Im sara eisen look at whens driving the action higher. A thaw in the trade war again. U. S. And china resuming tariff negotiations in october. Strong Economic Data helping ease some recession fears and the s p moving back above the 50day moving average. Key technical level. Tech stocks are leading the rally. Two big interviews coming up on closing bell. Box Ceo Aaron Levie and with Consumer Staples near alltime highs kimberlyclark ceo michael hsu will join us see both interviews only right here on closing bell. Joining us for the entire final hour of trade is stephanie link. Welcome back, stephanie. Thank you. So are you a buyer on this trade rally . I bought a couple things today. I added to a few positions, nothing new, nothing big, but i think the debate will continue are we going into a recession or seeing Slower Growth i have been saying i think Slower Growth mode and a lot of that because the consumer has been quite strong. I know a lot of people talking about that i spent this week at conferences. Goldman sachss Consumer Discretionary conference and barclays they had a Consumer Staples conference the consumers just fine these companies are doing quite well staples, investing over last several years and finally seeing the fruits the ones that have been investing. Certainly so. Theyre seeing good growth, mid single digit growth and innovation is paying off discretionary is Company Specific but in end markets like housing or restaurants or the clubs, all of these companies had good things to say and expect the consumer to accelerate in the sec haond halo the year i felt good today so i bought a little under armour. Oh. Talk about that. And a lot more with stephanie. She is here for a full hour as the market stands higher by 1. 5 dive binto the stories that are driving this rally lets start with you, seema. Trade seems to be the big factor in play here as officials from the u. S. And china set to hold trade talks in october sending all three major indices higher and state media reporting that the chinese may unveil stimulus for that are banks. The dow is now on track for the best twoday rally in three months and as for whats driving the dow today, not just one stock, a good basket of stocks contributing about 20 to 30 points goldman, boeing, caterpillar and 3m biggest point gainers at this hour transports on the best day since june aero space with a new record high today all 11 sectors are now positive for the week led by Consumer Discretionary you guys were just discussing retail standouts for the week gap, nordstrom, all up about 7 to 11 guys thank you dom chu looking at the sectors trading near new highs, dom. A number of them. Split more in the red versus green side of things but you can see its the financials, tech and discretionary, the cyclical sectors doing the heavy lifting. Certain sectors are lagging today but some of them did hit record intraday levels earlier this week and maybe even today, as well. Those defensive sectors still playing a huge role. As we tack about the big names, to the upside, take a look at the s p 500 and the dow, a lot of those stocks here overall are doing pretty well. Caterpillar, 3m all of them doing relatively well and then the underperformance of small cap stocks still a theme to watch very closely in terms of whens happening with the overall market, guys back over to you. Dom, thank you very much, as always optimism of a fresh round of trade talks with china sparked the rally. Eam eamon jafrs is at the white house. Reporter within the past couple of minutes we saw gm Ceo Mary Barra departing her meeting with President Trump in the oval office no indication yet what was discussed during the course of that meeting we believe that china was among the topics likely to hit on during the face to face session. Mary barra telling reporters which was a productive and valuable session as she walked out and meanwhile a story thats now on cnbc. Com focused on those Chinese Media outlets and blogs seen as a mouthpiece directly for the Chinese Government and possibly a bit of an attitude change on these china talks from some of those outlets. Global times saying theres more possibility of a break through with the new round of talk that is a blog saying its very likely of new developments in the china trade talks so thats an indication of optimism coming directly from some of those Media Outlets that are seen as speaking directly for the Chinese Government not clear whats driving the change in tone at the white house they say theyre taking a wait and see approach on those talks. Eamon, either way, it helped marks today for sure thank you for that. Joining us to talk about this is tom lee and stephanie link tom, start with you, is it time in your view that the fear levels dropped and equities rallied a bit . Yeah. I think it was really hard to keep that hysteria level in august high because i think people thought recession was around the corner and i think s p had every chance to break down huge in the month and instead we are breaking out to out of the range and approaching alltime highs and very important signal. But it doesnt mean that the volatility suspect over, does it fundamentally changed from what spooked the market in august to now . If i had to say whats changed, you know, number one, the volatility has come down if you look at the vix level or the vix term structure, they have really actually gone to preaugust levels. But i think the most important signal to us or message to us is s ps been decoupling from the rest of the world. The s ps held up really well. Its kind of telling us that the Business Cycle isnt as weak as the market believes and as stephanie mentioned, probably more indicative than a recession. Does it show you that the market reacts to macro headlines above all else Conference Season should help but i do think not only is the u. S. Leading the charge in terms of growth, i think people are more really extra worried about china and the slowdown in china, the deceleration and actually the data points from china have gotten better. The pmi services yesterday actually had a threemonth high, more stimulus overnight and didnt get a lot of press believe it or not. Auto sales are stabilizing if china can stabilize thats a good thing right . Obviously . Thats implications for Global Growth overall and perhaps no the a recession their fear. Whats stabilizing for yields, tom, is bond yields. Above 150 on the 10year how important is that correlation going to be . Heading south on yields will spook the equity market . Depends on the regime theres times people think lower yields higher stock prices and probably an environment where people want higher yields. I dont think theres a direct relationship necessarily but i think fundamentally Interest Rates are lower so mortgage costs go down. Consumer borrowing costs go down and stimulus and i think theres positives coming out of lower rates. One of the things in your notes, tom, why youre bullish long term is the cash return yield thats available, buybacks and dividends. Do you think investors would live that a higher weighting in their considerations if it was all dividend yield does dividend yield sort of shout this is cheap louder than buybacks does . Its a great question you know, dividend yields have been attractive in europe for a while and people argued that european stocks are cheaper but factor in cash return which is buyback because its real true free cash generation, u. S. Companies not only returning cash but huge cash hordes. You are not seeing that in europe i think u. S. We write about this in our note 36 of u. S. Companies in high value sectors. They contribute significant profits and value cap share and why theyre building cash. Its only like 10 of companies in europe and like similar percentage in other regions so the u. S. Actually has really companies so it matters more than dividend yoeld. Who will lead us to new highs in your bullish forecast because it is not fang netflix down for the month. I going to sound a little contrarian but i think the cyclical trade is the big trade into the end of the year because the isms turned down and people got really defensive but that downturn is telegraphed by the longterm yield curve and that same curve telling us cyclical growth is picking up stephanie mentioned other bullet points that seem bullish i think pressures could be building in the u. S. And bullish for cyclical stocks. Oil in general hasnt stephanie, do agree with that . Do you want to add to cyclical sectors . The value is definitely there. Meaning technology, financials, energy, industrials. Im overweight all of those sectors and very painful its been a defensive trade pretty much all year so i think if you can see china stabilize and get more stimulus there and see us kind of stabilize, yeah, i do i think you can see a rotation away from this very crowded sectors. I guess the question on industrials and the manufacturing exposure isnt that doing the worst than the rest of the economy, tom is it all cyclicals or Consumer Discretionary are cyclicals. Tech is cyclical you want to be overweight those but pmis are a Confidence Index f. The markets are choppy and someone says regional pmis are below 50, theyre looking at the stock market, as well. It is very influenced by contemporaneous sectors. If its a big issue, id say its a signal but i would have expected it to be worse given the plague of negative rates and the inversion of the curve and the hysteria surrounding it and it was 49. Remember, the stocks are down so much. All of the industrials are down so much. They lagged for a while. Not a lot has to go right for them to see a bounce. Cyclical duo. Tom lee, thank you very much steph is with us for the hour. Volatile day for slack that stock is sharply lower but off the worst levels of the session after issuing weaker guidance in the firstever Earnings Report last night ceo butterfield appearing earlier today saying the companys forecast based on the potential of unforeseen circumstances. Listen. When youre going to the rate that we are, you know, adjusted for the onetime stuff, 66 year on year, thats a hard thing to model. Theres a lot one big deal can make a big difference for us, one postponement makes a big difference we try to be as upfront as possible and not a dynamic where people have expectation of whatever we say is 8 or 10 higher. Meantime, another company in the ipo pipeline wework facing head winds sources telling cnbc the Real Estate Company is slashing the ipo valuation less than 25 billion after facing widespread skepticism over the Business Model. The company last valued at 47 billion in the private market. So were talking about almost half. This is clearly going to be one of the most challenging of lossmaking ipos and the time its coming out. Interesting thing to frame this as bad for the public investor coming so late, is there enough left on the table but the other angle and the same applies to uber is its nice to see the public investor is not completely duped in the same way as the last round or the last round or two of the private market has if it was 47 billion, im sure theres caveats to that. Much, much lower for this. The same for uber the last round or round before that higher than where it ipod at and good to see the Due Diligence by the Public Market is enough that the prices are coming down and the peak before this. You make a very good point and comes down to consumer and Investor Sentiment right . I mean, feeling like they want risk on, theyll deal with the companies at maybe lower valuations and not profitable. I mean, they have the growth but theyre still investing and theres a mix, a balance to that, especially on the valuation side. Wherever it was, 47 or around that, down to 25 that is a huge hair cut in the short space of time. I just wonder whether the likes of peloton, much, much smaller deal around the same time how much theyll be annoyed they didnt get it away three or six months ago the other question i have is wework is an own thing or indicative of more of a malaise around the ipo market in it is beaten up for its own Business Model and the management and other quirks of its own business. Thats why i mentioned sentiment. Investors want risk on, they participate. But we have seen what uber has done what lyft has done and thats not great for the confidence at this point. More to come including Goldman Sachs shares up more than 20 this year and rallying again today but big changes could be coming at the firm. We have the details. And two big ceo interviews ahead. Speaking with box Ceo Aaron Levie and kimberlyclark ceo michael hsu coming up. August adp well ahead of estimates, gains of 195,000 jobs august ism also topping estimates with a read of 56. 4 and factory orders did rise more than expected up 1. 4 in july. Dows up09ois. 4 pnt so servicenow put your workflows in the cloud, huh . Mmhm. Your employees must love you. Thank you. Ah, you could say that. So how are things with you guys . Great. Thank you. Thank you, sir. Lunch next week . Terrific. Say hi to the team. Will do. Call my office, i will. Sounds good. Alrighty. Servicenow. Works for you. Every curve, every innovation, every feeling. A product of mastery. Lease the 2019 es 350 for 379 a month for 36 months. Experience amazing at your lexus dealer. Doprevagen is the number oneild mempharmacistrecommendeding . Memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back and exodus of high level Goldman Sachs employees could be coming soon with as many as a dozen partners slated to leave by the end of the year. Wilfred is reporting all day on this shakeup. The first question, sara, why now . Two main reasons for that. David solomon made big top level changes a year ago now making some more to the levels just below. Second, the typical yearly cycles increased and brought forward ahead of goldmans big internal review and strategy announcement due in sort of january next year and i get the sense that meant the company and the individuals needed to say this is right for us for three 0 fiveyear view, not just, yeah, still sort of working for now. More broadly there was a sense emerging towards the end of the tenure that people were getting paid based on when the firm did well rather than based on individual profit and loss performance. And David Solomon wants to change that. He game from bear stearns and a big part of the changes hes making is to make that partner title more aspirational. What it means to be a partner at goldman. You are guaranteed a 1 million base salary. You almost always make at least a 1 million bonus on top of that most make 3 million and more in total. Some make more than that the chance to invest in internal deals and funds and increasing more internal partner meetings with access to solomon and in fact a lunch just today im told the recipe lamb, shrimp and hummus there are currently about 450 partners thats down from a peak of 500 and will tick lower from here and stay above 400 now, framed by some this story is goldman wanting to leave the classic wall street Business Model or glory days behind i think its more solomon giving the flexibility and head room to return to it and pay people what theyve deserved but pay people highly but what they deserve if they perform well themselves. My question is how different is the structure to other of the competitors . Not that different. I think that goldman used to be a classic kind of performance is everything and its lost that a bit and wants to get back there. As opposed to this signaling that David Solomon now wants to leave it i think it lost it and now moving back that way clearly none of wall street is as extreme as it used to be in that regard but the purer investment banks have more of it clearly doing more retail banking, more asset management, people in those departments will be paid more akin to the finance industry so as a total portion of Goldman Sachs paver sus 20 yores ago it is less than that but its something to get back to to make it much more like you get paid well if you perform well and not just expect it as a default. Hes done a good job at trying to diversify the company. Right . From being just like the intuitional hedge fund community, diversifying and the consumer world, as well. Credit card with apple. Credit card with apple. A few m as you will see more of that. Theres a lot to do but i think to your point other people get paid in other segments of the Company Better as they grow that business and outperform. I think that the share prices perform well off the lows that were infected by the scandal late last year. The big question will be how well received their big strategy announcement is in january they have quarters before then important and the big thing is that strategy announcement because they delayed it once if they dont deliver something to impress the market and also makes the market believe they deliver on the targets announced then theres more trouble but theyre past the lows and now the focus definitely on the january strategy announcement. We have more online. A detailed reporting on the story. Cnbc. Com. Weve got just about 37 minutes left of trade. Lets go to mike santoli for the market dashboard. Well hit this market rally from a variety of angles the big exhale is going on in the markets today. After that, going to take a look at somewhat higher metabolism that the Financial Markets are operating under. Is this a healthy stretch . We stretched out for a month in the s p 500. What are the internals telling us about that . Elastic demand in a very, very big factor in the Economic Growth but first,