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tv   Closing Bell  CNBC  August 15, 2019 3:00pm-5:00pm EDT

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on the news that china -- they might have heard that song, just meet me in the middle. if you meet us in the middle maybe we could get a deal done and sent markets higher on monday it was other stuff and on tuesday it was other stuff that sent the market gyrating. >> and watch europe and the ecb, what they do in september. thanks for watching "power lunch," everyone. >> "closing bell" right now. >> welcome to the "closing bell" i'll will fred cross it is already a volatile day for markets and individual movers, including ge tanking some 11% after the company was accused of fraud. coming up exclusively we'll hear from a board member. the chair of the audit committee no less. 59 minutes left to go. so much to discuss >> i'm morgan brennan in for sara eisen, let's look at what is driving the action. conflicting tariff news as china and the u.s. attempt to set the news for trade deal progress
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retail sales coming in stronger than expected this morning meanwhile, opposite signals with the bond market with yields dropping sparking concerns about the economy. we have got a full team coverage of all of these key stories driving the market action from new york to washington to the cme in chicago let's start with bob pisani tracking the volatility from here at the new york stock exchange. >> again, 10-year yield moving the stock market middle of the day. take a look. we've been overlaying this pattern for a week as it moves below 1.5% and sell programs kicked in prior to 2:00 p.m. and the market recovered as the ten-year moved over 1.5% that is the key mover of the market and weak today, first transports, problem all month. many of them down double-digits but logistics in trucking companies like jb hunt, ryder and american and fedex and weaker and all down double-digits just in the month of august. the other retailers, walmart is
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helping consumer sales but the big retailers getting slammed. macy's and kohl's all down 2% to 4% and gaap down 7% and energy weak today back to you. >> thank you very much. to kay len for the latest on trade. >> well, will, for the u.s. and china continue to be at odds over a deal and when it would happen in a series of missives the chinese government said it will retaliate in september if the u.s. puts on new tariffs that washington should not offer advice on hong kong even though trump has been tweeting the u.s. must meet beijing -- that half way to reach a deal. the president, meanwhile, said a deal will be on u.s. terms, that president xi should meet hong kong protesters to settle concerns and that the u.s. will soon be winning big on trade without saying when or how those two sides would get there. morgan >> kayla, thank you into shares of walmart are higher on strong earnings results helping to
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power the dow. get to courtney reagan. >> earnings and u.s. comparable sales and net sales up 37% contributed about half of the 2.8% u.s. comp sales gain. the 20th quarter in a row that u.s. coxp sales saw growth walmart upping the forecast for earnings revenue and comps for the year and that accounts for tariffs coming in september and october. analysts say the retailer is benefiting from a strong u.s. consumer but they also have to give a lot of credit to the retailer's management for all of the strategies they've employed to leverage stores and digit altogether >> courtney, thank you. while we have you, we got july retail sale this is morning. tell us about those numbers. >> even with other economic data points that are sending us warning signals, this is another indication that the u.s. consumer is strong so retail sales grew 0.7% in july from june this is a month over month
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number, stripping out autos and gasoline, retail sales grew 0.9% from last month. so july actually marks the 5th straight monthly gain and the strongest five-month growth rate for this since 2005 to 2006. nonstore retailers, so that is a lot of online players, the strongest group, up 2.8% makes sense. a big boost from amazon prime day that happened in july. restaurant sales up 1% in july electronics up almost 1% department stores, this is a tricky one, this is up 1.2% in the month. even after we saw macy's report that disappointing quarter but remember, the commerce department marks department store sales down 4.7% when looking year-over-year and that is how we look at a lot of the earnings reports. >> back over to you. >> thank you very much for that. now the 30-year yield dropping to a new record low rick santelli has more on the moves we've seen in the bond market once again today from the cme in chicago.
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>> greet retail sales trumped by headlines out of europe today foreshadowing the september 12th meeting with a stimive surprise. in the 30s, ignoring data points dropped under 2% where it still sits bob is right, we're down to 147 and we've bounced but the bounce at 153 is still down five on the session and boons. minus 71 there is a long time between now and the ecb but mexico running to the party cut rates for the first time in five years back to you. >> rick, i've been listening to your commentary all day and i believe the low close session of the german was related to the ecb member rain but do you believe that they would go ahead with a big stimulus in the final meeting before christine le garde takes over the reins surely they wait for him to come
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in and set out her store herself. >> these guys don't care if they do or not. they've been sent messages before they front run and not an illegal way and this is a phenomenon and they are piling in they pile in and the ecb does more tim lus and relieved by people behind them buying more and all of the hints and previous -- pre-meeting hints have been on the correct side of history. i can't tell you the answer. but i could tell you many global traders certainly do believe that >> rick, as always, thank you. now joining us for the full first hour -- stephanie nat. >> great to be here. >> how sum up today's moves. >> two stocks, walmart versus cisco. we've been saying the consumer is the engine of growth in economy versus global growth, slowing down particularly china and this is completely the case with both of the stocks today.
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walmart did a lot of good things that internally to actually have good results but the consumer traffic was great. same store sales 7.3% and good showing. cisco on the other hand, china was a problem for them one of the reasons they had to lower guidance it is the tale of two halves you want to be involved in the consumer and you probably want to just be careful on the cyclical side of things. >> let's add in david, chief market strategies at jeffries to the discussion great to see you as always, does the macro data of late match stephanie's micro summation of the kind of state of play at the moment? strong u.s. and weak international? >> i definitely think it does. the strong u.s. data is pretty amazing. the empire and the philly fed and a lot of other pieces of data and productivity data pretty good and the bond market shrugging it off so i think there is an international push,
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the bund to under negative 70. and i think there is another thing going on in the bond market we've seen volatility as measured in the move index which is like the vix for bonds, touch levels that we haven't seen since 2016 and think we're seeing a lot of stops. people have steepers on and getting out of those and there is a lot of positioning in the bond market that may not be as informationally valuable as we're trying to read into it so i think -- i want to watch how this bond market progresses over the next couple of weeks to see if the bond market isn't just kind of having one of those cathartic sessions where we have to get a bunch of people out of bad trades and then we can get the bond market to give us better signals for what will happen in stocks. >> that is a key point that david is making right there. especially when we talk about the-year-old curve inversion and that is a recessional signal and the dow down 800 points and a
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number of meme who don't regularly check their portfolio but see a headline number like that what do you think the bond market is telling us and are we talking too much about the rising risk of recession to the point we could talk ourselves into a recession. >> you could talk yourself into a recession if you get consumer confidence deteriorate both remain elevated i think the bond market is -- it is very complex. we do have slowing growth here as well as abroad. that has been known. so that is what -- one of the reasons why the long end is been coming down. but at the same time, lower rates around the world, it is like central bankers are fighting to get to the lowest rate and so naturally it is kind of like where are they going to go this is the best rate here and so i think that is really what it is much more fun flow driven versus fundamental driven even though we are slowing but not going into a recession. >> david, should the fed cut by
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50 basis points simply to resteepen the curve? >> i think -- well, you know i answer those questions on what the fed should do by saying nobody cares what the fed would do and that is what clients like to hear from me, what they are going to do. i think you could make a case for 50 i think it is a reasonable case. i think the inversion matters and jim bullard is one of the guys that pushed that pretty hard but again, i'll go back to my first set of statements. i think this bond market wasn't meant to be here this is a heck of a rally. it has gotten a lot of people forced in. one thing i didn't mention in the last little blush -- blurb which is mortgage convexing but when we see refinances and mortgages people have to buy more duration so this information and we're trying to glean information from the bond market for the stock market to say recession is coming, the curve is in verting and the fed
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needs to react watch the positions. it is august liquidity is not great this is actually as i've been recommending to our clients who kind of participated in the strength of the stock market and the bond market for the start of the year, this is not a bad time to be on the side lines and i think we'll get better information from the bond market in the coming weeks as people come back. i'm not at all convinced that we have big recession risks on the horizon. i'm also not at all convinced this curve is telling you that recession is on a 12 to 18 month horizon forward and i am quite concerned that we have just seen a lot of stop outs get us here so i think it is a decent time to be more sidelined if you -- think about where we came from in the beginning of july stocks were up 20% for the year and a typical bond portfolio with duration was up over 10% for the year those are great numbers in six months you don't have to chase this ten-year note below 2% and equities above 3,000 and you could afford to watch it and
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that is what i've been telling our clients and happy i did it and not seeing any reason to jump back into either until i get a better feel for what this bond market is telling me. >> david, as always, thanks for joining us we've got just under 50 minutes, 48 minutes left to go before the close yesterday, of course, we sold off into the close and ended at the session lows, down 800 points today's volatile and some green and red but close to the session highs at the moment, up 104 points and the session up on the dow is up 133. >> we'll see if this lasts plus ge plunging and a new report attacking the company accounting we spoke with the author of that report on cnbc this morning. >> those losses are unsustainable and growing at an exponential rate it is growing and will make this company probably file for bankruptcy >> well, gef is hitting back
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the ceo calling it market manipulation the report that is ge board member and chair of the audit committee leslie seidman will join us live for a interview in a few minutes. >> and as we head to the break here is a check out of our data tracker. economic report this is morning. retail sales strong as we've talked about and also beating was productivity in unit labor costs and the new york fed manufacturing index, the philly fed and on the weaker side was jobless claims which rose more than expected and industrial production and business inventory sootal bh missed we're back in a couple of minutes. do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand.
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. welcome back, the health care sector has pulled back after rallying in june let's get to the founder at farrah led strategies for more >> so we're look here at the s&p 500 health care sector etf and see the pullback here into some potential support and that $87, $88 area i do think it will discover support there. what is interesting about health care is that it is captured a phase of outperformance with the
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pullback in the s&p 500. so to me that shows its defensive qualities but it does improve the relative strength output which is very bearish for health care versus the broader market from about december through april. so it does suggest we'll get away from that kind of environment. >> and was that bottom in the relative performance right at the market top of the s&p 500? >> that is right so just really over the last couple of weeks that we've seen that relative relief rally. >> and you've been diving into an individual name as well that stands out in terms -- >> right so i have mckesson there we are so intermediate momentum is positive and that is quite rare in the market place after this pullback that we've seen so it stands out for that reason and we've seen a mckesson a nice break out above the base resistance level so that is promising. reversal of the down trend line, you could see that here based on the shaded area on the chart and that is also compelling to me so as a turn-around play within
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the health care sector, i do like mckesson. >> where do you stand on health care. >> i like health care a lot. i've been adding to united health care. one of my biggest position and most recently a brand-new position is am gen i like their pipeline and the value is cheap and biotech has been wishy-washy this year and mckesson, i have more concerns on the political front and the headlines. so that is why i'm not involved in that one. but plenty out there in health care to like. >> katie, thanks for joining us. we have 42 minutes left of trade. let's check in on the markets at break. we are up 84 points on the dow a nice 150-point swing in the last hour or so. we did trade lower as yields once again slipped about an hour and a quarter ago. but a little bit of positive momentum as we approach the close, up about 0.3% on the dow. coming up, a bearish call on one stock citing a weakness in the economy, a first place a recession might take place.
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and ge board member leslie seidman will respond as the company hits back and denies allegations. he reclinbe" after the break.
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welcome back to the "closing bell." time for word on the street. stevens has initiated on caterpillar with $100 price
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target and citing negative risk-e reward and a $40 target and pinterest as a host of content for the global ad industry and j.p. morgan upgrading liberty to overweight to the firm citing tail winds including inflation in sports media rights, a longer race calendar and better monetization opportunities. let's start with that one, the fun one. it is already up 30% year-to-date but the upgrade gives it another 20% upside from here sports rights are very valuable in this moment but formula 1 is not that popular here in the u.s. >> it is not but that is making it an interesting story and off the radar screen hi to take a double take when i saw the upgrade but i think the cost story is also important because you mention sports rights but it is on the cost front. they've been spending so much money over the last several years and now it seems to be plateauing and that is where you get the operating leverage and
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in addition they'll pay down debt still -- the balance sheet still not that great but that is the plan, to reduce the leverage. >> changing ownership a couple of years ago and settling down now after that on the cost side. and touch on cat, $100 price target and do you still hold cat? >> i do. it is trading at nine times earnings and down 9% on the year and in the recent quarter the company guidance on revenue was low end but they didn't lower numbers. in the face of global slowdown so if they could do that in the global slowdown if you get any pickup at some point i think the stock is ready to go. >> what sort of price gets you to top up your position? >> i think $110. i was buying this years ago when it yield 5% and it was $70 so it is a little harder for me to buy up. but i still like the story >> so sitting on some nice gains there. stef, as always, congrats. we have over 30 minutes, 37 minutes left to go of trade. the dow at the moment up 79 points we have red on the screen for the nasdaq and the russell, s&p
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and dow up about 0.23% still to come, the last chance trade before the close and ge shares plunging after that short reporter alleged fraud at the company this morning. ge swinging back an independent board member and chair of the audit committee will join us next live exclusive to dispute the claims made this morning. you don't want to miss that. the stock has been all over the place today. remains sharply lower. it can turn around off the back w. that intervie you'll find out next here on the "closing bell.
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welcome back we have 33 minutes left of trade. here are driving the action. conflicting tariff news as u.s. and china set the terms for progress and retail signals and yields dropping once again sparking concerns about the economy. we're up 83 points on the dow with 33 minutes left but it is time for a cnbc update with sue herera. >> hello, everyone here is what is happening. former colorado governor john hickenlooper is ending his bid for the democratic nomination. he released a video on social media announcing his decision.
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>> i'm also proud of the campaign i want to thank each of you, the leaders across this country, who supported this campaign. those of you who invested financially and the thousands more of you who made investments of your time and energy and ideas. thank you all so much. >> peyton manning helping to open the new children's hospital emergency room that bears his name in evansville, indiana. the former nfl quarterback for the indianapolis colts and the denver broncos was front and center along with hospital staff and children to cut the ribbon >> hormel foods said it will release a limited edition run of pumpkin spice spam on september 23rd but it is only going to be available online at and no word yet on what it might cost i am not sure about that one morgan, i'll send it back to you. >> sue herera, thank you.
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general electric sinking after fraud investigator harry polos reloosed a report alleging it is covering up accounting fraud. he claims to have uncovered $38 billion in fraud which he said is bigger than enron. take a list toeb -- a listen to what he had to say on "squawk on the street" this morning. >> the numbers are missing they report top line revenues and bottom line profits and nothing in between like expenses and research and development, general administration and research and development, it is all missing. including cash flows they don't provide working capital. it is the only company in that industry that doesn't provide working capital. in fact the working capital is minus $20.3 billion and the current ratio is.67. and if you word search current ratio it doesn't appear. name someone that doesn't do that that is accounting 101 enron lasted four months once
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accounting frauds were exposed and we'll see how ge does. >> the ge ceo larry culp calling it market manipulation saying the report contains false statement of fact and could have been corrected if he had checked in with ge before publishing the report joining me now in a ta-- on a exclusive interview. leslie seidman thank you for joining us to respond to this. >> thanks for having me here. >> so as the audit chairman, we just covered a little bit of mr. culp's response but how do you respond to the allegations >> morgan, when i saw the report this morning and had a chance to just flip through it, my initial reaction was that i thought it was full of misleading, inaccurate and inflammatory statements that report does not reflect the ge that i know i've been on the board for about 18 months now and i've been the chair of the audit committee since april and my experience
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being a director at ge is that i'm working with a great team of people and a greatset of director colleagues and our number one objective is to ensure that the market views our financial reporting as full of integrity and that we're providing complete and accurate financial information. so i think that the basis on which the report was developed is questionable at best. i don't recognize some of the accounting practices that he described as gaap and given my background at the financial accounting standards board, i think i'm in a unique position to know when i see somebody who understands accounting and somebody who doesn't. >> i mean, your former chairman of the financial accounting standards board, a role before you did come to ge the allegation of fraud, certainly accounting and accounting practices and standards historically at ge have been raised regulators are continuing to look pat that and some of the different businesses right now
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but fraud specifically, why not fraud? why is that the wrong label to be putting on this according to that report? >> fraud is such a strong and inflammatory word, meaning intent to willfully deceive. again, that is not the ge that i know we are in full compliance with accounting standards in the u.s. we prepare them with a rigorous process. i, as the chairman of the audit committee, have full access to the people and the books and records at ge. and i stand behind the financial reporting of this company. our role as directors is to oversee the process and since i've joined the board and again speaking for my colleagues, we take this really seriously and there is no basis for an allegation of fraud here >> long-term care insurance, i mean, it is just historically not only at ge but across the industry has been a really tough business for companies to get their arms around in terms of assessing the risks, taking the
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reserves and accounting for future liabilities does ge have its arms around that business? >> yes we have taken steps in its last year or so to bring in new talent to manage the operation we have gone through a robust process. with respect to the loss recognition test and the processes we go through to estimate the liability and as part of our normal course of operations, we're going to be performing a current loss recognition testing in the third quarter which is a normal part of gaap accounting so i think we do have our arms around the accounting and i think that the amount at which we state the reserves currently is fair and in accordance with gaap. >> so when this report comes out and says $29 billion in new ltc reserves and $18.5 billion that requires cash immediately you think what >> i think what is the basis for
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that statement i think the report is full of opinions and this is one of the case where's i'm not sure that the author of the report really understands the accounting in this area. we have generally accepted accountable principles and then we have statutory accounting prince peps and then we have other people who just inject their own opinions in this process. he seems to be conflating all of those different basis of accounting we can question, is it because of incompetence, he doesn't understand the accounting standards here, or is there some other motivation it is not acceptable under gap -- under gaap to just say let's make the liability bigger and take the statutory basis and book it for gaap that is not how this works we're following accounting standards and complying with them using probust processes and being our best to be transparent about it this is one of the areas where the company did a teach in to try to demystify the accounting in this area and i'll tell that you it was very well received by analysts and others as a best class
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practice for trying to help people understand. >> and certainly the fact that additional charges wor-- wornt announced with the teach in and larry culp and his team coming into place seen as a positive by investors and analysts and one of the reasons we've seen the stock rally as much as we have this year. that being said, here is -- this is a report out today. this is from millos research, scott davis who i believe is still an investor and analyst. buy right and target $16 but the short report depicted a ge story that deceived investors and we lived it and this part is real and ge has to credibility at all in responding to the report today as inaccurate. >> i'm here to try to set the record straight with regard to that i stand behind the accounting that we have for the insurance liability and every other element of our financial statements we are going through this
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process to try to make sure that people understand the elements of insurance accounting. it is full of assumptions and other inputs and it is not easy to understand. but what we're trying to do is show that we have trued up the liability when he had to unlock the assumptions and going through a periodic process to do that in accordance with gaap in the third quarter this year we go through our annual loss recognition test and we'll do it again. and let me just say that interest rates have declined, we have other changes in the assumptions and our experience that will be factored in and so we'll probably see a change in that liability but that is in accordance with gaap that is the way this process is supposed to work. >> now i know mr. marco pollos came out on cnbc and said that ge and ge's leadership even current leadership should be held accountable and there continues to be fraud and basically a cooking of the books. i realize you are saying that is not correct. this is factually inaccurate but
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if you look at the history of ge, everything you've seen happen with the company under predecessors, i mean is there -- is there a case here could there have been -- especially with the long-term care insurance were disclosed and so big and so much later than everyone else in the industry, is there a case here that predecessors have brought us to this point and there could be fraud there >> so i'm into the here to talk about predecessors as we have disclosed more times than once there is an ongoing investigation of those historical matters, i'm here to talk about the accounting today and i think it is -- it is baseless and inflammatory to accuse this team of fraud. that is so beyond the pail the people i work with and the management team and other directors, et cetera, are so committed to trying to enhance the credibility of our financial reporting and be proactive about what do investors want to know and provide that information
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the insurance teaching is a great example of that. so i think it is baseless and we really do need to question the motives of the people behind this report. >> in terms of the financials at the company disclosing, one of the comments also made by mark pollos today, come out with a clean set of books, he argued, add more details, expenses, r&d, sg&a and went down the list. is that something that ge can and should and would do? i think there is certainly a lot of investors that are long-term that would like to know more about the company's financials if for no other reason than to know there are no other skeletons in the closet. >> that comment, giving that level of detail business by business and here is a great example of a case where he is making unsubstantiated inflammatory comments. we are not required to provide that level of detail on a segment by segment basis if we have groundswell of investors who say we would like
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you to provide it that way, that is something this management team would take seriously. so it is fine that others have received that input and are providing that level of detail but the actual accounting standard in this area does not require that level of detail so it is inexcusable to use the word fraud in this context. >> he said that he's shared his data and his report with regulators said he's not making a comment but it has been favorable. have you heard from regulators investigating ge for accounting on this report yet. >> i have not. >> one more question for you in all of this and that is given the fact this is a name, this is a stock that has historically had quite a number of retail investors including both former and current ge employees, when someone does come out and talk about the possibility of bankruptcy and raises more questions about cash, which clearly has been an issue over the last couple of years what, is your response to them and what do they need to know about the state of ge right now?
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>> so, i think that ge has plenty of liquidity. larry has articulated many times that we have cash, we have access to credit lines, we have a plan to monetize other assets and so i don't have any concerns about the liquidity of the company right now. but you mentioned those investors and i think what i would say is i think we've got to get to the bottom of this i think that this report today set a very dangerous precedent where somebody can just say things and then potentially benefit monetarily significantly from the decline in the stock of the company. that is wrong. and i really think that we need to investigate the motives for this and -- because here we have mr. marco polis and whatever this unnamed hedge fund is probably benefiting significantly financially today and yet the the holders of ge stock have suffered a loss and just think it is wrong and
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we need to look into this sort of unsubstantiated reporting without him ever contacting the company for comment or for an opportunity to respond to any of the allegations. it is just wrong and i think we need to look into it. >> leslie seidman, thanks for joining us today. >> thanks for having me. back over to you. >> morgan, thank you very much for that and thank you to leslie seidman and what stands out is an unequivocal denial from the chair of the accounting -- the audit committee from ge that the accusations made this morning by harry mark on lus were wrong and unsubstantiated and he has great credibility in the area having been the former chairman of the accounting standards board but i would say that defense was based on when she joined the board in 2018 and about current management wouldn't go as far to say the same level of defense for her predecessors the share price is down sharply, 10.5% off the lows down about 13% or 14% ints raw day but down
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about 10.4%. stephanie is still with me as a shareholder what, is your takeaway. >> it is disappointing for sure. but the report this morning was all of the data inside of that report was in the kay. so we've known this. and they are going to have to increase their reserves. something to the tune of $9 billion with an accounting change, a charge rather, probably up to $14 billion, $15 billion and they could still pay down debt and liquid is fine they have $46 million credit line and they have $21 billion coming from the biopharma sale. so these are -- this is i think a big, big over-reaction it is hard to step in, right but i think she has a lot of credibility and i believe the company. >> do you buy more then with this 10% pullback? >> i want to wait for the dust to settle but i believe in larry culp and i think he'll get the job done and last quarter when they reported it was better than expected quarter on many fronts.
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there were puts and takes but power stabilized, cash flow improved, orders grew 4% on the industrial side. so i think there are some things that he's doing that are mix -- that are fixing the account and by the way he's buying stock this is a big overexaggeration and then let the dust seventile and then buy more. >> stephanie link thank you. we have 17 minutes left of trade. we're up 94 points next katie stockton is back to tell us what she sees in the charts if the u.s. is the best place to buy equities and earnings results, apop up 40% year-to-date -driverless cars... -all ground personnel...
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well, with 14 minutes before the bell, here is where we stand on wall street right now the dow up 118 points and in another volatile session s&p is also up about three times percent and nasdaq up and small cap and transports are the underperformers in the trading activity sy nede the last-chance tra sotatud. e mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers.
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welcome back to the "closing bell." 11 minutes left. we're at session highs you could see that leg up to the right-hand side of the chart up just over half a percent. 140 points on the dow and the s&p up close to half a percent and nasdaq in the green and russell still lags just
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negative back to katie stockton from fair lead strategies taking a look at global markets relative to development markets versus development, what is the telestrator telling us. >> we have long-term down trends in both developed global and also emerging market etf versus the spy or spdr which is continued long-term underperformance by equity markets relative to the u.s. stock market to me that is a continuation pattern. i do think over-sold conditions will give us a bounce in favor of a merging markets and develop global and to that end i think we should talk about china as being really the culprit as the most over-done on the downside here so this is a chart of the hang sang index and you could see it does have some support in this
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orange area here based on previous lows on the chart of course it has a lower high in place so that does reflect weak momentum but from the breakdown that we saw this month, we've already seen what is called a measure move so it reached its target so due for an over sold balance. >> that is the hong kong index. >> right >> and there are other factors weighing on it. >> of course that is why it is good to have levels of risk. >> looking at these charts, we've had a number of people come on and say that e.m. looks attractive and your response based on everything we're look at here. >> short-term there is opportunity and long-term it needs to prove itself in terms of momentum. >> katie, thank you. we have less than 10 minutes to go stephanie, what is your last chance trade. >> cisco so down 11% in two days and down 20% from the highs and trades at 14 times earnings which has been
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revised and they've been -- they very conservative on guidance and yields almost 3% and the story has not changed. mid single-digit orders and x the service provider business and the operating margins she raised and they have a new product cycle in switches, a family catalyst 5,000. i like this story and i think it is down on the down side and i added to it today. >> and even if growth and trade war surprises to the down side, you still like it. >> i think they de-risk the numbers. the guidance was surprise but half of the guide down was china, it was down 25%, from here we've already now de-risked that so it is not without -- you get a little bit nervous with global growth exposure but i think you have to take advantage of the high blue chip quality companies. with this fabulous management team to take advantage of it >> that is your last chance trade from stephanie link.
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kissco down and great tonight to buy. we have 7 minutes left of trade and we're near the session high, up 140 on the dow. we're covering all of the angles in our closing countdown when we come back. don't go anywhere. ht die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right - by consolidating your credit card debt into one monthly payment. you can get your interest rate right - by locking in a fixed low rate today. and you can get your money right. with sofi. check your rate in 2 minutes or less. get a no-fee personal loan up to $100k.
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the s&p is at 2853 it is time for the closing countdown. let's trade at the close with sean cruz, td ameritrade from trade strategy sean, what are you watching into the close here >> it is encouraging to see the market rally into the close today but i'm looking at the vix to see if any rally will be sustainable. or two continue to follow through to the upside and still seeing the vix, volatility index which measures uncertainty or fear of the market and right now it is showing uncertainty and that is why you're seeing it remain elevated at about 21. so before i think there is a lot of conviction behind any rally i want to see it break at least below 20 and back down to 18 to show that investors are feeling more confident in coming back into the market. >> aside from the vix, you've been focused on the max row data more than anything else, is that right? >> i think we got a lot out earlier this week. if you look at -- in about a 24-hour period we got bad news out of china that showed
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industrial production and retail sales lower, if you look over to europe we saw germy show a slowdown e.u., gdp came in low and their industrial production dropped 2.6% year-over-year so you ask how long can the u.s. remain resilient against so much weakness globally and that is in front of a lot of investors' finds and in the fed's mind as they determine policy for the rest of the year. >> and certainly that is putting pressure on energy if you look at the s&p, there is one negative sector that is energy but you see opportunities there too. >> this is an opportunity to pick up a little bit of yield. if your looking at what is going on with yields, we have the ten-year down around -- 1.5% so you could go into the energy names and i would look at diversified majors with stable and healthy balance sheets but something like exxon offers 5%
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yield or chevron offering a 4% yield so i think there is opportunity in the energy space but you want to make sure to buy in quality names. >> sean cruz thank you. we're going to send it over to rick santelli for the bond report rick >> we had really good data points today outside of the industrial data. retail sales, philly fed and empire but treasuries doesn't pay attention. a two-day of 30 year bonds still down six basis points and drifting back toward the low and one week of tens and down half a dozen basis points and boon year-to-date is stimulus at the next meeting and the dollar index and nasdaq trying to stay in the green >> looks like it is trying to firm into the close. cisco has been the big drag on the pace for the worst day in six years but seeing a lot of
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other companies that are also suffering today on concerns about slowing. j.b. hunt, eight months of shipping freight down. eight straight months. also american airlines, concerns there about slowing as well. potentially when it comes to flights hitting a new low. 337 new lows today a lot of them did turn around this morning particularly small caps like children's place and we did see a turn around in the big caps today on netta yesterday's biggest decline or one of the biggest decliners hit a new low so a little bit of a turnaround here at the close an we'll see if it closed. >> and mostly in lock stop with the ten-year bond after the ten-year dropped below 1.5% and take a look at movers. another defensive rally, consumer staples led by walmart earnings and health care up on the day. trade sensitive names were again weaker, particularly transports, metal stocks and retailers new lows in the retailers,
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nordstrom, kohl's, macy's and banks extended the selloff and energy a lot of new lows and again -- as well and there is the closing bell ending just off the highs for the day. the dow jones closing up roughly 00 points and the s&p up 6 points welcome to the "closing bell" i'm morgan brennan in for sara eisen. >> and i'm wilfred check in where we close. loftd about 40 points of steam on the dow finishing up 100 after yesterday's 800 decline. the high of the session came 15 minutes before the close which is up 140 but we were down significantly about 140 as well. a couple of hours ago. so a volatile session today closing positive stop the bleeding as bob pisani said but only up a quarter of a
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percent for the s&p and the nasdaq and russell slower and consumer sales helped by walmart. >> yes and consumer staples, real estate, utilities all of the names seen as proxies for the lower interest rates and energy and industrials, the worst performing sectors today in the session. joining us to talk about the day, stephanie link, head of global equity and along with scott wren, a senior global strategist at wells fargo and lisa ericson, head of traditional investments group at u.s. bank. stephanie, i'll start with you it was another volatile session. we were in and out of the red today but we finished near enough to the highs which you look at the close. >> so i mentioned i was looking at walmart and cisco but looking at interest rates. ten-year at 1.5%. >> touched 147. >> i know. and in spite of the fact that we had good data.
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productivity and retail sales some of the things walmart said about the underlying consumer. it is encouraging to rally but i would rather rally with cyclicals versus the defensives and the defensives were the leadership today. >> and again, on the yield point, as rick is pointing out, the german ten-year close at a low so that had some effect. data here was good cot wren, what was your take today. >> wilfred, i thought the retail sales number was good. and you knew it would be a wild day in the market when a couple of hours before the open in a 45-minute period the s&p futures traded in a 52-point range you don't see that very often. but that is kind of the tail of the day. the data was good. industrial production disappointed a little bit. but certainly the consumer is what has made this economy move forward and it looks like that is going to continue to be the case >> lisa, how do you view this market right now and how would you be telling clients to have
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themselves positioned? >> we're advising our clients to stand on their positions we feel like if a balance return risk picture and if you look at it, the data today confirms that view, what we have is a mix of data, certainly as your other guests were pointing out, really retail sales continue to show that the consumer is staying in the game but we've got some weakness on the industrial production side and again that shows really how there is a balance of return and risk going on. so really we like for our clients to stay at the strategic long-term positions rather than taking an over or under weight position at this time. >> stephanie, you mentioned the rates out look which is not positive how do you -- hanging on for a couple of weeks. where do you stand on the u.s. banks? we have warren buffett increasing his stake in the banks and -- where do you stand on u.s. banks. >> you have to be patient for sure you can't own a sector or stocks because they are cheap you do want a catalyst and i would say we don't have a lot of
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catalyst in the near term but i still like them. i still think the capital positions are strong and they're in there buying their own stock probably every day and the one theme that we talked about when the companies reported was how strong the consumer was so here we go again. all about the consumer, which is a big part of the u.s. economy and i think they can benefit from the consumer from mortgages as mortgage applications are up double-digits and triple-digits this week alone and then fees. and there are some positive tail winds for them versus just rates and just net interest margin. >> on that point, warren buffett is loading up on the money centers, wells fargo and bank of america and j.p. morgan as well. you've been long morgan stanley and are you still and why morgan stanley versus them. >> i do own morgan stanley but i also own bank of america and cityi group and i do think there is another story there and that
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is on the cost side of things. i think bryan moynihan and team have done a great job of controlling and accounting cost but there is more to go. you will see operating leverage like in the past quarter citi group is a global play and if the volatility continues, that is not a bad thing for them as well. but a distant third for me. >> on global plays, talk china trade headlines driving a volatile day on wall street. kayla breaks it down for us. >> the standoff continues between the u.s. and china with both sides digging in. in a series of missives, china said they will retaliate in september and that washington should not offer advice on hong kong and that the u.s. must meet beijing half way to reach a deal on the flip side, the president -- president trump said a deal will be on u.s. terms. president xi should meet hong kong protesters to settle concerns and the u.s. will soon
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be winning big on trade. one of the weapons used by the white house on trade is labelling china a currency manipulator and this afternoon president trump exerted what it calls immense pressure on interest rates with mixed results. >> to you, lisa, what is your take on the latest on trade. is the key factor you watch as to whether or not we're going to have risk on or risk off i sentiment markets? >> so we do think trade is a key factor driving the market. if you look at the economic outlook, we have moderate global growth so anything that could bring down the growth rate slightly is a concern and the big implication of trade is the uncertainty that it is bringing into the overall picture which is then again bringing down that capex spending and causing businesses to delay their spending plans so we do think it is a big factor right now we don't see it tipping the economy into recession but we want to continue to monitor it going forward.
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>> scott, do you think that investors need to settle in for a much longer u.s./china trade scenario playing out i know we're getting headlines and it is moving things back and forth on a daily and sometimes intra day basis right now. but not that much has changed other than the fact that we do have additional tariffs on 10% on more goods being imported from china coming in right now longer term, this seems like it could continue to be painful. >> morgan, we are expectingan eventual deal but it is probably not going to be this year. it will probably be sometime in 2020 and it might not be that great of a deal. i don't think the market really needs that great of a deal to respond positively to that but certainly we're going to react to every headline once again today was a perfect example of that. and some of the things that karen mentioned, currency manipulator, retaliation, these
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various things, this trade friction has been ratcheted up a notch here in the last week or ten days and that increases the risk to our outlook which is a modest growth and inflation and fed being pretty easy. no recession over the course of the next 12 months or a low probability. so these increased tensions really put negative risks to our outlooks so we're paying very close attention. >> stephanie, the russell 2000, the small caps which tend to be more u.s. focused again underperforming the market and they've been among the worst performing averages at least here in the u.s. year-to-date. is a rally due for this particular part of the market or no >> it could. for sure everything can bounce. but if there is a big component in terms of financials in this index too. so you have to see that financials will catch a bid and not with rates at 1.5%
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>> all right "wall street journal" editorial put out another op-ed critical of the trump trade policy called the navarro trade recession ii and argues that china trade policy is more to blame for the recent plunge than the fed interest rate policy. >> last week we spoke to peter navarro and responded to the response from the "wall street journal." >> to be attacked in the "wall street journal," they have never, ever, supported our trade policy going back to when donald j. trump was a candidate and we don't expect them to change their stripes now. >> scott, where do you stand on this debate? who is to blame and are we headed for a recession in. >> well, for us, we think there is a low probability in the next 12 months. although as i said, wolf, for the risks based on the last
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couple of weeks have increased the negative risk for that but i don't know if there is anybody to blame i think the president is trying to take a tough stand here we certainly are concerned ab t about -- of -- of taling intellectual property and we want to make progress there and everybody agrees on that not a lot of agreement on tactics. the chinese look like they're ready to play hard ball. but we expect volatilitybetwee now and then and a lot of days where the markets are going to react to headlines both positive and negative and like today you had positive and negative on the same day so that is been a little bit unusual lately but i think we should be ready for a continued volatility still, though, on drawbacks, the june low looks like a spot to maybe think about adding to
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equities but for the most part, right now we don't really want to hang it out there too much we want to lean a little bit towards cyclicals. but not very much. >> lisa, when you see a name like cisco finish down more than 8.5%, that is a big move for that stock and certainly comes on the heels of earnings and the weakness in the guidance tied to china. what is your outlook for earnings in q3 and q4 and do you think enough of the trade risk is factored in yet >> so we've been pleased with quarter two earnings certainly they were able to beat the bar of expectationals that were already set but to your point, looking forward, we are concerned. and what we see is that first of all earnings estimates are being ratcheted down both for q3 and q4 and in addition to that, if you look even further out, actually the expectations start to look a little bit high. so again starting with q4 and
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then into q1 of next year we've even are up to slightly double-digits on the earnings expectations for next year so those do raise some areas of concern and that is again leading to our more balanced out look again while we see the economy in decent shape right now. we need to see how that trajectory continues >> speaking of earnings. we do have an alert on applied materials. jon fortt has the report for us. >> applied has reported and it is a beat on top and bottom line and a positive guide this is important because applied materials is a bell worth weather for semiconductors and also displays. reported revenue of $3.56 billion versus $3.52 billion expected nongaap eps of 74 cents and then for the current quarter fiscal q4 they are expecting $3.68 billion in revenue plus or minus $150 million
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the street was looking for $3.64 million and they're also projecting 72 to 80 cents of nongaap eps versus 75 cents expected so the midpoint is 76 a little better than the street was looking forch that is why you see the stock up nearly 3% after hours so far >> jon fortt, thanks for breaking down the numbers. stephanie, what do you think. >> it is depending on guidance on display and member. we are waiting for them to say when are we at the bottom point? when are we at the trough. we're getting close. lam was conservative but there were some light at the end of the tunnel comments so we'll see what applied has to say tonight. >> and now up 44% year-to-date as well. >> trades at 13 times, not too expensive. >> trong performer we have nvidia as well
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thanks to stephanie link and lisa lend and great to see you straight ahead, after strong earnings guidance, up next we discuss whether walmart results could give relief to the retail industry as a whole or whether it is stock specific. and nvidia earnings are due out any minute coming up, find out how you should trade the chip maker stock after the results are released. and much more reaction on ge having the worst day since 2008 in wake of the fraud accountant who blewhe t whistle on bernie madoff's ponzi scheme. stay tuned
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welcome back to the "closing bell." a wild day for stocks. bertha coombs has the details. >> it looked like we were going to end in positive territory but at the end of the day cisco continued to be a drag on tech cisco hitting a seven-month low after the disappointing out look and earnings and talking about slowing partly because of china. but we didsee a number of big caps today were strong facebook, in fact, helped the
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communications sector avoid going below those august lows and challenging the june lows. so we did see a turn around there and we saw most of the sectors just flat on the day so that is pretty good news after that big drop we saw yesterday. over to you. >> bertha, thank you now retail earnings came in mixed overall. walmart and alibaba beat expectations and macy's and tapestry fell short. and while retail sales rose 1% in july the sector faced headwinds after trade disputes between u.s. and china bill simon ceo of walmart u.s. and dana lilly and dunn ceo of pro forma. bill, i'll start with you. is the u.s. consumer very strong >> u.s. consumer is doing really well all of the indicators that would -- that would you look at typically are very strong. employment is strong and gas
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prices which are a big indicator are low and table. wages are up so the consumers ferocious in appetite right now and continues to respond well. >> liz, on the one hand we had those numbers from macy's yesterday, the stock plunging and today stronger than expected numbers from walmart and the stock jumping. what is the read-through when you look at two different -- two different earnings reports what is the read-through to the retail sector broadly as we get por numbers next week? >> i think the consumer is in good shape but we're seeing a consolidation from some of the large players like walmart, target, costco, walmart said it in their press release, they are taking share and it is tough for a while and that continues and it is a contagious affecting the entire mall. >> i don't know if the president is watching but he tweeted 40 seconds ago, quote, walmart, a great indicator as to how the u.s. is doing. just released out tanding numbers.
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our country unlike others is doing great. don't let the fake news convince you otherwise. in a tweet coming out about a minute ago dana, is that accurate the u.s. consumer strong and is it walmart that tells us that when as morgan pointed out, there are plenty of retailers that aren't doing well. >> exactly we have a mixed bag of retail and i think the second half of the year we've been talking about it goes to be a tough road and it feels that way. value and convenience are winning. and walmart offers value and convenience. they've been besting their sales and garnering traffic and market share. if you look what is happening inside of the mall, department stores are having to reinvent themselves to be relevant and the pace at which they're having to do it continues to get faster and faster whether it is right sizing the footprint of the tore, or right-sizing the number of doors, i think both of them need to be put in play. but don't forget, we have other factors that are out there that are pressuring the u.s. consumer and pressuring retailers
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whether it is tariffs, whether it is inventory levels and that companies have brought in ahead of tariffs, they all have higher inventory going into the back half of the year along with a weaker tourist component and macy's called out tourists from international declined 9% in the july quarter as compared to just over 3% in the april quarter. >> phil, what do you make of the tariffs on the retail sector and whether they're absorbed by companies or pushed out to the consumer, if they are pushed out to the consumer, can the market place support that right now >> i think they can. if you do the math equation and follow it out, the tariffs themselves -- the actual tariffs aren't the big driver on the overall economy and walmart is a great example. two-thirds of what they sell in the u.s. is made or grown here in the u.s so only import a third which is still a big number
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about $120 billion in the u.s. and about 20% of that plus or minus from china and when you start figuring that out, that might be 5% or 6% impacted by tariffs and then when you add a 10% tariff to that, you know it is basis point potential impact. but companies have been hear being this for a while and taking actions to mitigate it. so i don't think the tariffs themselves play a big impact >> bill, do their size and scale mean the tariffs are an opportunity for walmart to take market share >> well, i think any time prices are moving, walmart has an opportunity to take market share because they've got the ability based -- as you rightly point out with the size and scale to keep their prices down longer and find other areas in the company to cut expenses in order to keep the prices low and i think the combination of tariffs and the ferocious battle that is going on between walmart and amazon over e-commerce and
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the pressing effect that is having on margins overall is making it very difficult for other retailers to potentially grow when walmart is $350 billion in the u.s. and amazon is $150 billion and both of them are growing, you throw in growth from target and costco, you have a really big chunk of retail in the u.s. that is growing above the market which makes it more difficult for others to grow >> liz, when you do look at -- factor in tariffs and the uncertainty with china there are retailers who have shifted their supply out of the country to a certain extent the selloff in the sector, are there buying opportunities here. >> it is tough because when you look at the charts, companies trading at the high and low end of the 52-week and the low end companies go lower like tapestry today looked maybe like an opportunity heading into earnings that is not the case because the stock is down 20%.
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there are select opportunities but it's going to be -- it is not the company's we're talking about. target and walmart have done quite well the stocks are trading at the high end of the valuation. i would like target over walm t walmart, particularly because it is a cleaner story but it is a difficult market right now and it is a haves and have nots kind of scenario. >> thank you for joining us. >> nvidia numbers are out. let's get to diedra bosa. >> shares popping 6% on top and bottom line beats from the chip maker reporting q2 shares of $1.24 versus $1.15 expected revenue of $2.58 billion higher than the $2.54 billion that was estimated. guidance very important here falling a little short, though q3 revenue expected at $2.9 billion below consensus of
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2.97 the stock is popping so we'll continue to dig into the numbers and see perhaps if that full year guidance is what is pleasing investors keep in mind this stock has tumbled 12% this month alone we'll continue to look through the numbers and bring you more information on the different segments like gaming and data centers, guys. >> it tumbled but still up year-to-date 10% or 12%. gaming is the big area for this stock, over 50% of revenues, isn't it >> that is right gaming is still the biggest source of revenue. however, the data center revenue is critical because nvidia is pushing this business to reap the rewards of the boom in cloud computing and while gaming has been the growth front, that has come down and now the focus even though it makes up less proportion of revenue is on data centers. >> diedra, thank you very much looking forward to the breakdown of the numbers when you have them. we have a news alert in the meantime on the bond market. according to the treasury
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department, japan and china as the top foreign holder of u.s. treasury japan holds 16.9% of u.s. foreign-held treasury versus china's 16.8%. with only those percentages i can't tell you if that is buying by japan or selling by china one would assume it is the latter but i need the absolute figures to give you that either way, as you could see, ten-year, 1.495 and we have the 30-year below 2% earlier today the selling, though, the fallen yields we did see today did see a slight steepening so i have got two tens inverted but bearish buying of bonds in general with yields going low. >> up next, we'll break down the charts to see why small caps have been underperforming in the broader market in the recent months and what that says about the outlook for stocks and later find out if market uncertainty and fears will help gold prices llray even higher.
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we're back in a couple of minutes.
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welcome back a look at how we finished the day on wall street following the worst day of trade yesterday after seeing the dow fall 800 points and today we recovered 100 points the high of the session was 140 and the low was 140. volatile intra day session so closing much closer to the highs than the lows. though we did see a little bit of slippage into the close to close up just 0.4% on the dow
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and s&p up a quarter of 1% and nasdaq and russell were in the red. in terms of the sector performance, it was defensive in terms of what led high staples top led by walmart and followed by real estate and utility. >> small caps have also been underperforming and we saw that in force again today here for a look at what that could mean is jeff degraff who is joining us over at the telestrator. jeff, tell us about this chart. >> this chart is two things. it is important to understand small caps because of the waiting. small caps have roughly 18% of the market in banks. and what we have here, the blue line is the relative performance of banks versus utilities. banks sensitive to down drafts in the ten-year yield which is our orange line so the relative performance, you could see banks collapsing as yields collapse taking down the banks on a relative basis versus utilities and that is a big reason as to
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why the russell 2000 is underperforming the russell 1 because of the disproportionate waiting in the banks for the russell 2000 so as long as treasury yields continue to decline, banks likely to decline and the russell 2000 is likely continuing to underperform which you could see there. >> it is about 25% waiting or so to banks. >> about 18% now but because they've come down. >> fallen so much. and what are the other big sector weights there in the russell. >> you have tech and health care those are the other two. so health care actually tends to do well when the curve is in vert sod we'-- inverted so we're looking at the life science tool names and suppliers an the services they look great. >> and i know you watch these closely, s&p 2847 today. what are the key levels -- >> 2730 is a key level the good news is put calls have started to spike and we had a huge trin yesterday, an internal measure, the highest since 2015. that is usually in the zip code
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of some type of near term low. so we think we're in the process of hammering something like that out. to give us a bounce. that bounce will be important. if there is no momentum to it is, it is a bigger top and if there is it is a consolidation and we go higher. >> great to see you as always. time for an cnbc update. sue herera has the update. >> here is what happening at this hour. ilhan omar said israel move to block her and rashida flab from visiting is an insult to democratic values. in a prepared statement she said israel's move is the eck whiff lent of president trump's efforts to block travel to the u.s. from muslim dominated countries. the ohio coroner said the dayton gunman had drugs in his system at the time of the shooting and they found a bag of cocaine on the body of connor betts. florida representative
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debbie wasserman-schultz joining parkland parents whose children died in the mass shooting calling on senate republicans to take on a gun background check bill already passed by the house. >> we're on a continuous loop of violence and mass carnage and the outrage we're here to express includes rage in the face of mitch mcconnell's refusal to schedule a vote on any legislation that will actually help keep guns out of the hands of violent killers >> you are up to date. that is the news update this hour back downtown to you >> sue, thank you very much. still it come here on the closing bell, nvidia shares up 6% after hours find out how you should trade that stock ahead. >> and ge having the worst day in more than a decade following fraud accusations. what that means for the stock atd the company's future ler on the "closing bell."
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welcome back tech names reporting earnings after hours bucking the recent trend given that semis have been doing so badly applied materials shares are higher after beating wall street earning estimate and nvidia
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spiking after profit and sales results, that stock is up 6% for more on the nvidia results we're joined by chris. thanks for joining us. what is the standout for the numbers across the board beat or some sub sectors in particular that stand out. >> yeah, so i think first of all this is a better than feared report i think sentiment was low. it is underperformed the stocks going into this print. and as we look at the different sectors, they've really only announced results in which gaming and auto are good data center was a tad bit disappointing and if you look at guidance for next quarter and we have to wait for details but if i had to guess, the guidance is outstanding for next quarter which might lead some to believe that data center, ai products is the way to think, is about the -- it better chan expected.
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>> how important is data center to the long-term story of the company around this stock. >> huge. as we look at the addressful market for ai and this company as a leading player in ai training, this could be a $50 billion market some day. is what jen sung talked about. so we're only a few billion into this the fact that ai is on track again perhaps for these guys after a couple of difficult quarters, could bring a lot of bulls back to life here. >> in terms of the gaming, which is the biggest sort of chunk of revenue, strong quarters as you said, how is competition playing out there for them at the moment who are the main rivals and what is on the docket >> so this is a two-horse race nvidia and amd amd came out with the navi products and amd has 25% share and i would expect that to go to
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30% and nvidia could match or surpass amd probably in the spring of next year and take that share back again. >> what is your assessment of the semi sector more broadly right now given the numbers we've gotten with inventory levels and also the fact that next week you potentially have the -- the end of that extension for some of the companies to be supplying huawei. >> it is challenging we have ten months of consecutive lead time drops. we think lead times are a great indicator of demand behind it. so we should be coming out of the semi cycle down cycle if this is a traditional cycle but this is lingering and it continues to linger. >> key focus for nvidia in. >> can i focus on call >> what is your key focus for the call. >> no problem. >> i imagine you'll be focusing
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on the call later. >> i am. so really it is some of the details around why gross margins better and whether we'll get a reacceleration in data center and op ex is better here and if they are truly focused on driving lower op ex and higher eps as a result, this is a new kind of moment for them. >> your rating on nvidia >> positive. >> thanks for joining us today christopher roll land. >> we'll let you go and focus on that call. >> thanks. well up next, seeking safety global recession fears have some investors flocking to precious medals the best bet for your portfolio in the uncertainty ahead. and later a pulse check on the home builders. revenue is out tomorrow. more ahead on "closing bell. dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world.
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welcome back gold is up 8% since august 1st as global recession fears lift safe haven appeal. here to break it down is jim steel, chief precious metals analyst at hsbc at post nine gold, how much further can it rally from here? >> well i think right now we're probably going to come into some
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period of consolidation. gold needs a sort of diet of intrigue or bad news to keep going up and so any respite in that from positive headlines, a rally in the stock market or anything like that has the power to trigger a little pullback i think because the market has done very well recently. as you said, up 8% this month and up about 18% for the year. >> how strongly correlated in an inverse way is it to yields and why has it seemingly reacted much more in the most recent short-term move in the yields than on the prior couple of years? >> there is a good inverse correlation as also with the dollar so the dollar has been strong this year, that has also been an issue which normally would have weakened gold but gold has done well despite that and that is because of the yield argument. as the yields have come down and i think it is the flattening of the yield curve and also the negative yielding rates abroad
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we have about $15 trillion now in government debt worldwide that is negatively yielding. and gold has a positive yield. i never thought that i would have seen gold yield more than a bond. >> -- has a positive yield. >> gold, you can earn something for owning gold. it is not much. >> but you could hold the physical metal. >> or lend it and get it -- get a yield on that. >> that nuance there. >> you have to be in the market -- >> what about other options in the precious metals space that might not have yet run up that would be an opportunity? >> yes, i think you might see carry over into the platinum, the two are related. platinum is trading at a discount to the gold market. on some levels it is superior to gold and in some chemical processes and the plateum has rally sod that might have a upside the silver has done rell li--
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relatively poorly compared to gold so that might play catch-up with gold. and investors might have felt they missed on gold. >> silver and gold have tended to move together and the tact that we saw that relationship kind of break apart for a period of time, you mentioned they are both rallying together is it safe to say that correlation is back in place looking at this market more broadly? >> i think so. if you look at historically that gold/silver ratio could move significantly over time but on a historical level, gold -- silver is cheap compared to gold. >> jim, thanks very much sorry -- >> i want to go back one more time at gold here and just get your thoughts, how much of the demand we're seeing at market right now is central banks >> the gold central banks have been strong this year but particularly trong last year but one thing i would point out very quickly is we have seen a big slide in imports into both india and china and into the emerging markets
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gold is very expensive in merging markets where the bulk of physical gold is bought and that will translate through to the price and that is why i think we might see stabilization in times to come the physical market is having a tough time bearing such high prices. >> retail investors looking to get involved in the metals, the least risky or maybe easiest way for them to do so is what? >> well unfortunately i'm not allowed to give that direct sort of advice. but a simple bullion market, there is a lot of options to go into because of my legal standing that is why. >> okay. >> jim seal, thanks for joining us great to see you. up next, shares of ge tanking on a new report calling the company a bigger fraud than enron. the ge isn't backing down, we'll discuss. and coming up on fast money, another wild day for the market and another technician will ve t k leltoatch
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♪ >> welcome back to "closing bell". general electric stock crushed today, closing out the worst day since the financial crisis shares finished down almost 12% -- 11% i should say. this comes after a whistleblower warned about fraud at the company which he calls bigger than enron here is what he told us today on "squawk on the street." >> they report top line revenues and bot onlitom line and nothin between, research and
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development, it is all missing, including cash flow. they don't provide working capital. it is the only company in the industry that doesn't provide working capital. in fact, ge's working capital is minus 20.3 billion the current ratio is .67 if you word search current ratio it doesn't appear. name a company that does that. it is accounting 101 world com and enron lasted about four months. we'll see how ge does. >> ge hitting back last hour i spoke exclusively with ge board member and audit committee chair who says there is no basis for fraud allegations here >> fraud is such a strong and inflammatory word, meaning intent to willfully deceive. again, that is not the ge that i know we are in full compliance with accounting standards in the u.s. we prepare themwith a rigorous process. i as the chairman of the audit committee have full access to the people and the books and
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records at ge, and i stand behind the financial reporting of this company. you know, our role as directors is to oversee the process, and since i have joined the board and, again, speaking for my colleagues, we take this really seriously and there is no basis for an allegation of fraud here. i think the report is full of opinions, and this is one of those cases where i'm not sure that the author of the report really understands the accounting in this area. >> she joins the ge board about 18 months ago. also is the former chairman of financial accounting standards board, so carrying some weight there. ge getting support from noted investor stanly druckenmelle are who has been short in the past he said, i believe cole. i bought stock today it is a developing story we have both been covering it all day on air we will see where it goes from here meantime, it is not like he didn't do his homework
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he spent seven months and it is almost a 170-page report, a lot of analysis in here. but certainly from both sides raising a lot of eyebrows on wall street. >> for sure. i mean a couple of things stand out to me throughout the day as you said, we have been following since we interviewed him on "squawk on the street" this morning the first is given the level of accusation he has applied and the stock price declined not that severe. 10% is a big move, at times it was down 14%, which is the worst percentage decline since the late 1980s but if it is supposedly going bankrupt perhaps you could imagine a bigger share price fall it did find a bit of a bottom when stan announced he was buying today both of these are great in their fields. >> exactly. >> when the dust settles one of them deserves to lose all of the professional credibility they've built up when you look at the strengtho arguments they both place in those two interviews on our air time today, one of them is
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wildly wrong and we look forward to the dust settling to find out who it is ultimately. >> it is a tricky thing. certainly i have heard from a number of investors, analysts and the like who have pointed to this report and markopolis and said is there a perceived conflict of interest given the fact he's involved with a u.s. hedge fund he did not disclose on air that is involved in shorting the stock right now, how does it factor in? on the other side, ge is a company that's gone through a lot of hardships in recent years. they are under investigations for several of their businesses with regulators right now, and there have been a lot -- there has been a lot of focus on their long-term care insurance business, which is a big part of the report whether they have to book more reserves, what that will look like and how it could have gotten as out of hand as it did. so we'll see we will see how all of this plays out. >> and a couple of other just quick takeaways from each of those interviews from the first one this morning,
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to your point about the conflict of interest, for me markopolis did not correctly or satisfactorily explain his timing for when it came out because he said he identified this first in the '90s but had only been working on it for the last seven months and he didn't successfully say why that really was, apart that it moved its headquarters but he had been looking at it for a long time. again, that conflict of interest, when he started to be on the payroll of the hedge fund, that raises its question in your mind on the flip side from your outstanding interview, morgan, in the last hour with the ge board member, she did not unequivocally rule out accountiaccount practices of her predecessors. she said, it does not represent current board members. she didn't defend her predecessors it is worth noting of what she failed to do in the interview. >> certainly the current ge ceo has spent
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years building a reputation, so we will see how it continues to develop. > a wall street look ahead the key things an investor needs to watch as we head into a new trading day. country cl
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welcome back july housing starts and results
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are on the market tomorrow let's start about a preview of housing. diana has it for us. >> housing starts have been running slightly below last year's levels, but in a falling rate environment builders should be bullish on putting new holes in the ground, right builder sentiment improved one point in august. we will be looking tomorrow morning specifically at single family housing starts in the data to see if the lower rates have builders upping their inventory. we saw a strong jump in mortgage applications to purchase a newly-built home in july, so that could predict higher housing starts ahead back to you. >> diana, thank you. d results are out tomorrow as well. a bellwether for the industrial part of the economy. >> hi, morgan. analysts expect earnings to be up 10%, but it has been a rough week for deer, it is in part because of a report on monday that pointed to a bigger than expected u.s. corn harvest this year. a couple of things to watch for tomorrow, a response for the report, any additional color on
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the impact on the trade war on farmers and guidance last quarter deere slashed its projections. back to you. >> rahel solomon, thank you for that we closed higher on the s&p 500 by a quarter of 1% we are out of time thank you for watching "closing bell." >> "fast money" when begins right now. ♪ it sure does live from the nasdaq market site overlooking new york city's times square, this is "fast money" i'm tyler matheson in tonight for melissa lee. traders on the desk are pete najarian, karen finerman, dan nathan, guy adami. a roller coaster. >> i hate that. >> tyler, we had a whole conversation. >> some would call it a roller coaster ride on wall street as stocks bounced between gains and losses throughout the session. we will find out what is driving all of the volatility. also, whose hand is that coming in there look at that. >> creepy. >> also ahead, shares of nvidia and applied materials, both on


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