Transcripts For CNBC Closing Bell 20240714

Manufacturing data this morning. Weve got full Team Coverage of todays selloff bob pisani is covering the markets reaction to that weak manufacturing data Bertha Coombs is watching the movers at the nasdaq Rick Santelli is looking at todays action in the bond market lets check in, though, where we stand. We are down 281, the low of the session on the dow was down 347. A slight improvement in the last 30 or 40 minutes or so but a significant fall from where we opened up 129 points or so lets check in with steve grasso from Stuart Frankel whos joining for the full hour. Steve, what is this . Recession fears again or is it justified to see this slippage you know, its funny, you know, im tempted to just jump onboard and say its all recession fears. And then you have the first day of the month and then you have impeachment. And then you have trade. But definitely, this is recession fears, but i wouldnt read into it as much as Everyone Wants to you have the first day of the trading month, theres a lot of different rotation things at work energy, materials, industrials are the three worstperforming sectors theyre all down more than 2 . All cyclical. Cyclical manufacturing. It makes sense should you be buying some of the nonmanufacturing sectors today . I think you have to wait until the Market Action clears just a bit, but i know theres a train of thought that you want to buy those cyclicalbased companies that have been beaten up already, to deep, deep, deep valuation discounts. Well, we have a lot more with steve coming up. But lets get over to bob pisani now for a closer look at whats driving todays drop it was a big miss on september manufacturing. I think thats a problem for the markets. The s p moved in a 50point range lower since the ism report came out at 10 00 a. M. Eastern time that is a huge outside reaction, and partly responsible for the size of the miss, was just the amount of the miss, but despite all the turmoil around global trade and a weaker economy, the other big problem is where the market is. The s p is still 3 from historic highs so you put those two together, you got a problem. So this dropped cyclicals like industrials, materials, energy, and bank stocks, they fell as the bond yields dropped. We know manufacturing is weak globally, but will it impact u. S. Consumer spending thats holding up the Global Economy . Thats whats got people talking. This jobs report friday now becomes very important keep an eye on defensive consumer stocks, that have had risen dramatically this year small group, home depot, starbucks, mcdomdnalcdonalds, all weaker today bob, thanks very much lets get to the nasdaq. Also kicking off the Fourth Quarter with a big four. Bertha coombs is having a look for us there reporter the nasdaq biotech sector, part of the reason why the sector falling back into bear market, falling 20 from its high just one year ago, with no lows in both large and smallcap names. Meantime, in large cap tech, apple today has been extending gains after jpmorgan raised its iphone estimates yesterday, but were not seeing any followthrough on yesterdays rallies when it comes to chip or other subsectors the nasdaqs best performer today, its in consumer names, ulta with its biggest gains since last christmas the director disclosing he bought 330,000 shares. Bear in mind, both those stocks are in bear market, well deep into bear market, morgan bertha, thank you the bond market has also seen some big moves today its been a volatile day following developments in japan and of course that weak ism manufacturing number here in the u. S. Lets send it over to Rick Santelli our look at todays bond report. Rick well, thank you you know, whether it was a Government Pension Investment Fund in japan or the bank of japan, both arent buying as many japanese government bonds so the futures dropped, the biggest drop in three and a half years. Look at a oneweek chart of jgb tenyear yields. You can see theyre on the rise. Ism, weakest since june of 09, and finally, an intraday of twoyear notes, down seven basis points huge range when you see the curve steepening, as it has done today, with rates dropping, thats usually not good Economic News wilf, back to you. Rick, thanks very much for that now the dow swinging more than 50 points in todays session joining us to break down the volatility, art cashin from ubs. Art, good to see you whats your take on how volatile this is. At the lows of the day, we wiped out all of q3s gains. Yeah, weve i dont want to be too fltechnical here, but weve had four days in a row, inside positive rotation and outside negative rotation. Then an inside positive and right now a negative outside that tells me that the market is building up a real head of steam here and when it breaks out, its going to be more than just a few pun points in which direction . We dont know yet . Were not entirely sure trade is where were concerned that when they came today and broke below 26. 6, that it might begin to spiral. We didnt get a trap door selloff in fact, we spent a great deal of the afternoon trading between 26580 and 26650. Its been a narrow band. Were testing that low as long as we stay within that, the bulls have some hope if you break down below the earlier lows, we could have a big problem. Yeah, grasso, to that point, youve got the s p on pace to close below the 50day the dow is in danger of falling below the 50day how much of this is technical from your perspective. Were about 30 handles lower than that now. So if you look at the recent highs, or alltime highs, then you look at the august lows, you bounce back from there, 2979 is your First Support so breaking that is a bear setup Going Forward so im not happy about it. But i dont think we are doomed, unless we start to break down, as art said, below another 20 handles lower from here. Then im going to start to get very concerned off yields for broad sentiment indices levels japan had an absolutely dreadful government auction and that has sent yields ticking up all around the world and we would probably be higher in yields, except with that dreadful number that we got in the ism. So things are changing i would keep my eye on yields. I personal think that yield are probably going to go lower here. The pileup on the repos may be a little deeper than people think. Im sorry to jump in, but what does that really mean when you start to look at powell being back in play when you start to see his whats negative for the market is actually positive when the powell angle comes back into play unless you think were heading to a recession thats driven by trade and affecting manufacturing. But if its driven by trade but its driven by trade. If youre a short seller, do you want to get in front of that Freight Train with possible headlines coming out in the next 10, 11, 12 days, or so even if its less negative, theyre still going to be negative compared to the environment were in just now. Art, the fact that october has been the most volatile month of the year, how does that play into this . I think the first couple of weeks probably look like they will be volatile but remember one other thing, and that is, octobers notorious for forming bottoms. And many of the great bottoms weve had come in the month of october. So i would be very wary of the first two weeks. And then see what we can build as we start to go out of the month. Steve, in terms of Sector Performance at the moment, as we said earlier, the cyclical ones at the bottom, that includes the likes of financials, even though thats not so linked to manufacturing. Is that an opportunity it should be. At face value, it should be. The problem is ask him about the banks the problem is that the xlf to me, if you look on a longterm chart, theres an extreme double top going back to the financial crisis its almost down to the penny. I need to see a breakout of that 31 range in the xlf to really prove the point. Because if you go back there, no one knows better than you, you had less regulation back then, and you had high leverage. You had 301 leverage. We have less regulation now, but not to the level we had back then, and were never going back to 301 leverage, correct . So why would it be a rosy scenario for the banks arthur, just quickly, were off the lows as we stand, down 260 on the dow what are you kind of expecting for the final 50 minutes of trade. Do you think we retest those intraday lows . I think you might what i want to watch is that band that i discussed before if they can cut the loss and rally back above 26650, that will be at least a moral triumph for the bulls. And, you know, theyll say, okay, we escaped without a trap door selloff and that was very good volumes today volume today, hard to compare, because you had the end of quarter, which helps swell the volume a little bit at the close. You had nearly 2 billion to sell on balance late yesterday, so i would watch, i think the market is going to be looking offshore, particularly at japan and what happens in europe tomorrow arthur, as always, thanks very much for joining us great to see you still to come here on closing bell, recent ipos getting hit hard in todays selloff, and some of silicon valleys top venture capitalists are holding a meeting. And well dive into the announcement from Charles Schwab today thats sending the Online Brokers tumbling take a look at those stocks right there. Stay with us closing bell will be right back welcome back weve got 47 minutes left to go after starting the day up triple digits, the dow is currently down 299 points lets get a check on some individual market movers, though mall owners are getting hit today after forever 21 announced that its filing for chapter 11 bankruptcy the average forever 21 store spans 40,000 square feet, some are even larger, larger than 100,000 square feet, which is the size of a Traditional Department store analysts say filling those spaces could be a burden on the malls. You see that right there with names like simon down about 2 and shares of spice maker mccormick on pace for its best day since june 2018 after reporting earnings this morning. That stock is up about 6. 5 . The company cited Strong Demand for products in both the u. S. And china. Sales in asia pacific were up 11 year over year as well and you can see those shares are bucking the trend in the Broader Market today were down 300 points on the dow, with 45 minutes left of trade. Lets get over to mike santoli for todays market dashboard hi, mike hey, wilf heres what weve got ahead. A new wild card has been played by one of the big brokerage players. And hitandrun, one big style trade in the market has gotten hit, but now its still running a little bit playing in shadows a little look at the macro here based on todays data and whether, in fact, we are seeing the shadows of a downturn ahead. And a highleverage situation. Corporations really taking advantage of an easy debt market first, to this news today about Charles Schwab deciding to go to zero commissions on most trades for customers, following Interactive Brokers in an effort last week. Heres a timeline going back more than 20 years to 1997 its the progression of standard commissions at Charles Schwab. Of course, Charles Schwab, a pioneering discount brokerage from the mid70s but this was a trade, 80 around 1997 for a live broker or by phone. 2999, went to a big deal in 1998, set the standard and you can see the stairstep down, weve got this deceleration recently all the way towards zero clearly, the market saying the rest of the industry might have to get there so i do want to look at the breakdown of revenue for schwab. Its actually not very leveraged to trading commissions this is commissions are in there. That 6. 8 of estimated 2019 revenue. Thats split there you can see net interest, its kind of a bank on the back end thats the biggest chunk and Asset Management fees are also a huge and important area thats why schwab can afford to do this. And finally, look at the stocks of the Online Brokers, compared to the s p 500 over the last couple of years. Theyve now pretty much all overperformed. As of today, the market saying, look, this is going to be tougher for these guys, some more than others i would point out, this period here, the fed was raising Interest Rates and the markets were strong. Thats a great combination for these guys who earn a spread and earn commissions, but that has been undone right now, guys. Mike, fascinating story and analysis there i guess the other offset to that clearly falling chart of the price of commissions for a company like schwab is that the aum has gone in the opposite direction over that time net net, though, the effect, of course, has been fee compression across the industry. And i would just bring up, as well, for the banks and the banks that have more of this exposure in terms of Asset Management, theyre all down today, but not quite as much, because, of course, when theres discretionary management, the fees have held up a little bit better theres not quite such a price war. But nonetheless, its the same trend, which is a bit more automation, much less fees across the space thats exactly right. They want to gather the assets and for schwab, a lot of those are portfolios of etfs and things like that their relationships with many investor advisers. Steve, major moves lower in these broker stocks today. I mean, is the takeaway here that because it seems to me that it was inevitable that we were moving closer and closer towards zero especially when you see startups like robin hood getting in the game and helping to push prices lower. The move in the stock, is it because it happened faster than everyone expected . I think thats as good a reason as any. But its about services. And as mike pointed out, net interests, they are banks when you look at it you want to be in a rising rate environment so they can clip some type of a fee or some type of a, im borrowing from you and paying you this. And its just a Net Interest Margin is with where theyre going to make their money. But its about services. What other services can these brokerage houses provide, other than the Straight Commission because theyre dealing with a lot of retail membership and a lot of retail clientele, not constitutional clientele weve got 42 minutes left of trading here today the dow is currently down 281 points the s p is down 31, 2945 is your level there. For more, lets bring in chris johnson, ceo and cio of Johnson Research group chris, what do you make of the selloff today i think its a little bit of a reaction, obviously, to the production numbers this market is on edge were playing around with a lot of technicals. When you look, the s p 500s 50day is right where were trading. The technicals are a little more enhanced now when we break these levels, youll see more volume and a little more volatility come in. A lot of expectations going into october, though. And i think thats what additionally is putting investors on edge right now. Talk to us about the seasonality. What should we expect normally for an october and for a q4 . Sure, wilf. When you look at seasonality, october is known as this i call it the comeback kid it is the month that we best associate with volatility, because if you ask somebody when the markets crashed, typically theyll pull out october those are the ones theyll remember thats why you see indicators like the volatility index start to spike when you look at the vix, the vix readings on average over the last 20 years hit their highest levels of the year in october, but they quickly subside and start to come down and as that negativesentiment unwinds, it turns into a rally that carries us through stronger november and into december you always have your exceptions. I mean, think of it this way, wilf it is a its almost a selffulfilling prophesy when we see that bottom, we know people want to go in and buy the dip here if they dont buy the dip, though, now it turns into a loathing situation, where the market if we dont finish october in positive territory, if we dont come back, typically we see that november and the december trade sideways to even down if you look at last year, the vix made another two spikes after the spike in october this really is where the market needs to kind of set into that volatility trend get through it, and have investors feel a little better about buying the market, either earnings, a trade war resolution, or maybe even that infrastructure bill are going to help to do that. But we need something right now to help fuel that optimism so how would you be investing for this october, given the fact that there are all of those headline risks and uncertainties . What sectors do you like, if any . Right now, looking at oh, there are some sectors out there that you can play, morgan. When you look at the sectors, utilities have been a safe Harbor Investors have been putting money into that. Thats one of the areas weve seen a lot of cash migrating to. Also, when you look at it, believe it or not, retail is still gaining some traction right now, and thats because were in a strong seasonality pattern for retail that goes from labor day until thanksgiving the other group that im looking at, like everybody else, consumer products. When you look at Companies Like campbells, hormel, et cetera, theyre going to do well, because theyre safe harbor, theyre giving dividends that are better than what youre going to get on the tenyear, and oddly, the one that stands out are the Technology Stocks. If you start to see october actually bottom out and run into a higher november, Technology Stocks are going to become in favor, because a lot of those Portfolio Managers want to have the good tech names on their yearend statements. So provided we have a good october and we come out on the other end in the plus category, november and december should provide some good returns in the tech sector. Steven, for all the kind of seasonality arguments, last year is a good reminder to not believe too much in them and when you look at im a Firm Believer in, you never get the same action twice. You know, for us to look at, is october going to go to be down 11 , is december going to be down another 16 on top of that . I dont know if its ever that easy, but it is interesting that everyone is panicking over the ism number today and when you look at european pmis, they were up in august and up in september. Thats whats going around the street right now does that mean that europe has bottomed and that a lot of these stimulus measures that are taking place are, we are basically catching up to where they were and theyre leading us back out of it and youll see rotation out of the u. S. And into europe i dont think thats the case, but that is what a lot of the conversations that are taking place on the street are today. And certainly here in the u. S. , we have seen things like industrial recessions, not that long ago, by the way 2015, 2016, that didnt take the broader u. S. Economy into recession, either. Correct and just to put a bow on it, when you look at that, we were looking at a much different fed environment, right we had the fed that was overreaching and tightening. I know youve heard it a thousand times when we started this selloff, we have a much different environment now, and after the ism number today, youll hear a lot more dovish fed speak coming out between now and that date. Well certainly see and the jobs number on friday will help bring us there chris, well leave it there. Chris johnson, thanks for joining us today after the break, bank of america upgrading one tobacco stock due to its lack of exposure to the vaping market. The word on the street on that call, coming up next and in just a few minutes, well take you back into the market zone, our new commercialfree stories that matter most to your money. Lower carbs. Lower calories. Higher expectations. The light beer youve been waiting for has arrived. Welcome back to closing bell. Time to get word on the street bank of america upgrading Phillip Morris to buy with a 96 price target the firm sees attractive valuations and says the company will, quote, rise above the noise, given lack of vaping exposure keybank upgrading a host of semiconductors today, analog devices, microchip technology, and nxp semiconductors, all with buy ratings. The firm says asia channel checks show that while overall demand trends remain weak, theyre not getting worse. So maybe a bottoming out you can see its a mixed picture for some of those stocks today, though evercore isi upgraded spotify to hold with a 110 price target. The firm says given that the stock is down 30 from recent highs, opportunity related to shorting spotify has diminished. Those shares are down 1 , as well steve, what do you think of, i guess, any of these stocks spotify is an interesting one, because its not like the analyst is saying, oh, you know, the fundamentals and the financials on the business are Getting Better, its just that the stock has sold off enough now that the risk reward seems balanced i can get onboard with that i bought ulta i bought ulta cosmetics back in the 227 range, because it was just sold off way too much if youre looking for an overreaction in some of these names, i can get onboard with that but i cant get onboard with just the competition, the mountain of competition that we see in spotify and the average revenue per user going down. That, to me, is not a winning success rate but you can make money if youre looking for some type of reversion trade. Bank of america on Phillip Morris i love that its the lack of vaping exposure that makes this a buy. The one thing that had delivered structural growth to a declining industry and was the darling factor for the last couple of years, now gives it an attraction its got a high yield, 6. 5, i believe, percent yield on their numbers. And sometimes a high yield can be an indication of a red flag there but i would have went the same route that you picked. Youre looking at an industry that has already gone to its peak and has been falling off for years now. And that you are only saving grace was trying to move out of that and cut down on their dependence and move into the vaping world theyre not going to get in there now. At least for the foreseeable future but the truth is, we dont know anything about this yet. Its so early in the cycle there will be a viable event on these, as that reversion trade happens or a bounce trade happens. I dont think were there just yet. They have that icoqos Technology Big question mark around there that new manufacturing data came in much weaker than expected, reignites fears of recession new ipo worries as uber, lityft, and chewie hit alltime lows and falling sharply on that soft manufacturing data this morning. Its time for a cnbc news update with sue herrera. Hi, sue. Hi, wilf. Hello, everyone. Heres whats happening at this hour, secretary of state mike pompeo claiming in a letter to the House Foreign Affairs committee that democrats are trying to intimidate and Bully State Department employees and that depositions scheduled by the panel are not feasible pompeo is in italy meeting with italian leaders. Australia says it is willing to cooperate with attorney general William Barrs investigation about the origins of a probe into russian meddling in the 2016 u. S. Election. An australian official was asked if it was appropriate for australia to be cooperating on such a controversial u. S. Issue. The government has put out a statement in relation to that point youve just raised, and weve said weve always been willing to cooperate in shedding light on those investigations. And again, that was confirmed in that conversation, that the statement from the government speaks exactly to that question. And sony is cutting the price of its subscription game service. Its playstation will now cost 9. 99 a month, down from 19. 99. The yearly rate also cut from 99. 99 to 59. 99 it all comes as entertainment giants battle to increase market share amidst fierce competition. That is the news update this hour ill send it back downtown to you. Let the gaming wars begin, sue. Absolutely thank you well see you next hour. Lets send it over to mike santoli now for his second dashboard. Mike hey, morgan taking a look at a hitandrun pattern of sorts a lot of talk in the last month or so about a rotation around big Growth Stocks. This is a relative chart, a ratio of the russell 1,000 growth index to the russell 1,000 value. This goes back five years. Obviously, a very clear trend. Growth is winning on a longerterm basis. And i think whats interesting about this recent move down, which means value has started to outperform a little bit, is that thats a pretty sloppy trend line but just more or less, thats what youre talking about is, it really has remained in this trend. You had a couple of very sharp setbacks here, but nothing that really violated the overall pattern of big Growth Stocks reasserting themselves after they have one of these switchbacks. I think you want to keep an eye on this ratio. I would say today in the selloff, Growth Stocks outperforming again, because a lot of those cyclicals have taken a hit on the manufacturing numbers, guys. Mike, thanks very much for that well see you again later in the hour of course, weve got 28 minutes left until the close slight improvement over the last hour were off the lows of the session. The dow was down 347 at one point. Its now down just 298 still over 1 of declines for most of the industries the russell, as mike was just saying, down sharply still to come, weve got your last chance trade. Steve grasso is picking one tech stock thats up. We think its got further to go. Well reveal the name in just a few minutes. And coming up next, the transports are getting hit hard as well amid this selloff well hear what the ceo of u. P. S. Had to say about his outlook for the economy right after the break. Your brain is an amazing thing. But as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. Thankfully, the breakthrough in prevagen helps your brain and actually improves memory. The secret is an ingredient originally discovered. In jellyfish. In Clinical Trials, prevagen has been shown to improve shortterm memory. Prevagen. Healthier brain. Better life. Filmgate is growing really staffing a small bquickly and. Is challenging. I needed to fill a production coordinator role. I was looking for someone with specific skills. So i posted a job on linkedin. Maribel had all the skills i was looking for. And looking at her profile. I saw shared connections. That was a plus. But the most important thing. Is the ability to connect to people and she had it. And i knew. She was the one. Post a job today at linkedin. Com grow transports getting hit hard amid todays selloff. Morgan has more on that part of the market for us. Hey, morgan. I sure do, wilf transports down today more than 2 , having their worst day since late august. The biggest decliners today include Union Pacific, csx and u. P. S. I spoke earlier with u. P. S. Chairman daviding abney and askd him his view in the u. S. , its still consumer driven and we are seeing that its holding up. It may not be as strong an increase as last year, but we still feel pretty good about what were seeing. Of course, wed like to see Industrial Production and manufacturing increase but the consumer is holding on right now. And were glad to see that now, on the international side, abney also pointing to brexit and china trade negotiations as headwinds. But also saying that his company has the flexibility to adjust, since we are in the Fourth Quarter right now. That means were going into holiday peak shipping season i asked him about that, as well. He says the company is gearing up and is pretty upbeat, i would say, in terms of the forecast for the final couple of months of the year. But let us not overlook the news of the day and why i was speaking to u. P. S. ceo abney in the first place. The Company Became the first of any to receive from the faa full part 135 standard certification, so it can do these big expansive out of the visual line of sight, at night, et cetera, Drone Deliveries and it basically means that u. P. S. Is now going to build out a Drone Airline and invest in infrastructure to deliver more packages, at least to start in health care with drones which is huge and we were discussing this briefly, morgan, before the news broke, you broke the news. Stocks still trading down. One would think this is a massive step forward for them and for the industry, potentially, but particularly them i mean, transports all hit broadly, clearly macro selloff. This is the manufacturing number again but no pop from but its up on the year its almost matched the Market Performance on the macro but did i hear it was a great interview, by the way. Thanks. Did i hear something about the weight of these packages weight is increasing, too going up to 55 pounds, including the drone and the package. So theres going to be a lot more leeway in terms of what they can deliver oh, my goodness, 26, 27, i dont know anyway, its theyve beat out amazon, theyve beat out uber, beat out alphabet and some of the other companies out there in terms of getting this certification. And i think on any day other than today, you wouldnt be necessarily seeing the stock down 3 . But there it is. The manufacturing number hitting the Broader Market, including transports morgan, great stuff up next, weve got your lastchance trade. And later, well get Earnings Results from retailer stitchfix. Well tell you the key things to watch, thats coming up. Limu emu doug 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. Weve got 19 minutes left to go here and the dow is inching closer to its lows of the day. Its down 321 points right now the low was 347. And thats, of course, after we started the trading session in the green. Okay well, as we finish up this day here, steve, whats your lastchance trade . Ive owned this stock for what seems like forever. Its apple and when you look at apple, it was sold off a lot with the tariff situation and with china trade headwinds. And now you have a rebirth of apple. While you see a lot of the other large cap tech stocks being sold off, it seems like this one has a second, third, or fourth life. Its increased basically, its leveraged to hardware and its looking at a services company. But as jpmorgan said yesterday, if iphone sales surprise to the upside and theres more of a demand, now you get services along with hardware working at the same time. But the jpm upgrade put the price target at 252. Thats for next september, as opposed to this december and the iphone surprise it put in was because they also think a new model will come out in the fourth quart First Quarter or the Second Quarter next year. Its not as pure as this latest its not as pure as the latest one that youre going to get in demathat demand for. But everyone was worried about it being the proxy for china trade issues and that is gone thats yesterdays story and people are thinking about this saying, wow, we thought it was just a services bouncing above 40 billion, as far as their contribution to revenues being the catalyst for the bullish story. And maybe, now, its still hardware so if thats the case but i will say theres one caveat. You have to wait until the stock trades above the 233 mark. That is longterm resistance wait until it trades above that. Steven, thanks for that thank you for joining us apple higher today despite a broad market selloff. This is the last commercial well take before the close, so well bring you uninterrupted coverage of the last few minutes of the trading day and bring you up to speed on everything an investor needs to know well take you inside the market newh osg llzo, enclinbe returns. At Southern New Hampshire university, 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 30 minutes left in the trading day. Were now in the closing bell market zone. Commercialfree coverage of all the action going into the close. Well tell you everything an investor needs to know in these final minutes and break down the Market Action after the closing bell rings youll see some of the big movers in the dow, the s p 500, and the nasdaq constantly changing and updating on the right side of your screen. And cnbc senior markets commentator mike santoli will join us every day to break down these crucial moments of the trading day. Today, were also joined by john patrides new data this morning showed a larger than expected slowdown for u. S. Manufacturing the ism Manufacturing Index coming in at 47. 8 for september, the lowest reading since june 2009 this marks the second month in a row of contraction for the index. Mike, a much bigger contraction than expected. The question is, is recession around the corner . And thats kind of spooking investors. No surprise, it was actually not a secret that manufacturing was the weakest part of the economy. I think the decline was steeper than expected, and also broader than probably was expected, as well in other words, the number of sectors reporting a decline in activity thats what has the market spooked. Although, i think over the course of the day, the reaction in stocks and bonds was moderated slightly from the worst levels john, your thoughts i think were probably already in or entering an industrial recession as long as the consumer holds serve, which is 70 of our economy, hopefully that keeps u. S. Out of recession. But the Global Economy is clearly slowing. Lets dive into some individual sectors industrials the worstperformers today. Lets get over to seema mody it was that weak manufacturing and construction data, followed by a report by ubs industrial analyst Steven Fisher that came out this afternoon. Hes forecasting weak demand for big machinery goods. In his report, fishers says farmers are not optimistic regarding the timing of a resolution with china. How much the government steps into help in 2020 remains an open question, which could push farmers to delay the purchase of large machinery goods. Thats why a number of these names like caterpillar and deere, which have that exposure to the Agricultural Sector are trading lower. Separately, a tough day for rail operators, after Canadian National railway was downgraded. You can see names like kansas citi southern and Union Pacific down about 3 pocket on the day and of course, they would be exposed to stronger dollar, any kind of weakness in manufacturing. Seema, thank you john, i mean, its so broadbased, the selling in industrials right now. Youve even got defense names that are not necessarily exposed to the Global Economic story right now that are getting hit yeah, i mean, listen, the last two weeks, weve been thrown with so much information. The market finished up positive for the month of september i was surprised that this volatility hasnt happened already. And we got this one data point to really push stocks lower. Mike, just quickly, i guess a sign when you see these stocks sell off, that even if we expect more easing from the fed, its not directly helping the cause of the weak manufacturing data right especially because industrials had lifted off their lows. So you had a little bit of a hope trade in there. And this idea that we were perhaps going to be getting a fed rate cut this quarter, at some point, without having to go through the tough period of a downturn in economic activity. So anything that happens right now, that detracts from that view is probably going to hit the stocks Online Brokers plunging today after Charles Schwab said its ending commissions on stock trading. And dom chu has more on that story for us morgan, you would be hardpressed to find a part of the market thats deeper in the red than those Online Brokers. Yes, industrials are bad, but check out Charles Schwab, off 10 today. Td ameritrade, off 25 etrade, off 16 , and Interactive Brokers off 10 . These brokers now responding to the fact that Charles Schwab has now pushed commissions to zero will they have to follow suit . This is a stock that peaked a wile back and its been rolling over since Charles Schwab right now, zero commissions. Robin hood has had zero commissions for years. Interactive brokers does have zero commissions for some of their products, but fidelity still at 495, Td Ameritrade at 695. The question is, will all of these folks have to go to zero dollar commissions at some point. You know theyre all talking about it right now wiff wilfred, morgan, brokers very much in the heat today john, whats your take on some really big moves in the stocks i think areacheded the zero on commissions has been the trajectory for quite some time i think the market has been thrown off by how quickly it happened it was only a couple of years ago that we went to 495. Investors were expecting maybe a trip to 1. 99. The speed with which weve got to zero is whats surprising investors. And its revenue thats being surrendered. Is that why Td Ameritrade is down yes because schwab went to zero on options trade, as well thats a real profit center. Historically you say, fine, kind of market orders for stocks or etfs youre able to discount on that, hoping that the more active traders will be paying you to trade options. We should mention, the Broader Market is slipping down 316 points on the dow, 1. 2 in percentage terms all of the major indices down more than 1 we have 7 1 2 minutes of trade mcdonalds is under pressure after a note from jpmorgan thats right. Jpmorgan out with a note today, reiterating an overweight rating on mcdonalds with a 230 price target, but also a warning allimportant samestore sales could come in softer than expected for q3. Jpmorgan lowering projections from 5 to 6 . The note cites less value attention around the companys current offerings as well as a missing presence in the chicken sandwich wars and a bigger push into plantbased meats but on the upside, jpmorgan projecting that the investments that mcdonalds has made around technology could help to boost spending in the future back over to you its Pretty Amazing mcdonalds has made at least three acquisitions in recent months that are focused on technology so how does that change the game in this company . Thats right. So mcdonalds has been making a series of either Strategic Investments or straightup acquisitions in the past six months all centered around enhancing and bettering the Customer Experience some Voice Recognition Software Technology so theyre hoping that will be in play in the quarter to come that dynamic drivethrough technology is in about 800 stores now and should be fully across the United States by the end of the year. That could push more traffic to mcdonalds in the future, guys kate, thanks so much for that six and a half minutes left until the close. Down 320 points on the dow all of the major indices down around 1 . If youre just joining us, you might notice your screen looks a little different weve launched the market zone uninterrupted commercial coverage into and after the closing bell well cycle through the biggest winners and losers of the day. And at the bottom of your screen, you can see a preview of the next few stories were covering to guide you through the close. Meantime, take a look at shares of General Electric those are down about 4 today. Today marks the oneyear anniversary since outsider Ceo Larry Culp took the helm in a company newsletter, culp once again calling 2019 a reset year, but also adding later in the letter that, quote, we expect significantly better results in 2020 and beyond, and that as operational improvements take hold, the industrial segments should, quote, yield cash on sales more than double last years levels culp has cut to a penny. The current selldown is raising 38 billion to put toward paying down industrial debt nonetheless, shares are lower in this broader selloff and shares of ge over the past 12 months are down about 26 , although i will note, they are up Something Like 18 yeartodate, they have seen them come off the lows of the past year. I guess investorshope this is the final reset year. Exactly when he got the job and took the job, he said, its not going to be a quick fix and its obviously proven that to be the case youre seeing the decline today, probably an exaggerated move its become a bit of a trading stock. And thats why i feel like you cant lean back on current earnings to justify where it trades 4 1 2 minutes left to trade after the bell, well get earnings from stitchfix and Courtney Reagan has a preview. So ahead of results, stitch fix shares are up in a down market, but investors will need to see some solid Revenue Growth to add to those gains. Estimates for Revenue Growth to grow nearly 36 . Research growth can come in the form of new consumers or current shoppers spending more investors largely want new customers. Though stitch fix has previously louted increases in average user purchases going higher stitch fix launched in the uk in may. And last earnings call, ceo katrina lake said it seemed like there was a lot of excitement there, but did that excitement translate into new subscribers thats a big question. Morgan that is the big question. We know youll bring us those numbers when we get them, court. Thank you mike has one more market breadth chart today. As you would expect, youve had some pretty determined selling right there. If you look at the up and down volume, you obviously see right there, its thats pretty much an 80 or more down volume move and thats usually what you what you see at a time when, you know, things are pretty dicey in the market i also like to take a look at the equalweighted s p and the rsp has been underperforming. So the average stock suffering a bit more than the s p. Mike, all sectors lower, quite noticeably also, were getting close to testing the lows on the dow, which we discussed with art cashin the low is 347 important to kind of hold above the low of the day i mean, you would prefer it, i think. Obviously, if youre looking for this to be a oneday shake out but you did have a market on close, lopsided to the sell side so i think thats what youre seeing the effect of right now and if i look at 2940 on the s p 500, thats a level a lot of folks have been looking at john, at these levels, both the dow and the s p with todays losses are wiping out the entire gains we saw for q3. Does that bother you here . Not overly surprising i would expect more volatility as we get into earnings someone we need to see the rubber hit the road into how companies are operating in this environment. Lets get into the closing countdown. Weve got just two minutes left of the trading session Rick Santelli is having a look at bonds for us. Rick, a huge impact on equity Market Sentiment today absolutely and i think its more because of the policy implications. Look at a 20year chart of tenyear japanese government bonds. Wow were just hovering in negative territory below zero for quite a while, while there was an announcement maybe the bank of japan is calling it off on qe and the markets reacted. Then everything changed, of course, at 10 00 eastern look at intradays of twos. Theyre on their low yields right now, down eight basis points where the long end was unchanged a minute ago in 30s, its now down 1. 5. The curve has steepened. Bertha, everything was painted red after that 10 00 number. We did see that sharp fall. And we really are seeing the biggest impact on the midcap and smallcap names. Theyre down more so than large caps and in health care, thats where were seeing an awful lot of pain thats where were seeing most of the new lows today. Gossam gossamers bioscience was hitting a new alltime low, along with livongo health, one of the more recent Health Care Ipos meanwhile, apple extending its gains. Take a look at apple on october 3rd, it hit that alltime high its still down from there well see if it can catch up and continue those gains through week finally today, alulta is seeinga bit of buying on the inside with a major director buying nearly more than 240 shares tesla today doing pretty well, despite reports that its new smart summon, not quite so smart. A few fender benders, bob, in parking lots as people try to use it back to you. The ism moved the s p 50 points, bertha, today. That is an extraordinary move. It doesnt happen very often thats a big outside move for that and you can see the move into the close here you want to watch here the jobs report on friday, b consumer names have had big runups. Watch ross stores, home depot, nike, and starbucks. Theres the closing bell the Dow Jones Industrial average closing essentially at the lows of the day s p 500, down 35 points. If youre just joining us, welcome to the closing bell. Im wilfred frost. And im Morgan Brennan in for sara eisen, along with mike santoli, cnbc senior markets commentator. We are in the market zone. You can see the days action on the right side of your screen, with the stories still coming up on the tabs on the bottom of your screen. Lets take a look at how we finished the trading day as bob just said, the dow very close to the lows of the session. It was 347 at low at about 2 00 p. M. For the final two hours of trade, we attempted to come off of those lows, but did close 333 points lower as you can see, 1. 3 s p, 1. 2 . The russell down close to 2 all of the sectors lower industrials, materials, energy, and financials down more than 2 i picked out a chart of uber, as well, not really related, of course, to the weak manufacturing data, but some of those ipos really suffering of late, down a massive 4. 3 . Market cap below 50 billion compared to the 80 billion plus it listed it at back in may. Transports are down more than 2 as well today and with the losses today, we have erased all of the gains for q3 for the dow and the s p one name that has bucked the trend was u. S. Steel that finished the day up 3 . Thats after that company said its requiring a stake in big river steel, basically forging a partnership with a lower cost rival that had threatened its core business, putting u. S. Steel in more direct competition with newcorp, as well, which finished the day lower joining us to talk about the market today, john petrites is still with us here at the desk, along with Jason Trennert, chairman at Strategas Research partners but first, mike santoli, the fact that we did close near session lows, what does that tell you it fell below the range the market has held in in the s p 500 all of september the lift off of those august lows was premised on the idea that the recession fears had gotten overblown, bond yields had gotten too low, and you were able to have this nice sort of relief trade out of that i think the ism number, it didnt really, you know, render a verdict about whether a recession is on the way, but it did kind of disturb this idea that yields were going to be on the march higher to more normal levels and stocks could go along with them. And that we could get a fed rate cut, potentially, without having to suffer through the nearmiss of a recession in terms of manufacturing. So i think thats what got disturbed today. It didnt really change the overall trend, but it did show you, there was a limit to how resilient the market could be. Are you fearful the fed has not got the tools to fix the problems that exist in the economy . Its a great question if my opinion, another rate cut is necessary, but i also feel quite strongly that another rate cut would not really solve all the problems that we have. The problems that we have are that we have a trade war with china thats still going on, thats slowing Global Growth i think the other problem is that the rest of the world is very focused on monetary easing, when it should be focus on fiscal and regulatory easing and so, in many ways, were using the wrong tools, i think globally, certainly, some agreement with china would help out, quite a bit but i think when it comes to europe and japan, the amount of negative yielding debt is telling you that youve exhausted the use of Monetary Policy as an effective stimulative tool with that weaker manufacturing data, lets remind ourselves of what James Bullard told us here on the closing bell last week, wanting, of course, further rate cuts. I go another 25 before the end of the year, but i would like to reserve judgment i dont like to prejudge meetings well see how the data come in, if you guys are right and i should be more optimistic, ill certainly take that onboard. John, does another rate cut offset the negative sentiment weve had today . I think definitely another rate cut does happen, at least one more the market was baking in an october cut, but i think it happens in december. Why i think you are seeing some i think the underlying Economic Data is slowing and the feds idea is to cut off inflation by having higher levels of Interest Rates, but there is no inflation. So what are you cutting off . So why not loosen the screws to unleash some growth in the economy . And youre seeing it, look at the bond market. The companies are taking advantage of lower corporate lower Interest Rates you had one of the largest issuances of bonds in the month of september in quite some time. You will see some effect of lower Interest Rates mike, has the antejust been upped for this jobs report on friday it seems like it. You dont want to see a trend of worsening numbers, so the market is a little bit edgy about the idea that we are going to kind of see more leading indicators of recession i dont think it has to be a blowout number, but you dont want to necessarily see it kind of spiral lower from here. Jason, in terms of how you position expecting a further rate cut, but perhaps questionable manufacturing data, which sectors do you want to be buying right now wilf, its very tough, because to be quite honest, i want to be overweight value and cyclicals, but i think thats not going to work. I think were in a tina market until again you have something thats positive as far as economic growth, Global Economic growth is concerned. So were kind of were barbelled, if you will were overweight Consumer Staples, on the one hand, and were overweight industrials and technology on the other. And so were kind of punting the Consumer Staples are awfully expensive. Utilities are awfully expensive. Buff again, i keep going back to the fact that you have 15 trillion in negativeyielding debt you know, those sectors dont look that expensive when youre comparing it to what the other alternatives might be. Jason, i realize we just had two straight months now of contraction in the ism manufacturing number and certainly, this reading we got today is the worst weve seen in ten years. But the recession talk, how worried are you about the fact that we could see the manufacturing, the industrial part of our economy, actually, the weakness there actually bleed out into the consumer part its tough, just given the nature of our gdp equation, its very tough to get a recession out of weakness in manufacturing. 85 of our economy is services, 15 is manufacturing we also run a trade deficit, not a trade surplus. So were somewhat more insulated from weakness around the world by the same token, theres no question that global weakness is having an impact on Business Confidence and on Capital Spending so unfortunately, i think until the trade situation gets resolved, youre probably stuck at best about a 2 real gdp economy. And that makes Profit Growth difficult, not impossible, but it makes it more difficult the dow finishing the day down 343 points. Lets get over to bob pisani now for a look at todays biggest laggards bob . 50point move in the s p on that revised ism and that revived concerns about consumer growth, potential recession concerns so you saw deep cyclicals in the dow, your 3ms, your boeings, caterpillar, for example, all weaker goldman was down as the yields moved down mcdonalds, big consumer names that did well this year. Mcdonalds, ross store, nike, home depot, starbucks, also all weaker elsewhere, Online Broker Charles Schwab kind of surprised a lot of people, announcing zero percent commissions on equities and etfs big move there but look at Td Ameritrade and etrade down really big there the difference here and there, trading, the reliance on trading revenues differs Charles Schwab is only 8 of its revenues from trading. Whereas e trade and Td Ameritrade, they get 25 of their revenues from trading. Charles schwabs got a big bank and a nice Asset Management company. Weve got them, maybe dont have as much impact when you reduce your revenue from trading. Guys, back to you. Bob, thank. Mike, i realize there are some very specific marketmoving stories, including with the brokers that are out there today. But in general, when you see every one of the s p sectors in the red today, selling was very broad based. Is there reason to think it was maybe a little overdone or more technical than anything . I dont think it was overdone in magnitude, necessarily. I do think it was it was essentially representative of people reducing exposure across the board. It wasnt necessarily, i dont think, people pounding certain areas. What is interesting is, what qualifies these days as a flight to quality trade or a fear trade is, visa was up. Apple was up a lot of these very familiar, reliable Growth Stocks some of them with very high valuations, seem like theyre insulated from whatever it was that was bothering the ism survey recipient lets get stitch fix earnings, which are just out Courtney Reagans got them for us hi, court. Reporter so for stitch fixs Fourth Quarter, the company reporting 7 cents a share. Thats better than what analysts were expecting at 4 cents per share. Revenue essentially in line, 432 million active clients, 3. 2 million, also essentially in line thats up 18 year over year the average revenue per active client was up each of last Fourth Quarters. This was the companys fourth fiscal quarter and that revenue per active client was up 9 in this quarter. Shares, though, you can see here, are down about 6 . Its important to note, however, for the week, theyre only down slightly, if that much, because they had gained 5 yesterday and 4 in todays session. Back over to you court, thanks so much for that john, do you have a take on stitch fix so, im surprised that they beat on earnings and the stock is down 7 or 8 , still this is, in my opinion, an unproven Business Model still. Not surprising the stock has gotten destroyed this year so youre seeing a rally and the stock has come back here a bit, but, you know, i think this Business Model is still wait to be seen. And that certainly seems to be some of the sentiment out there on wall street, that in some ways, its an untested Business Model that being said, mike, back to your point before, it has also been a growth story so far it has been a growth story in terms of being able, still, to expand users and all the rest of it but i think its the kind of stock, when the market gets rocky, it doesnt necessarily have great sponsors. Jason, want to have a quick final broad market comment from you. These kind of problems that weve seen today of weak manufacturing and the question mark of whether Monetary Policy can fix can issues, i guess thats an even bigger problem when you look around europe and japan. Can that drag the u. S. Further lower in terms of sentiment . It certainly could drive our markets lower in terms of sentiment. It would be difficult to drive u. S. Economy into recession, but clearly i think Global Growth has to pick up for the broader part of our market to do better. I think right now, what youre seeing is that companies with very high yields like staples and utilities are doing very well and things that promise you very high growth are doing very well. Everything else in the middle is not working. And i think thats its difficult to get a sustainable rally from here based on that. All right, gentlemen. Thanks for joining us today. John petrides and Jason Trennert after the breaker, venture capitalists sending a warning about the downside of going public the alternative routes they are pushing peopleo ta tke closing bell is back in 90 seconds. Finishing this first day of october in the red with the dow down 343 points, near the lows of the session, 1. 3 loss there. Similar story for the s p and the nasdaq with the russell 2,000, the biggest laggard of the day. Meantime, recent ipo stocks are getting crushed, as well this as venture capitalists are holding a meeting to warn startups of the downside of ipos, favoring direct listings deirdre bosa is here with that story. Hey, morgan that meeting getting underway just a few blocks from here at the palace hotel the agenda is titled direct listings, a simpler and superior alternative to the ipo wellknown vcs like benchmarks bill gurley are starting to startups about the benefits of that route and the drawbacks of underpriced ipos, which provide less capital for those companies. Now, theyre holding this meeting on a day that recent ipo names are getting crushed. You named a few of them. Lyft, uber, smiledirectclub, peloton, all trading well below their debuts slack, though, we should note, one of two direct listings ever not immune to that selloff. Guys, back to you. D. , thanks so much for that for more, lets bring in mercy victoria grace, partner at light speed Venture Partners what is your take as to where we stand in the broad ipo market and whether direct listings are a way out for some of the Companies Planning to list given the negative headlines of some recent ipos. Yeah, you know, direct listings are something that work for companies that have a strong Consumer Brand and critically dont need to raise money from the Public Markets and they can be good options for companies that fit both of those things and they can also be good for investors, as bill gurley has said, quite famously now, who feel like theyre leaving money on the table so, in light of that, mercy, i mean, if there are companies that would not necessarily be candidates for direct listings, what then . Because it certainly seems like in general, the cv community and the private markets would like to see some changes made im not sure what to tell you about those companies. Okay. Whats your take on whether this could have helped a wework, though clearly, wework faced problems due to the scrutiny that the traditional listing process offered, but it also desperately needed to raise capital. So its kind of an odd dichotomy as to whether direct listings actually offer the right sort of alternative for companies that need a traditional ipo process given weworks cash position, they were not going to be a good candidate for a direct listing, and i dont know that we can draw a lot of broad conclusions from wework, which is a very specific example do you think more broadly the sort of partys over as it were for techrelated ipos. Has there been just one too many highprofile, either pulling the ipo or listing and seeing the stock price decline, like we were talking about with uber, down 40 since may no, i think the ipo market is definitely still open for companies that have an efficient Business Model and are attacking a really large market. The companies that we see having trouble are Consumer Brands that dont have a totally differentiated offering for the public and that can be easily subed in for Something Else so this is where you see lyft and uber, where taking a ride from one place to another is effectively the same and its pretty different for companies that have very differentiated marketings and revenue recognition thats high and better Business Models we were having a conversation on squawk alley, another cnbc show earlier today, about the ipo pipeline with the ceo of a right now private company and one of the things he listed as a potential uncertainty when a company is looking to go public right now is the 2020 election do you see it the same way no, i dont see it the same way. Okay. Well, lets we want to get your thoughts on some other news of the day, as well, while we have you here. Your take on facebook. The verge released some leaked audio of a recent q a session with Ceo Mark Zuckerberg heres what he had to say when asked about politicians and their recent push to break up Facebook Like elizabeth warren, who thinks that the right answer to break up the company, you know, if she was elected president , i would bet that we would have a legal challenge and i would bet that we would win the legal challenge. So its so basically, its, um and, uh so, does that still suck for us . Yeah i mean, i dont want to have to have a major lawsuit against our own government i mean, thats not like the position that you want to be in when youre, you know its like, like we care about our country and want to work with our government to do good things but, look, at the end of the day, if someones going to try to threaten something so existential, you go to the mat and you fight. Senator warren responding to this story on twitter in more details just a few minutes ago in one tweet writing, quote, zuckerberg himself saying that facebook is more like a government than a traditional company. They bill dozed competition, used our private information for profit, undermined our democracy and tilted the Playing Field for everyone she continues, my plan to hashtag break up big tech would undo their competitive mergers youll still be able to use it to share photos of your dog, but theyll twa have to compete wit each other to make a before the product for you. How likely do you think it is that well actually see breakups i dont know how likely that is obviously, it depends hugely on whos actually elected president in the next election, but what i do think is troubling is that we do have a democratic election coming up and facebook is a platform that has really an outsized voice and whose voice gets heard and theyre inviting scrutiny because of that. Mike, clearly he makes the comment, mr. Zuckerberg, that if there is a current case against them, they can fight it and they might win under the certain terms but that doesnt acknowledge the possibility och new laws being passed to change the current setup that is true. If there were a new law, somehow, you essentially made them, you know, a publisher, for example, which theyve tried to avoid. Basically, enforced some kind of other behavioral standards on facebooks business, that would really constrict it. No, thats exactly right to be honest, i thought the comments he said about, look, if they try to breaks up, well have to go to court and try to protect the corporate structure, is what any ceo would say. Literally, its exactly what you would be required to do under fiduciary duties so its not that outlandish. Do you think it was foolish for zuckerberg to be saying this openly on a call, albeit on an internal call. And it doesnt suggest great loyalty that someone has leaked this facebook is certainly not a monolith everyone who works there doesnt agree with the political climate. But i mean, he is a ceo who is doing his job and as you said, taking steps to defend the Financial Health of his company. Mercy, thanks so much for joining us facebook closed the day down 1. 3 up next, major manufacturing weakness, weak ism data weighing on the dow in a big way. Mike santoli will head to the tell traitor wiadministrato tele break. And big volatility after t eng been down double digits onhearnings report we just got, now higher by 1 . Well be right back when one student gets left behind, we all get left behind. 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. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. I dont even know why youre going down this path this trump economy is strong as a rock manufacturing is strong as a rock and you know, ive been to wisconsin and ive seen firsthand the fruits of president trumps labor on the manufacturing front. Ive actually been to that wisconsin factory myself that was white house economic adviser Peter Navarro responding to a question from Kayla Tausche yesterday, pressing him on possible weakness in the manufacturing economy. The weak factory data this morning is the subject of mikes third dashboard of the day talking about playing in shadows. Some lengthening shadows over the manufacturing economy. They want to make a longterm view of the ism Manufacturing Index relative to previous recessions in the lead up to those recessions the green line is the level reported today, 47. 8 obviously, 50 is the demarcation line between expansion and contraction. And the shaded areas are recessions, right . Theres a recession, theres a recession. So what i find interesting is the times weve plunged in these areas, but not had a recession come so again, we keep pointing to these same dates mid90s is one of them and back a few years ago, 2011 and also 2016. So you can kind of get below 50, the manufacturing economy says its in contraction. And its not necessarily something that extends lower obviously, Something Like that is the financial crisis, thats kind of an unhinged. The other thing to remind people is, this is a survey, and its a diffusion index, which means, how many people say things are Getting Better this month, how many say things are getting worse . 37. 8 from a strong level is not as many as 37. 8 from an already weak level i want to put that in perspective. Not to really discount the message of the numbers, but this is showing you that its getting touch and go in terms of recession indicators, but were certainly not there. I do wonder, mike, along that chart, how often when youve seen the u. S. Dip below 50, you also have china five months in a row ble 50 germany at 32. 3. You certainly had it in 2011 and 2012 and it didnt lead to a recession. It didnt in the u. S. Lead to a recession, yes mike, thank you still to come, were looking ahead to tomorrow. Bed bath and beyond set to report results what to watch, when we return. Did you know that americans that bought gold in 2005 quadrupled their money by 2012 . And even now many experts predict the next gold rush is just beginning. So dont wait another day. Physical coins are easy to buy and sell and one of the best ways to protect your life savings from the next financial meltdown. [narrator] today, the u. S. Money reserve announces the Immediate Release of u. S. Governmentissued solid gold coins for the incredible price on your screen. These Gold American eagles are official gold coins of the United States and are being sold for the price on your screen. Pick up the phone and call americas gold authority, u. S. Money reserve. With nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u. S. 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Welcome back only 4 out of 30 stocks were higher today on the dow. We closed right near the lows of the session, down 343 points or down 1. 3 . Meanwhile, no sectors of 11 were higher on the s p, which also closed down a little over 1 today. Time for a cnbc news update. Sue herrera has got it for us. Hi, sue. Hello, wilf heres whats happening at this hour, everyone at a press conference in kiev, ukrainian president Volodymyr Zelensky says he has never spoke or met to rudy giuliani. Former new york congressman Chris Collins leaving a new york city courthouse after pleading guilty to conspiracy and making false statements in an Insider Trading case he faces up to ten years in prison and up to 500,000 in fines. Sentencing is set for january 17th virginia and new jersey reporting their first deaths by vaping, bringing the death toll to 16 in 13 states overall, the cdc reporting 805 vaping cases and illnesses in 46 states and a federal judge ruling that harvards undergraduate Admissions Program is constitutional he rejected a challenge accusing the school of discrimination against Asian American applicants they claimed they were being held to a higher standard than students of other races. You are up to date. Thats the news update this hour guys, ill send it back downtown to you, morgan sue herrera, thank you. Ism data coming in at its worst read since june 2009 this morning, sending markets tumbling on renewed recession fears. Here to discuss is jim paulison, and lakshmanan that is number certainly seemed to drive the action today. The selloff we saw, warranted i think its a bit of an overreaction, morgan it was a weak number, theres no doubt about that and even the internals were fairly weak, as well but i just think if you put this in perspective, you know, the economic surprise index has been soaring here in the United States, back from negative territory up to very strong positive levels, showing that most economic reports, a broad array across manufacturing and other areas are doing pretty well best theyve done in a long time if you look at that, we had a good report on Manufacturing Day two. The ism market number went up from the low 50s to the low 51 area actually, the first turn upward in that index, which is a good sign Industrial Production, Manufacturing Index in the United States has had a healthy increase last month and has bottomed in april this year. Manufacturing employment peaked out and came down has been rising of late chinas ism is still negative, but has been rising since april. So i think Capacity Utilization rate had a healthy gain this last month even data around manufacturing is looking a little better for me unless we get a little better job number on friday, that the market is going to come back from this bad number today lakshmanan, i presume you have a slightly more bearish take on the data yeah, but ill pick up on what jim ended with, jobs. I was on with mike a month ago, talking about our leading Employment Index hitting a tenyear low in the growth rate. And i think when you look at the survey data, the ism, the market, the trends are to the down side. And in particular, when you get into the internals, some of that employment stuff is particularly troubling. And i like the leadin that mike was doing with the charts, because it had the shaded areas in it for recessions and cycles. And when you see those moments where ism dips down and theres no recession, really, whats going on there is theres no manufacturing recession. Youre not getting manufacturing job losses and i think that is a risk here. We have to watch that. I think the market is beginning to wonder about that, as well. And even though the story goes that, well, okay, manufacturing is cycling down, but the rest of the economy, the consumer, is kind of offsetting that, all of that comes into risk with jobs growth really slowing. Its been a pretty sharp slowdown this year were at an eightyear low in nonfarms year over year payroll growth and thats going to continue, looking at the leading indicators of employment so that could kind of undercut the Consumer Spending growth, which itself is over a twoyear low in the growth rate, with the one exception of that december spike down that we had so, im not so sure its all that weve turned the corner and were off to the races and i think the market is wary of that so, jim, if you feel like this is a bit overdone, we had every sector in the s p finish the day lower, do you see buying opportunities here and if so, where i do, morgan. I would be i would be looking to, you know, move a little bit in the direction of cyclicality here, take advantage of what really got pounded today was most of the cyclical sectors, industrials, basic materials, financials, and lightening up a little bit on the defensive stocks that everyones buying to help them sleep well at night. I think that weve got full policy support from just a dramatic reduction in the longterm cost of capital across the globe, Interest Rates have just plummeted in the last year. Money supplies are up around the globe. Fiscal stimulus has been in play in many places and were now reaching about the oneyear lag where that stuff starts to really starts to kick in and were seeing that with economic surprise indexes turning up around the globe. And i think its going to work its not surprising to me that manufacturing is still weak. Thats an old story. Weve known all year the other thing about it i would point out is, remember, that manufacturing is really a small piece here a lot of these indicators that were gold back in the 60s and 70s and 80s, just arent that way anymore, because the new era economy, at least in Business Investment now, when we started this economy, new era accounted for 38 of the total investment. It now accounts for 54 . This is the First Recovery where new era spending in business spending is the biggest part of the dock and it might not be that we could have a manufacturing recession that just wont kill the economy. It happened in 2016 already. It could be happening again this time so i would take advantage and be net net turning a little more bullishy or riskon. Lakshmanan, very quickly, if we get more rate cuts, does that turn the economy around . Yeah, eventually. Look, cycles always turn but those long and variable lags, dont forget about them. The markets can react very quickly to them, the economy, not so much. And we think it was a mistake, we were screaming it from the rooftops are since last fall, but they hiked in september and hiked in december, and only then pivoted. And we have to deal with those earlier tightening situations. And, you know, if you can look for places where they didnt do that, right . If you look over at europe, people are scared over there, but its a little bit more constructive, because they didnt tap on the brakes so much there. Not sure its more constructive in europe, but well, yeah, look for the surprises. Were out of time, gents. Thank you so much, as always, great to see you both. Jim and lakshmanan still ahead, weworks real estate risk. Well scs e padiusthimct of weworks woes on the broader commercial Real Estate Market. 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. So chantix can help you quit slow turkey. Key. Along with support, chantix is proven to help you quit. With chantix you can keep smoking at first and ease into quitting. 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The most personal technology is technology with the power to change your life. Weworks struggles to go public, dominating headlines of late, but what could that mean for the broader commercial Real Estate Market . Robert frank is here with more on the story hi, robert reporter hey, wilf wework leases 7 million square feet of office space here in manhattan, by far the largest anywhere in the world. And this building behind me Near Union Square highlights the risk to the Broader Market. Now, it is partly owned by adam neumann, weworks founder, wework holds the lease, but this building is now for sale for 110 million, which will be a stretch given and neumann and his partners bought the building for 70 million. In addition to that, they have a 78 million loan on the building and this comes at a time with growing amounts of office space coming on the market here in manhattan, where until now wework was the renter at the highest prices and weve got a growing number of developers who now say that will no longer lease their buildings to wework, and those who have high exposure to wework have pulled their buildings from the market in this building, wework has the lease until 2031, so the big question is, will a buyer take that much risk for a lease that goes until 2031 and at what price . Guys, back to you . Its a key story, robert. Thank you for bringing that to us these ripple effects on real estate for more on this and on wework, lets bring in greg diedelsweg i realize your company has never actually leased to wework, right . Right but how closely are you watching this and the impact it could have on commercial office space . Wework does have about 7 million square feet. And wework has really been sort of a leader in the coworking environment. So its not just wework, its all the coworking tenants that were watching carefully to what extent has the big breaking news of the last three or four months for the stock market, ie, weworks ipo not coming good, already been priced into the Real Estate Market that the smart money across your industry kind of already knew that wework wasnt, perhaps, hitting the ball out of the ground, as people were expecting it to, with its ipo . You know, i was thinking of Peggy Noonans article, her oped in the wall street journalist, where it was entitled, Everybody Knows. And she was talking about politics, but i think the same could be say about wework. And Everybody Knows that wework is not truly a technology company. Everybody knows that theres a disconnect, really, between the longterm leases that they sign and the shortterm leases that they license out to their licensees. Because wed seen their debt prices already rise, quite significantly before this ipo was pulled so is that already priced into your market . Or do you think there is a big shock to come from weworks travails i dont think theres a big shock at all in terms of new york, you know, new york, it seems, has never been more vibrant in terms of the types of tenants that are coming to new york so were seeing a lot of technology tenants, financial tenants has always been the case, creative tenants so wework is just a small portion of this space. But you sound like you are skeptical of some of the other flex office space operators, and names like convene, no convene, industrious. They all suffer from the same issue. The durational inconsistency between the longterm leases and the shortterm licenses. So thats really everywhere that were seeing that. And then, you know, also, in terms of the spaces themselves, as a landlord, we really like to control whos in our tenants and the shortterm nature of these sublicenses means that you cant really control whos in your space thats really a concern. I can see why as an owner, you would be hesitant to participate in this market but has that type of activity caused mispricings out there . What actually affects other landlord who not participating in that space that would really matter for the longer term well, we are seeing cap rate differentials between those buildings that have a big exposure to wework and those that dont so, thats already been in the market so theres nothing really new there. I mean, wework is just very much in the news. You know, so thats just part of it but the real story has been the story all along. Quickly, is there too much Office Space Online here in new york city right now . No. In our buildings, were finding that weve never been as busy as we are now however, the smart landlords are really learning from wework and creating communities in their buildings, and thats really attracting a lot of tenants. Thanks so much for joining us here today, craig. Thank you up next, violent clashes breaking out in hong kong. The big global impact, thats straight ahead welcome back to the closing bell. Lets send it over to mike santoli for his final dashboard of the day mike morgan, a highleveraged situation, its kind of a nerdy baseball term on this the first day of the baseball post season. I didnt make it easy for you today. Now i understand the theme here october baseball was the thread running through this i thought it was batman subtitles, playing in the shadows. Could be its a rorschach test, you know thats the good part about it. But take a look, this chart showing Investment Grade Corporate Bond issuance, it has been a bonanza Companies Taking advantage of very, very low rates, huge demand for corporate debt. This is a breakdown that the bank of America Merrill lynch folks put together in blue, it is the volume of issuance, of investmentgrade corporate debt thats been used to refinance existing debt in other words, lock in lower rates on new debt. And then down here, this is for stock buybacks and m a so those are somewhat more risky, if shareholder friendlytype activities what this suggests is that the corporate issuance boom is not companies trying to lever up and squeeze more returns out, its essentially saying, were just going to take advantage of what the market is trying to give us here in terms of low rates it creates a accusation for Corporate Cash flows on the whole going ahead, and probably means that we kind of refreshed Balance Sheets poet to strain them more. Mike, thank you so much for that still ahead here on closing bell, tensions rising in Hong Kong National day demonstrations turning violent earlier today. Well bring you the latest when we return. Make fitness routine with pure protein. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. Find our coupons in sundays paper. That could allow hackers devices into your home. Ys and like all doors, theyre safer when locked. Thats why you need xfinity xfi. With the xfi gateway, devices connected to your homes wifi are protected. Which helps keep people outside from accessing your passwords, credit cards and cameras. And people inside from accidentally visiting sites that arent secure. And if someone trys well let you know. Xfi advanced security. If its connected, its protected. Call, click, or visit a store today. Welcome back violent clashes breaking out in hong kong on the 70th anniversary of the peoples republic of china. For more developments lets bring in olivia emos thank you for joining us gauge for us exactly how much of the violence has picked up over the 70th anniversary celebrations relative to the peak over the summer months. Well, last night marked the most violent evening of protests we, of course, saw an 18yearold student allegedly shot by a Hong Kong Security force operations policeman and you know, this was the first shot that has taken place. This came in the midst of immense violence from both protesters as well as Security Forces where you saw protesters actually in some cases throwing pechlt tro bombs into the metro stations you saw a number of activities you would say are generally violent. And i think this is which many in the International Community are calling for an independent investigation into the conduct of the Hong Kong Security forces but also in general calling for peaceful protests. These protests have been by and large peaceful this marks an abrogation from the norm appear there is hopefully going to be a return to the more peace of the beginnings which have traditionally marked the protests olivia, whats it going to take for the protests to come an end . What do protesters actually want now . And how will this play out so of course the protests originally started in response to an extradition bill which would have enabled any individual for any reason at beijings request to be kprated to china that posed an existential threat to freedom in hong kong was a great reason for people to take to the streets but as protests continued really we saw demands pro liver eighting so there is been a call of course for carrie lam, the chief executive in hong kong to resign, also an independent investigation into into the police brulgtsty i think that these are the types of calls that are now, you know, central and a focus. But i think at the end of the day there is a real need for the protesters to go back to the drawing board and to make smur they have legitimate reasons for taking to the streets. The central claim they want to defend freedom and liberty there needs to be the primary motivating factor. Olivia, this is one we continue to watch close i. Thank you for put going in context for us up next a few things every investor needs to tcwah heading into a new trading day when closing bell comes back. 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. Whai tell clients, etfs can follow an index, but which ones target your goals . Its not about quantity. Its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. 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. You mighyour joints. Ng for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Welcome back to check out shares of stitch fix, volatile after earnings this hour etf top estimates. Revenues in klein. Active clients come in at 3. 2 million. The stock downhill are down double digits as you you can see now just 1. 5 . And this friday on mad money cramer sits down with stitch fix ceo katrina lake its one to watch for sure. Looking ahead to tomorrow, though, bed bath and beyond set to report results. And Courtney Reagan has a preview what to expect. Hi, morgan. Investors are likely to look past earnings focusing on strategy updates we had bush things a new ceo will be named. After activist pressure betted bath and beyond changed the board ant ceo stepped down happening earlier this year. Since the retailer undergoing measure as cost conduction cutting bab inventory and core assets and more as it looks to regain lost market share while thats some quick fixes others taking a while to take hold the shorts have grown in the name to 52 from 47 of float last quarter back to you. Thank you very much. Leaves with us a couple minutes. Mike to chat about the market day to day as we have skted all sector lower. Selling over 1 for major indices. Apple and netflix stood out higher. A bit of return toward the secular Growth Stocks that had come in a bit in august and september. Obviously thats a little bit of a reflection rotation move because theyre not affected by the downgrading of the expectation of manufacturing obviously a bit of a gut check for the s p at this point. We did buckle below where the market had held in all of september. But that being said, it didnt seem like it was a really run for the hills move bond yields even though down on the day and longterm end didnt go anywhere near the lows of august i think you have to consider it a oneday adjustment and see where it carries from here. Biggest thing to to watch as the rest of the week unfolds obviously the jobs report friday you do not want a narrative developing thats spraus that says the economy has reached a point where it really is on a slide. Down toward recession or something close to it. I still think you are give or take 2 economy. Ed gdpwise in the Third Quarter by most estimates. So the market can live with that although if we get a fed rate cut in october or des its going to be the hard way not easy way. Meaning dealing with ugly numbers in terms of macrodata again. Do we need sea rise. As the yields were rising for whatever reason and the stock market followed along until the december a. M. Report. Big intraday swings opened hire on the dow. The low of the session around 2 00 p. M down 347 the final hour or two we tried to get higher but ended chose to the lows down 343 points out of time that does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlooking new york citys times square this is fast money. Im mels aye pleep pete narjen tim seymour. Karen finerman and dan nathan. A brokerage babying down a as schwab ups the ante in the price wars who comes out on top to race to consent decree. We debate. Watching stitch fix bound bouncing after reporting results. The Conference Call getting under way. Well bring you highlights and later one top technician says in chart is looking so bad its good. Where he is finding big opportunity right now. But we begin with the manufacturing medo