end of todays session wing, helped that final leg up of equities, small kbagains, though, not significant. I just picked chevron twoday chart shows you the whole story of this crazy ride in energy. This massive jump up, led the dow, off the oil spike giving back some of the gains today well what happens with saudi arabia and if they respond and the dollar jumped and retreat today. That helped equity sentiment were on earnings watch today. Fedex and adobe and chewy all set to report results any minute well bring you the numbers and instant analyst reaction when we get them joining us to talk about the market today, dan nathan is still here, founder of risk reversal advisers. Danny hughes joins the conversation, ceo of divine Asset Management and mike, actually, it was a pretty decent day, if you look at where some of the gains were had. Energy, obviously, a big loser, though a lot going on moreau tbelow surface. I think the broader message of this market is it holds here near the highs first got above 3,000 in the s p one week ago and have more or less hovered in that area. I dont think theres been a lot of drama with the overall market position the market is fine with bond yields going up and backsliding a little bit i dont think you want to see a real acceleration lower. And bond yields from here. See how they react to the fed tomorrow but overall, i think were getting ourself into this neutral position near the highs right in time for another fed decision you know, as dan has been mentioning, as ive talked to him a couple of times, that was the occasion for the start of a pullback in may and july, but i wonder if were all fixated on that, its not going to happen danny, we saw rates rise as the market recovered over the last couple of weeks does the fed now derail that, if they cut rates tomorrow, or not . I dont necessarily think so. The thing thats just baffling is that were at alltime highs and the fed is going to cut a quarter of a point to kind of encourage more borrowing and really, its got to be demand driven, i think, if were going to really see the next leg up dramatically. But i think theyre in between a rock and a hard place. And theres been a huge deluge of buyers of bonds in the United States because of whats going on globally. So thats why theyve got to cut. What is the correlation right now between oil and the stock market, dan . I think in the last 48 hours, weve seen that when oil was down a lot, it was more a function of excuse me, when it was up a lot, equities were down now that its down today, were seeing equities kind of bounce a little bit its kind of negatively correlated here. And that makes some sense. As we talked about in the last hour, we dont think Energy Stocks are a big mover within the s p 500. With the s p back at 3,000, if you go back to january of 2018, every time weve been above 2900, weve made a new incremental high from the prior high, it has a been an impetus for sellers to come in and weve had some pretty significant selloffs. Q4, a 20 . Weve had a 7. 5 peaktotrough decline this year already. So to me, i dont really see what the impetus is on a rate cut to pie stocks if youre still not that optimistic about Global Growth and youre not optimistic about earnings power accelerating because of that cut. I was just going to say is, where else do you go from a global perspective, where else do you put your money where youre going to get some return, with so many large issuers yielding very well people are going to the stock market rather than the bond market and my point is really simple dont buy them at 3,000, buy them on the pullbacks. Because where youre getting the alpha, youre getting them when we pull back and weve gotten four really consistent pullbacks from these levels over the last 19 months or so. I just dont see what the impetus is to make a meaningfully new range above 3,000. We just havent been able to do it so far. But mike, were quite well supported at this level, it seems like when you look at volatility i think the weight of the evidence says you are pretty well supported you have to go back to december and you look at the dynamics around that low. If you give if you basicall have a premise that that was a very consequential low in terms of the carnage that came before it and the volume of buying around that low point, that means it buys you a little bit of the benefit of the doubt. Nothing says you cant go down a few percent from here on almost nothing, but for me, being sideways for a year and a half with a slight upward tilt and having the macro starting to inflect a little bit to the better in terms of the data flow right now, i think that things like yields, oil prices and sentiment are all in a zone where the market has a little bit of a buffer. Were waiting, fedex looks like a miss at first blush well get to the numbers as soon as we get through them but how much of a sentiment gauge is that . I think fedex has been in an unusual situation where people thinking they were already braced for a miss, thinking that expectations were already low, and the numbers have continue to come out and not actually proven that to be the case. But the stock has been up a tremendous amount in a month its had one of these things where its down by 33 in 12 months, but up a lot in this month. You saw fedex stock down more than 7 . The company had a miss on eps, 10 cents below sfamt aestid a miss on the top line the company saying this weakness is due a lot to macro factors like the trade war, also providing some very weak outlook for 2020 fullyear eps guidance. Well below estimates for the full year. Fedex shares trading lower after earnings down about 7 back over to you yeah, thatll hurt, mike. I think that the street was fine with this current fiscal year being basically a nogrowth year and just get some things in order, ride out a slow global macro story. Thats what it is the first quote says its negatively impacted by a weakening macro environment and increasing trade tensions and policy uncertainty but how many more do we need to see like this for it to change peoples view on the overall zbloeglobal macro, whic otherwise has plateaued of late. What are we talking about with global macro with fedex were talking about shipping volumes from places that used to ship a lot and now arent shipping as much so china is a big part of that so i dont think it means that the average company out there is going to be in the same boat as fedex, but they are right at the center of where the stress points are in trade flows and in shipping well, couldnt you say for the last year or so, its kind of been the canary in the coal mine this is a company that i think universally believe is very well run. I know that the president thinks that any company that blames tariffs or trade on their weakness are weak and poorly managed, as he tweeted a couple of weeks ago i think fred smith is probably the farthest thing from that i think hes dealing with a very complicated situation or a difficult hand that hes been dealt. Weve got two weeks left in this quarter in 2003. You may see some preannouncements and a very easy excuse for management to actually explain away the quarter and to give cautious guidance i would say rival u. P. S. Has done a lot better. Both in performance yeah, its less geared towards those parts of the Global Economy than fedex is weve got another earnings alert on adobe aditi roy has the results adobe shares are now up about 2 after an earnings beat. Earnings coming in at 2. 05 versus expectations of 1. 97 on revenue, it basically was in line with expectations 2. 83 billion versus 2. 82 billion. Thats a 24 increase year over year in revenue. Breaking out the specific segments, digital media, the more traditional side of the business, with offerings like photo shop, coming in at 9. 16 billion. Thea slight beat over the 1. 93 billion that was expected. And digital experience, which is the companys move into marketing analytics. That coming in at 821 million a slight beat over the 820 million that was expected. Guidance, however, for q4, a little bit light on the revenue, 2. 97 billion versus the 3. 03 billion that was expected. Eps guidance on q4 is also a bit light. On the call, well expect to hear some more commentary on any new highprofile clients as well as any tariff impacts. Back to you guys aditi, thanks for that. A nice beat for adobe. Its up 2 in aftermarket trending where do you stand on this trend and the Software Software we like, adobe, we like, but theyve grown their business the last three years, 45 year over year its huge growth, right . So this is like a downtick for them but i do think that theyre digesting three acquisitions theyve made you could see some growth. Dan its interesting, salesforce, which has also been very inquisitive and also has tremendous growth and in a very similar space, you know, they reported last month, a beat and raise, stock gapped up and it hasnt seen those levels in a while. And i think investors may look to digest some of this and see really where the grorganic growh is these are getting to be very expensive and crowded stocks weve also got to keep watching cnbc, because adobe will be on coming up later tonight. Mad money, 6 00 p. M. , the ceo, an exclusive interview dont want to miss that. Dan and dani, thanks very much up next, well discuss the increasingly competitive streaming industry with netflix cofounder and former ceo, Marc Randolph were back in 90 seconds servicenow put our workflows in the cloud. 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. We believe in education built for all people. , [woman] snhu was the best experience of my life. [man] without snhu, i wouldnt be the leader i am today. [woman] i graduated high school 19 years ago. I still finished. [man] in the military, you feel that sense of accomplishment. Thats what snhu is. You will march from this arena and say to the world. I did it. [woman] you did it. I love you. [graduate] i love you too. Weve got a news alert here on facebook. Julia boorstin with the story. Julia . Sara, facebook is giving more details on the independent Oversight Board its creating for content decisions. The board will have between 11 and 40 members working parttime. Facebook is stressing the independence of these board members. They will be paid out of a trust and facebook also said theyll be transparent about their decision making. Mark zuckerberg saying, quote, the board will use our values to inform its decisions and explain its reasoning aopenly and in a way that protects peoples privacy. Facebooks goal is to shift questions about the companys bias and what qualifies as inappropriate content or fake news away from its executives and over towards its new board julia, thank you very much. Well be back for more on that later. Fedex reporting q1 earnings missing on the top and bottom lines, cutting its forecast and quoting a weak environment trip, weve also got don joining us whos disconnected. Trip, ill start with you. Whats your take on these numbers . Quite a big share price pullback, as well . Obviously, a very disappointing quarter for fedex and fedex is a bellwether to what might be going on in the economy, and so were a bit surprised by the guidance that they gave for this next year we knew that they were facing a lot of challenges bottom from tariffs and also from the integration of their tnt acquisition in europe which is over a year behind schedule and 800 million over budget so fedex is definitely facing a lot of challenges, but we think theyve done the right thing cutting expensives and focusing on their Ground Network that has higher margin opportunity for them going forward, especially as a partner in the ecommerce space. The antiamazon delivery company, if you will don, you remember really looking aheaded to the guidance off these results. What do you make of it as we started last week making the clarion call, the weakness we were seeing as well as in Asian Pacific air freight leaves us in the position where its really hard for them to do anything other than guide lower on the Macro Economy and guide lower on earnings. The investment in the airplane fleet and the investment in the i. T. Advanced hubs, all of the things theyre doing to become more and more efficient, are those paying off and showing up as you get down into the details of this . Absolutely but the macro is crushing them and everyone else right now. Tariffs are a terrible tactic. U. P. S. Is trading down a couple of percent also 2 for them versus about 7. 5 to fedex. Does that feel about right to you . At least, if not more so. U. P. S. Is more exposed top europe, one. Two, its a clear historical pattern that fedex is the a student and u. P. S. Is the c, maybe at times b student, the bottom line as the economy goes up and down, fedex benefits more than u. P. S. And goetz hurt less than u. P. S. In the downturn so i totally agree. I think u. P. S. Probably ought to be weaker. Okay, we have to leave it there, guys. Fedex down 7. 5 after reporting weak numbers weve got another earnings alert on chewey. The stock here with a loss of 21 cents were not sure if thats comparable to the 11 cent loss that the street was looking for on the revenue side. You do see a slight beat, 1. 15 billion, thats better than the 1. 13 billion, that analysts were expecting. The q3 revenue guidance, better than expected. The fullyear revenue guidance, an increase from what they said before and also better than expected well continue to monitor that stock, right now not moving too much, down half a percent. Back to you guys thank you, eric chemi coming up, well break down chewche chewys results in a first on cnbc interview with the companys ceo. Still ahead, how will new streaming services from disney and apple impact netflixs Business Model l lk to the netflix cofounder and former ceo, Marc Randolph, straight ahead see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade the video streaming war heating up cnbc parent comcast throwing its hat in the ring with the announce of its own streaming Service Peacock set to debut in april, which will have exclusive rights to parks and recreation and the office. This comes as hbo max strikes a deal to stream the hit series the big bang series and netflix lands the rights to seinfeld joining us in a first on cnbc interview, Marc Randolph, netflix cofounder and also the companys first ceo. Hes out with a new memoir that will never work the birth of netflix and the amazing life of an idea. Reminds me of shoe dog, actually its a really good read and some amazing anecdotes. But first, on the news of the day, mark, how much room is there for all of these streamers . I hope theres a lot of room for people as a consumer of television and movies, i love whats happening. I mean, i certainly do not only watch netflix, i enjoy the fact that theres multiple companies producing content. I think its great for consumers. Clearly, were saying the word streamer there, because thats what netflix and many others have evolved to when you founded the company, it was sending dvds via post. To what extent did you get lucky that the market evolved and allowed you to disrupt quicker or to what extent did you foresee that would happen . So thatll never work is really about these first crucial years at netflix, when it was, in fact, sending dvds through the mail but we knew from day one that eventually you would be downloading movies or streaming movies and the trick was, how do you build a business that will keep you sustained until that moment comes . And it took more than ten years of sending dvds through the mail before streaming finally arri d arrived. Did you know back then that not only would you be streaming things, but had to be producing the original content certainly thats become a huge part of what netflix and the other stream reverse doing but quite frankly, on day one, that was the furthest thing from our mind we were trying to keep our website from crashing. We were trying to figure out, how do we get someone to rent and avoiding late fees was the business it certainly helps when you have a large market and ten trenched competitor leaves an experience that can be improved upon is that true that it was founded based on frustration with blockbusters. Blockbuster had a term called managed dissatisfaction. And if youre going to against a market, you would love a competitor who have managed dissatisfaction. So reed hastings, the ceo now and for most of the companys history, how did it transition and was there a big clash between the two of you it was ant clash. It actually happened there was one night i was working late and the door stick cracks open and s his head in and delivers those words, weve got to talk he was concerned with my leadership we had just tried to raise our series b and it hadnt gone quite so well. And his concern if there was smoke at this level, there would be fire later. He wasnt proposing to can me, he said, we should run the company together but i had this dream of starting and running my own company, and it required me to say, wow, whats more important . The success of the company or having me be the guy running it . And ultimately i decided, having reed join would be a great thing. And slernl looking back now, wow, that was probably the smartest decision evi ever made. Do you still get on with him now or did that create animosity between the two . No, no, reed and i went from that moment of sharing responsibility in the company, in some ways that was a renaissance for netflix. Thats where we found the Business Model that worked and came up with the Personalization Technology and reed and i are not only great partners, were still good friends. Well, the stock is now 130 billion company. Back to the story of today, everybodys chasing netflix. It was the first mover, but all of the big content players and Able Companies are all trying to go after do you think netflix faces some real existential threats as they pull some of their content from the sites . I havent worked for the company for 16 years, so siam not a good person to comment on their current strategies or current tactics. The thing im perhaps qualified to talk about is their culture, because that netflix culture springs from how we treated each other and our employees. And its always been about the customer and its always been about pushing responsibility down lower in the organization and empowering people to make decisions, which enables a company to not only move fast, but to always be willing to leave behind the past to embrace the future so i dont know what netflix has up its sleeve, but culturally, its extremely well situated to do a great job in these coming years. Do you still hold the stock now . I do. I would do, i would say, for sentiment reasons, but it certainly has been performing pretty well economically, as well i bet youre happy you didnt sell it to jeff bezos for 14 million. I certainly am. That was quite a story. Yeah, we went up to seattle to hear what he had to say, and in one way it was validated. This was, what, a year into the company . This was two or three months after launch but what it ended up being was not just a turned down acquisition, but this almost Commitment Ceremony for reed and i, where we had to look each other in the eye and say, we can get out now if we want or do we go for it . And thank goodness, we went for it to ask one of mikes questions in a slightly different way, to begin with, whether it was going to be by dvd or streamers, you were a distributor of content and clearly now, netflix is very much a creator of content. Does it worry you when you look at the company how much theyre spending on that, where the company is in its life cycle its been running for 20 years and the fact that its not profitable so im not worried, because i think netflix is looking forward. Theyre not acquiring content on todays audience, theyre acquiring content on the future audience and you always are going to look back and say, wow, what a deal for example, if you look what hulu was paying for seinfeld, that was a lot of money. But, what netflix is probably paying for seinfeld is even more but look back even further to those very first deals, i think netflix has got the entire starz catalog for 1 million i mean, looking back, you go, wow, that was nothing. And its because it scaled you have more and more subscribers over a fixed acquisition. You talk about your attachment to the early days of netflix and i know youve operated in the Startup Space and tried to mentor other entrepreneurs and things like that is it sobering to you that right now the industry that netflix is playing in is essentially all about the netflix against the incumbent giants there isnt another start up out there saying, were going to revolutionize this thing i talked about the culture being so important and when we were small, and i talk about this in the book, when we had seven people, you dont have time to control people you say, were going over there and ill meet you there, figure out how to do it you can do that when you have seven people or when you have 70, but when you 700 it gets hard, but when you have 7,000, it gets really hard. And netflix is one of the few companies of scale that still thinks like a startup so they dont believe theyre the entrenched player. They always believe theyre the startup and theyre going to behave like that can you build a netflix in todays environment . Well, wow, i have no idea im wondering if the startup culture and environment is as ripe now as it was for you back in the 90s . More so i want to tell people that these tips and secrets that i learned is applicable now. When we did netflix, we had to spend six months and 1 million just building a simple ecommerce website. So testing that idea took time and money. The exact same thing could happen today in a couple of hours for a couple of hundred dollars. All sectors or just in media . In all sectors. So one of the things i say is that nobody knows anything no one knows where this next movement is going to come from and the people that are going to take netflix down may not even be in business yet, but netflix realizes that. But im extreme lip excited about innovation and the future. I think were just getting started. Whats your flaifavorite net show im afraid im a bit of a luddite and im months behind. Were just finishing narcos. And ozark. Stranger things, youve got to get im very commonplace in my tastes good choices there. And the book, as we said, that will never work, Marc Randolph, out now and congrats on the book my pleasure thank you for having me. Hello, wilf, hello, everyone. Heres whats happening at this hour in an apparent setback for Prime Minister netanyahu, exit polls now say he has fallen short of securing a parliamentary majority with his hard line allies the results posted by israels three major tv stations indicate netanyahus political future could now be in doubt. A seventh person has died from vapingrelated lung illnesses. Health Officials Say the victim is from tulare county, california, the second in that state. This comes as the cdc has announced it is now activating its Emergency Operation Center Elizabeth warren explaining her call for an impeachment proceeding against Supreme Court Justice Brett kavanaugh this during a new York City Campaign tour drawing thousands of supporters we just need an investigation. When Brett Kavanaugh was confirmed, it was after the fbi had done a hurry up job and the whole nomination was car borammd down the throats of both the congress and the United States chewy sales are under pressure up next, the company ceo will discuss those results with us on a first on cnbc interview. Dot awhe. Ngonyer hmm. Exactly. Liberty mutual customizes your Car Insurance, so you only pay for what you need. Nice. But, uh. Whats up with your. Partner . Not again. Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty stand up if you are first stand up if youre a mother. If you are actively deployed, a veteran, or youre in a military family, please stand. I will tell you this, Southern New Hampshire university can change the whole trajectory of your life. Classical Music playing throughout i wanted to alert you about a headline from the new york Federal Reserve, which says it will conduct another overnight repo operation tomorrow at 8 15 a. M. Eastern this follows a similar operation earlier today after overnight repo rates surged above the feds target rate in english basically, the Federal Reserve is going to take action again for second day in a row for the first time in a decade to calm the money markets after a key measure of shortterm lending spiked overnight despite the fact, mike, that the rate has collapsed again today. Still just a rumbling along of this issue obviously on alert for the fact that there may be clogs they want to stand ready to inject cash into these overnight if you wanteding mark i funding markets if needed. They need to quell it, because its affecting the affected fed funds rate, which is a broader lending rate for the economy. Exactly the new york fed has to ensure that, in fact, the fed can hit the target rate, which is in a range, usually, spanning a quarter point. Now, its been a busy session for afterhours earnings fedex shares under pressure issuing a week adobe lower after weak ginuidan. And chewy under pressure the share price moves all down significantly as you can see for more on the chewy results, were joined now by the ceo, sumit singh in a first on cnbc interview. Thank you for joining us its great to be here on the headline, 43 sales growth, talk us through it and the quarter more widely. Sorry, i couldnt hear that question very well say that again on the headline, 43 sales growth, in line what you were looking for, but a little bit disappointing on the bottom line look, were actually super excited about the results. 43 growth in sales, 40 growth in active Customer Base. If you look at our sales to our customers, 49 year over year. Were a growth mode company and were happy to be growing and happy to be growing the best Customer Service to our customers and happy to be here the 40 customer growth, down a little bit, still very strong, of course, from the prior 45 . Whats your forecast for where that goes from here and how much has the slightly grow islower g. If you look at the Customer Base growing with us weve added 3. 5 million customers year over year, which is pretty good and look at the United States. U. S. Market, youve got 90 million customer households. Clearly, you can see, theres a lot of good momentum and a lot of good journey in front of us you know, you have to think of us as an experienceled company, not just a retailer of products and supplies the experiences that we bring to our customers and the way that we build engagement and the way that they stick with us over long prreriods of time, thats w our Business Model works so a lot of good momentum in front och f us what would you tell investors who have been a little bit skeptical lately and continue to be so off the back of these results, who are worried that its costing more and the growth rate is slowing, ultimately . I think i would say a couple of Different Things. First, i would point out to the fact that were playing in a very large market size, 70 billion. I would also point out the fact that its early days for ecommerce. 14 penetrated, we believe this number could be 25, 30 over the next few years i then point out the fact that the solid proposition that were bringing to the table. Were still guiding to grow about 1. 3 billion year over year and if you look at our profit, we are consistently showing deliberate incremental improvement in profit. And thats exactly what the Investor Community would want if us at this point weve got a lot of growth in front of us and were capitalizing on our unique Value Proposition to be able to go get that growth. I think im right in saying that amazon was much more aggressive on a pricing point in june and july than they were in august and september did you see customer churn change based on how aggressive amazon was being i think pricing in the ecommerce, you know, dynamic, is just an industry trend that you have to kind of ride up and down what really goes at the back of that is the choices that youre bringing to the customers and the experience that were delivering for the most part, were operating our business like we want to. Were executing to our strategy as weve laid it out we are differentiating ourselves, bringing health care offerings, a more diverse privatebranded offerings to our customers and wowing them with the cool mechanisms that we have, that weve always had. And were happy with that. So, obviously, youre the biggest pure play pet care retailer how much of that business is shifting online and how fast do you see that shift happening its shifting pretty rapidly. If you go back three to five years, the online penetration was low single digits. Coming out of this year, its probably in the midteens. And if the research is correct and i believe it is, because we remain bullish on this index, over the next few years, you can see ecommerce penetration getting north of 25 , 30 . There are mature categories that are north of 40 so ecommerce, when you look at the proposition. Who wants to lug heavy dog food bags from the store back home . And when you combine that when you combine the scale and convenience of ecommerce along with a really superior Customer Experience that we bring to your doorstep, in a way, its the best of both world we expect this to continue for long periods of time are people spending most money on their pets right now . If you break down the industry across food and supplies, health care and services, those are the three sort of verticals that connect and 65 of the span is on food and supplies if you consider that to the customer and how they spend on us, ill give you two numbers. On an average, the u. S. Average pet spend per household on food and supplies is roughly 700 to 800 and our spend coming out of q2 was 352 were already capturing 50 . Reporter sumit singh, thank you very much. Well spend anything on our pets and our babies ceo of chewy up next, well break down the charts for a look at the impact the trade tensions are lls. Ng on the impacts in doar schmeand here are some oe biggest looser on the Energy Sector today were back in a couple of minutes. Ever since i started renting from national. Because national lets me lose the wait at the counter. And choose any car in the aisle. And i dont wait when i return, thanks to drop go. At national, i can lose the wait. And keep it off. Looking good, patrick. I know. vo go national. Go like a pro. Its an honor to tell you that [ applause ] thank you. Liberty mutual customizes your Car Insurance so you only pay for what you need. I love you only pay for what you need. Liberty. Liberty. Liberty. Liberty. Lets go back to mike santoli for the final dashboard of the day sounds like a good one yeah, this could be one up your alley, sara so what goes buck in the night maybe to something to worry about in the macro front lets look at two ways of rendering the u. S. Dollars progress, recently so whenever, lets say the president complains about the strength of the dollar, you hear a lot of trader types on wall street say, the u. S. Dollar index isnt even back to its highs of late 2016 after the president was elected. That is true you can see right here, thats the high from late 2016. We are not quite there at the u. S. Dollar range. But the tradeweighted dollar, the one that actually has direct bearing on the relative attractiveness of goods and services around the globe is, in fact, at a new high over this foo fiveyear period, not necessarily a new alltime high. And that is one that concerns things like the chinese currency, lots of emerging market currencies. And thats why it bears watching we dont even know how the dollar consistently reacts to specific moves by the fed and how the strength of the dollar necessarily bears on markets, but this is the backdrop of this fed decision coming tomorrow we should basically never look at just the dxy and never look at the dow skpan only look at the s p 500 youre right about that the dxy is overrepresented in the euro and the sterling and pound. Youre exactly right about that. In terms of realworld effects it is good to be reminded of your orange line here, because it gives credence to the president s criticisms and concerns about what it means i think ultimately, it gives credence to the idea that they have a case to intervene if they really, really want to thats always sort of floating out there. If you believe in currency intervention right but thats out there and it gets taken seriously on desk. The other side of it, though, is that some people would argue that the goods that the United States exports or wants to export are not really super price sensitive commodity goods you can find somewhere else. Its not as if the currency translation is the key thing the only thing i would say in the pushback to this point for the likes of the president is that the euro on a tradeweighted basis is not that weak, because the chinese yuan has been so weak so, again, theyve got their own issues that theyre still facing either way mike, as always, thanks very much up next, the fed in focus. Tomorrows key decision will take center stage for investors. Well have a breakdown of what to expect. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Ptech students around the world. 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Limu thats your reflection. Only pay for what you need. Liberty, liberty, liberty, liberty thats where i feel normal. Having an annuity tells me my retirement is protected. Learn more at retire your risk dot org. Up next, the senate Judiciary Committee holding an antitrust hearing this afternoon, as the crackdown on big tech intensifies well have new details, coming up next. The new sporty glc. Come on. [ cars honking ] its so late. Yay. It fights traffic. No parking. I told you. Oh, a spot hold on. It fights tension. Seriously, did you take my phone . Passenger light on. It even fights. Fighting. Innovation that keeps people together. The 2020 glc. Lease the glc 300 suv for just 479 a month at your local mercedesbenz dealer. Now for the wall street look ahead, General Mills set to report results before the bell tomorrow but first start with a preview of what to watch from the fed appear wilfred has that. I do. The Federal Reserve concludes the twoday meeting with the statement at 2 00 p. M. Eastern time time and News Conference following that the reaction to which, live on closing bell. The fed is predicted to lower rates by a quarter point for the second time in as many months. But there has been last minute drama with the sharp moves in oil and the r oechlt epo and since we heard from powell, we have seen a calming of u. S. China recommendations. New stimulus from the ecb and rielgs rising rates in the zbloous yeah and even a firmer Inflation Report well see how it gets thrown in the mix. Thanks, we get a preview to watch from General Mills. Its been a hot stock, up 40 this year. The question tomorrow is whether they can get the momentum in the underlying business, cereal, protein bars, a recent note from gugen mime says its their topic in the space also a year since the acquisition of the pet food Company Acquisition grow closed. Well see how it its growing. Its in the premium part of the business, a big contributor to sales. But in general they have turned snacks around. Thats been a good bright spot and in re cereal is growing than the overall category of taken share from kjell okay. Tomorrow morning from General Mills. Yes. Diarcoitaelts from the senate juciy mmtee antitrust hearing the headlines after the break dont goat are go anywhere 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. Should always be working harder. Oney thats why your cash automatically goes into a Money Market Fund when you open a new account. And fidelitys rate is higher than e trades, Td Ameritrades, even 9 times more than schwabs. Plus only fidelity has zero account fees and zero minimums for retail brokerage and retirement accounts. Just another reminder of the value youll only find at fidelity. Open an account today. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Announcer early trading action as the markets await a fed decision, the Companies Investors are watching and why squawk on the street, 9 00 a. M. Eastern. Cnbc tomorrow. House Speaker Nancy Pelosi will be on mad money in just about an hours time she sat down with jim cramer who asked about the president s trade tactics with china. They cannot continue to violate our trade relationship i think the president had to do something about it im in the sure he went the right away i think we should have done it multilaterally with the eu and the rest what i would say is whatever path you want to take to improve a trade relationship, do not empower the other side to hurt your farmers and your consumers. That full interview with the speaker of the house and jim cramer, 6 00 p. M. Eastern time on mad money. Dont miss it. Speaking of washington, news out of the congressional oversight hearing for the department of justice and the ftc. Ylan mui track going. The top antitrust officials at the ftc and doj sitting next to each other during the testimony. But that doesnt mean the attention agencies get along both of them acknowledging that theres been some turf warfare in the dueling investigations into big tech. Ill take that as a yes things have broken down at least in part. Thats yeah, i would agree with that. I cannot deny that there are instances where chairman simons and my time is wasted on those types of squabbles now senators say they are worried about this jeopardizing the investigation. They say the agencies have been moving too slowly and urge them to ask aggressively. There has been debate over whether the rules for antitrust should be rewrien o written and also a growing push for a new agency to oversee the entire check sector not just antitrust but also privacy appear Data Security lawmakers here say that they are worried that the Tech Industry is not waiting apprehend for regulators to get their act together and that the government could be too late to unscramble the egg. Back to you. Ylan do you get a sense from the hearings that there is a renewed assembles of team work or that that might follow and clear commitment to hold the companies to account. I think team work is the opposite of what we saw here both of them were essentially saying that the process they had agreed to earlier this year to divide up the work as they investigate the companies has broken down. And so there is concern that regulatory overlap is kerpg that is both infesht in terms of investigation and also infesht use of taxpayer dollars. Ylan, thank you our ylan mui looking for the setup tomorrow you have fedex under pressure. Yes. After earnings. And fed meeting and mixed economic data. Major guide down to fedex that goes against the idea that macronumbers are firming up hard to know if its sques atmosphere first degree the fedex effect or transports or not. Given that lead up to the fed meeting you basically had a lot of things that would have been the impetus for easier fed wane. You dont vermont inverted yield curve right now. Obviously u. S. Growth fine so i think perhaps the 25 basis points cut thats universally expected and you have to imagine the fed wants to preserve flexibility after that point. Nice final 30 minutes of trade took us above 3,000 to the close on the s p the alltime closing high, 3025. Very close to those. I think were still somewhat benefitting this week from the fact that people did get negative and needed to top up the equity allocations and the fact that yields ob oil are up from worrisome levels but not to point where you think they are pinching off growth or anything. For now i think thats fine. Of course the fed reaction we dont know i think its 11 of the last 14 meetings you had a negative s p response on the day of the release well see if it holds. Well see something in the News Conference. Just maybe going full in the direction the market would like them to go thats been the pattern. The News Conference we have live on the closing bell, starting at 2 30 likely finish during the closing bell. We finished higher 20, 30 points thats do does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site over yook times square. This is fms. Im joe kernen in for melissa leap traders pete narjen tim seymour and brian kelly. Guest trader the Technical Analysis head chris ver own and the big show tonight. Fedex shares i already read this early on preparation for it and i love it process crumbling like we had card board who came up with that . That is. I take credit. I know. After the shipper fails to deliver op quarterly results. Sues that tomorrow. More from the trade not tell anyone i got it tomorrow
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