An 11 rise in exports for january. Still both were higher than economists expected. Over in europe, a check on how were doing there. The dak dox down better than 1 n germany. Down about 1 across the board in political news, well, you want to look at these first . What . Treasuries. Of course. Dont want to jump past those. The tenyear it was sitting there. I didnt see it i was so excited for the political news 2. 831 is the number on the tenyear recent high was 2. 88 that happened in the midst of that payrolls report then the market turmoil. After that soft auction yesterday and the budget agreement with the raising of the spending cap, thats when you saw yields take that little bit of a jump higher should we do political news now . Lets do it the clock is once again ticking in congress. Lawmakers having until mid night tonight to pass a spending bill and avert another Government Shutdown this time theres a major bipartisan budget deal in the work democratic and Republican Leaders in the senate say they have reached a twoyear budget agreement increasing money for the military but it still needs to pass the full senate and house. President trump tweet the his support saying it ends the dangerous sequester. Nancy pelosi staging a record breaking eighthour speech yesterday in an attempt to force a vote for protection of dreamers it was the longest continuous speech in the house on record. Well get a live report from washington at the bottom of the hour how do you actually physically do that youre the only one who would know i dont have eight hours in me forget the heels i dont have eight hours or the heels. I was going heels kelly doesnt need the heels. Thats true the big news this morning, tesla reported an adjusted Fourth Quarter loss of 3. 04 a share. That beat wall street expectations but also teslas biggest quarterly loss in history. They announced plans to spend more capital in 2018 stoking westerns about profitability on the call elon musk said theyre on track to meet produ t production goals for the model s. That is 24 hours after the spacex launch. Dont you think he gets a halo effect when Something Like that goes well he does, but they keep missing production numbers spacex is doing spectacularly. He has made it a point where hes kind of brushed it aside. I dont think it matters whether they missed or not one day it might matter. But hes done an excellent job of making it it indifferent. Does it matter that much of the tesla suite have departed . So many executives gone. Does that Say Something about the production issue is there a larger message in there . Could be his cerebral content and his cerebral bandwidth sucks up the air in the room and maybe they feel like they done have a seat at the table. The cash has kept the stock where it is. I know its lower now. Its been tight on a relative basis. But going back to the bears, thats the one thing you focus on with tesla, can they do this. Can they keep this going i dont know where the cash came from, if it was debt offerings but it was much better than expected when he talks about being gaap profitable in a year or so, that is troublesome. That is the biggest issue. Why is that troublesome i dont think he can do that. The smoke an mirrors play that hes been able to hit and kind of progress with is a totally different thing than profitability. Now well hit it First Quarter next year. Now well hit it midway through next year. You are not long the stock . I have been long, long on and off. Not long currently i would not short the stock. Its susceptible to these rips up with a 22 Short Interest its just reckless to be short it he essentially gets a pass for running the two big businesses, spacex and tesla, first thing that comes to my mind is dorsey, twitter and square you said spacex is doing great im thinking twitter is doing great. But we gave them a pass in the market everybody is saying dorsey needs to choose between one or the other. Much harder on dorsey this guy needs to choose hes focused on rockets one day, building cars next because dorsey, as good as he is, is not musk. One guy, with apologies to jack dorsey who i like very much, what elon musk just did for humanity i think in the last 24 hours is a different level. Its next level. But its stilt attention we focus attention on spacex if he was knocking the numbers out of the park on on tesla, i wouldnt bring this up there would be no reason to. Because hes a genius, people give him dorseys a genius, too. He could be, but in different ways youre talking about a literal rocket scientist, when you look at somebody like this, you give him a pass saying maybe i dont understand how he can juggle all this the stock is doing fine if tesla all of a sudden cratered and lost 90 of its value, people would react differently. What do you think the chances are there are tesla loopians who feel this way, that win day te one day tesla may merge with spacex depends on if they need spacexs capital remember solarcity . That was competition at one point. Exactly you forget about the boring company, which is not so boring. Then you dont have to worry about paying for growth or the multiple at all. If youre talking about flying everything bingo tesla lower premarket today Take Two Interactive reported better than Third Quarter results. The video gamesmakers revenue missed forecasts as the Fourth Quarter sales outlook. Shares were down 5 . Take two delayed the launch of the game red dead dedemocrat shun 2 for a second time. Yelps Fourth Quarter profits fell short of estimates. They protect an operating loss as they ramp up spending on restaurant reservations and marketing analytics. Yum chinas Fourth Quarter results just edged past estimates on strong growth from its kfc restaurants, but that was offset by disappointing sales from pizza hut. Shares down about 5 joining us for a conversation about the broader markets is ed keon and ja jay jacobs ed what have you done in the last 48 hours . You dont have to reveal how many drinks you had. We get it. Tuesday morning were buyers. Tuesday morning youre a buyer. Y. At the end of the day we increased exposure on tuesday. We were overweight stocks going into this. We did add to our exposure during the course of the day on tuesday. Well skip wednesday what are you doing this morning have you made phone calls yet . We probably wont do anything we got the portfolios where we want them to be. Were willing to ride out whatever volatility we expect to occur for several more days, if not longer you say several more days, if not longer bottoming does not happen in one day. Is everybody agreeing that we just bottomed . That scares me everybody said we are bottoming i think we were down 359 when we dumped at the close yesterday. Right if this is all about a deleveraging, how long does it take to delever . Its not a fundamental issue you cant bottom that quickly if it was fundamentally a change in the market i think theres a legitimate reason to think inflation risk is higher than a few weeks ago you have to build in a certain premium because of that new risk thats already happened. Jay what are you doing . Weve been talking to clients and work on the behavioral side of the market, trying to coach people what this means its been so long since we have seen this volatility and shook up the snowglobe like we saw on friday and monday. This is where people need to think about is this the time to deploy cash or stay pat . If you dont need the cash now, dont try to trade in this market this is an advanced market the most sophisticated traders are trying to figure out whats happening. In terms of reallocation that you did what does it look like in a 60 40 , we were about 64 , 65 stocks. Domestic . Internationally . Yeah. The last several years we have been nonu. S. , but we shifted towards the u. S. A few months ago. Now were overweight the u. S. , overweight the markets and efa what are you doing the biggest shock is the things that outperformed last year are still outperforming this year. People are saying its not a double year for f. A. N. G. I think f. A. N. G. Stocks will be doing just fine. Last year in march, financials were strong, industrials were ripping, then it kind of pivoted you have to think if theres another leg in the tax reform policy or do we start hearing about infrastructure if its infrastructure, then the industrials will have that strength what does the street think is happening on infrastructure . We started to think it was a 1 trillion deal then President Trump said maybe 1. 7. Now 1 1. 5 trillion infrastructue hypothetical deal. If you start to see wall street and d. C. Acting in connection where things are getting done now. We had the tax policy done youre starting to see budget deals get done if infrastructure gets done, thats huge tailwind i wonder what the risks of inflation and how they seeped into the market already, how that impacts the debate on infrastructure you already have a guided government over this spending agreement, then youre talking about a massive infrastructure package when youre already getting worried about what the effect of inflation will be. In my view, the most important number is productivity part of the reason why we had this inflation scare, we got a slightly negative productivity print. With all economic data, theres always special and onetime effects. Thats probably below the real trend. We thought we saw some evidence of productivity coming up a bit. Infrastructure will help that. Things pulled together and will help that. If we do get stronger productivity growth, get closer to the post second half of the 90s level, then you can get strong growth, strong wage growth, not have inflation and a bull market can continue if we continue to have slow productivity growth, that means the Economy Speed limit is probably less than 2 . So stronger growth will end up generating inflation and ending this bull market what happens if the tenyear goes above 3 does that force a new low to be found . Yesterday afternoon we said the budget deal, soft auction, yields kicked up, the markets gave everything back as yields rise it puts pressures on the valuation of the market going back to infrastructure, we have an Infrastructure Development etf. Is that p. A. V. E. . Yes a lot of flows have come into that fund. What is in that . Infrastructure development companies. Not owners and operators, but the companies that build infrastructure so caterpillar . Those types of companies. We look more domestically, caterpillar is more international. Weve seen a ton of interest in that space even if something doesnt pass in washington, local infrastructure is getting more and more even that performance there, it shows a drop off. Nothing was immune to fid ri and monday its a little bit off the bottom doesnt have huge expectations baked in now if you take the chart back to november, starting with tax reform and december, this was performing very well expectations are starting to grow in the space. Okay. Thank you. Youre hanging out im going to. I have to place to go. Market doesnt open until 9 30 you have a home here. Coming up, tesla is easing investment concerns posting a Fourth Quarter loss that beat expectations the company says it is on track to reach model 3 production goals. Well dig through the report with an analyst. Well do that next hold together. A little to the left. 1, 2, 3, push easy easy easy horn honking alright alright weve all got places to go weve all got places to go Washington Crossing the delaware turnpike . Surprising. Whats not surprising . How much money sean saved by switching to geico. Big man with a horn. Fifteen minutes could save you fifteen percent or more. You know whats not awesome . Gigspeed internet. When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Heres some stocks to watch today. Jeff immelt has been named chairman of athena hes boaalths board. They cite his digital expertise as reasons for the appointment. Swiss re is in preliminary talks with softbank with a possible minority investment softbank could buy a stake in a third of the company the deal would be worth at least 10 billion. Softbank plans to offer swiss res Insurance Products to other companies it has already invested in. Do you have a take on this, andrew this is a weird one. I understand softbank has a lot of capital theyre investing, but swiss re insurance . Softbank bought into fortress so theyre getting into financials the whole idea i think theres a view between the Fortress Investment and this investment that this is not about just investing in Technology Companies but almost having their own Financial Services operation to potenti potentially fund, advise and do these transactions for themselves . For themselves. They also own wework, a Real Estate Company theyre going into other places. Theyre doing the buffett thing. A little bit. Costco said january sales rose 6 . The analysts saw an increase of 4. 9 samestore sales were up 3. 6 . Tesla reporting a smaller than expected loss for the Fourth Quarter that comes one day after another elon musk company, spacex, scored a launch of the worlds most powerful rocket with musks personal tesla on the board. On the earnings call, musk tried to put the headaches with the model three into context if we can send a roadster to the asteroid belt, we can probably solve model 3 production its just a matter of time joining us snow colin rush from oppenheimer good to see you. Is it just a matter of time . The complication is robust. If they can solve the problem of getting the roadster to the asteroid belt, they can probably do the same with timing, but theyre not. They dont know what the issues are at this point in terms of automation and solving that. They talked about having some of these machines in germany and getting those things on a boat and implemented. Were not looking until q3 i heard that theyre hedging some production timelines. Were not totally surprised by that we expect them to have ongoing problems theres two issues with the stock. One is what theyre setting up with the street in terms of what theyll do but that the not new. The real issue is what theyre doing relative to other automakers other automakers are making steps towards Autonomous Vehicles but not walking quickly. The question is how fast does tesla execute on this. How do you model the stock when it sounds like you dont trust the numbers . We take a conservative view we had about 1,000 model 3s in the 2017 estimates they did better than we expected we took down numbers on 2018 model 3s at 40,000, and i think ma may go lower so were cautious same thing with gross margins. They have some wood to chop there in terms of Cost Reduction and getting back to where they can support 25 gross margins. Did i mischaracterize that in any way . Do you trust the numbers do you trust musk to deliver what he says he will no, not in terms of fact. We discount what he says substantially. So he says he needs time. You effectively say he needs time where is he are there other automakers you look at and you think theyll catch up to where they are now 2019 is the year where we see cars compete with model three and the snx out in the market. Its been curious to us to see auto makers move so slowly in terms of doing that. They can make cars effectively but they havent the question is are they cannibalizing their own vehicles with these new cars. My question might have been wrong and your answer heres the second piece of this do you think that the buyers of teslas are looking for evs thats the market . Thats the proper definition i once had a conversation with elon, we were talking about climate change, batteries. He was saying im not sure that 90 of the people buying teslas are doing it for those reasons they buy it because they think its a cool car. I agree with the cool car thesis then maybe were not thinking about the market properly here evs handle well the leaf has a lot of power and goes fast and is fun to drive, even though its not a grade car relative to some of these other things the ev thesis for me the guy walking in buying the leaf is the same guy buying the tesla . No. Evs have a lot of power because of the torque. If you want a cool car, fun to drive, evs are where its going. Thats part of the thesis for automakers, but theyre cannibalizing their own market and migrating slowly the question is are they migrating fast enough to fend off the tesla products what about the gap profitabilities comment . Do you put much stock in it or leave it no. They pulled all the looefr every could on cash flow they gained about 5 500 million out of working capital had almost 1 billion the billion dollar burn was about 900 million. That was cash they gained to keep the Balance Sheet in check. We think that continues to happen they roll out capex and not why dont you have a sell on this stock you laid the thesis out for that we downgraded on the solarcity acquisition, we felt that was an irresponsible move on managements part but i think they are innovating in the automotive space. Its exciting. They have taken a challenging route with Autonomous Vehicles and are not owning um to the fact they have serious problems. Other than that, weve been bullish on the stock until the solarcity acquisition. Coming up, countdown to the sh shutdown the clock is ticking for congress to reach an agreement in washington. As we head to break, look at yesterdays s p 500 winners and losers my experience with usaa has been excellent. 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