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tv   Closing Bell  CNBC  October 8, 2018 3:00pm-5:01pm EDT

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>> yeah, we'll find out. banksy, i think your days as the anonymous artist may be ending soon fascinating stuff. >> terrific stunt though, wasn't it >> loved it. >> thank you so much for watching "power lunch." >> clo >> "closing bell" starts right now. >> it's time for the "closing bell," i'm wilfred frost at the new york stock exchange. will spiking interest rates end. that's the key question for investors today. the tech sector getting hit hard we have a debate whether it's time to get out of growth. >> i'm sara eisen in for kelly evans. data exposed google shares are under pressure right now after reports of a security flaw in google plus we've got the details for you. plus, hurricane michael heading towards the gulf we'll tell you which oil companies could be impacted. the "closing bell" starts right now. ♪ it's the final countdown
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>> good afternoon, welcome to the "closing bell. we'll get to all of those stories in just a minute first of all, let's check in on the markets. the dow, excuse me, the dow on track to break its losing streak despite concerns over rising rates just back into positive territory in the last few moments. >> not much for the rest of the averag averages well off of sessions lows. we were on 1% decline for nasdaq the bond market is closed for the columbus day holiday the performance, traditionally interest rate sectors in the stock market is indicating tomorrow could bring some relief for the bond investors dom chu has more back at headquarters. >> sarah, wilfred, maybe not unforeseen that we could see a pull back in the interest rates given that we have come so far for so fast especially with the ten-year u.s. treasury note and the 30-year bond as well if you take a look at the market action, it's playing out as such at least with regard to interest rate sensitive sectors
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if you take a look at the higher dividend payers, things like real estate. also consumer staples and utilities, you can see here 1% at least advances for each one of those a good amount of this might be some of the optimism perhaps that interest rates are due for at least a bit of a pull back. some of these sectors get a bid when those particular interest rates start to move. also stuff to watch now, a couple of key hot spots. we have noticed as of late a very large downtrend in terms of the overall housing market one of the big etfs is the ishares dow jones u.s. home construction etf you can see down trends have been playing out for quite some time we are in the green by 1%. a good amount could be short covering or at least the idea that we do see a little bit of relief even if it's on the short front. another place to look is the semiconductor industry this the vaneck vector etf is trying to get back to positive territory.
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sarah, wilfred, one overall point to watch, we are trying to find some near term support at these levels you can see around here that happens to be around the 50 day average price for the s&p 500. also, guys, the russell 2000 small cap index trying to find some support at the 200 day or longer term moving average back over to you guys. >> dom, thanks very much for that as melissa mentioned, big interday mover around 2:00 p.m. was the banks within the s&p. >> banks higher recovering from being lower. >> didn't she have a report on the "power lunch" on the banks >> i did the other thing to take away, markets have been higher when i've been on air, 9:00, 10:00, then they fell. >> you have an hour to prove yourself on that. >> or prove myself wrong which is probably more likely. joining our "closing bell" is eugene profit, gordon chala and jack barugian.
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good afternoon to you all. gordon, if i start with the action today a yo-yo session. back towards flat at the end of the day. is that encouraging? >> well, apart from you being the catalyst for the move today, wilf, i think we can be encouraged by what we've seen today. you can't get too crazy obviously with the bond market being closed and the fact that it's thanksgiving in canada. so to your canadian viewers, happy thanksgiving that being said, the action last week was interesting the way they sold off in light of rates, in light of tariffs, volatility has gone up and i think we'll see volatility stay up here right through elections. >> another factor for why we were soft last week related to buy backs. >> well, what happens is when you have earnings the companies are prohibited from standing their ground, if you will, and buying back stocks so if you have some of these technical signals and some of
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the prof guys and quants head to the exits, there isn't much support there. friday is a big day. some of the smartest guys have said to me, you have to watch out what happens with financials on friday when the earnings start coming out that will be the barometer that we'll be looking for as we head into earnings seasons. the action this week until friday will be indicative of what we should be seeing as the trend moves forward. >> eugene profit, great name is it the raising fear of rising rates which is keeping this market jittery don't forget, we also walked in this morning with a 3% plus decline in the chinese stock market and italian bonds and stocks under some real selling pressure >> well, sara, i think today is a good example of what we're going to see over the next couple of quarters make no mistake, rising interest rates will eventually calm this market but we're in an environment in the u.s. where corporate earnings are high, low unemployment in europe the economies are a little bit weaker but the
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sentiment is really that the market is going to go higher but the fact is that we've had three interest rate increases and we expect more. it's sort of a situation where sentiment will eventually change but it won't happen today. >> jack, when you see the headlines out of china overnight over the weekend in terms of the action they're taking to keep the economy going, two questions. do you think that that shows that they're hurting a lot more from the u.s. trade tariffs than perhaps people have thought so far? and can it come back to hurt the u.s. as well if china does, indeed, slow down? >> yes and maybe let's take a hold of those yes, do i think they're feeling the pressure absolutely i think what we've been experiencing over the course of these last few sessions is a good old-fashioned chinese global margin call they have been selling everything they have been held to try to hold their yuan up the yuan has been under serious pressure with the way the
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chinese equities markets have been acting. can it hurt the u.s. i think if it spills off into a deeper and deeper tariff war, remember, tariffs are a weapon of capitalism. i would be real careful if i were china where they go with this the bottom line is this, that if the markets here were reacting a little differently in that you saw equity maurkts five or ten% lower based off of the velocity that we've seen, then i would be concerned. were a he not seeing that. this market is digesting all of that, selling all of that pressure and everything that's happening over seas very nicely. i think over the course of the next few sessions october is very scary and it's a quiet period but i think we'll be okay. >> jack, are you saying that was it the big selloff in bonds and the jump in rates, that was the drama for the year, it's not the beginning? >> i will point this out to you, sara did you notice the selling stopped when europe closed today? that's when we saw the selling stop in equities, that's when we
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saw the pressure in the bond market stop. it's coming from over satisfiea' not something that's domestic. is it a blowoff? not yet. but then again, we might be just seeing one of theserolling low and rolling panics that's taking place. quite frankly, if i were a bond owner and somebody who had to repay the tree eight capital back to beijing, i'd be a little bit worried right now. >> gordon, you mentioned earnings is it going to be a tough one to beat >> well, listen. we've done well so far to jack's point, that's why volatility is at a high. we're starting to see premium in volatility the difference between democrats and republicans carrying november elections is significant. donald trump, the republican administration will hold the chinese feet to the fire if the democrats get in there and they feel that they have to pander to some of the voters who maybe have been affected by some
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of the economic changes here, then that will send a shift in the economic environment and what's happening down here on the floor. >> we're throwing out a lot of themes here, eugene, but if we tie it altogether with the story of rising rates, give us a pick, a sector or a stock that you want to be in if we are in some sort of regime change here with interest rates >> i think what you see today is you see the financial sector hitting a bit. you probably will see health care, consumer staples and utilities doing very well. a stock that we like here in the rising rate environment is pfizer it's a health care name. obviously a lot of people know the name it has a dividend yield rate of 3 but it also has about 20 drugs coming off fda approval through 2022 and essentially the growth rate in pfizer has been growing up it went from 4% expectation this year up to 13% just in a year. we think this is a company where analysts will be increasing their price targets.
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you have some down side protection in case the interest rate increases do put some cold water on the stock market. >> thank you to all the exchange guests there oil prices hitting a four-year high last week many oil companies have sat out that rally joining us to discuss that is paul sanke from mazou host securities you look at the performance so far this year, paul. oil prices up 20 to 25%. energy stocks up 7%. why the disconnect >> what we describe as the triple effect. essentially the big issue is the so-called tesla effect the general end of the oil regime the second is as the oil price goes up, especially to the levels that we're at now and potentially beyond, it's almost as if the tesla effect could be exacerbated by the potential for higher oil prices and then finally there's the overall issue of the companies frankly not having a great reputation in
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the market for generating good returns and good returns to shareholders it's a real bad one, a triple effect that we saw really starting in 2017 this year we've just sort of bounced around the lows that we've seen, which by the way are the lows since 1998. 20 year lows -- >> when you say tesla effect, can you just explain that? >> the tesla effect is the overall concept that the 20th century was driven by oil. the 21st century will be driven by electricity there's a 30 year transition and we're somewhere probably ten years into that transition and ultimately terminal value of oil has been severely affected by the potential for us to change. >> despite that, wti did well as did brent. what's driven it in the last couple of months and can that continue for the rest of this year >> generally speaking demand has been good for oil and the demand is huge. it's $100 million barrel a day market ultimately what'salso been
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driving things which is less positive is iran the fact is when you get into a very risky oil market and the market is clearly pricing geopolitical risk here, that's not good for stocks. it's almost as if the oil price is getting out of control and will lead to a dumping of the price over the spike it's been a struggle to get people excited about oil stocks. >> $100 is obviously a flashy headline >> yeah. >> everybody is wondering if we should be talking about that number again. >> i joined mezuho in may and we immediately started talking about $120 a barrel. there's not enough supply, too much demand and the market will balance itself by encouraging supply which isn't possible because the oil is in government held, difficult places such as venezuela and iran or because the permean is pipeline con
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strained it's a question of at what price does demand start falling. we're at 80 brand. it's 100 we'll test it, 120 we know there will be a problem our argument is that's where you're headed. >> what about rates and the .s dollar, does that factor into your ultimate long-term forecast >> yeah. part of it is global manufacturing itself the way we expected that to play out is through inflation and the most efficient and global measure of releasing inflation into the market is the oil price. that's why we're arguing for 120, a very, very high price. >> what's your top stock pick? >> we like the emps given the disconnect although they still have issues with the strategy and the need to return the cash return to shareholders, we still think the disconnect between the oil price, the oil sector and the market is too wired.
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so names like eog, pxt, pioneer, oxy, occidental, we think they're likely to outperform in the next year or two years. >> monitoring a new hurricane, hurricane michael. >> yes. >> any specific companies, production facilities in the path >> it tends to be fairly marginal unless we get a monster that hits the gulf coast and affects refining it's not that out of the ordinary for them to evacuate platforms. there's a mild effect at the margin this stage i think it will be a minor effect what we watch for is category 5 hitting the refining system. >> we'll keep an eye on it thank you. we've got about 45 minutes left of trade. we've recovered significantly in the last hour to be just positive now on the s&p. the dow's up 51 points we have been down as many as 223 points earlier in trade. coming up on the "closing bell," rising rates often seen
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as bullish for the banks but there are some risks for the financials we'll discuss whether you should be buying that >> plus facebook unveiling new hardware looking to compete with amazon or google and whether facebook is too late for this. stay ahead
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who has more mortgage loan exposure as we see higher rates? is it helpful or does it
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ultimately hurt? >> sara, i'm bullish on the banking industry here's why this has been a priority for our industry and federal and state regulators over the past few years to prepare for the rising rate environment we're in. our banks have been creating a mixed portfolio of variable rates and fixed rates to prepare for the environment that we're in the fed is getting back to a normal rate environment which we were,, as you know, in a low, low environment. this will create liquidity for our banks. our customers will save more money now in an fdic bank account and have a balance in their portfolio. this will help us raise more capital for more lending because we believe the economy is strong we belief tax reform has strengthened the economy loan demand is still very high consumer confidence is high so
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by a rising rate environment we create more savings, more liquidity for banks and our banks have been prepared for this as well as ourbanking federal and state regulators for the last four years, sarah >> thamatthew, talk to us abouto the environment is approaching earnings which ones are best supported for the rising rates >> the yield curve the balance sheet positioning matters and when you step back and you look at the united states, you say pockets of the southwest and southeast are asset sensitive meaning they fare better but pockets of the northeast, particularly in the metro areas like boston and new york city where you have liability sensitive institutions, long dated assets, short dated funding, they're seeing new compression what they need is a steeper curve and for the fed to slow down and stop raising rates
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altogether for improving margins. >> wilfred, let me say this. wilfred, look, the fed needs to normalize the rate environment because a down turn will come in our economy. the economy looks strong a down turn will come. when it does, wilfred, we need the fed to have the tools in its tool kit to lower rates, to stimulate the economy then they have to be careful because they don't want to put a wet blanket on this economy. what the fed is doing is the right steps to keep the economy strong and not put cold water on it, but we need to get back to normalized rates for our country, wilfred. >> yeah, which we're on a path of doing quite significantly, more so than a lot of the other developed nations. matthew, let's dive into some of the stock picks. you mentioned geography matters,
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structure of the balance sheet matters. big banks who's set up the best? >> my bet in the northeast, sterling bancorp we expect the core margin to be sustainable as they reposition the balance sheet. they have some thrifty assets they're turning into stronger assets i expect them to do well in the margin front and profitability front. i think that stock is pretty attractive ten times the earnings we remain under weight of ny com bancorp. the spreads have been razor thin it's been a super competitive asset class so i expect to see more margin compression over the next 12 months. >> guys, we'll leave it there. alex sanchez, matthew breeze. little under 40 minutes to go here before the closing bell and we have seen a turn around for stocks from session lows
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now positive territory for the dow. >> wilfred on camera. >> the s&p and the nasdaq. >> it's not always about you. >> today it is though. >> no. correlation exists maybe not causation. >> nasdaq down half a percent coming off of a pretty weak week and the russell is positive. sparkling water brand lacroix is in hot water over a new lawsuit alleging that they're adding n synthetic -- >> it's lacroix. >> i would have read it lacroix. >> lacroix explains it on its website that it rhymes with enjoy. i would have corrected you. >> i know. so you didn't have to. instead i outed myself jane way, coming up later t.d. ameritrade's chief market strategist joins us thwi one pretty surprising name his clients were big buyers of last month. & you start to panic... don't.
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the "closing bell" we're up just slightly on the s&p as we approach the close 35 minutes to go let's have a look at some individual market movers general electric getting a boost after barclays upgraded the stock from over weight to equal weight most of the bad news has been priced in and even hardened skeptics might want to re-evaluate. it's up 3% today it follows 9% gain last week and, in fact, they didn't alter their price target which is
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still at 16 so, again, not huge up side from here. a lot of the up side coming last week did upgrade that rating. it's a pretty full note in terms of what other steps could be taken to allow them to upgrade their price target. >> you were talking to jim cramer about this. has the stock bottomed >> yeah, he seemed to think so as well. he thinks there's a lot of levers and the thing that this note says which i think jim was warming to is even though the big restructuring familiar was in june, that culp was willing to step fully away from that and start afresh. >> right. >> that's the same as what this analyst wants to see as well >> certainly he's got investors behind him check out shares of national beverage ticker symbol fizz. the sparkling water brand lacroix taking a hit saying they're adding synthetic compounds including an arrow matic oil found in cockroach
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insectici insecticide. they say they categorically deny the allegation apparently, wilfred, i did some research on this. >> okay. >> the chemicals, they are plant-based compounds. so for the company to defend itself with the all natural, there's no actual definition of what all natural is. it could say that they are all natural and they are extracted from essential oils often found in citrus peels. we don't know if this is sic synthetic or natural bottom line scientists say it's still okay to drink lacroix. i know there are tons of fans out there. >> i'm a big fan of sparkling water. >> lacroix in particular is a cult favorite. >> i'd rather go for lemonade or water. not halfway. >> i agree with you. i'm not into -- i'm not even into sparkling water. >> pelligrino or -- >> lacroix not lacroix >> it's down 1.6%.
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time now for a cnbc news update sue herera as always has it for us. >> i do. thank you very much, wilf. here's what's happening at this hour the u.s. telling the international court of justice that iran should not be allowed to recover $1.75 billion of seized assets. the u.s. supreme court in 2016 ruled those assets must be turned over to american victims of terror attacks. that is a claim that iran disputes >> this case concerns measures taken by the united states progressively over a period of years to enable victims of terrorism to hold iran accountable for acts of terrorism directed at or affecting u.s. persons speaking of the national press club, nobel peace prize co-winner nadia murad of iraq said she will commit 100% of her prize money to end sexual violence in war but she also said that money alone is not enough to stop the persecution
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her fellow people face at the hands of the islamic state group. hundreds of people paying their respects to a south carolina police officer who was shot and killed in the line of duty last week sargeant terrance car ca raway was a 30 year veteran of the force. >> thank you we'll see you next hour. stocks have been on a roller coaster ride today as they continue to digest last week's multi-year high in interest rates. >> joining us to discuss what buyers are seeing, j.j.kinnan, always great to see you. >> thank you for joining us. >> always a pleasure to be here. >> let's focus on the rate impact is there something that you think is affecting client's decision making when it comes to stocks >> yes, but not in the way you necessarily expect i look at what our clients have done last month we saw our clients be sellers of bank of america and citigroup. and it's interesting to me that
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in an environment where you see rates rising and the fed saying they're going to, there's a sense of can they continue to hold it? because investors have been burned so many times last year where they rushed in the financials saying this is the time they get their great run. up a little bit, come back we'll take wells fargo out of the picture because they have other issues but most of the financials are down slightly, up slightly >> so it's not that massive rush into the banks quite the opposite what about the overall sentiment? does it make people worse about the stock market >> no, what we're seeing is people engaging with the market. their engagement levels have picked up with things that are going on they've used any selloffs that we've had to buy things. what's interesting is over the lastfew months before septembe we saw people really starting to pick on or buy some names that weren't sort of more of the top 20 stocks that you would expect. when we get to september they're back to the apples, the amazons, actually tesla, our millennial,
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we talked about this last month, tesla sells off our millennial population still really likes it maybe -- >> just the millennials? >> across all our clients but the millennials very much the leaders in buying tesla as compared to our overall client base. >> just to be clear the data goes through end of september. >> the da it went september. anybody who made any trade stocks, options, equities, fixed income. >> it doesn't cover the move. >> it didn't cover it, but if you think about t it was telegraphed. we all knew there was a rate hike coming. it did cover the sec deal. we see whenever there's -- tesla gets around 280 or so our millennial population steps in that's what -- between 280, 260 they want to start owning tesla. that's a very interesting -- >> you mentioned apple and amazon, your clients still buy that >> our clients are still buyers of apple and amg ma zon.
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the last two years in a row, many of our clients apple would run up, they'd be sellers. what swachd is over the last couple of months any opportunities to buy apple and any type of selloff, they'd go back so i think longer term, facebook continues to be one that's back and forth with our clients. so, it's, again, very interesting to me how although people will say, oh, my god, the retail trader is getting long, it's terrible, whatever it may be, what they are doing is going to names that they know in a much better way, they're already sort of widely held rather than taking shots, if you will, on stocks. >> i mean, you've been doing this for a long time >> yes. >> i was going to ask what typically makes your investors most nervous is it rising interest rates?
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is it a trade? >> the end of last year, you know, with the tax cuts, et cetera, not knowing what policy would be, i think that does make people nervous the tariffs, we haven't seen tariffs really be a slowdown for our clients. they've been following what the masht's doing. the market hasn't shown the signs until you can say earlier today obviously some things, but overall the market hasn't slowed down significantly because of tariffs. our clients haven't either i think the most significant part is when we start the earnings season is what the ceos say. they talk about the strength of the dollar in energy prices. this quarter we'll see if tariffs get added. >> i was looking at sales in september, we haven't mentioned oil names. >> exxon and chevron 52 week high rather than be buyers, they were sellers. at the end of september we saw this crude move where it got ahead of 70.
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that 70 level has been a level where we started to see sellers come in on crude so as soon as we hit there, it's interesting. those who may not want to tried their fingers by selling an exxon or a chevron. >> is fang still loved >> fang is still very much liked, but if you see apple and amazon on our list. >> i heard you say facebook sort of wishy-washy. >> yes netflix had been on our list for quite a while. so, you know, that one is -- so you've got to remember, this reflects abnormal activity so if you see an apple and an amazon, then our hands are tied. >> we have got 25 minutes left of trade and we are just higher -- flat, in fact. no, we are higher on the s&p by a basis point.
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dow is up 17 basis points, all of those legacies doing better than an hour ago. coming up, brazil's stock market is soaring today. but the voting i'tsn over just yet and we'll tell you what it could mean for brazil's market i am an independent financial advisor. it's our name on the door. we are accountable to our clients everyday. we have the freedom to build a plan. a porfolio based specifically on their needs. we're fiduciaries, stewards of our clients' money. entrusted to do what's right. it's a mission. a guiding principle our firm lives by. charles schwab is proud to support more independent financial advisors and their clients than anyone else. visit
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we've got about 22 minutes to go. keeping an eye on the major averages s&p, dow and russell up. russell is positive, not so much right now. the nasdaq is obviously "the biggest loser. technology is the biggest weight on the s&p health care and communication services also lower. still ahead on the show, we'll have much more on the impact on rising rates in this market a including a look at which hedge funds could climb. and after the break, will facebook's new smart speaker be a success. we'll take a look and discuss whether it can compete with amazon's alexa. cnbc sector sort is sponsored by sector spdr etfs.
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bye! you can put smart to work. welcome back to the "closing bell." 18 minutes left of trade
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well off the lows. the dow is up 0.3% nasdaq remains a leg up down half of 1% >> it's the defensive groups real estate, consumer staples, utilities. all the outperformers. facebook unveiling a pair of new hardware devices today in an effort to compete with amazon and google julia boorstin has the details in los angeles hi, julia. >> reporter: sara, facebook's voice control will ship early next month they have a smart camera that followings you as you move around the room. the device is designed for video targeting it's targeting video calling. it's targeting the 400 million people who use messenger, voice, video chat monthly the tenent's screen portal costs $200 while the portal plus is a 15.6 inch screen is priced at $350 these devices are equipped with amazon's alexa voice assistant software so consumers can ask for the weather, control smart home devices as well as stream
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music from spotify, pandora, amazon, watch video from facebook watch facebook has not partnered with apple music or netflix apple dominated the smart speaker market in the first half of the year. facebook is not just a late entry to a crowded market, it's also under scrutiny for privacy practices. facebook says these devices are built with privacy and security in mind. there's a cover for the camera the ability to turn the microphone off facebook says it doesn't listen to or save calls certainly a tough time to be introducing this kind of product. guys, back over to you. >> it sort of gets into the question that we've been asking about facebook for a while but relates to this new product, and that is don't they have a trust problem? are users really going to give facebook the kind of credibility that it would need to sign up for this kind of portal camera in their living room
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>> there are a lot of hurdles for this product, sarah. not only could you already have one of these or buy one from amazon or google but remember that what they're really going after here, the sort of voice calling, is something that you could also do on your phone. there's this hurdle of convincing people that they need another device beyond just an ipad for their kitchen and living room. there's the question if you're going to buy any piece of hardware or device, do you want to be buying it from facebook or a company that makes hardware that you may have in your home a lot of hurdles here. when it comes to privacy, the timing is not great. >> julia, as you mentioned, timing not great on that side of things, but it also seems quite late either way given that alexa is well ahead, google home pod seems well ahead and this is also going to rely on amazon to power it as well. >> reporter: yes, look, i think it's probably smart for them to partner with alexa because that amazon, alexa, voice technology is so sophisticated.
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it is probably better for facebook to use that than try to build something from scratch it is an established market. there are projections that this entire market will grow dramatically look who they are up against you have amazon who controls 1/3 of the market. google controls 22% of the market it's not just like facebook is going up against some small rivals here, these are formidable opponents in this space. >> what's the opportunity here for facebook to make money i mean, is this a whole new revenue stream in terms of consumer products? is it a potential platform for advertisers? >> reporter: i think it could be all of the above, sara i think if you look at the fact that facebook does have the oculus head set, that's one move into hardware but a different move it's failed to hit the mainstream many people hoped it would even last year i think what they're really trying to do here is make sure that they own this idea of communication and video voice calling. they want to make sure that
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people don't get so hooked on all of their other devices that they don't think of messenger as a place to go for that communication. now if they have 400 million people using messenger and voice, they want to sell them a device. >> recode called it an audacious launch happening today julia boorstin. we have 13 minutes left of trade. we are up 0.3% on the dow. just higher on the s&p still lower. well off the lows. up next, brazil's stock market soaring today following the results of sunday's presidential election. the voting isn't over yet. we'll bring you up to speed what has to happen next. coming up tomorrow on "squawk alley", we have the ceo of adidas, kasper rorsted. >> what's going to be the top topic? >> arsenal. >> yes. >> they did just announce that. >> a new sponsorship deal, 300 million pounds. >> maybe if you're lucky i'll do
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three seconds on that. >> kanye west, geopolitical and arsenal. that's coming up at 11:30 a.m. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need.
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welcome back to the "closing bell." we're showing you an interday chart of the dow it's been a crazy one. we were down at one point as much as 233 points completely rebounded and now the dow's up 71 points or 1/3 of 1%. as far as who's leading the charge higher points, additions to the dow, it's home depot, travelers, walgreen, walmart a little bit of a defensive tone there. most dow stocks higher after the dow completely outperformed. >> one market that's been higher and higher all day is brazil's that's following yesterday's presidential election. seema mody is back at hq. >> that's right. a commanding lead in sunday's first round but fell short of the 50% needed to go outright. it will ultimately determine who will be the next president
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it's dealing with the worst recession on record. they have thrown their support and a chicago trained phi than cierre who is seen as the gary cohen of brazil. they think he can eradicate corruption and rein in on crime which is a big issue for the country. markets continue to push higher. brazil continues to buck the downward trend that we're seeing in emerging markets. the key issue is whether the new president, whoever it may be, will get the support from congress to push through these new policies and economic reforms. if not, this rally that we're seeing in brazil could be short lived. sarah? >> yeah, 2% new higher for the real today seema. government news alert on netflix. julia? >> sara, netflix plans to open a new u.s. production hub in
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albuquerque, new mexico. final negotiations to purchase abq studios located in albuquerque saying netflix plans to bring $1 billion worth of production and to create up to 1,000 production jobs a year this comes as netflix continues to increase its spendingon original content this will be another place where they will shoot a lot of that content and they have done some series in new mexico already netflix is trading pretty much flat back over to you. >> another billion dollars, julia. just a reminder how much this company is now spending on original content and on production >> albeit a reminder rather than an additional billion dollars. >> is that right >> this is not an increase in content spend or is it, julia? >> reporter: this is a billion dollars in production spending to new mexico over ten years this could be indicating where they will be shooting some of their shows they are getting tax benefits
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from albuquerque by shooting there. this should enable them to create a lot of content at a slightly lower cost that they're managing their production out of a couple of facilities they are investing a lot of office space in los angeles not far from where we are. this is a sign of where they will be doing their shooting. >> not quite amazon's hq2 but a big boost for albuquerque. >> i imagine most production people and actors will be paid more than $15 an hour. content is expensive julia, thank you very much. we will leave it there we have got just 5 1/2 minutes left of trade. roller coaster session we'll be summing it all up in the closing countdown after the break. brett kavanaugh's nomination to the supreme court could have an impact on business. the matters that matter most to wall street. you're watching cnbc, first in business worldwide
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introducing e*trade personalized investments professionally managed portfolios customized to help meet your financial goals. you'll know what you're invested in and how it's performing. so you can spend more time floating about on your inflatable swan. [ding] welcome back to the "closing bell." what a ride it has been. the s&p 500 interday chart, a little bit of positive we had until the open we went green a half an hour into trade then a sharp selloff negativity kind of coming in because of comments in and around china either way we lost momentum. down significantly then we
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rallied towards the end of the session. the s&p is just positive at this stage. if we look next at some of the factors that caused us to be lower earlier in this, it was very much international factors, china down sharply playing catchup. italy down sharply not playing catchup, just down in its own right. germany down 1.3%. the ftse down a percent itself once europe closed that is one of the factors that allowed us to close bob pisani, let's see how this played out the banks about an hour and a half ago that started to allow this to rally and the financials as we stand up 0.6%. staples doing well, real estate doing well, utilities doing well the banks are very defensive sectors that have propped us up. technology suffering the nasdaq is suffering because of that. >> so, again, if you take a look at what's moving here, again you get underperformance from technology again, this is the third day in a row now getting
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underperformance from technology outperformance from defensive names. a little surprising to see, for example, reets, utilities. consumer staples these can be defensive names at least short term they're outperforming. here's an unusual thing. vanguard utility, very high volume this year, today. s&p 500, value high volume we've been debating for a long time whether, if ever, value would start to outperform growth stocks growth stocks have outperformed for years. low growth environment low interest rate environment. buy anything with growth somewhat higher rate environment. somewhat higher growth environment. that's a different situation that's why tech is under performing and we're starting debate again whether value should outperform. this is a tough day to figure out because the bond market's closed you're kind of looking at only half the market. it's like looking at somebody trying to figure out what they're thinking by looking at their eyes and they have sunglasses on. if the bond market was open
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yields would be down today, not up and that would have helped the market that's kind of what the stock market seems to be implying at this point. >> bob, thank you very much. there goes the bell ringing here at the big four. we are well off the session lows pq corporation the dow is up 48 points having been down 223 at the low that does it the first half of the "closing bell. sara, back to you. and welcome to the "closing bell." i'm sara eisen here for kelly evans. wilfred frost will be joining me we finished up the day on wall street, a crazy interday reversal that led to the dow closing up about 44 points it was down as wilfred just said more than 220 points at the low. came back almost all the way in fact, all the way s&p 500 closing just around the flat line. 2884.74. the nasdaq composite by far the
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under performer. tech got hit hard. closing down .7 of a percent less of a loser from last week the russell 2000 closing lower not quite as bad as the nasdaq coming up this hour, we're going to discuss how the recent rate shock will impact the technology sector and why many on wall street will benefit from higher rates. we are all over the various angles on that big story joining today's panel, cnbc market's commentator mike santoli and mike schiantoni. walt greens was a winner, arconic was a winner and abiomed was a laggard. >> a lot going on. obviously as bob mentioned, we don't have the bond market to use as a beacon for really what sectors should do and how the market should think about this yield story. i do think -- i often say the
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stock market is kind of the feckless kid brother of the bond market doesn't know how to act unsupervised that being said the market was already kind of over sold. the s&p refused to stay down below this old january high. there's been this kind of cushiony floor underneath the market down 3% or 2 1/2% from the highs. i wouldn't draw tremendous conclusions from the reversal. the market already had some wear and tear on it coming into today. >> the reversal happened once international markets were closed does that have an impact >> it could. >> is that a factor? >> it could. i don't know if that dictated the sector performance the fact that you were relieved from the pressure over seas where, of course, you do have signs of stress in china, in italy, and all the rest of it. interesting to see if it opens tomorrow also the vix closed way off its highs which is another -- you know, you can take it as a bullish element as well. >> one factor that was
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consistent all day, michael, the turn around and the bounce back for the dow and s&p was weak and a drag has the tide turned for technology >> no, i don't think so. i think probably you're just getting a lot of negative news around the tariff story as well as supposedly the -- what's happening with google in terms of some of the privacy issues. so i still think tech is fine, but tech is going to be impacted by what's happening with china i want to comment if i could for just a second on the reversal, sara i wonder if some of the reversal has to do with at least the united states and china are publicly talking they might be saying harsh things to each other out loud, but at least there's some sort of dialogue. i think perhaps that might be a positive from a market perspective. >> well, let's move right there because tensions between the u.s. and china did flair today as secretary of state mike pompeo and china's foreign minister wayne yee met to
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discuss north korea and butted heads over a number of issues including trade. the chinese foreign minister saying the white house's recent actions against china have, quote, directly impacted our mutual trust and cast a shadow over our bilateral relations i don't know, what gives you hope there, mike michael yoshikima? >> what gives me hope is that people are talking it's interesting all the posturing that is occurring. i was in china last week and they are very, very concerned. if you look at investment in china, talking to some investment managers in places like shaman, which is a financial capital for china, people are very, very concerned. it's very reminiscent of the financial crisis in the united states for people taking money off the table. 9 fact that people are talking is what really matters again, they might be harsh towards each other but there's some sort of dialogue. i remain convinced there's a
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deal to be had i think china is eager for. >> i guess on the flip side, michael, the point in terms of whether they're talking or not is the tone both today and from the vice president last week is definitely soured. i don't think the prospect we're dealing with in the short term i don't think they'll look for something until at least the mid terms. china wants to know what the worst case scenario is and that could change either way, there's a huge amount of ground to make up in a way that there wasn't so much particularly with the final deals that were struck with perhaps, as you could frame it, south korea, mexico and canada. >> yeah. that plays two different ways. one is that it kind of frees the market from paying tremendous amounts of attention to the give and take of the china trade story in the very short term if you've kind of written it off and said we're not going to have new information on this of any substance for a while, you don't have to necessarily trade off it, so to speak. >> no. >> but if that also means that both sides are getting a little bit entrenched, there was a wall
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street journal story over the weekend suggesting, look, the administration is looking at the tariffs on chinas a long-term wear them down strategy not just a quick tactic to strike a deal. >> the one thing i do agree with michael on is i do feel china is feeling the pain on this. >> sure. >> china is down 4%. most of them were down 4% last week in asia china is playing catchup i actually think the currency shows it the best of all the equity market is levered this is down 10%. >> that's after it's spending a lot of reserves to prop it up. >> exactly. >> they're feeling the pain, but i don't know if the deal is close to ease the pain, michael. >> well, here's the problem. this isn't really reported so much if you actually talk to people in china, forget the headlines, forget the shanghai index. if you talk to people in china, if you talk to business leaders,
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even if you talk to those in the investment business, the level of caution that they have right now is very similar to the financial crisis in the united states it really is a freezing of infrastructure spending, spending on export businesses and, in fact, the regular population, the citizens are freezing -- are freezing activity as well real estate sales, maybe not in hong kong but in the other provinces and the other cities is stalling. so i think there's a lot more pain than gets reported in the media when you actually talk to people on the ground in china. >> kevin reid, the former prime minister echoed -- >> the question is if you don't have to have elections how much pain can you absorb when your time frame is not in cycles every two years. can they withstand that kind of pain can they fight that with the 3 trillion they still have in reserves >> china thinks they've kind of done this before they know what tools to employ if you want to liquify the system in the short term
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manage a currency decline if that's what you have to do gerd the people for a period of pain. >> they still have 3 trillion in dollar terms. >> they do. >> however, that is down 25% from the peak. >> expensive to have i don't remember currency collapsing. >> down 50% in terms of its size, its percentage of gdp the peak being in 2010 it's not unlimited it is declining to a significant factor but it is way higher than any nation during the asian crisis. >> china's goal, remember, is to have a more balanced economy to not have an export economy with consumption again, people on the ground are spending less money. what happens when you spend less money, there's less internal consumption. you become more reliant. yes, that's absolutely true. that's something chien fwha has obviously going for it in terms of being able to stay a course but you're actually in a lot of ways setting up to take china
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away from their goals, which is to have a more balanced consumption-based economy which is impacted by currency as well as sentiment it's a complicated factor. you can't just throw some of the reserves at because i think the population might not revolt but they might stop spending and that's not a good thing for china. >> let's have a look at how the so-called smart money is dealing with rising rates. leslie picker looks at hedge funds. >> hey, wilf they've been blaming the low interest rate environment for their own underperformance for years. it may be true that at least some of them should be poised to benefit as rates move higher most hedge funds make bearish bets, a thing called short selling. as the rates rise they get a short rebate it sounds complicated by the way it works is this to short a stock, for example, you must first borrow one and then sell it short the proceeds you make from that
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are then invested in treasuries or cash and then you earn interest from those investments. by and large the rule of thumb is that the higher the interest rates, the more profitable the short rebate now from a performance standpoint, the market may also favor long short equity if a rise in rates causes a drop in the stock market commodity trade advisers or ctas benefit from a hedge fund consultant he says ctas deploy a small percentage of their capital due to the inherent leverage in the futures that they're trading and the remainder is allocated to short-term rates which, of course, earn more as yields move higher he says reassurance strategies are poised to benefit because they hold cash and liabilities same kind of situation, guys. >> leslie, interesting take there on the sort of classic long-short equity fund and how they can make a bigger return on the short rebate what about the sort of
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traditional macro rates currency trading funds, are they fewer in existence today than perhaps they were a decade or so ago >> in fact, it's actually the opposite there are a lot of hedge funds in existence today that weren't there a decade ago that's one of the main issues that hedge funds complain about. we've seen a record of $3.2 trillion in assets they're estimates that amount to about 15,000 hedge funds out there. only 500 that have $1 billion in assets or more so one of the big complaints has been that there's just too much crowding into this space, too much competition which makes it harder to do their jobs which is partly why you're seeing so many of them close up shop especially over the last couple of weeks or so. >> leslie picker, thank you. there's data, mike, from the cftp showing that there's been a record short position from funds like this in the treasury market i think it was scaled a little bit back last week. >> it was.
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it was one reason people thought you wouldn't see this backup in yields typically the market goes against when you have a crowded speculative short position there is some revisionism. people think the futures positioning is the shadow of a larger positioning outride treasury holding so it's hard to know how to interpret it, but it's interesting. the cynic's interpretation of what leslie was talking about is what they've always said about hedge funds is the returns largely come from leveraged carry. leveraged yield collection is kind of a big tail wind for hedge fund strategies across the board. >> michael, in terms of whether people are going to really bet on the direction of yields, do you think the big magnitude of the move has already happened when we look at the u.s. treasury market? >> no, i don't think so. the yield move really hasn't been that great. we're at 3.2 on the ten-year treasury it was at 3% so it's not like it's been so gigantic that that opportunity is lost. i think there's still plenty of yield move available for people who want to speculate, but
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remember, if you're buying just speculating on the yield move, then you're really not hedging, right? you're basically speculating i think sometimes people get excited thinking they can predict the interest rates and they buy naked options that is essentially like gambling on an ipo stock you have to be careful how much risk you're taking in your portfolio strategy. >> guys, we'll leave it there. michael, thank you very much great to see you as always out in san francisco up next, tech stocks selling off over the last week as interest rates spike we'll look at whether it's time to get out of growth that's coming up. plus, we will discuss what kind of impact the supreme court could have on the market now that brett kavanaugh has been sworn in as the ninth justice. and we want to hear from you always you can reach out to the show on twitter, facebook or send us an e-mail, the "closing bell" back after a quick break. this isn't just any moving day.
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and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. tech stocks were the worst performers today with the s&p technology sector finishing the day more than 1% lower. growth stocks in general have been taking a hit as rates continue to rise is it time to get out of growth? joining us is timothy lescoe and
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elizabeth harrow from schaeffer's investment group we've been asking this question as bob pisani said it's often a fakeout and growth always wins the day. is this time any different >> i don't think there's anything particularly remarkable about the fact that tech stocks were down today. we've been noting that stocks tend to struggle a little bit in the wake of a fed rate hike for up to a month after a rate hike we tend to see choppy or sometimes bearish behavior and this is just a little bit of shaking out as far as we're concerned. we still see support holding right here. >> so are you a buyer on some of the weakness in growth names technology >> yeah, we still see names, some of the old guard names like your dotcom horse men like microsoft and cisco here there is a lot of emphasis on the fang names like facebook the underperformance isn't new
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this has been going on for months for some of those names >> timothy, do rates -- i'm sorry. excuse me, elizabeth, for cutting you off there. do rates have a direct impact on tech itself or is it just a question of the sort of general risk sentiment out there >> well, i think technology companies aren't unique in their sensitivity to interest rates. there's a lot of the go go growth companies have been living off of a period of low interest rates as cost of capital matters and future earnings matter, then rates will weigh on them i echo what the other guest said a little bit in that that really bodes well for the older, cheaper tech >> yeah, i mean, i guess the question is why rates would matter for high value tech stocks, right? i mean, tim, a lot of people in a textbook way say, well, growth companies, very long stream of earnings you have to discount it back
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with a higher interest rate. is it as simple as that or is that just a little bit of an excuse >> in the long run, yeah, mike, it's as simple as that in the short run it's probably a little bit of an excuse. i think some of the high flying tech companies that are exposed to data have some other reasons that they're selling off, but the switch from growth to value usually has some sort of larger issue at hand and i'm not sure if interest rates are that issue. >> elizabeth, your thesis that usually the market has trouble digesting a fed hike and it's always sort of choppy around that this move in fed moves, you're not spooked. and whether that's the beginning of something bigger, a bigger selloff that we're going to see in the bond market and the ripple effects across stocks you don't see that >> at this point it's not something we're concerned about, no we still see support levels holding. if you look at the low today for the qqq, it's right around a
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trim line that's been connecting some higher lows since april and we also have been seeing kind of a volume spike for that etf that was similar to what we saw with the lows in february and april so we do think it's kind of just a shaking out at this point. we don't think it's anything to panic about for right now, no. >> with a great skyline behind you, that's cincinnati. >> i see i didn't know what you were trying to mouth to me. can you see that ice cream store you love in that picture in. >> you can't but there is a grader's -- >> what's the football stadium called >> paul brown stadium. >> paul brown stadium. >> i'm impressed you knew that, sara. >> thank you timothy and elizabeth. i did grow up there. >> didn't you say the ice cream store moved to new york? >> no, they sell pints of it in new york stores. bonus points for any guest who comes from cincinnati on the show google on -- >> i thought you said any guest
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that brings us ice cream. >> google is under fire for reportedly exposing personal data of hundreds of thousands of users. >> big story this afternoon. josh lipton with the latest details. high, josh. >> sarah, here is what we know profiles of 500,000 google plus accounts were potentially affected here. the exposed data could have included users' names, e-mail addresses, birth dates, profile photos though not any information related to personal information and photos the bug was activated between 2015 and 2018 when google did patch it importantly the company says there was no evidence that any developers were actually aware of the bug or abused it. in response, google is shutting down its google plus service for consumers, the enterprise version the company is saying will remain active google does not break out how many google plus members there are, but the bigger story here is the lack of initial disclosure and why
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the journal says google didn't disclose the issue because of fears that doing so would draw regulatory scrutiny. the company says that it adheres to certain specific thresholds when deciding whether to disclose such a bug and this did not meet them. for example, there was no evidence of actual misuse. guys, back to you. >> but, josh, i mean, in the current environment i'd say sort of particularly the last six months when other companies, rivals were going through similar issues, were reporters like yourself, companies like cnbc not reaching out to the likes of google to say have you ever experienced anything roughly of this sort yourselves? and at that point did they deny it >> no, i'm not aware of that i'm not aware of that, wilf. listen, the company is saying they only disclose when they meet certain criteria and this bug did not hit that criteria. brent till has covered alphabet
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for a long time. he was on cnbc he doesn't see a financial hit from this. google plus never really gained a lot of traction, never really took off he quickly did say is there headline risk. i do think that speaks to this broader point, wilf. this is occurring during a sensitive time for google, facebook, big tech in general when obviously a lot of regulators have questions about these very kind of issues like user data and privacy principles, guys. >> yeah, the optics are not great. josh, thank you. josh lipton in san francisco. up next, mike santoli explains why this chart may signal a buying opportunity in bonds. plus -- chart's coming for you. don't worry, no, it's not coming for you but it's a good one. trust us. plus, rising rates may be hurting. wall street right now. we'll explain why this may be welcomed on main street.
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because national lets me lose the wait at the counter... ...and choose any car in the aisle. and i don't wait when i return, thanks to drop & go. at national, i can lose the wait...and keep it off. looking good, patrick. i know. (vo) go national. go like a pro. bond yields have spiked in the past week but have they gone too far too fast mike santoli taking a look at whether there is a bond buying opportunity with the afore mentioned chart. >> yes, stocks versus bonds. let me explain more what this is it's the s&p 500 over the last two years against the barclays aggregate. this is a total bond market index. you see stocks have outperformed bonds by 40 percentage points in the last two years this begins two years ago.
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what you've seen when you've had an acceleration in stock versus bond performance, this was the run up into january. you had a quick gut check there. this is not as dramatic but it's still relatively steep when i say perhaps a buying opportunity for bonds, it's not a prediction that in fact yields are going to start collapsing again but it is something that would basically affect somebody that had a balance portfolio if you started with 60% stocks, 40% bonds, you're now at 68% stocks and 32% bonds so your natural rebalancing would be selling some stocks to buy some bonds here the final point is because bond values have been going down as stock values have been going up, it shows you that stocks can go up while rates go up at this point the ten year treasury was at 1.7. it's now 3.2 almost double. stocks in absolute terms are almost up 30%. >> the portfolio strategy balancing between the two asset classes are based on the assumption that if one over a long period of time is going up
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the other is going in the opposite direction is it possible we're heading for a moment where that's not the case, particularly in the case of a big pull back for equities? could we also see bonds move in the same direction >> you could there's been a little bit of a hint of that because stocks and bonds have become inversely correlated in that way just -- or more correlated in that way i don't know that you're necessarily going to see that would imply kind of a stagflation story where rates go up a lot and stocks collapse yes, absolutely. but i still think bonds would go down less than stocks in a stock bear market. >> what would be your protection in that environment? gold or something? >> cash. >> cash. >> that's the alternative because cash is actually paying you something right now and, you know, one month treasuries, 2% or something like that >> it sort of gets to the question which we've been asking on the network all day which is, well, if bond yields are going up for the right reason and that is better economic growth, lowest economic rates in decades
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could the stock market race higher what does history say about that >> history says, yes, that can happen stocks can continue to benefit from the good environment. i think the sensitivity is how fast yields go up and also how much the economy and profit growth decelerates next year if you're in a situation where money costs more, you have a little bit less liquidity, companies paying more for debt at the same time cash flows are going down and the fed staying aggressive, that could give the stock market a jump. >> it's like the dollar and stocks it can go up. if it starts going up very fast or it's really detrimental to profits, then it's a problem. >> it up ends somearart of the capital market. >> mike, great stuff make your way on back to the desk >> you're invited back. >> you're invited back long way away. let's get a news alert on google josh has the details. >> wilf, more news on google here the company now saying officially they are not going to be bidding, wilf, on that jedi
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contract remember, that's that big pentagon cloud contract valued at $10 billion certainly a lot of top cloud providers are very interested in that jedi contract so why are they not going to be bidding on it? google telling us they couldn't be assured that it would align with their ai principles and we determined that there were portions of the contract that were out of scope with our current government certifications interesting. earlier this summer we learned the company was not going to renew that contract that they had with the department of defense, project maven, where they helped identify and analyze drone videos there were a lot of upset google employees. google will not be bidding on that jedi contract guys, back to you. >> okay. josh, thanks very much for that. down about a percent or so today is google. let's take a look at how we finished the day on wall street. we certainly recovered from the
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lows of the day, but it wasn't a positive session ultimately. the dow low of the day was down 223 points as you can see, it finished up 39 points but that's only 15 basis points s&p slightly lower and nasdaq down 0.7%. >> and the russell >> don't want to mention it. >> also lower by less than 2 tenths. >> small caps. >> update with sue herera. >> hi, guys. thanks so much here's what's happening at this hour, everyone the limousine involved in this weekend's horrible crash that killed 20 people in upstate new york failed inspection new york governor andrew cuomo also said the driver of that limousine did not have the proper license to operate the vehicle. >> the owner of this company, the owner of prestige has a lot of questions to answer there's an ongoing investigation, but is there a
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possibility of liability, civil and criminal certainly. >> one of the winners of the nobel prize for economics paul romer said he ignored two phone calls from stockholm because he thought they were spam romer along with fellow american william nordhaus sharing that $1 million prize. jean-claude juncker threw a little dance move today before a speech raising a laugh in brussels as he appeared to mimic that lady right there, british prime minister theresa may she sacheted on the stage to the sound of abba's "dancing queen" about a recent trip to south africa >> and i have to say -- >> i think she's got it over him. >> well, i think she does, which is not a ringing endorsement of the dancing skills of mr. juncker but usually with tense relations you would embrace a juncker joke fair play to him.
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>> it's a softening of relations between the u.k. and the e.u i thought they were at a crazy standoff. >> all the tweets, one video clip merged the two on stage and this is how they'll announce the brexit deal when it's done. >> excellent >> together. >> leaders are going to come out dancing to the podium. >> everyone would if we managed to make a deal that would warrant that kind of thing, you know? there we go. we'll see what happens sue, thank you very much. >> you've got it see you tomorrow now brett kavanaugh has been confirmed, of course, sworn in as a supreme court justice after his three-month process. could another conservative voice be good for investors? let's ask terry haines and chuck from capital alpha partners. chuck, if i start with you i guess the sort of return, as it were, potentially for stocks on this sort of thing would be much slower than a different type of regulatory appointment is that possible in the medium
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term this could help the market? >> my view, wilfred, all along has been that kavanaugh is an incremental positive for markets. the reason is very simply that he's interested in reining in and providing some stability on regulatory agencies and, you know, we saw in the obama administration, i'm not singling out the obama administration here, but we saw in the obama administration a lot of regulators really try to over reach and they were pulled back by the courts, by the supreme court and other courts on immigration, on environmental, bunch of other things. and to the extent that kavanaugh is a positive force for business on the supreme court, that positivity lies in his ability to want to rein in regulators a little bit, make it harder for them to try to go off on their own. >> chuck, we were already in that -- moving in that direction. this was a conservative court thinking of a few high profile ones recently like american
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express and the anti-trust are there important business decisions coming up where we could really see the impact of this new even more conservative court? >> i don't think so in the near term in this next term, sara, but there are a lot of things that were left unsettled by previous courts, including things like how to read disparate impact and the notion of unintended discrimination against borrowers through lenders who are just literally following through and playing by the rules. so i agree with terry that this is important because it's a bit of a check on any change in administrations that brett kavanaugh will sort of, you know, tip the scales towards really limiting chevron differences we call it we think they're a really big plus for the energy and utilities sector. >> terry, does it change the likely outcomes of the mid terms, the fact that he has been confirmed to the supreme court and what effect might that have
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on the markets >> my instinct, wilfred, is that what you get is you get a much smaller intensity gap as pollsters would call it. everyone's understood that democratic voters were going to be very intense this year. what you get from the way the kavanaugh confirmation happened, greater intensity among republican voters than likely than expected. there's a lot of uncertainty into how that plays out. so far it has not been enough to disturb my own views that what you get is a marginally democratic house, and i mean marginally ten seats or less. but you still get a republican pickup in the senate, and that sort of divided government is there for markets. the most important thing it means is you're not going to get the pluaccomplishments of trump
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rolled back. there won't be a roll back of tax reform. >> chuck, would you agree that is the outcome we're likely headed tooshd? and really what does it matter for markets? it's a few links down the chain to try to say that it means something for policy or investor perception of business friendliness i wonder how you think that plays out. >> mike, the first good news is this is one of a number of things that could go wrong in september or early october that didn't mueller news, government shutdown, really bad news on trade. we ended september obviously with a u.s., american, mexico, canada trade deal. so, you know, that's the first positive news, but it does matter a lot that this basically meshes with expectations that essentially we're going to get a republican senate, that you have additional hope of that, particularly with polls in the aftermath in missouri and north dakota and tennessee really showing up well. and we would argue that the investment significance could be
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that if republicans actually not only hold but gain a seat or two and boost their margins to 52 or 53 to 47, that, you know, the message to democrats is they look at the 2020 cycle they're probably a little bit less likely to have as good a shot as some might think retaking in 2020 so the president can actually deal with marginally democratic house as terry describes and a slightly more republican senate and maybe cut an infrastructure deal, maybe even the dealing could start during the lame duck with a retirement savings bill so we think the senate really does matter in that respect it is probably good news for investors. >> certainly the kavanaugh news was the biggest of the weekend mike santoli and i were actually texting about taylor swift, terry. the fact that she opened up politically, publicly for the first time was a very big deal we can wonder what it means for her and her fans, but ultimately should marcia blackburn and the other republicans in tennessee be worried
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>> i think that celebrity endorsements mean politically farless than most people think that they mean the first time i will have seen a celebrity really influence an election will be the first time and the senate -- that senate race between them was already tight as a tick and it's going to continue to be tight as a tick the thing that i would urge people to think about as they're assessing that is she may have picked up some intensity and some positive voter stimulation, but there's going to be a lot of people who recoil from swift's endorsements as well so i think it's sort of a wash. >> all right taylor swift versus kanye west. >> swift booting >> there you go. terry haines, chuck gabriel, thank you. coming up on the show, find out what one major shipper is
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trying to fix on a looming labor -- how they're trying to fix a looming labor shortage in this very strong job market. we'll have that story next
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some stock investors aren't too happy about rising rates, but up nextwe'll look at why many on main street may be rejoicing this rate shot. and target is targeting price conscious shoppers by launching a new private label brand in csuonmer staples in what is becoming an increasingly crowded market the details coming up on the "closing bell. something is transforming and our world.. it's the longevity economy - americans 50+ driving 7.6 trillion dollars... of economic activity every year. right before our eyes, aging is unleashing exponential growth...
4:44 pm every industry. are you ready? we are. a-a-r-p is teaming up with business leaders and innovators... ...sparking new ideas and real solutions. so, what are you waiting for? you may be at increased risk for pneumococcal pneumonia, - a potentially serious bacterial lung disease that can disrupt your life for weeks. in severe cases, pneumococcal pneumonia can put you in the hospital. it may take weeks to recover making you miss out on the things you enjoy most. just one dose of the prevnar 13® vaccine can help protect you from pneumococcal pneumonia. it's not a yearly shot. prevnar 13® is approved for adults to help prevent infections from 13 strains of the bacteria that cause pneumococcal pneumonia. don't get prevnar 13® if you have had a severe allergic reaction to the vaccine or its ingredients. adults with weakened immune systems may have a lower response to the vaccine. the most common side effects were pain,
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redness and swelling at the injection site, limited arm movement, fatigue, headache, muscle pain, joint pain, less appetite, vomiting, fever, chills, and rash. prevention begins with prevnar 13®. ask your doctor or pharmacist about prevnar 13®. welcome back surging interest rates have taken a toll on wall street over the past week. it could have a huge impact on main street, too sharon epperson has all the
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details. >> hey, wilf rising rates will have an impact but it's not all bad there are some nice rewards including higher returns for savers, more interest income for retirees and more for borrowers. you can earn 2% or more in interest the national average rate on a savings account is .9% according to bank rate so you could more than double your savings rate. you need to compare rates at onliene banks which generally have the highest rates. higher savings rates means more interest income for retirees if you don't want to tie up your cash for that long, there are banks offering over 2.5% on 12-month cds with no minimum deposit according to magnify money. there's ghusd for borrowers too since there's more credit availability banks have a greater incentive
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to loan out reserves at higher interest rates if you're looking to buy a home or refinance your mortgage, you may be able to find a product for you. that's especially true for credit worthy borrowers. >> those savings rates, the average there quite distorted as you suggested by the online banks which might not carry as much in terms of percentage market share as the main street banks who still buff up close to zero. >> that's exactly right. as long as it's an fdic insured account, you are safe to go with an online bank people aren't used to going into a brick and mortar bank. you want to look for the best banks, you have to go to an online bank. mike, as we look ahead to the bank's reporting, deposit beaters, the rate at which banks have to pass on the rate hikes will be a key focus. some of the big banks with their traditional sticky retail deposits have managed to hold on
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to a lot of that rate increase delivery. >> right they should have leverage if they don't have to reprice deposits that fast one way i think about it, when interest rates go up, the price of the main product is being lifted by the market. >> right >> in theory if your raw costs don't go up as much -- >> are pure play banks the best way to go? >> no, i'd say one of the differences is the smaller regional banks toned have a higher exposure to retail banking as opposed to investment banking but it's the bigger national banks that seem to have a stickier base. the point is they're rising as they do at this stage in the cycle which is bad for banks they're not rising as quickly as worst case scenarios. up next, target hoping to fight back against the amazon effect with a few new private label brand of discount products we'll have the details in a moment and how big of a threat
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this could be for some of the consumer staples
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target is taking aim at price conscious shoppers by offering a new private label line of consumer staples so more than 70 products including soaps, paper towels, razors, most of which will be priced under $2 will be sold under the brand name smartly at target stores and online later this month the products will be priced about 70% less than the brand name products. and will be sold for less than the existing brand up and up target is hoping that it will lure customers away from discounters and attract millennials. this is a big deal walmart is doing it.
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amazon it's a persistently big threat for consumer package goods companies. because it not only hurts their margins and has the price wars but also brings new product lines into investors who are not as loyal to brands we have an analyst from bernstein who has a private label susceptibly index to see who's most at risk clorox, kimberly-clark, edge well p & g coke and pepsi are not as at risk he looks at the private label and multiplies by that company's percentage of sales in the category. >> does this hurt those kind of hedge funders -- taking stakes whether in a p&g and a unilever and trying to drive down the costs of the bigger companies? >> right it's just been get cost gown, get the margins up but no they're fight -- if
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they're fighting price wars that makes it tougher but in general this entire industry has been struggling to grow for any top line growth forget margin expansion. it's where is the growth going to come from >> it's just the pendulum over here, now it will swing back in favor of the brands as opposed to the retailers warren buffett said with regard to kraft heinz, yeah, the retailers have power because they're willing to swap private label brands in for shelf space. >> well, a lot depends on the quality. if target is going to price something at 70% it better be as good as a gillette razor or a crest toothpaste i think that's where the brand distinction comes in and will dictate if that's a turn back to brands eventually. still to come on clegg clegg, the steps that dhl is doing to compete for workers in the job market. and tomorrow, an interview
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with adidas ceo. when wilfred says adidas -- we already know it's adidas. but we're in america so we say adidas. >> i'm sure he will tomorrow as well actually, this can -- we could be wrong on this one well, across europe it's pronounced differently. >> german company. that's what he'll say. wilfred is right, but in the wrong country. what do advisors look for in an etf? i tell clients, etfs can follow an index,
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but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to for a prospectus containing this information. read it carefully. your company is and the decisions you make have far reaching implications. the right relationship with a corporate bank who understands your industry and your world can help you make well informed choices and stay ahead of opportunities. pnc brings you the resources of one of the nation's largest banks, and a local approach with a focus on customized insights. so you and your company are ready for today.
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one of the world's largest package delivery companies is sounding the alarm about a looming labor shortage frank holland is at a dhl warehouse in ohio with the details. hey, frank >> hey, good afternoon well, right here we're at the dhl facility outside of columbus, ohio the management has plans to expand this site by about 25% next year. but management says it will be difficult to find top tier qualified workers like these people who you see packing and picking orders as well as experienced college educated workers with technical and operational skills to fill the jobs well, a lot of reasons for that this the a tight labor market, but amazon which just recently
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announced it has a $15 minimum wage for their workers has two sites within the site of this one. plus, ohio's unemployment rate is at 3.4%, lower than the national average which is at a nearly 50 year low. >> we are finding that we have to interview or consider about ten candidates for every hire that we have so in our efforts to build a pool we have to build a substantial pool in order to find the right talent that we're looking for. >> and back out here live now right now it's estimated only one qualified supply chain worker for every six jobs like this dhl says it pays about $15 an hour so it feels competitive there. still, it's very challenging here's one thing they're doing to close that labor gap. check it out these are called vision picking goggles. these are pretty cool. cheese show -- these show the workers what to do and how do it and it reduces training time by
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ago 80%. back over to you. >> how many options did they have in terms of locations to expand no question it had to be that for logistic reasons or did they pick another branch for certain reasons? >> well, they serve one particular business here, rhoden & fields and they do 100% out of their -- of their orders here. they want this particular site to grow because the workers are trained to do this work. >> okay. frank, great stuff nice glasses as well make sure you steal a pair of those. frank holland for us in ohio, dhl facility. >> which is a huge trend i mean, the labor shortage, the tight supply the inability to find workers. should lead to higher wages, but it speaks to the skills gap out there. >> but at the same time, it leads to companies trying to find labor saving devices and other ways around it it happens in parallel so wages could take you so far.
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>> quick follow-up, the big intraday rebound >> we have the bond market tomorrow to tell us what to think -- >> would you call that's the big brother? >> the supervisor. >> there you go. >> feckless little brother. >> that does it for "closing bell." >> "fast money" begins right now. "fast money" starts right now, live from the nasdaq market site, tonight on "fast," bringing good things to life the stock is up 20%. yep, 20% in the month of october. and the chart master said there are more gains to come you won't believe how high he thinks it can go if you're looking for yield you don't have to look too hard. the traders will take us yield hunting in the dow that is right where we start with rising rates and investors playing defense, yes, that crucial element that was missing from the new york giants loss. the fe


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