Transcripts For CNBC Closing Bell 20240713

And we got better than expected manufacturing data here in the u. S. , but the imf did lower its Global Growth forecast joining us for the hour is steve grasso from Stuart Frankel you know, we hit these highs earlier in the session didnt hold on to it for very long what do you make of todays action we didnt hear about impeachment. We didnt hear about china trade, really. We havent heard much about a lot of things, but we did hear mostly about were earnings so the market wants to get back to something that they can look at and say, its binary. Either services it was a win, it was a beat, they got it higher or lower and were going to run with the market there. Not enough to make new highs, but were on our way there with earnings, i would guess. It is interesting to look at companies fundamentals, actually push the trade headlines aside just a bit still hopeful, perhaps but let the day be run by earnings its true everybody has been run by macro lately so twothirds of all stocks trade with the overall market. So if theres a negative headwind, the overall market is going to go down, regardless of the fundamentals on that one given company. But now we get an excuse to focus on actual earnings, so we can see what the stock market is going to go shortterm on earnings weve got a lot more to talk about. Coming up on those details but lets focus on some other big stories were watching today. Wiff meg terrell has Johnson Johnsons results. And Bertha Coombs is watching United Health. Lets start with wilf on the banks. Big day for you. Indeed, big day for the banks. Share prices improve significantly during the session, as the numerous earnings calls reassured investors despite mixed numbers this morning Net Interest Margins declined across the board due to the lower yield curve, but Net Interest Income saw a less stark decline, because loan growth did remain solid fixed income commodities supported the overall trading picture, particularly thanks to a strong September Goldman sachs profrecovered inty like the rest of the group, but the stock remains the underperformer their investing suffered from an 80 million writedown in their stake from wework, thats to 70 million from originally 150 million. And their Share Buybacks were lower than expected. Jpmorgan, on the other hand, has led the pack throughout the day. Their 8 Revenue Growth year over year really stands out compared to rivals jamie dimon was more cautious on the Corporate Outlook due to the trade war but remains very upbeat about the u. S. Consumer focus turns to bank of america tomorrow and Morgan Stanley on thursday ceo will join us exclusively here on closing bell to go through all the themes of the week and much more and earlier today, you mentioned, there are some more levers to pull, potentially there. Yeah, so, interesting how they both were lower in the premarket when they reported and both significantly higher now. And they both did face that kind of pressure, because of the yield curve. The tone, though, that came across during the call, one, importantly, was that the forecast for Net Interest Income, the part linked to the yield curve didnt really see declines its almost as if we saw the worst in their forecast for that Interest Ratesensitive part of the business, even if we get a couple of more rate cuts and theres cost cutting and Share Buybacks, all of which helps the eps growth and these stocks, steve, are incredibly cheap they are incredibly cheap but theyve been incredibly cheap. But i do agree for im looking for a shortterm pop in all of these like weve seen today. And especially when you look at a wells fargo thats been the underperformer thats when you get the beta trade. If things get a little bit better Going Forward for them. If we start to get closer to the end of their issues versus the beginning, which im sure were there already. You can start to see that one outperform but the other ones are reacting, Net Interest Income and Net Interest Margins are reacting to an inverted yield curve that weve seen recently. So youre not going to see the true benefit or the tail wind Going Forward that were seeing right now without that inversion of the yield curve the only other thing i would say on wells fargo is their revenue did in fact stay flat year over year was expected to decline slightly on the topline, with all the headlines theyve had as of late, that wasnt as bad as it could have been. And john ssclus shrewsberry will join us. Lets send it over to mike santoli for todays market dashboard. Lets pick up on the financials and finding a floor looking at the financials relative weighting in the s p 500. And cracking the ceiling take a look at the overall Market Making another run up against those old highs. Thinking about a refi. This is about companies, perhaps, being pushed to fix their Balance Sheets as a top priority and assessing a white house, the interplay, president ial approval, and the stock market finding a floor, though. Take a look at the very longterm weighting of the Financial Sector within the s p 500. This is courtesy of Wolf Research you can see, its actually kind of gone sideways for a number of years. Despite the underperformance, i would want to point out, this also includes the real estate sector, because for historical purposes, it used to be part of financials, it was separated out. Financials, per se, are a little under 13 of the s p right now and real estate is about 3. 2 . But what you see here is just a general sideways move. This is the financial crisis and right here, prefinancial crisis, it was a very financialized market i guess the big question here is, does it make sense to have financials broadly defined as one sixth of the overall market, given how the economy functions right now . If you wanted to get full mean reversion, would you have to get below . Its hard to say it seems right now, this group has kind of found a steadiness to it that perhaps has got not so much sold out, but basically, people comfortable owning them at this level. And of course, this is going to depend, guys, what the other sectors do if we get a huge nasdaq bubble, thats going to bring the waiting of financials down just by default, not because those stocks go down necessarily its so interesting, im slightly surprised it didnt get higher than 20, 22 in those final years in the runup to the crisis i think if you were looking at some of the european indices it might have been because oil was also a tremendous weighting at those days. Some of the european indices in that runup to the crisis because of the extraordinary growth despite relatively small asset bases of large asset bases from small market caps in like europe and the uk got even higher than 20 . But still, a very sharp decline, as you point out, down to about 10 . More to discuss with the banks later with mike. Now, shares of Johnson Johnson higher after reporting an earnings beat this morning a massive beat on both the top and bottom lines for j j, driven mainly by its pharma and medical device units j jcfo telling us on squawk box that it was the best quarter since 2015 the Company Raised guidance for the full year, but for earnings, the lift wasnt as big as the beat for this quarter. And the stock still trails the s p yeartodate, as j j faces a huge number of legal battles from talcs to opioids to a number of its other products litigation far from over. One other big mover today. United health. Bertha coombs is at the nasdaq with more on its earnings as it leads the dow higher, up more than 8 . One of its best days in five years. Unite ed health care results wa driven by its optimum service units, a growth of 16 Profit Growth and on the insurance side, United Health care revenues were up 5 . And the allimportant medicare membership grew more than 10 . United also boosted its fullyear outlook. Ceo David Wickman sounding pretty bullish on the companys call about its prospects for driving growth in medicare in 2020 the stock today, in fact, cutting much of its losses for the year so far. And providing a tailwind for the sector, setting a positive tone as 2020 medicare enrollment gets underway today, guys courtney thank you very much, bertha well, lets bring in laurie calvasina. Health care is leading the way when it comes to sectors weve had a lot of things to digest today from earnings to other macro head winds what are you watching today and what do you make of the upward trend from today sustainable . I think its important to remember that reporting season is always very lumpy by sectors. Weve gotten some health care today, some financials those were two pretty cheap sectors coming into this reporting season and health care in particular, we had seen that earnings revision trends had been real resilient. So we think there was room for good news to pull some of these stocks up. Its nice to see the reaction. To that extent, lori, was earnings themselves actually that good . I keep hearing two things. One, investors are ready to tune out the noise and get back to fundamentals, as you guys discussed earlier on the show. So i think just being able to focus on earnings and some decent fundamentals is something investors are just frankly really excited about right now but i also think what im hearing a lot of is better than feared so things dont necessarily have to be perfect. I think expectations were pretty low coming into this reporting season so just seeing that there are no new nasty surpriseds i think s new nasty surpriseds i think ur. Do you think were underestimating the impact that a brexit deal could have on this market ive been talking to clients, you know, i was out seeing clients all day today. Its just not coming up a lot in conversation even the political rhetoric, which was pretty, you know, domestic political rhetoric that was pretty in focus last week, that seems to have died down and i think investors are just happy they can focus on the fundamentals steve, on the china trade deal of last week, you actually think its a positive that the deal is being broken into a number of faces . Yes, so this is the first time that ive heard of three phases, right . So last week, when we were talking about the phases, right before that, the president said he was not interested in any type of a small deal or a mini deal and then it went to three phases of a deal. So that, to me, is a 180 from him, a positive for the overall market what has kept the short sellers on their heels the possibility of a deal getting done now you have to wait for three phases of a deal to get done, before you can lay into the market you mean overall, you felt china trade deal stuff was going to be a buy rumor, sell the facts. And now the ultimately, when you get a deal that is completed, three phases, one phase, whatever it is, its going to be a sell the news event, because theres nothing to stay on top of the market, to actually just if you look at it, china is going to have less growth by doing the deal, correct . Right so if china is the Growth Engine of the world, by even the principles of a trade deal, theyre giving up something. If thats giving up something and were done or that unknown is done, then i would say that you probably have a good sell the fact event on your hands when a deal gets done, but not until that deal gets done. Lori, quickly, health care has nice setups, which other sector stands out for you . I would say the one were really watching is industrials one thing i noticed about the preannouncements coming into this reporting season is they were still a little bit evaluated in industrials versus history, but werent as bad as they were last quarter we felt like at the margin, the news, the setup might be getting a little bit better. And its another one of these sectors. Our p\e model shows its back down to financial kris lcrisis w we thought all the bad stuff was priced in. And there was a lot of room for upside if we got some decent news thanks for joining us still to come, cfo john sclo shrewsberry will join us and heres a check on our data tracker weve been following the slowdown in the manufacturing, but we got a rosier read from the empire state index today 4. 0 versus estimates of 0. 8. Still below levels that weve seen for the past few aryes, which is important to point out. Closing bell will be right back 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. The best combination for every fitness routine. Was in an accident. When i called usaa, it was that voice asking me, is your daughter ok . Thats where i felt relief. Were the rivera family and we plan to be with usaa for life. See how much you can save with usaa insurance. Wells fargo today higher today after beating revenue estimates. Investors looking ahead to monday when Charlie Scharf will take over as the banks new ceo. Joining us now, John Shrewsberry, also a member of the global ceo counsel a very good afternoon to you thanks for you to joining us i want to talk overall, first, about the revenue, which was essentially flat year over year, most analysts had expected it to decline slightly were you happy with that well, i would always rather have more rather than less but it is nice to beat expectations it was a complicated quarter for us we had flat revenue. Our expenses were a little bit higher we produced 4. 6 billion worth of net income. I think what investors were taking away from the report was that happiness that both loans and deposits had been growing, year over year, and quarter over quarter. We seem to be getting some of our, the last of these sales practices issues behind us, with our evaluated operating loss expense in the quarter charlie, as you mentioned, will be starting next week. I think investors are excited about that and then in interest income, we gave pretty good guidance for this year and were sticking with it. And people now are curious about what next year looks like. And we gave some relatively specific guidance for that and i think it exceeded peoples expectations, given how low rates have gone over the of the last quarter or so and thats why the stock, as you pointed out, seems to be is up a little bit today. Well, to that point, lets talk about the forecast for net income interest Going Forward, john because as you pointed to during the course of the last quarter, we saw yields get incredibly low, and even that weve had a rate cut since then, and we may well have another couple do you feel like Net Interest Margin has bottomed in terms of the foreseeable future yeah, i dont think that it quite has. Were calling for our Net Interest Income, knowing what we know today, about what implied forwards say about the shape of the curve at the front end and the long end, estimates for loan growth, estimates for deposit growths and deposit costs that our margin will probably come down a little bit further. It looks like it will probably flatten over the next couple of quarters and all in, that combination of events leads to Net Interest Income next year thats probably down low Single Digits versus 2019 which, again, was better than people might have imaged given the huge rally in rates and the fed moving in the front end. John, it looks like you had some good traction in your Consumer Loan business and it seems if other if your banking peers had similar. What does that tell you about the state of the u. S. Consumer and where they feel financially they are right now the consumer is very strong so our Mortgage Business produced about 58 billion worth of originations in the quarter about 40 of that is refinancing as people are taking advantage of lower rates, which means 60 are people purchasing homes. I think that means that they feel comfortable with their income, with their ability to service debt, and thats certainly born out by the numbers over the last ten years. The household debttoincome ratios, paymenttoincome ratios have gotten better and better. People have gotten less levered. Thats good news in autos, weve grown auto originations year over year more than 40 we had really slowed our auto originations down for a period of time. And then got back into the market in a bigger way this year and people are buying cars, both new and used and in credit card, we also had an increase of about 800 million in the quarter thats more seasonal people tend to spend more and revolve more later in the summer and during backtoschool season theres nothing particularly different about that but the performance of our Consumer Credit portfolios, the three that i mentioned and others has really never been better its very good right now, reflecting a healthy consumer. What about on the corporate side are you seeing confidence slipping because of the trade war . Yeah, well, i dont know if its because its a trade war, but im sure thats part of it but ceo confidence, as reported, has been slipping. Businesses for some period of time has been deferring capex. You know, the gdp number suggests much lower business fixed investment thats whats been missing in the late part of this recovery, in terms of business spending. And i think people are taking a little bit of a riskoff approach it hasnt yet impacted jobs. That, of course, would have an impact on the consumer, if it happened and the consumer, thats been driving the late stage of this recovery so, you know, corporate Balance Sheets are in good shape our corporate customers credit quality is very strong, but theyre defending that, i think, by being a little bit more circumspect about what they spend money son and risks that they take. And the trade rhetoric isnt helping. John, what do you think Charlie Scharf will do differently and needs to do differently on monday morning . You know, its hard to say. I think he will arrive and begin a thorough investigation of all of our businesses, how we do what we do, things that weve bem been emphasizing recently. I think hell bring a fresh perspective to the approach weve been taking in both growing our businesses and serving customers, on the regulatory as well as risk remediation front. Im not sure what to expect except that i can tell already that it will be very thorough and the conclusions that he reaches and that we all reach together will be borne out by the facts on the ground, and by this fresh perspective did the regulators imply to you that you needed a fulltime ceo and they wanted to see who that was before they considered lifting the asset cap . I dont know that theres that its that explicit. I think when the board announced after tim sloans retirement that they were appointing allen as an interim ceo and that they intended to do an external search, that that set the table for things as they transpired over the last six months i certainly think its helpful in any discussion with a regulator to be able to say affirmatively that this is our ceo and its a permanent position he is fulltime, as you say, and thats got to be a help at the margin john, thanks so much for joining us thank you thanks for having me on. See you next time well, with less than 38 minutes to go before that closing bell sounds, the dow is higher, but off the highs of the session. We are off by 264 points the s p 500 is just below that 3,000 mark, higher by 31 points. Were going to talk about the connection between facebooks Digital Currency problems and the trade war with china thats going to be in word on the street, coming up next. And the recent ipo stumbles continue to reverberate through the market well discus s. What do advisors look for in an etf . S. I 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. What do you look for when i want free access to research. Yep, td ameritrades got that. Free access to every platform. Mhm, yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. Now offering zero commissions on online trades. We charge you less so you have more to invest. Welcome back to closing bell. Its now time to get word on the street the firm citing a differentiated shopping experience, huge Addressable Market and momentum behind revenue initiatives Piper Jaffrey upgrading lowes to overweight, rising its price target to 130 a share from 113 a share. The firm saying the housing and home remodel backdrop will strengthen into the first half of next year and rbc out with a note on libra saying if u. S. Regulators dismiss libra, Chinas Central Bank Digital Currency could become the defacto global Digital Currency in emerging economies. This comes after key libra backers, mastercard, visa, and others abandoned the project pretty good writeup on the prospects of cryptocurrencies. Less clear what the stock plays are. Are you in the crypto . Im not in the crypto right now. And i think that its so look at how many people pulled out. So, you have allof the payment processors pulling out as far as regulatory issues are going to be the headwind wies were assug right . Thats the scrutiny thats put on them. What do they know that we dont know they have their finger or their ear to the ground and their finger on the pulse. So what is it that they dont know that they are trying to avoid by this connection or what is it that they do fear in terms of more regulation coming their way what about quickly on lowes, upgrade from 1. 3 to 1. 30 on the price target i do like lowes. Ive owned lennar for a while. Ive owned kb homes. I think its a nice way to play it with a home depot or a lowes home depot is the favorite name in the space its outperformed lowes by about 18 . If you want a smoother chart, its home depot. But lowes has definitely been the underperformer it has to clear above 1 18 on a technical level to be bought we have 33 minutes left to trade. Were helpfully higher weve been at or around those levels for most of this session. Coming up, well have your last chance trade steve is looking a an airline heading into united earnings that come after the close. And forget sameday delivery. How about delivery straight into your refrigerator. Well discuss that and as we head to break, heres a check on bonds. The tenyear yield ticking higher, above 1. 7 thats up 14 over the past week well be right back. This is hamish. Hes a bit more brave. Oh. Look. Welcome back weve got 28 minutes left to trade. Were higher by about 1 a bullish start to earnings season, as big banks and United Health beat forecast from the street we got better than expected manufacturing data here in the u. S. , but the imf did lower Global Growth forecasts and renewed hope that europe is closer to a brexit deal, that has also lifted sentiment. European stocks finished at the high of their session off the back of that news up over 1 and the british pound, as you can see, having another strong day after a couple of strong sessions in the last week. Its up 1. 4 , close to 128 guys, last week, speaking to a couple of currency traders, they all kind of point towards 135 being the level, if we did get a deal and it passed through parliament, the recent low says 120. So at 128, were kind of splitting the difference there its like the market priced in sort of 50 chance of a deal the mood music coming out of all of the reporters over the course of today, it seems like the eu and the uk are close to a deal it seems like brexiteers in Boris Johnsons own party are not dismissing it. So most rest now on the Northern Irish party, the dup that support Prime Minister Boris Johnson. Not a done deal yet, but optimism certainly improving significantly over the last week and you forced to make a decision and i know sitting in that seat, everything that you know, and i hear the accent. Its not from jersey so everything that you know, where do you think is it still 50 50 with you or where do you think it shades . I think we got up close to 50 , as the market is saying chances of a deal, as of a week ago, were much, much lower than that now i think it is higher but theres still a lot of things that can happen to derail it and the shortterm focus now is the eu summit that will take place thursday and friday. And then this special session of parliament on saturday, where Boris Johnson, if hes got a deal from the eu side, has to sell it and get it over the line dpl domestically a lot of hurdles still it is now time for a cnbc news update with sue herrera hello, court. Were going to have more on brexit at the end of this news update heres whats happening at this hour, everyone Rudy Giuliani is acknowledging he earned 500,000 doing work for a company run by a business associate who has been charged with federal Campaign Finance violations he says he received two payments totaling that amount, related to the work for lev parnas company, fed guarantee it is based in boca raton, florida. Rescue workers still searching a collapsed construction site for a missing worker new Orleans Hard Rock Hotel under construction collapsed on saturday, killing two workers. Our crews are back in there this morning with some equipment and dogs, still trying to locate the one individual that we have not accounted for. Obviously, were hoping for the best, but, you know, as this thing drags on, the chances for that diminish. And british bookmakers say the chance of Prime Minister Boris Johnson seeking a brexit extension from the European Union is now pegged at 75 Bookmaker William Hill estimates theyve taken about 100,000 pounds worth of brexitrelated bets in just the past couple of months we will see. Its a big week. That is the news update this hour guys, back to you, wilf. Theres some im interested in what their definition would be, though, sue. Theres some nuances in that, whether there could be a short extension, just to pass the necessary laws in order to get a deal across the line or whether the extension theyre referring to is a longer one, exactly. But either way, theres a lot of moving parts certainly is. Sue, thank you very much weve got 25 minutes left to trade. Were higher by about a percent on the major averages. Lets get over to mike for the second installment of the market dashboard. This is raising that question are me putting some cracks in the ceiling of this market look at a twoyear chart of the s p 500. Really captures this entire sideways phase really close to alltime highs lets see if we can get an arrow right here at the 3,000 level. There you see it we had two very little kind of trips above there, right there and right there. One thing that this move has going for a it, at least in the minds of a lot of investors is this line right there, which shows you that the market really didnt buckle when it was taking on all of those recession fears, a lot of geopolitical fears and other noise in august. Maybe its got a little bit behind it as well as very defensive positioning in sentiment. That is the argument right here. Although, of course, in order for this market to get escape velocity, you would think you would have to do a little bit more than reverse negative sentime sentiment. See how those earnings come through and if we get more of a corporate bull case. 3,000 key level for you, steve . 3027, thats the old high that we were taking a run at recently i would look for the overshoot levels of 3050, 3075 you have to always look at recent highs, which is 3022, but ultimately, this is about new highs. The market is not satisfied unless we make a new high or else this is all for naught and weve just been churning around the same points in the s p for quite some time. More likely than 2950 i agree with that that was a question i dont want to make a statement on that. I would agree with that thats not my fault that 2950 is a pretty tight level to the downside. Maybe i would go a little bit wider than that to look at it, for it to be more likely the 3050 market. Far enouir enough. Weve got about 23 minutes before the bell. Heres where we stand on the major averages s p 500 is better by more than a percent. The nasdaq composite is the leader of the three, up almost 1. 3 coming up next, weve got your last chance trade. 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. 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Im proud to be a part of aag, i trust em, i think you can too. Weve got less than 20 minutes left to go in todays session. Steve, what is your lastchance trade. So this is in the theme of buying a laggard, buying an underperformer, and its Spirit Airlines Ticker Symbol is sav its down 37 fact yeartodate they raised guidance on friday the stock popped a little bit. Ive been waiting to buy it. I bought it today. This is about a lessbad story Going Forward, enough to rally the stock. This is about valuation this is in the necessarily a play on the fundamentals of this company . The fundamentals, i believe, are troughing. I believe youre going to be doing a little bit better Going Forward. But i also believe that the Airline Industry has a weight put on it that the laggards, once that weight is removed, the laggards should rise a lot more than the Overall Group thats why im picking the worst performer in the group so united that reports after the close today, well have those numbers live, if they beat or miss, does that make any difference to spirit no, i think that wherever you see any company report, youre going to see this stock move on it so i was waiting for it for the last couple of days to buy Something Like this. I bought ulta on the dip, sold it out, up 20 bought roku on the dip, sold it up 18 i missed this last pop in the roku im trying to do the same thing with Spirit Airlines i couldnt wait any longer i bought it today. And you have the chance to buy it too, actually better than i bought it today. Spirit up 1. 3 . Steve, thanks so much for joining us today and a reminder, United Airlines due after the close. Weve got 18 minutes left to trade. Heres where we stand. Were up just over 1 for all of the major averages, as we stand near the session highs and have been there for most of the session. This is the last commercial were going to take before the close. When we come back, well have uninterrupted coverage of the final minutes of the trading session. Well take you inside the market zone here on closing bell. You should be mad at airports. Excuse me, where is gate 87 . You should be mad at nonseasoned travelers. And they took my toothpaste away. And you should be mad at people who take unnecessary risks. How dare you, hes my emotional support snake. But youre not mad, because you have e trade, whose tech helps you understand the risk and reward potential on an options trade its a paste. Its not liquid or a gel. And even explore whatif scenarios. Wheres gate 87 . Dont get mad. Get e trade and start trading today. Weve got 14 minutes left in this trading day and were now in the closing bell market zone. This is commercialfree coverage of all the action going into the close. Cnbc markets commentator mike santoli is here with us to break down the crucial moments of the trading day. And weve got Barbara Duran joining us, too. Lets kick things off with the banks. Heres where we stand right now. Jpmorgan leading the pack up a healthy 3. 3 Goldman Sachs lagging the pack, as it has all day. You can really see its intraday recovery during the course of the earnings call, from that chart, citigroup, wells fargo, both trading nicely higher we spoke with the ceo of wells fargo, John Shrewsberry earlier in the show. Heres what he had to say about the consumer the consumer is very strong so our Mortgage Business produced about 58 billion worth of originations in the quarter about 40 of that is refinancing, as people are taking advantage of lower rates, which means 60 are people purchasing homes, i think that means that they feel comfortable with their income and their ability to service debt and thats certainly born out by the numbers over the last ten years. Ceo confidence, as reported, has been slipping. Businesses for some periods of time have been deferring capex you know, the gdp numbers suggest much lower business fixed investment thats whats been missing in the late part of this recovery in terms of business spending. And i think people are taking a bit of a riskoff approach comments about the commercial and commercial outlook im a little surprised at the level which these stocks rebounded. Goldman sachs, less surprised, because there were two or three specifics that they addressed that put investors at ease for others, it has been a broad sort of sentiment idea and thats been worth about a 4 to 5 intraday swing, which is pretty pronounced. Albeit, they were cheap stocks coming in. Also, point out the bond market the threemonth to tenyear spread is up, not a big deal, but it was inverted not that long ago so you had a tail wind of a strong market rally as well as pretty steady numbers that people could latch on to in terms of the specifics on Goldman Sachs, the Share Buyback for them was much lower relative to expectations compared to the other banks. And that did suppress the eps number the revenue number had been in line on the call, they did suggest that part of the reason they did that was due to ongoing discussions with the government about the one mdb scandal, which may be a hint that theyre getting closer to settling that. David solomon will join us exclusively on thursday. But i think that would be worth a huge jump in the share price if that were removed as an overhang bob, which of these banks stand out for you in terms of valuation or is the sector itself kind of too late cycle . Were learning at the earnings today of jpmorgan, best in class the stock there, you can own, but its not cheap relative to its peers. Wells fargo is interesting, obviously, the way the stock act today, investors are assuming the worst is over. Theyre reporting all the bad stuff with the new ceo coming in wells fargo, the problem weve seen a downside in this. Wells fargo is probably not a bad risk reward. A lot of the analysts wondering, whats to come. Will they have to throw the guidance out the window when he gets in there . Exactly shares of some recent ipos are under pressure as their lockup agreements expire leslie picker has more on that hi, leslie hey, take a look at shares of pinterest and zoom, trading lower today on higher than average volume their lockups, which prevent early investors from shelling until 180 days after their ipos expire today that means investor and insiders are free to sell their stock and since each company has risen substantially since their ipos, some investors were looking to crystallize their gains. Between the two companies, about 30 billion worth of stock became available for sale today. Although only a small fraction of that was actually sold. In the remainder of the year, about 140 billion will be released from ipo lockups, guys . Thank you very much, leslie you know, bashr, these are two names that have definitely performed better than some of the others that went public around the same time the selloff today, all expiration lockup expiring . Its been selling off for the last month if you saw both of these, they are great fundamental stories. These are ones with long runways of growth ahead of them. But they got overvalued in the short run. The stock, one of them doubled in this time frame and zoom three times. But the stocks now, when you look at the average price targets out there, they are still showing substantial room to go. So somewhere in here, i think theyre an interesting buy because about a month ago, lockups just dont suddenly happen people know theyre coming youve been seeing this selloff for the last month so theyre getting interactive i will say, pinterest, 40 million trades, its like ten times normal people are taking advantage of this these companies, i think its almost, perhaps, a good thing to see the stock down less than 3 . People already knew this supply was going to hit the market. They anticipated it and the stocks have declined into it more often than not, you kind of soak up that supply and it probably leaves the stock on better footing if you dont have waves coming after that. And pinterest reports earnings at the end of the month. I would be buying somewhere in here if you want to establish positions. And frankly, im going to look at them to do just that. We have eight minutes left of trade. The dow up now just under 1 roku surging today on streaming news lets get to julia boorstin. Julia . Roku shares are up over 11 today, bringing the stock yeartodate gains up about 330 todays move on the news that the appletv app is now available on Roku Streaming players as well as tvs. Theyll be able to use the roku app to watch movies previously downloaded to their appletv. Starting december 1st, roku users will be able to log into their subscription or subscribe through roku for 5 a month. Roku, presumably, earning a cut of that subscription revenue guys im surprised at this, as all of my colleagues know, im a big fan of roku, we have three of them but i thought we already knew that appletv would be fully available . I think the news today that its launching now and in 16 countries around the world roku has been an incredibly volatile stock and a stock that has really skyrocketed this year on the sense that this is a company thats going to be more of a switzerland we did know that appletv plus was going to be available on roku the fact that its launching now, and its not just going to be about accessing that subscription content, but anything you have on appletv, is whats really driving the move higher today julia, thanks very much this one had a great run pulled back a bit. Kudos to mark mahaney. Its obviously become really this sort of steroidal stock people feeling like this is a juiced way to play this sector its going to overshoot in both directions but i think the longterm story is supporting interest in it volatile in three months, but yeartodate up 332 well, General Motors Ceo Mary Barra speaking with the leaders of the United Auto Workers today. Phil lebeau has the latest on the negotiations hi, phil and the significance of this is that mary barra and the ua warks leaders, they talked in the past but today mary barra and the president of uaw, they went to the main bargaining table. Thats the latest sign that perhaps, perhaps they are close to a tentative agreement in fact, one source told me, he gets the feeling or they get the fe feeling, i should say, that theyre in the home stretch of these negotiations the union leaders, by the way, they are going to be meeting in detroit on thursday. At a minimum, theyll get an update on where the talks stand, but there is the possibility that this is when a proposed tentative agreement will be laid out for those local union leaders. And they would, obviously, decide whether or not to take that to the rank and file. By the way, as you take a look at shares of General Motors, up more than 2 today keep in mind that there are strike costs that continue to add up here. Bank of america, out with a note today saying they estimate that this strike has now cost General Motors 2 billion, as we roll into what will be the onemonth mark of this strike tomorrow it will be exactly one month tomorrow guys phil, thanks for that and whilst we have you, can we pivot you please to United Airlines what should we be looking out for in those numbers coming after the close . The estimate is for them to earn 3. 97 per share that is the estimate dont be surprised if the main focus here is going to be on cost remember what we heard last week from delta about rising costs . Thats going to be one area that analysts will be focused on when the numbers come out in about half an hour and also, of course, were always going to be asking about whats happening with the 737 max, which is off the united schedule until early next year thank you very much, phil we have less than five minutes to go. Mike has more on the market internals today. What are yes looking at . Its pretty strong, as you would expect, given what the indexes are doing. I would say pretty steady. If you look at the up down volume for new york stock exchange, it has been earlier, it was about 80 to the positive you see 2 billion shares advancing against less than 750 declining pretty firm footing. Theres a lot of give and take in there the defensive sectors selling off. They want to highlight the volatility index, as well. That has really now come back into the normal zone its below 14. So here is a yeartodate chart of the vix started off very evaluated coming off the Fourth Quarter selloff we did get that other. In early august. And now, really, its closer to the lows for the year than the high so belying octobers reputation and history as a very volatile month right now, anyway. Seems like we got a big welling up of concern and thats been draining away in the last couple of weeks barbara, do you keep much focus on the absolute levels of us breaking to new highs or not . Do you feel like thats something that would give the market extra impetus i do, i do. I find with everything thats been going on and earnings expectations coming down, all the trade uncertainty, i find it extraordinary that we are close to new alltime highs. And the volatility is so low we got the trade truce, although im sure no one thinks someones getting the bank on that i think the worst is in the market at this point mike, in terms of the volumes themselves, we were expecting more of a jump today following the semiholiday yesterday. It picked up. Although still a little bit light. I think you would say. But that has been the pattern, when the market is up, volumes tend to be light when the market sells off hard, thats when you see the heavy turnover and i think thats just the way we trade right now so its not so much like it used to be, where you have to have lots of volume to ratify whether or not a rally is real or not. Were up 244 points on the dow. Lets get over to Rick Santelli for a check in on bonds. Hey, rick. Hey, wilf big day in all Interest Rates look at a september chart of tenyear note yields right now they look to be closing at the best levels since the 19th of september, just shy of one month but maybe bunds are leading the way. Heres one week of bunds, just in five trading days, theyve jumped 20 basis points highest yield close in two 1 2 months today at 41 finally, the palm versus dollar. All the brexit news youve been talking about. Were at a fivemonth high against the greenback. Bertha, the 19th of september, best close for the options action looks to be like that today. Same day as bonds. Looks like it will be and a lot of it being fueled by chips. The chip sectors are hitting a new historic low theyre hitting back there in spite of all of the concerns about china trade. Among the best performers today, nvidia, its seen its price target moved up to 250 over at bank of america, Merrill Lynch over at 225. But it is not the highest of the day for them, despite a fiveday win streak weve got about eight other stocks that are hitting new highs in the chip sector and facebook within the f. A. A. N. G. Complex today, so far its been one of the best performers of this month, and today, it has moved out of correction, notwithstanding all of the regulatory issues that lie ahead there. Bob, over to you three narratives today, bertha good earnings from jpmorgan and the implication that the consumer is strong pb progress on brexit, and some positive comments on trade out of china so we are 1 from a new high we can make that tomorrow, but were going to need some things. Were going to need good news on the september retail sales report were going to need earnings from some of the large regional banks to be strong im talking u. S. Bancorp for example. Even decent guidance from some of the industrials that are reporting tomorrow csx, for example, and steel dynamics, good examples right now. So keep an eye on that elsewhere, schwab had very good numbers at the close thats a good sign for some of the brokers. Theres the closing bell we are off of the highs, but an excellent day. We are just shy of 3,000 on the s p 500. Remember, the closing high, 3,025 for the s p. Good afternoon welcome to the closing bell. Im wilfred frost. And im Courtney Reagan in nor sara eisen along with mike santoli. We are in the market zone. You can see the days Market Action on the right side of your screen with the stories still coming up on the tabs at the bottom of your screen. We were higher by essentially 1 for all of the major averages the dow just dipping below that level, up only 0. 9 at the close or 236 points, the high of the session, had been 333 for the dow. S p, up 1 , as you can see the nasdaq and the russell up slightly more. In terms of sectors, the best performers were Health Care Communication services and financials two of those sectors, of course, health care financials, heavily influenced by earnings, which the market has taken as strong also worth pointing out, the pound up 1. 4 . Brexit optimism also influencing the markets positivity today. Joining us to talk about the market day, we also have Barbara Duran, bd8 capital portfolio manager. And peter shackini is joining us so mike, closing off the high here is. Losing a touch of steam into that close we kind of flirted all day with that 3,000 market in the s p, which is more of a psychological thing, but relevant i would point out, at the highs on friday afternoon before we got the confirmation of what was in the trade truce, the s p was at 2992. We lost 1 over the course of two days, essentially got it back. Markets a little more comfortable with the fact that just the trade stuff is a little bit off the headlines for the moment and the bond yields rising did give clearance its constructive, but earnings season can be very much, each day is a new gain. And mike, to your point about the yield curve helping markets and helping the banks specifically, the secondbest performer of the banks at the big six was bank of america, who havent even reported yet. They report tomorrow and i think thats an aspect of the broad environment and the yield curve, not necessarily the specifics of earnings season that said, on earnings, peter, strong markets today lots of earnings out were the earnings good enough to justify that jump. Yeah, i dont think it really had very much to do with earnings markets have been trading sideways for quite some time now. And whats interesting about the reports today, when you actually parse through some of the numbers, when you look at jpmorgan, for example, and you look at things like Net Interest Margins on a much flatter to inverted yield curve, Net Interest Margins were actually lower, although Net Interest Income was up a little bit i dont think it has much to do with earnings at all in fact, if we look at earnings on the year, we can see that earnings for the first two quarters were more or less up about a percent to a percent and a half on average. For the Third Quarter, analyst estimates have been coming down very, very quickly i believe the current estimate is down about 4 , with the years earnings coming in probably at about up only 1. 6 and here at kantor, weve been saying that we thought earnings have been flat for the year. What weve gotten is multiple expansion, with the s p now trading just under 20 times earnings, which by my estimation, is quite rich. And if you look at on an enterprise valueto ebitda basis, its at about 13 times, which is close to the peak we saw around 2,000 when you think about Global Growth, we have the imf coming out, downgrading again its not totally surprising. Many people saying, look, theyre a little late to this game had a lot of positive news today, but are we still on the lookout for some further slowdowns globally and here in the United States . Where are you sitting . I thought it was interesting, the imf when they said that trade, the uncertainty, and the actions are nicking 0. 8 off Global Growth. They look for recovery next year assuming policy sports that means no more trade tariffs or things that will be ininjuries so the concern is it will spill over to the Service Sector what i heard that was very encouraging from both wells fargo and jpmorgan, the consumer is alive and well. And as long as that persists, i think the market is in good shape. And thats why i think the market acted so well today and its not about that particular earnings. Its about that broader message. Pinterest and zoom closing lower after their lockup periods expired, although be it perhaps a little less lower than we might have expected. In fact, zoom was higher Goldman Sachs also reported a financial hit from their stakes in uber and wework, which both had to be marked down. Black rocks Ceo Larry Fink appeared on cnbc earlier today and was asked what message we should take from some of the recent ipo stumbles. It said something about the private growth valuations. And i think thats the bigger issue. I this is why i believe in Public Market. The Public Markets, its harder to hide. Reality is shown every three months and this is why having that public exposure and transparency is the best outcome for all companies to continue one of the things thats so interesting peter, what do you make of the whole ipo debacles that weve had in the last sort of three to six months . And whether or not there are signs for the Public Markets yeah, i think there is a readthrough. And clearly, the unicorn effect is something that weve been watching for quite some time and i think the failure of certain ipos to price well and perform well in the private markets as well as the failures of others to come to market clearly mean that investors are a bit more discerning now than they have been in the past and yes, were seeing, you know, very high valuations in private markets. As i just pointed out, Public Market valuations arent exactly cheap anymore, either. Especially when you look at them on a risk reward basis to me whats supporting Public Market valuations is the rotation into u. S. Equities, and this hope that the u. S. Consumer can continue to sustain the u. S. Economy. Yeah, if youre some people, when we saw the slate coming into this year of likely ipos, all of these unicorns that had waited and waited, one concern was going to be that the market would get whipped up into a speculative frenzy and get overexcited about that that clearly has not happened. The other thing that could happen is the market could reject them and say, sorry, no, and that would reflect the fact that overall demand for stocks was going down and the overall market was going to come in. That also hasnt happened. You can argue that the market has essentially said, we dont want those Silicon Valley economics right now, but that has not really bled into being worried about the overall Business Environment the one thing ill raise, though layoffs at wework, layoffs at uber, if that seems to snowball or becomes a story that companies that were Venture Finance got too big, too fast, now theyre retrenching, that obviously would have echos of the posttech bubble in 99 and 2000 just on the wework, within Goldman Sachs numbers, they wrote that down from 150 million to 70 million it was more than a 50 haircut i dont know if they previously carried it on their books at that muted number. But they applied a 50 haircut or so to how theyve been carrying their small private stake in that company. It seems like theyve been such streextremes and you have beyond meat and pinterest has done very well and zoom has done very well. Lets get back to bob pisani with stocks in todays winner cycle. Just 1 from a new record high we talked a lot about jpmorgan didnt talk much about Charles Schwab they had a nice beat, moved up 5 a lot of concerns when they went to zero commissions. That stock is off a threeyear low. A good day for them. But elsewhere, we are waiting for a broader breakout in the markets. We have had a half a dozen superstars this qule s this that home depot, this has consistently been on the new high list almost every day for the last couple of months. But we need a little broader moves from some of these stocks. Nike is another superstar in the dow thats consistently hit new highs, as well did that again today microsoft, another one microsoft being one of these names. Target is another one thats consistently hit new highs what we need now is a much broader breakout than the six, seven, or eight names that have hit those 52week highs. And if we move to 23,500 and above that, i think well see another 150 new stocks down here at the nyc hit new highs today bob, thank you very much for that bob, as we look to the rest of earnings season, which sectors stand out for you . Well, the defenses have clearly been outperforming for some time. But i think theres not a lot of valuation possibilities left there. For me, looking at software, whether its microsoft, which does have a high valuation and a lot of room to go. The palo altos of the world, salesforce. Com, and the momentum stocks, the technology you have amazon, facebook, google i think it might be getting time for these stocks to move forward. Its been now about six weeks, theyve been down. Money has rotated out. And with the constructive tone of the market, could be time mouhow about some of these retail names is that a good way to play yes theres a real bifurcation, theres the lululemon, the walmarts, the costcos, nikes theres a whole bunch you can just be short, wbecause theyll be going out of business do you use these levels as a chance to take profits yes, i do think it is and the market has been range bound for quite some time. And ive been bearish of the market here for the second half of the year. And im sort of sticking to that you know, the narrative that we based that on has really held up pretty well when it comes to the fundamentals and i think this is mostly about late cycle capital flows, with the rest of the world being as weak as it is, the s p is one of the few places that investors can go for yield, with 15 or so trillion of negative yield, its that and u. S. High yield and thats whats really driving the bus here okay. Barbara, peter, well leave it there. Thank you so much for joining us, as always. Weve got an earnings alert. Its on interactive brokers. Eric chemis got the numbers for us so interactive broerkers, a miss on the top and bottom line. As we know, the real story has been whats happened in the last few weeks, down double digits after this industrywide push to zero commissions on a lot of stock and etf products in this quarterly earnings, remember, that didnt really take effect, because they announced this on september 26th at the very end of the quarter and as far as this quarter were reporting on right now is concerned, the company even mentioning a doubledigit increase in commissions revenue from the year ago quarter. And higher commissions per share in stocks. So still making money on those commissions. In that quarter. Well have to see what they talk about on the Conference Call Going Forward. Right now its a miss and the company down 1 . Back to you. Thank you very much, eric chemi. We are minutes away from Earnings Results from United Airlines were going to break the numbers and get instant analysis, thats when closing bell returns in just about 90 sengconds from now stick with us. Servicenow put our workflows in the cloud. This changes everything. Youre right sir. Everything. No not everything, i mean youre still blatantly sucking up to me gary. Brilliantly observed, sir. Always three steps ahead. Six steps ahead. Sixteen. So many steps. You done . A million steps ahead. Servicenow. Works for you. We have a news alert on mgm resorts. Contessa brewer the in las vegas with those details hi, contessa hi, there, courtney this news just breaking. The property right behind me the bellagio will be valued at 4. 2 billion in a new joint venture with black Rock Real Estate income trust thats a reit, so it will go to black rock the property that the bellagio sits on, but it will be leased back to a subsidiary of m kbrks m to operate and mgm will pay 242 million in rent it will receive a 5 equity stake in this new venture. That represents a Purchase Price multiple of 17. 3 times rent and receive cash of 4. 2 billion its one of the decisions thats come out of the board to maximize the value of the properties that mgm owns also in this release another unrelated but coming out of that Real Estate Committee piece of news that circus circus las vegas will be sold for 812 million outright to an affiliate of Treasure Island owner phil ruffin, 825 million there, about 2,300 employees working for mgm and now theyll have a new boss courtney thank you very much, contessa shares bouncing around they were higher briefly and now down by about 1. 7 on the news of some of those sales thank you, contessa. Chinese state media is optimistic on u. S. Negotiations, saying the two parties have achieved substantial progress in the latest round of talks. While phase one of trade negotiations havent been signed yet, how are businesses navigating the uncertain landscape . Joining us now is steve orleans, president of the National Committee on u. S. china relations. Great to see you again, steve. Thank you for joining us great to see you. Great to be here whats your take on the latest bit of progress we got last week . Its better than not having a deal but if this is what we had the tariffs for, its not worth it what we had were some agricultural sales that had been blocked by the tariffs, so its clearly not worth it so the question is, by the end of november when xi jinping meets with trump, are we going to see progress on what they call the structural reform if its not, its really been bad for the American Consumer, bad for American Investment confidence, and bad for farmers. If youre china, are you relieved more than happy happy with this deal is there still room to make some decisions before its put to paper . I think youre happy that the additional tariffs, which was scheduled for today, did not go into effect. That the chinese economy, as were seeing from all the data, is slowing rapidly so the tariffs kind of add insult to injury in terms of chinese economic growth. So they certainly have to be happy. But because these weve been this to point now four times this is the fifth time and weve seen it unravel four times. So if history is any lesson, we should be fairly cautious about thinking that there is going to be a full deal by the end of november also, you know, im a lawyer by training and a lot of times, you reach agreements in principle and you cant document it. So i think we have to be cautious about our ability to document this. I think the market is very react active to this and to some degree, overreactive if this setup is essentially the same as weve had for a while now, what does alter the equation is it simply a matter of looking toward the election . Are we waiting for something to break in the chinese economy it seems like it just might be a matter of status quo and gradual disengagement. I hope theres not gradual disengagement. Thats bad for the American People and the American Consumer and bad for American Business. I think fundamentally, the policies that weve adopted have been counterproductive that theyve been policies that have hurt us that the idea of a bilateral trade deficit being meaningful oh, come on its the ratio of current accounts surplus to gdp. And what weve seen in china is is a drop from 10 ten years ago to 0. 3 now. So they basically have had these reforms. What we need is intellectual Property Rights protection, which china is going to move to. We need is some structural reform, an ending of state subsidies, which you do by sitting at a table and being friendly, unfriendly i think a halfhour clip of President Trump with vice premiere lee o hough was extraordinary. He said, we now welcome chinese students, 16 billion to the u. S. Economy is actually meaningful so it really was he was trying to reset the tone if this is a permanent change, thats really a good thing for the American People and the American Business and american investors. And the market i want to switch focus a little bit and talk about hong kong to what extent is the unrest were seeing there a sign of other levels of unrest across Mainland China that is perhaps more suppressed . Is there anything comparable under the service in terms with indictment with the chinese leadership on Mainland China no, i think that the unrest in hong kong is really a reflection of the economic inequality that existed exists in hong kong. That if youre making a decent salary, you cant afford a home. Thats very frustrating if youre graduating college and looking at the future, you become very frustrated and you demonstrate, and thats whats happening. Whats kind of in china, its really completely different. Even if there was this unrest, you couldnt and protest like that. You would be cracked down entirely but the reason that the mainland is not instructing the Hong Kong Government to crack down is they realize this one country, two systems approach, which started in 1997, has actually been fairly successful and they desperately hope the Hong Kong Government can maintain order. But its not developing in a good way you know, we saw a bomb placed on the side of the road. We saw a policeman artery cut by a knife, by a violent protester. What the u. S. Media needs to focus on is the difference between the protesters who are basically peaceful, and we share their goals, and the very small minority who are violent protesters and i do not share their a sympathy for their means or for their goals, tearing down a system which has been pretty good and the real losers in this are the working class of hong kong most of iyou know, when i ran lehman brothers, i had 250 employees working in hong kong a lot are contract workers if they didnt show up to work, they didnt get paid if you have these demonstrations, which interfere with your ability to get to work, youre not getting paid, so you cant feed your family. Steve, sadly, weve got earnings on tap, so well have to leave it there. Those earnings are united lets get to phil lebeau take a look at shares of united, moving afterhours and moving higher as the company beat the street in the Third Quarter, thats ten cents better than expected. Revenue coming in at 11. 38 billion, just a little bit shy of upcomings the numbers within the numbers that people will be looking at, revenue per available seat mile, up 1. 7 . Thats within the guidance from united and keep in mind, they did take an impact or felt an impact from the reduction in flights to hong kong and to china in the Third Quarter. Because of that, their unit costs were up 2. 1 , just a little above their guidance of an increase of 1 to 2 but this is one reason why the stock is moving higher the company raising its fullyear Earnings Guidance from 10. 50 to 12 a share. That was the previous guidance now it is 11. 25 to 12. 25 a share as you take a look at a reminder that tomorrow morning, we are going to be talking exclusively with united ceo oscar munoz, keep in mind that one of the questions were going to bring up to him, whats been the impact of not having the 737 max. Guys, for the Third Straight quarter, they are not saying what that impact sis, at least i their earnings report. But you can bet well be talking to oscar munoz about that tomorrow morning on squawk box we look forward to that interview tomorrow for more reaction to the earnings right now, were joined on the phone by airlines analyst. Thanks for joining us, darryl. Your first take on these numbers . Well, i think it looks a little bit were the overall. The Third Quarter ep sat 407, is about 12 cents better than when the consensus was set up the 1. 7 unit Revenue Growth is about 20 basis points better compared to the midpoint so this is slightly better and then the 0 to 3 unit revenue expectation for the Fourth Quarter is probably a little bit better than where i think investors were expecting, as well. Generally speaking, the you know, the questions that ive been getting from my clients over the course of the last week or so would have led me to believe that people were looking for a roughly flat midpoint, so the 1 midspoipoint is a little better on the unit cost performance here, you do have a, you know, a slight upward revision in the unit cost expectation for the year at 1. 2 now this compares to the prior expectation for 0. 5 to 1. 1 sorry, 0. 5 to 1 so were about 50 basis points higher it looks like theyre experiencing some, you know, some higher cost growth in the Fourth Quarter so ill have to go through in some detail and figure out what exactly is happening there but i would imagine that some of the capacity reductions are having a little bit of, you know, of a negative, you know, an upward effect on the unit cost growth there. But overall, the Fourth Quarter, 7 to 9 , adjusted free cash margin expectation, its probably about in line with what people were expecting, coming in, with top line better and cost a little bit higher offsetting it. I would highlight also that united has tended to provide a conservative guide i think people will probably view this, you know, the updated midpoint as, you know, as perhaps, you know, the low end of what could be expected to do. Darryl, thanks very much for joining us the stock up 2 afterhours. Before we go to break, we want to make a quick clarification on the mgm story the joint venture will be with plaq blackstone, not black rock still to come, Ben Silverman will join us to discuss the streaming wars and how it breaks down between disney, apple, netflix, and many more welcome back to closing bell. Weve got a news alert on Johnson Johnson. Remember back in august, j j lost a case the oklahoma over opioids and was ordered to pay 272 million the judge in oklahoma says they made what amounts to a typo or calculation error amounting to 107 million, essentially, j j was ordered to pay 107 million over figuring out guidelines for neonatal services. And that should have been 107,000 so essentially that 572 million that j and j was ordered to pay is going to be reduced to around 465 million now, hes going to rule on the rest of the issues heard there over the total settlement over some period of time. But on that, its a win for j j. We have to call your attention to some other headlines that are cross right now from the wall street journal over the broader opioid situation they are reporting that the three major drug distributors, amerisource bergen, cardinal health, and mckesson are in talks to settle opioid litigation for 18 billion you are seeing cardinal and mckesson up there after hours. Amerisource unchanged right now. This would be ahead of the First Federal trial in the opioid cases set to start on monday where those cases are named. Well bring you anymore we get on this, guys. They are also reporting that j j may be contributing to that 18 billion potential settlement with all of the different plaintiffs in the opioid litigation thank you very much, meg. A big story and a lot of big headlines to follow. Lets send it over now to mike santoli with his third dashboard of the day thinking about a refi a lot of corporate ceos are doing if theyre listening to their investors. Take a look at this result from the global fund manager. The global takeaway from that survey that investors remain very cautiously positioned, a little bit defensive minded at the moment but this is a question thats asked very much, is what they would prefer companies do with their excess cash flow, in terms of priorities. The top answer right now is in orange, is improve Balance Sheets and thats actually made a big run in recent months, essentially, Institutional Investors wanting companies to reduce their debt outstanding, refinance in a lower rate and term out their rate. Thats a big change from earlier in this cycle. That was a big ask back in the depths of the financial crisis, understandably but what i find also interesting is return cash to shareholders is really at its lows for the cycle. Thats in blue right here. What does that mean . One thing it means, investors already feels Like Companies are already distributing enough cash to shareholders. And the other is capital investment, which is well off of its highs. So it seems as if investors are suggesting that companies maybe hunker down a little bit right now, and i guess you could interpret that in multiple different ways in terms of the market message, guys interesting readthroughs on that, thank you, mike. Coming up, well hear from a top leadership expert on how companies can avoid the top of dramas in the c suite facing wework and boeing. Woi felt completely helpless. Hed online. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Its now time for a cnbc news update with sue herrera Rudy Giuliani will not comply with the congressional subpoena against him according to a letter from his attorney obtained by nbc news it reads in part that he will not participate because they claim it appears to be an unconstitutional illegitimate impeachment inquiry. Up to a dozen accusers could testify at the Sexual Misconduct trial of cuba gooding jr. , according to the prosecutor. This as the actor pleaded not guilty to an indictment alleging two instances of Sexual Misconduct his attorney was dismseddismayee charges. We are shocked, outraged, and absolutely dumbfounded that the District Attorneys Office has wasted the taxpayers money, resources, and time. A homemade bomb exploded on an Elementary School playground in montanas capital this morning. Luckily, no one was hurt, but students were evacuated. With emergency crews sweeping the campus and nearby schools. All of those schools were locked down some scary moments that is the news update this hour guys, ill send it back downtown to you courtney thank you very much, sue. Coming up next, former nbc entertainment cochairman Ben Silverman tells us whether increasing competition could way on netflixs earnings tomorrow on thursday, dont miss an exclusive interview with david nke mon on the state of th baing industry thats thursday 3 00 p. M. Here on closing bell. For your heart. Your joints. 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. [phone ringing] how are we doing . Fabulous. I wonder how the firms doing without its fearless leader. You sure you want to leave that all behind . Yeah. Stay restless, with the icon that does the same. The new rx crafted by lexus. Lease the 2020 rx 350 all wheel drive for 439 month for 36 months. Experience amazing at your lexus dealer. Oh, wow. You two are going to have such a great trip. Thanks to you, we will. This is why voya helps reach todays goals. All while helping you to and through retirement. Can you help with these . Were more of the plan, invest and protect kind of help. Voya. Helping you to and through retirement. Well, netflix is first of the f. A. A. N. G. Names to report earnings the stock under pressure, down 23 , though, since last quarter, when the Company Reported the first u. S. Subscriber loss in eight years. And new competitors from apple, disney, and time warner launch in the coming weeks. For more, lets bring in awardwinning contact creator and content chairman and coceo, Ben Silverman. Thanks for joining us. As a content creator, i imagine you also Pay Attention to subscriber growth. You want your content to go to a large amount of eyeballs, do you not . Of course, we want the biggest reach possible for our content and all our storytelling partners are looking to create culture. So we clearly would like the biggest platforms and most successful ones possible ben, i guess, longterm, i know we discussed it before, that youre optimistic and bullish about a company like netflix, but do you think in the coming weeks and months, they will see some pressure on subscriber numbers, even if its only in the shortterm, because of the onset of various new competitors . Well, well see if people are going to zero sum game it and only choose a new one if they get rid of an old one. I think with apple and disneys pricing, an strextra 10 a mont collectively or 12 may not be the straw that breaks the camels back in terms of people making choice and cutting one service for another. I think its just the whole reintroduction of this basically new bundle, and are you going to have to cut off your old bundle to experience all of these new services, or is there going to be a way that the kind of comcast dish directv players also start serving these up to remain in the home as the primary supplier this may be netflixs last quarter without a lot of intensified competition Going Forward. Do you think its possible that netflixs best days are behind it well, as ive said before on the show, and to anyone, you know, we are looking at it with a very u. S. Centric perspective, visavis netflix or any of these streaming wars next phase of growth. And i see the International Market place, where we supply a ton of content, both primary content in local languages, and also formats of our programming or even the finished episodes. And i think they are just so ahead internationally in reaching out and creating subscriber growth and subscribers in general, but the next phase of competition, and this one hasnt even begun in the u. S. , is going to be internationally, where they have a market lead, just as they do here and i think youre going to see more and more expansion along whats happened in the u. S. Globally i mean, international certainly would be a selling point, i guess, if youre talking about from a content creator standpoint, where you want to live although disney, it would seem, also, would have that going for it its content travels around the world, as you know i guess, i wonder if netflix still has to work against the perception that all they really have is money to pay with, and therefore have to pay a premium to allow people comfort to come on to the netflix platform do you think thats the case, that they essentially have to pay more than others would well, no, because, as a supplier, i make a lot of content for them and for other players. And many times, you are not ending up in a situation where ten of the platforms want your program. Youre usually ending up at the platform thats either building a brand or has an audience deficit that its looking to fill with the content youre bringing them. So its not always that you have everyone going after the same content. Usually its only one or two buyers for a show idea at the end of the day, after you go out and pitch them all. And then theres also developing content in a bespoke way with a platform we have a show, prank encounteencounte s going on netflix with gaiten who stars in stranger things, and that show that launches around october 25th and is a scary show is perfect for netflix. It extends gatens relationship with the platform and is very targeted around halloween and this time of year, which they go after very aggressively. And so, you start to build your relationships around the right platform for the right idea at the right time and its not about, you know, the money its always about the money, but its not about whos paying more for it, as much as, where do you think it will be most successful and live the longest . Ben, thank for joining us great to see you, as always. Thank you so much, wilfred. Thank you, courtney. Up next, well look at the extraordinary coeliorratn between a president s popularity and the dows performance. Dont go anywhere. Dow is back in two 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. Lets send it over to mike santoli for his final dashboard of the day hi, mike court, assessing white house in stock market terms. Look at this very longterm chart from Ned Davis Research of the Dow Jones Industrial average placed against gallup president ial approval. Very longterm chart of the dow is always going to say it goes up almost all the time however, ned davis determines that 35 is actually the threshold when approval is bad enough to correlate with bad forward returns for the Dow Jones Industrial you see it doesnt happen all that often mid70s, nixon, late 70s, and of course, financial crisis really, the economy has to be pretty awful for it to get down there. Whats interesting, between 35 and 55 is the sweet spot thats where President Trump is right now, in the low 40s. Dropping below 35 often is caused by a bad economy. Exactly its really a chicken or the egg and its exactly the case. But until you get down there really not a lot of correlation with the market. And weve got a democratic debate coming up tonight thank you, mike. Well, up next, leadership expert simon sinek explains why hes skeptical of the roundtable statement with profits no longer their main focus first, take a look at United Airlines after a beat on earnings and raised its forecast the stock vi hheafr mongigr te hours. Were back after this. You fina, will it feel like the end of a journey . Or the beginning of something even better . When you prepare for retirement with pacific life, you can create a lifelong income. So you have the freedom to keep doing whatever is most meaningful to you. A reliable income that lets you retire, without retiring from life. Thats the power of pacific. Ask your financial professional about pacific life today. Or trips to mars. No commission. Delivery drones, or the latest phones. No commission. No matter what you trade, at fidelity youll pay no commission for online u. S. Equity trades. At fidelity youll pay no Commission Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Well, drama in the c suite over the last few weeks, weve seen Dennis Muilenburg stripped of his title, adam stripped of his title, and Companies Like juul and e bey replacing their ceos here to discuss is leadership expert and author of the infinite games, simon sinek. Simon has advised organizations like disney, american airlines, and the United Nations on leadership simon, obviously, a lot of different issues going on fundamentally with many of those companies, but is there something bigger that we should glean from all of these executive changes . Is there an issue with leadership right now 100 . Weve had a leadership crisis in this country in business for quite some many years now. And were starting to see seein showing up right now business is an infinity game there is no finish line. No such thing as winning business but if we listen to the language of too many leaders we they talk about being number one, being the best and beating competition. The problem is there is no agreed upon object he was and no agreed upon time frames. And when we lead with a finite mindset in an infinity game there is a few very consistent and predictable outcomes the decline of trust, decline of cooperation and decline of innovation and were starting to see all those things play out right now. But havent all those things always been the case of business having competitive ceos. Whats different. Having competitive ceos is not the issue. Its what driving them a lot of the standard Business Practices we consider normal have not always been the case. For example shareholder supremacy where we define the purpose of business as maximize profit within the bounds of the law was only popularized during the 80s and 90s. The use of mass layoffs on annualized basis to balance books did not exist in the United States prior to the 80s and we used to reward and pay Senior Executives and professional executives based on the performance of the company not necessarily the performance of the equity. So were starting to see in sort of focus on the finite and shortterm that ramped up and popular used in the 80s and 90s and now considered normal and we are seeing the problems. I wouldnt say mass layoffs to balance books is normal though there might be examples what you are pinpoint something came up at the business round table where they made announcement to encourage a shift towards more management for stake hoermds not just shareholders and in fact earlier today jamie dimon was discussing them chair of the which is round table at the time they made the announcement lets take a listen. I do think we try and im speaking for let oaf companies try to do a tremendous amount to help the communities because there have been people left hipped the inner city cools not failing because of banks and infrastructure is not declining because of banks he can help the infrastructure train people, work skills, get involved with education systems. All that kind of stuff that a lot of us do in detroit. We can lift up society and i think its good to lift up society. And when society does better everyone does better. Should all ceos be thinks as broad as society jp morgan is the biggest bank in the land slightly different kettle of fish but he i can understand a shift from not just shareholder foss stakeholder but commerce or employees but should managers be thinks as broad as society. Ultimately when we prioritize the wants needs of and desires of skpers and bees it does benefit society as a ripple people working in places where they like going to work are happier people they treat kids better and spouses better yes there is a Ripple Effect to society. But being purpose driveren this irked me about the business round table statement, being purpose driven doesnt mean g giving to charity its not Corporate Responsibility program. Thats not what were talking about. What were talking about is taking care of internal people before the external people im a little cynical when that statement came out op dont get me wrong its good to be purpose driveren by companies. But the people they used to sign the letter in the press release, the spoke people sort of you know you had Johnson Johnson just paid a maefts fine for involvement in the Opioid Crisis and even jamie dimons company a few years ago announced record layoffs, the exact year they had record bonuses which is an interesting correlation. I would have preferred to have seen the ceos or former ceo like jim senegal or kip tindle from kostka of, thank you be better representatives because this they have been stakeholder driven for decades its not a recent thing. So, you know, i want to know are they truly changing the way they are doing business or responding to public pressure. Quickly final question and wework, whats your take on that whether the failings of that company were really worth some blame por adam neumann or whether they was planning for the long term and had issue in the shortterm. I enjoy watching them blame each other and at the end of the day they are all to blame. The board should have been watching more closely somebody who had sort of seemed to have lost control and enjoying the trappings of success a little too much and at the end of the day newman probably also obviously deserved some responsibility there. I think everybody deserves to say raise their hand and say i think we have you had up a little bit. Simon thanks. Youre welcome. Up next the key things an investor needs to watch ahead of another big day of earnings when we return. Orlando isnt just the theme park capital of the world, it also has the highest growth in manufacturing jobs in the us. Its a competition for the talent. Employees need more than just a paycheck. You definitely want to take advantage of all the benefits you can get. 2 3 of employees said that the workplace is an important source for personal savings and protection solutions. The workplace should be a source of financial security. Keeping your people happy is what keeps your people. Thats Financial Wellness. Put your employees on a path to Financial Wellness with prudential. Each day our planet awakens but with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. Tomorrow will be another hunl day for earnings. Investors will digest more financial. Bny melon. Mnc melon. Also on top results from netflix and ibm. And ibm cfo Jim Kavanaugh will join us to break down the dow components results it skruf interview tomorrow 4 00 p. M. Eastern time but its not all about earnings wamz gets the lafayette reading on home Builder Sentiment and retail sales report. Before that investors will pay close attention to the president ial debate tonight. For more on candidate plans to tax wealth the Robert Franke joins us with the new details of the book behind the Elizabeth Warren and Bernie Sanders tax plans could include a plan for government to fake shares of private companies anded david stuckerman at the university of extra berkeley advising warren and sanders on wealth taxes is proposing a novel plan to address the problem of valuing private companies for a wealth tax if a Family Owned Company thinks the government is overvaluing the company to collect a higher tax, the family could pay the tax with shares of the company the government would then take those shares and then resell them on a new market to venture kpapist private equity or other wealthy families an estimated 20 to 35 of all wealth of the top 1 is in private companies. So its important how they handle this. No commentet the Warren Campaign whether this is an official pastor plans can you imagine the government getting into private equity what could go wrong, right. Exactly there is so many difficulties. Even if you get the sentiment right, and people do in fact by buy into it, the logistics of delivering some of the plans is incredibly trick judge. Right and the big part is how you value ill liquid assets. Addressing one of them but it is it realist sfwliek robert thanks very much for the broad range topic coming up in the debate tonight. Check back on market how we finished led by earnings and yield curve. A 1 of a record high we get macrotomorrow to mix with earnings a check on the consumer is probably something we start off about o with. Dow up 1 that does it for closing bell. Fast money begins right now. Live from the Nasdaq Market site overlook new york citys times square this is fast money process im melissa lee. Trade remembers tim seert seymour. Kaern finerman, dan niegt nathan and guy adam in and tonight steve iceman where he spots the next opportunity a earnings alert on United Airlines, a lift after results we break down the headlines and speaking of earnings the Options Market is betting big on the big move from fet netflix reporting tomorrow we will break down the action. We the race to new records stocks breaking out as banks earnings get under way jp morgan gaining 3 on strong