Transcripts For CNBC Closing Bell 20151019 : vimarsana.com

CNBC Closing Bell October 19, 2015

Financial trading revenue saw a drop of 15 . Hear what the companys ceo has to say about the results with shares down almost 6 on the session today. Many of its competitors are not down today. All right. We have a brain drain at yahoo evan has been talking about, two more people, high level people, have left the technology giant. We will discuss the impact of yahoos executive exodus coming up. And ibm set to report right after the bell. The companys cfo will join us live before the Conference Call for an exclusive interview, shares down about 1 ahead of that report. Lets start with chinas economy, that has september Oil Prices Lower today, dominic chu has the story for us. So, bill, kelly, we understand right now that the china slow down effect has been anticipated for quite some time. You could argue perhaps priced into the market but still we finally got confirmation of some of the worst levels of Economic Activity that we have seen since the Global Financial crisis back in 2008, 2009. As you talk about the shanghai composite over the last year an index overall thats still up 44 . So, yes, it has slowed down and this righthand side of the chart looks pretty bad. Still on the grander scheme of things we are seeing at least a more robust chinese stock market than some other ones around the world. We are seeing signs of a slow down. If you take a look at where the ripple effects are going, you talk about the oil complex, were seeing a lot of this happen, brent crude, as well as wti, you can see here on an intraday basis down 2. 5 to 3. 5 . We are seeing weakness here. Over the longer term, the last year to date period you can see a little bit of that move over there. Year to date you can see that down trend continues, especially towards the summer months. As we take a look at some other parts, we always refer to copper, this leading perhaps indicator of global Economic Activity, copper so far intraday down 1. 5 as well. You can see here over the course of at least the past year to date and one year periods as well copper has been on a bit of slide ever since we saw what happened in the spring. So commodities, oil, the metals, base ones in particular all feeling the impacts. Kwet becomes whether or not some investors find this as a bottoming process or whether this slow down leads to more bad data on the economic front. There are those out there who say can you even trust the data coming out of chinese markets. Back over to you. Sure. Thats the overaveraging question. Dom, thank you. I read the most amazing stat in the journal today, the chinese economy in total size nearly twice as large today than six years ago. Wow. Try dealing with that one. Now to Morgan Stanleys earnings mist on the street today, Mary Thompson is covering that one for us. Quarter of disappointing Earnings Results from all the big banks, Morgan Stanleys were the most dis appointsing, missed estimates by 20 cents as profits fell 42 . Revenue miss forecast by over a billion dollars in what the firm called an unusually volatile trading environment. The firm citing three challenges including an increase in legal reserves to cover a settlement, volatility in china which designated the value of an asia focused private equity fund and weakness in fixed income commodity and currency vang. Vic tumbled. Ceo james gear man who has shrunk and restructured that business brushed off decisions more radical steps need to be taken saying there will not be a knee clerk jeks reaction to one can quarts performance. The firms Wealth Management and brokerage business posted lower revenue. Retail clients moving to the sidelines. Back to you, bill. All right. Mary thompson, thank you very much. Lets talk about all of this in our Closing Bell Exchange for this monday, joining us today jamie cox from harris financial group, kenny poll carry is with us at the new york come exchange and Rick Santelli in chicago. It could be argued that all stories eventually lead to china. The growth there has kept the fed from raising rates, caused a slow down in Global Demand for commodities, on and on and on. Do you agree . I do agree. As a matter of fact, i agree to the extent that as bad as it is in china im not confident the numbers will give us a reality. They have giving you a reality of a lower glide path. I do think eventually the numbers will get more honest with the economy but i think thats over a very long time of a lower glide path. Just consider the crb index may be a rough gauge of the commodities, it was down 2. 7 today. Thats a big move. There were only two second force slightly positive, one was soft commodities the other livestock. Yes, it was aup encompassing, the dollar index backed into that strength and held on it. Also consider everything is tied in. Global trade, Morgan Stanleys returns, the days of ge when they used to garner so much of the revenue from finance, they divested from that, there is a divesting in the trading back in banks. All this is tied up together and i think that the Global Economy on the way down theres a lot of denial what it means, but it means exactly the opposite of on the way up and i think its going to be a long haul and i wouldnt look for china to give great contribution to the Global Economy, but on the other hand i dont think you are going to wake up any morning and see a dis strous release of data. Jamie, on that note i saw in your notes talking about trends being the move from north to south. I assumed you were going to say with the Global Economy over the last couple of years, but youre talk being one important trend for you being the migration of people in this country from north to south. How are you playing this theme and can it stand up in the face of all these broader concerns . I think it does, kelly. I mean, what were seeing among our client base and just in trends with real estate, people are moving out of the northeast when they retire, getting some tax arbitrage, moving to the south, being able to retire more comfortably and use the money they get from real estate in the northeast and use it for travel and other things like vehicle purchases and having fun and enjoying retirement. We saw it a lot happening from new york, new jersey, but we are starting to see it in West Virginia and maryland which is sort of a an odd transition. We dont normally see that, but its happening a lot, north carolina, South Carolina, florida picking up a lot of those people from those states which are not traditionally states that people move from. I think those trends do continue and it does spell well for people who are looking to whether or buy homes in the southeast. Ive been saying for years baby boomers need to find their retirement property early on because theres going to be a land rush thats only going to pick up pace as years going on. Kenny p. , what about this market . Were coming off of three straight up weeks despite head winds of a slowing economy and mixed picture on earnings and now this story of growth coming out of china right now. The story out of china was like rick said wasnt nearly as bad as they had prepared us for. 6. 9 was better than the expectation and certainly much better than some of the calls that 6. 3 or 6. 4 which i think people would have viewed as disastro disastrous. I also think investors and traders are almost tiring of the china story, almost tiring of the fact that everyone is trying to he will it us that china is going to steer the whole Global Economy right off the edge. People are tiring of that and focusing once again back on earnings in this country and punishing certainly the stocks that dont perform well and taking advantage of the ones that do and so, therefore, you have this own internal reallocation going on in the states. Im not necessarily surprised today the market was off slightly, off 9 points on the dow or 4 points on the s p, nothing for anyone to get nervous about at all after what weve been through. A wonder, jamie, if you do cogive us examples of the Home Builders or other sectors or companies as specifically as you can that you think will be attractive in the medium term here. I think you could look at things like travel, i mean, airlines, i came to san diego last night completely full flights, airlines are paying people to bump them off flights, 800, 1,000 to come from richmond to atlanta. Take the money and drive. Thats right. Thats exactly right. Also hotels are full. I think also in our client base it seems like we buy a vacation a week, people are going on viking river cruises, ive been want to go try one myself, were seeing a lot of our folks spend money on travel, going and using and trying to do those bucket list items that theyve been wanting to do. How do you invest in viking, jamie . I dont know how to be honest with you, i think you look at the airlines, if you want to look at those people who are looking at viking river cruises. Do they wear under armour, fit bits. The viking cruisers . Oh, vikings, i bought you were saying biking. Never mind. They do very active these days. Vikings wear that stuff, too. Kenny, is there a spark you are looking for thats going to move this market one way or the other. Between this week and next week we have a slue of earnings coming out and thats going to be focus, we have macro data and housing data later this week i think the focus is going to be on earnings and what theyre saying and what the guidance is and what people are saying about china. As soon as we want to set that to the guide in the back of everyones mind they want to know what ceos and cfos think about the contribution that the asian economy is going to make. I thought you were saying under armour because you thought sand and a halfians. Our secret is out. She only listened to her questions and i only listened to my questions. Thats what that comes down to here. Rick, we have to go here. Levels in the ten years, anything substantial happen today . No. No. Were still hovering near or slightly above 2 . I think that will continue and just to put a real face on housing and get out of the denial, you know, tomorrow were looking for starts to be around 1. 14 million. In 2006 they peaked at 2. 7, basically double the level. Even though housing has improved, we all have to acknowledge that there have been setbacks, we are nowhere near overtaking in housing and especially new family formation which has the biggest contribution into the economy. Youve got to get specific. Guys, thank you very much so much this afternoon. Hang this n. There with the cubbies, rick. 50 minutes to go in this session. The dow trying to get back into positive territory, the s p down 3, the nasdaq is in the green by 8 points. Up next, a leading yahoo analyst weighs in on the continuing brain drain at that tech giant adds two more high profile executives jump ship. Ibm posting results after the bell today, we will bring you those numbers the moment they hit the street, plus t companys chief Financial Officer speaks with us include civil before getting on the Conference Call with analysts you dont want to miss it in all about an hours time. That and plus more on viking coming up. My name is mark amann. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. Welcome back. Gopro which by the way is propeller with vikings rising on news that the wearable camera maker is hiring bul mccullough, the Vice President of hbo sports to be gopros new executive producer for team sports and motor sports channels. Those channels are distributed across a number of platforms including youtube and facebook. Brain draining gentlemania hoo continues as they lose two high profile jute tiffs now. Josh lipton has the latest. Marissa meyer continues to lose top butte nants as she struggles to turn around this company. The latest jacquelyn reses leaving to join jack dorseys square. Thats according to kara swisher. She will work at Square Capital which is the companys cash advance business. Yahoo also lost its svp of Marketing Partnerships and platforms, we know there has been a steady stream of executives leaving yahoo including the chief marketing officer last month, Suntrust Bob Peck says 12 key people by his count will vr left this year, thats vers us four last year. Peck says the turn around at yahoo appears challenges and that could be accelerating these departures. Yahoo stock down more than 30 so far this year. We will find out more about how the company is performing when yahoo reports tomorrow. Yahoo declining for comment for this story. Back to you. Josh, thank you very much. So the question is will yahoo continue to bleed talent as Marissa Meyers turn around plans continue to struggle. Scott kessler joins us now. Scott, you just downgraded that stock to buy from strong buy. Why . Well, bill, when you think about yahoo, theres no question that we see a lot of value there. Were still recommending the stock as a buy, we have a 12month target price of 38, but the stock has risen 15 since the end of last month, which is just three weeks hence, and the s p 500 is up just 5 . Were heading into earnings as josh indicated and frankly we dont feel so good about the executive departures and the potential Tax Implications associated with the alibaba spinoff. We see value, but we see risk. That translates to a buy for snus scott, this particular far tour im glad you brought up alibaba might have bearing on that. I guess as executive having a lot to do with handling that spinoff. Does that say anything to you about the prospects for it here . No, not really. When you think about what most people are concerned about visavis yahoo its whether they will have to pay taxes if they spin off the alibaba stake. The irs chose not to indicate that it would not be a taxable transaction and thus we are kind of left wondering if in fact thats going to be something that will hit yahoo and its Balance Sheet and ultimately its value. You know, every time i hear another story about Marissa Meyer that questions her strategies or is critical of what shes doing at the company to try to turn things around theres a voice in me that says its only happening or mainly happening because she is a woman. What do you think . I think honestly that could contribute to some of the attention and scrutiny, but the facts are the facts and the facts are that she hasnt reignited growth at the company, she got people very excited about the new executives that she was going to attract to build a new yahoo and frankly a lot of those feeks have left as was indicated and now i think there is really kind of a broader challenge, which is why wr is yahoo going and how is the morale at the company . Big, Big Questions i think for yahoo at this point. No question there have been some missteps, the alibaba story is a valid criticism as well the way its been handled, but she has had to defend herself from day one. How many executives when they show up on the doorstep the first day have to defend themselves, even before theyve started their new strategy and she has had to do that. Yeah, i think, bill, the way that i think about it is shes just a high profile quarterback type ceo. What i mean by that is she has been a lightning rod. Initially when she joined think about all the enthusiasm and excitement, it really drove the stock higher, but it seems like thats flipped and now people are as negative perhaps as they were positive at that point. Thats kind of both a blessing and curse for being a high profile ceo at this point. Just briefly, scott, again, this alibaba spinoff one of the biggest issues for them. If they had just done this back when alibaba shares were trading much higher they could have done t paid the taxes and still come out ahead relative to where we are today. Has the market gotten too bearish now on either alibaba, on assigning a core value to yahoos business without all of that that thats extremely low and in some cases negative. When we saw the barrons cover story talking about an anticipated additional 50 drop in alibaba share that largely marked the bottom. The stock has gone from mid to high 50s to now mid 70s. We have a strong buy opinion on alibaba. If people want to get involved in alibaba we vugt them do so directly instead of perhaps looking at yahoo as the primary vehicle there. All right. Good to he so you, scott. Thank you. Front page indicator striks again. Thats Scott Kessler there on yahoo. 40 minutes left in the trading session. Wur not seeing a lot of volatility from the major averages, dow down 7, s p down 2, nasdaq up 10 points. Shareholders are waiting on any news of Corporate Governance changes at United Continental after the ceos heart attack last week. We havent oochb heard officially it was a heart attack for the company. Plus price squeezing and bribery investigation right side the latest issues to hit walmart. We will talk to two top retail analyst toss find out how these latest challenges for the number one retailer could impact Walmart Stores and stock still to come. Its more than a network. Its how you stay connected. With centurylink as your trusted technology partner, you get an industry leading Broadband Network and cloud and hosting services. Centurylink. Your link to whats next. Ive got two reasons to take thats why i take meta. M

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