>> thank you >> one last point on video games. it's a technology investment that's taking away from productivity >> thanks. >> got to run. thank you. thank you for watching power lunch. >> you don't want to go any where. closing bell starts right now. it is time for the closing bell a midday slump sending stocks tumbling headlines from china and europe. we'll break down all of the market information you need to know >> the builders and innovators conference coming up live and exclusive, an interview with the new ceo. we'll discuss his vision for the bank and the current market volatility txdot is getting slammed

today. the ceo of sap joins us to talk about the sector's slump closing bell starts right now. good afternoon and welcome to the closing bell. the dow right now is down 340 points it was down as much as 470 points worries about china, europe, rising interest rates all weighing on investors today. >> yes here is a check on the volatility index it is up above 20. it settled down following that spike late last week last week it was up towards 29 it is still reflecting i think the sort of instability not showing anything close necessarily to real panic.

wontd wondering if it is a story >> talk a little more about this and get to our closing bell exchange joining us here is director of floor operations rick is at the cme as usual. thanks to all of you i just mentioned you could look at any point and say it's china and even italy what do you think was the trigger today? is it part of the bottoming process or something worse >> yeah. just as the european markets were beginning to close you had a couple of things that spoke about the risk to the economy if people didn't play by the rules.

it is a rather creative budget process and a few others in the eu land took a shot at italy the yield on their bonds spiked. we were close enough to the close that i didn't have a disproportionate move. interestingly contemporaneous with that secretary announced he would not be going to saudi arabia i think a lot of people saw that headline and said that's why the market is selling off. if it had been due to the decision i believe that oil would have spiked showing that the relationship between the u.s. and saudi arabia would become testy oil did the opposite it came down i believe it was italy more.

we lifted a little does it mean anything? >> you broke it in at least two key indexes. you also have the transports selling off in a manner that could cause a cell signal. so it looked like everything was going to come unravelled but they didn't. there was no selloff i think you're right people said tomorrow is an exploration. maybe i don't want to sethrow tm out the window yet >> he threw out everything from italian bond yields to treasury yields >> a lot of uncertainly out there. you had larry talking about the chinese are not willing to talk to the u.s. on a positive basis.

i think that's part of it too. if you go to a pool and put a beach ball under water and let it go it pops. that's thousand it is. we are very oversold we are getting this pop. unfortunately i'm not that impressed with the rally or the recovery i need to see more stabilization. i'm a little concerned about the failure to make new highs and failure to hold the rallies. the one thing the market doesn't like is failed rallies >> it's funny. the stock market is acting a little mellow dramatically whether you had a hot leading economic indicator today, maybe the dollar is up a little bit. none of that is out of the recent range what is your word on how other

markets are kind of metabolizing all of this? >> actually it is out of the range. we say you that the six trading session really tight yield closes along the curve we are looking to bust out we saw it yesterday. we closed it, you know, at 320 today it looked like it wanted a challenge. we are at 337, 338 and 30s 340s is high yield close of the yield. rates want to go higher. they do pay attention to stock volatility they don't bring yields down dramatically it just stops the upside from developing i love his analogy i'll take it a step farther. we know there's a big brouhaha we doubled the pace since october 1st. our central bank is doing it

so with his beach ball analogy how much does it pop if it's resting on the bottom because all of the water is gone in these are pointing towards issues listen, don't under estimate the notion of how markets may be just like any individual when the market goes down you have to pony up. >> we'll give you the final word maybe if you could be sector specific we are looking at all of them lower. >> i'll make a very simple analogy. as long as the recent lows of the last week or so hold and any of these sectors i'll be willing to trade them short term but if we have this beach ball analogy i believe there's a hole in the ball if we start taking out the lows

i think you'll start seeing dramatic declines across the board. the areas i suspect kind of make sense should hold up relatively well would be more of the defensive stocks, the staples and utilities for example. >> all right we will watch for that that is what is holding up relatively well today. thank you. with that let's send it over to santa barbara we are live from goldman sachs builders and innovators company. the first interview. take it away >> thank you very much for that. david, thank you for having me here >> absolutely. great to have you here again always like seeing you out here. love this event. it is a terrific event >> congratulations as well >> thank you >> on becoming ceo at the start of this month. it is great to get a chance to

talk to you about the event and about becoming ceo in your vision as we were discussing i want to start with market volatility the dow is down 400 points earlier. of course follows a very volatile down week last week as well when you talk to your clients what's the biggest reason that they are selling in your eyes? is it the spike in rates that you have seen? >> i think you have to put market volatility in context i start by saying as we came into october we had six months in a row of up markets each month. you know, i also looked back and i noiticed if you go back to th spring of 2016 on a month to month basis we had 27 out of the last 31 months coming into october. so 85, 87% when you have a run like that there's no question at times markets will retrace a little bit.

i always go back to what's going on in the underlying economy it is pretty strong. from time to time given the gains that people have seen in markets it's not surprising you see selling or rebalancing >> a lot of people question whether the economy is late cycled do you any that's fair >> i'm not good at predicting the length of cycles we are probably closer to the end than we are to the beginning. at the same point with economic activity actually in pretty good shape there's a good chance it can continue for some period of time there's no question that we have pretty good visibility on strong corporate earnings also some continuing technicals that i think can support the market if the underlying economy continues to be stronger >> i guess it is the fed and

interest rates he said i think the fed is making a mistake i think the fed has gone crazy is he right? >> he has been very transparent and very trauhoughtful about th process of starting to unwind this policy that has been in place for quite some time. i think they have done a good job and again, things have to be put in perspective there has been a movement up in rates. i think it can have an impangt -- impact on the markets. you don't have to go back to have a different perspective i started in 1984. when i started in 1984 i think the treasury was around 11.5%. there are different environments that can effect things over time i think it is pretty transparent. you don't want to get into a position where the fed gets

behind it is unprecedented. i think the feds are being thoughtful about that. think if rates start going up faster than everyone expects and that's when we get behind. >> when you talk to companies and corporates how is their view on how strong their feeling changed in the last 12 months? >> i think it is still pretty strong that's because generally speaking, you know, corporations have a tendency to look through the rear-view mirror a lot of momentum with respect to corporate earnings. it is generating a lot of cash they are deploying that cash in the form of investment or returning it to shareholders i think it's pretty high >> if we come back quickly i mean we saw big moves last week, 2% today on the nasdaq are those big moves a consequence of the changing

nature of equity markets with more etfs? is that something we should expect to continue >> you know, look, i think there's no question that market structure can at times contribute to volatility i think one of the things we are spending a bunch of time thinking about is how changes in market structure over the course of the last ten years will effect market activity there's no question between regulation which effected the way large institutions par tis paint. index product t growth of systematic trading and machines more involved in what we do. all of those things untested over any duration of time with severe stress. when we see a little bit of stress you can see reactions that might lead you to believe that it could play a bigger role i wouldn't predict that. it is certainly something we watch. there's no question when we look

at last week some of the selling is the result of selling because volatility goes up some of these force people to sell >> uh-huh. >> back to the sort of broader economy, one of the risks people always mention is trade with china. is it fair to say we are now in a trade war with china >> i don't know whether it is a trade skirmish or trade war. it has potential it don't think it has had a significant impact but i think the more interesting question around the relationship between the u.s. and china is not just figuring out where we are on trade but factually there's an enormous imbalance i think it is something the administration has been right on in terms of how they articulated it, in terms of how business is

including how a business like ours can participate all of that has to be rebalanced trade is one component of that i think one of the more interesting things that market participants are looking at is where are the more medium term relationship going as we try to resolve this it is actually something that democrats and republicans really do agree on. we have got to bring that more into balance trade is one aspect of it. >> whether you like the tactics or not is the chinese economy hurting more >> i think you have to be careful with that. i think the diagnosis is right we have an imbalance we have to fix it there's no question at the moment china's economy has been under more pressure than the u.s. economy has been i think you have to be careful about how you carry that through. i think it's something that's not going to get resolved

quickly. whether the trade issue specifically gets resolved the broader issue with respect to how china and united states participate, that's going to take more time >> can it derail >> i could have an effect on u.s. growth. i think over time we will talk a lot about the u.s. and china and it will have an impact of global growth >> another issue in the cross hairs is said udi arabia if tensions escalate is that something that could damage growth and damage markets? >> there's no question markets really respond to confidence you asked me about ceo confidence i gave you an answer that was tied to what ceos are seeing in the business if it becomes more volatile or issues like that, yes, it could effect markets and translate into growth for sure

>> he said he wouldn't be going to the saudi investment conference is anyone from goldman sachs going? >> we had no plans to go. >> clearly you could find issues to point to. >> look, they all complicated issues we balance them all of the time. over the last couple of years we have listened as they have talked about their vision to participate more broadly in the global economy and diversify and also to remake or remodel their society. we recently watched that

to the degree that they could deliver on that it could be good for saudi arabia and good for the world. this is unacceptable and clearly they have to answer questions regarding this incident and how they answer questions and how more information becomes apparent around all of this will have an impact on how we all interact it is something we'll continue to watch closely >> want to switch focus to the fact that you're the new ceo of goldman sachs. sorry it has taken so long to get to that topic. >> that's okay >> you dealt with a lot of ceos. were there any you would sort of like to emulate yourself >> so i have been very fortunate in my career.

i guess two people come to mind. one is tim cook which was following, you know, this incredibly iconic leader hard hard act to follow. you know, i think he has done a very good job in making that transition he leads apple with real simplicity and clarity around what they are trying to do and am also in a human way. i also point to his transition at microsoft it is a big history. you know, big culture but a company that needed to transition or evolve a little bit. he was very very successful in going in

i would also say he leads in a humble way we are blessed with incredible people we still, like all businesses, have to change and evolve. so evolution will be very important. how do we take advantage and also evolve the business in a changing world >> we'll come to that in a moment i want to follow up on the human point you made >> i think for leaders to be successful and lead to work force i think you have to be approachable i think you have to be human and you have to be vulnerable. that's something we talked a little bit about

we have nearly 40,000 people at goldman sachs. you know >> 60% >> yeah. >> i think that, you know, generationally people want to understand their leaders not just as a leader of their company but what they stand for and i think it's important you're seeing a lot of great ceos really trying to think about that you know, what's the right way to be a little bit open about who you are as a person. you to be committed to the business and be a human being. >> onto some big questions one of the big moves we have seen goldman sachs do is to use the balance sheet more to lend more is that something that was his initiative or driven by you as well >> it was certainly lloyd's initiative you know, the firm had an institutional investment model

we became a bank context of that, there was good and bad that came with that. certainly when you look at our platform one of the areas was lending to our clients one of the things we have been very focused on is, you know, looking at clients and saying what do they need from us that traditionally i haven't had. lending is an opportunity we had to offer them something that was important to them. we have been growing the lending businesses it is debt businesses generally. you think about what we have done in our investment banking business over the decade we were a small player in debt businesses and we invested significantly.

>> are you admitted kmiete comm the lending side >> yes we provide very differentiated services to consumers. we have the great advantage of not having been in these businesses but also having a ri k management expertise which is very important we are excited about the platforms we are accumulating and really in a position where we think we have an opportunity to build differentiated products over the last three weeks we have been because it is in a very positive way. i think there are opportunities for us

we will be slow and focused on risk management but i think it can serve consumers in a differentiated way >> where does it go in five years time >> is goldman sachs in a full money center bank? what portion do you want to be funded >> i think the way to think about it is we are going to continue to grow our deposit business, our deposit platform it is a diversify case of funding for us we are continuing to diversify our funding that way we want to bald digital store front. we have an ability to bring a variety and services to customers completely digital that's where the world is going. as i said, we have the advantage of being able to build it from scratch. we'll offer a range in digital products and services to our customers.

>> i guess a lot might ask is whether or not a move could have been made earlier in particular with a single shot what kind of regret do you think the board has when you consider what morgan stanley did and others around the financial crisis >> i think we feel good about the fact that we are building a platform, you know, from scratch. i think it is one of our advantages it doesn't mean there might not be an opportunity at some point to think about something inorganic. i think we are building it into our long-term competitive positioning. you are to see it through our eyes i go back and i think about the fact that we started building an asset management with the goal of waking up 30 years later and having a significant platform. we are trying to build this for the next three decades

we will make sure we get it right and be very thoughtful about it wra was the bigger r error that made >> if you look at our trading businesses we have world class trading franchises we like everyone else have had to deal with the fact that the overall wallet -- >> but your market share is full of 2010 to today at a time with when u.s. investment banks has grown. >> there were structural changes including regulation that took certain parts of the business away we have been growing our market

share. we have number two with top 1,300 and our market share in the last 12 months have been growing. we have fantastic people they do a very very good job we have to articulate what this business, where this business is going to go from here and not look back to ten years ago and talk about what it was for the financial crisis before the remake we have the number two franchise in terms of market share with constitutional clients we think we can grow from there. it's a great business but i think it is to add certain products, services and foot prichblt i w print. i was talking about how we focused on adding to that. when i look at our business we are underway to compare to banks that we compete with corporates. we have great corporate relationships and they are focused on that. there are areas we can do

better it's a good business and we are going to continue to make it better from here >> can you leverage your relationships to deliver across other parts of the business like trading? >> i think with corporate in our trading businesses with more focus on that clientele and a broader product offering there's more for us. one of the things that's interesting is if you look at financial institutions and the products and services they offer we have a narrower range even though we have great relationships with corporates broadly. i think there's an opportunity for us to lever our broad corporate relationships and with technology bringing a broader array that are added to those clients. >> i want to touch on regulation to what extent are you fearful that it's intertwined with politics and changes in the

environment you have seen? >> i do think politics can play a roll in regulation i always think about regulation and how it effects a business like ours. there's the tone of how the regulators are interacting with institutions like ours there's the rule making set and-legislation. over the curse of the last 18 months to two years the tone improved significantly there's some discussion of adjusting rules where it is coming out of the financial crisis that people can look back and say we would like to adjust this because it would be better for the system there's been very very little legislative action if you had some sort of a shift i think the tone can adjust a little bit i don't expect anything that happens to have a significant impact in the short term on the regulatory environment over time you have to watch

that >> you mentioned at a conference even higher than factors like china and trade with cyber security do you think that the u.s. banking system will be hacked at some point in the next decade? >> i think that more significant cyber attacks are a risk that could have a real impact on confidence and have second and third effects. the places that are most obvious are transportation system, power grid and things like that. i'm not going to predict there will be a significant hack into the financial system when i think about things that could have second and third impacts that could change confidence and effect growth a more significant cyber attack than something we have seen is a risk are governments working hard at

protecting against that? others would be effected are spending a lot of time thinking about that but you can't say it's not a risk you need to think about and try to think about when some could be >> to come back to the markets one of the things you did say is if rates go up toofast it's the speed of change if you get a 50 basis point move that's the kind of thing that has a greater chance >> i think it could a slow

transparent of interest rates. i think you run into bigger problems if market perspectives shift and rates go up very quickly. that will have the big ger impact >> and to round things off what do you think will be the bench mark that you would like to measure your performance by. our job is total shareholder return over time when you look back we will have done >> thank you >> thank you, wolf >> really appreciate you being here thank you for your time today. >> i'll send it back to you. >> thank you very much >> we'll see eyega next hour great introduction

>> they covered everything from the marketvolatility. >> you don't want to get behind the curve, the bontd market was also interesting he decided to mention as perhaps models of him assuming this role >> and they both followed kind of big figures of different types and have a cultural issue. >> he also made news there confirming that no other goldman sachs executives will be

attending the saudi investment summits. they said they need to provide answers. we'll continue to digest this interview. we'll follow this market which is selling off pretty hard into the close. we have about 30 minutes to close go before the closing bell take a look. dow is down 1.4% not as bad as it was an attempt to rally looked like it hasn't really panned out. >> we were down a little more 10 to 15 minutes ago. >> 2% decline on the nasdaq. still ahead we have another interview coming your way. bill mcder nmott, why his stocks falling despite double digit growth in the crowd business we'll take a look at how it could have ripple effects. stick around we are right back after the break.

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frm what is driving this afternoon sell off >> first china think of the stocks. 25% of sales to asia it stabilized and dropped down again. it is down about 11% for the month. we have the whole issue of

higher rates and what's going on with higher rates? look what's happening. important thing here, higher rates, tight housing markets home depot down about 13% so far this month we have the margin pressures take a look here they lowered their guidance. they talked about infavorable. it is materializing. >> and italy should not bust their budget what does it have to do with us? a lot of u.s. companies are significantly invested in the europeanmarket

right now we have a whole host of issues weighing on stocks >> bob thank you very much. >> the best thing you can do if you're in the fed is put ear must hav muffs on and don't listen. >> what he said about the president's remarks about the fed. making my dreams a reality

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it would take a lot to move at the moment >> and they said the market hasn't had enough to make a change >> randy, nice to see you. how bad is it about to get out there before the fed reacts when it comes to rates and a stock market selloff >> it is not just the stock market it is really the overall change in financial conditions and what the changes if financial conditions mean for credit availability it is sort of a whole set of things in the financial markets. >> and those things are really not flaring up as much as you

might think would get the feds attention in any big way >> a least not right now you're not seeing dislocations in the availability to trade bonds or even junk debt so areas where there might be a little less liquidity. so if those markets sort of freeze up, if it blows out that is -- it is not just movements in stock market. >> he said he had full faith to ignore the president it is that the feds could move to show they are not reacting to the president. they could raise rates or go faster to show and assert their independence is that a risk >> i don't think that's very likely i think powell and the others, almost all of whom i have been

nominated and appointed by president trump are people who are going to do what they are going to do anyway i think there's a long tradition of ignoring what politicians say. i think it will be the same thing here i don't think they will prove a point by raising rates why would they if they thought interest rates would be 2.5% and they go to 3 they go to economic downturn which they don't want if we assume as fed officials do that there is a another rate hike in december and then from there on it seems as if there are two parallel thought processes. one is they want to get too neutral. perhaps a little beyond that on the other hand chairman powell has referred to chairman greenspan's forbearance. where are we tracking into2019

they did not raise rates in the faith of productivity increases and he forsaw those more than others did pt that's the debate now. is there a productivity boost coming or not? i don't think it has been worked out in the minds of most of the decision makers yet. >> what is your best bet a rate hike in december and how many in next year? >> i think unless there's some sort of cataclysm i think we'll have a rate hike in december

roughly most people have in mind around 3% is where roughly neutral is that's going to be are we seeing significant productivity growth that means we don't have to move forward or are we not seeing it and we have to worry about inflation. >> that will be the debate thank you. always good to talk to you randy from the university of chicago. shanghai composite plunged as they continue to pressure their markets. take a look at the 3% slide. coming up how it could have a big imapact he u. mpy.eron.scon we'll be right back.

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>> welcome back. a weaker economy could strain chinese consumers as well. >> we have a look at which u.s. companies could be impacted if consumers stop spending. >> a lot of those companies do a lot of business in china especially consumer focused

ones not every company in america breaks out country by country specifically what sales are but here are some of the names that could be most impacted if the consumer in chien nna really sts to slow down a bit first of all you have tiffany and company. no surprise there. the asian markets are key for this company tiffany gets around 15% of overall revenue from china that's one to watch there. nike as well 14% overall. china a huge key market for that estee lauder very big in asian countries. they get about 13% of sales from china. tapestry includes the greater china region so as we talk about consumer

companies these are some of the ones to watch as we watch the drama play out with regard to whether the economy will slow down or pick up. >> always hard to figure out if it reflects underlying in china. >> well, the market is far more volatile it is growing 6 to 7% as opposed to a bare market >> we'll wait to hear from those companies. >> eight minutes left until the close. we have the dow and s&p off the lows for the day still down about 1.4 or 1.5% the nasdaq leading down a full 2% it is down 1.75. we'll look at that next. later we have earnings today from paypal after the bell we'll bring you instant analysis coming up.

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>> welcome back to the closing bell dow is down 350 points here are the biggest losers. it has been a tale of industrial weakness caterpillar is off 14.5% from the october high a few weeks ago. ibm, home depot and apple are biggest losers you have things like verizon all showing strength today nasdaq is down for the eight time in 11 sessions. lel let's go uptown for the bigst movers >> here is a stat for you. about 74% is now in correction territory.

a lot of talk around china heightened concerns around the gdp customer it would be the slowest expansion in groit it's also the first since they imposed tariffs. 23 you take a step back it is down about 30% this year elsewhere blizzard the worst performing stock after opening weekend sales for the call of duty game that disappointed. netflix giving back some of the gains and paypal is what we are watching outside of its earnings report a lot of talk about where the price of oil is going with saudi tensions at play it is one of the worst performing stocks. back to you.

>> thank you very much we have less than three minutes to go. the dow the down about 350 points it was down more than 400 earlier. tuesday we had the very big rally we have given up the majority of that last week's closing low on thursday it was 27 and 28. you have about 1 or 2% between where we are right now and the recent lows. perhaps it is some kind of a retest when you have a big selloff. it really wasn't that urgent it didn't seem like a real run for the exits. >> what we do not see is the heavy volume it corresponded with pulling out of the conference and then also

warning italy and it is a hallow warning. it did seem to move the market a good theme ton china slow down story. caterpillar dropped below last week's low we have home depot and a good example of the rising rate pressure home depot, people haven't paid a lot of attention for to it we got the of course concerns about margin pressures effecting caterpillar. dow was down on big european exposure a little bitover dlrn. and then this whole debate pulling out. does its mean anything a lot of people said yeah, we think it does. it effects tech investment

and bottom line is we'll get -- it was kind of an ugly week for ibm. >> the market has a lot of sensitivity. thank you very much. ringing the bell here at the big board and up as the nasdaq, that does it for the first hour of closing bell >> welcome to the closing bell i'm sara here. mike will be joining me here in just a moment. let's look at how we are doing things here. dow closing 1.25%. at wasn't point the dow was down 170 points a weakness in industrial names

s & p 500 down 1.4%. it was lead low are by tech and communication services all of the big losers. the defensives did better than the rechlts nasdaq got hit the hardest. it is down 1.8%. it is the biggest since last week two big names reporting earnings in a few minutes we have it covered for you it will bring us numbers as soon as they are out. let's talk about the selloff leading the dow is verizon over in the s&p it was the winner united rentals was the decliner which speaks to the industrial weakness i know you own a lot of these stocks what was the primary concern out there today? >> it wasn't wasn't of the most

disappointing. they beat, they raised and adjusted crash flow but rental rates were disappointing that's what the stock tends to trade ochbltn. they were able to see it even without getting the rental rate increases that were expected down 15% it tells you people were derisking. it should have been down but not this much. they had a disappointing quarter. it is not for this industrial piece. it was the piece that got them into trouble so they had to lower numbers as well was it justified sure they were the second best sector from the lows from the summer. so, yeah, they are giving back i think next week we get more diversified but it wasn't enough today to overcome all of the

uncertainty. >> i don't know what you thought but talking tough on china, there were so many it was one after the other. >> and you came into the day with people a little bit concerned about the chinese currency the market remains wounded after that all of it was doubted and so tech didn't help you today we talk about the industrials warning. the nasdaq was down 2% just because, right >> and the thing is good earnings are rewarded at least immediately but then look at netflix. it gave everything back. look what happened last week or

today. so there's no cover and so people are derisking across the board and waiting. i get the sense people would rather chase up than holding the potential blow ups because it's hard to overcome >> it hasn't been -- >> right >> we still have the issues. a two year yield shot up to a new multi-year high. >> it shows you it is very much in play whether it's justified or not the market doesn't want the fed to be full steam ahead that's the way it is going to be >> do you have any about the fed? >> i really don't. i really don't i think the fed is raising rates because the economy is good. i think that pow isell is more n people are giving him credit for. he is a smart man and has a great track record i feel like if it wasn't good

that's when i would be worried again, you had another great initial claims number today. you will have better data. >> did you say housing stocks? >> housing is certainly kind of the -- one wild card if you will you went from growing it like 6 to 7% to growing it to 3 to 4% one could make the case that this little pull back could elongate the cycle it's not to say that i know it's a soar point for sure. i'm certain mortgage rates are a big cause of it. i think there's so many other things going on, mainly jobs, wages, unemployment, that sort of the thing >> all right we'll talk much more about the selloff today. first we have the breaking news here from the white house. fres we have details. >> yeah. that's right

president stopped and talked to reporters as he was getting on board air force one. he was asked about the washington post contributor who has gone missing he was asked if he is dead and president said it certainly looks that way to me it is very sad the president was asked whether or not the united states was going to respond to what is alleged to be a murder by the said saudi arabian. he said we will see what happens. finally he was asked about reports of a shouting match here at the white house between john kelly and john bolton. they reported to be a very intense shouting match between the two men just outside the oval office. he said he hadn't heard anything about that >> all right we will maybe come back to you

and see if that changes. appreciate that update also on the stance on saudi arabia we spoke to david solomon. >> yes indeed. given the recent market volatility i asked what could possibly lead to more equity market selling >> i think the equity markets can with stand a slow thoughtful tra transparent gradualization of interest rates where you go into bigger problems is if rates go up to basis points it will have a big ir impact than absolute level. the growth of passive product, index product, the growth of system dpof systematic trading it was untested over any

duration of time with severe stress you can see reactions that might lead you to believe there's a risk with more significant stress it could play a bigger role some force people to sell. >> we should say in moments of volatility he likes to bring back focus back to the economy he said the underlying economy seems like it is pretty good that was despite discussing risks like cyber security and like saudi arabia he said the behavior is unacceptable and questions to answer. it is something he is watching

closely, guys. >> yeah. big headline there what stood out to you? this is his first interview. what stood out to you about the path that he is going to take goldman on that talked about having different goals and how he admired tim cook. where did you learn about where goldman sachs is going >> i think he said 60% of their employees are under the age of 30 which is quite a surprising statistic to me. as you said, he particularly sited the human nature of their leadership and seemed to suggest he wants that to run through goldman sachs as well. in terms of the actual strategy, a very clear and loud kplicommit to using their balance sheet for more lending whether it is corporates or the consumer he wants more of that. he said it's very much his

initiative he was optimistic about trading. the trading performance hasn't been great over the last decade. it has been good over the last year he wants to get it back to where he was in the past and said he could leverage to get more trading with corporates not just with hedge funds >> yeah. all great stuff. in fact some of the notes that he struck certainly qualify him as a goldman sachs ceo he mentioned the great client franchise and also a sense of a longer term commit we are not looking to make a quick score. >> exactly on the topic of the lending base a lot of people wonderedwhethe they should have speed up the amount of assets they have and very clear that's not the plan for david solomon.

the broader point in terms of the long term perspective very much shareholder return. yes. there's a human nature with which he wants to lead and for his employees to be happy but ultimately it comes down to the bottom line to grow total shareholder return over the long term >> all right great work out there appreciate that. american express earnings are out. we have the numbers with jsh >> american express here earnings per share of $1.88. it is expectations of $1.77. refr knew $10.1 billion. looking quickly through the release here provisions for losses come in at 817 million. that was up 6% from a year ago expenses 7.2 billion it is up 8%. as for the guide here they say they are expecting full year 2018 revenues to beup 9 to 10%

they looking for adjusted eps. it is up from the 690 to 730 range they have said at the start of the year. >> all right thank you. stephanie owns this one. on the surface it looks pretty zrong. >> at least it is clean. yeah it was really good the thing about american express is they spend a lot of money they often don't show a lot of leverage as a result i am pleased to seeing not only did they beat it on the top and bottom line it is great. they have a game plan in place i still think it is such a good value for a company that will see 30%. so i own it. i like it and i'm a buyer even down here at 102 >> what do you think are going to be a points of emphasis on the call what are they going to get pressed on here? is it the credit picture >> it will be consumer and also

be corporate it will be, you know, all about credit it seems like from all of the banks things were fine i think the longevity of the top line, how they are going to continue to do 9 to 10% and how much are they going to spend they have been investing a ton in technology. we want to get spending trends too. >> and let's go right there. sort of down 1.5%. it wasn't the worst performing group. on the back of higher yields this morning some times they tee off of that and some times they don't just by better results we got >> i think we got good numbers from kind of the money centers and big banks. it's the regionals that have not been that good we talked about this remember when i went to conferences in september it is certainly struggling because you have the banking competition. it is kind of playing out. now you have the buy backs coming in. you had solid results.

they fell on the news. we didn't get it we got good enough and you got to buy backs i think they can continue. today they weren't the worst it kind of tells you that maybe there's some interest and kind of in the group. i hope so. >> tactically in terms of the markets there's a lot of talk everybody after the selloff last week that said it wasn't truly a washout. would you like to see a little more weakness? you know what's been happening is you are seeing a rotation so like one week or one month or one day it's technology and then the next is industrials and the next is energies where i am buying is health care they are having good results they are very strong underlining

trends >> tech is having good results as well. >> i think they got overowned. >> it kind of got fumbled a little bit >> i just e-mailed my analyst, which software name would you be dying to own >> what did they say >> fan favorite.com. >> internet of fames those cyber security these are themes that are not going away they on my list. >> another selloff here on wall street today we'll look at what could be worth buying ste stephanie said sales force i'll have a panel discussion next and as we discuss tech getting hit hard today in a first we'll talk to bill

mcdermott coming up soon we want to hear from you reach out to the show on twitter, facebook and send us an e-mail closing bell back after the break. ♪ a moment of joy. a source of inspiration. an act of kindness. an old friend.

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paypal beating revenue 3.68 billion it is up 14% and higher than $3.6 billion that analysts were expecting. it is 58 versus 54 cents tpv in the quarter hit 143 billion. it adds 9.1 million active

accounts total is 254 active accounts what we are watching is guidance and partnerships the app processed approximately $17 billion. that's growth up nearly 80% year over year. ton earnings call we will be getting more metrics telling us how they are making money off of the venmo app. we have the announcements expanding partnership with walmart. it kicks off in about 40 minutes from no. it has been flip-flopping a little bit currently up about 3% it is down during the trading day. back to you. >> thank you >> joining us now to break down the numbers is lisa. on the stock move an initial dip even shthough it looks like a 2

gain after hours it is maybe the one investors are more it is a good strong number the tpv number up 25%. that's also largely in line. i would expect that's where we are seeing a reasonably knew value reaction the number that looks like it came in really strong is the new account gains. 9.1 million active account gains this quarter up from 8.2 in the same quarter last year it was a very good number. it was a tough comp. venmo came in about 17 billion in venmo volume. across the board looks like a largely, you know, solid modest beat kind of across the board from paypal.

>> the stocks came in 17% from the high is that getting caught up in growth stocks? is there anything in particular you would look for >> yeah. so most of it is just this selloff in growth stocks for sure i would say maybe the paypal specific issues is twofold on one hand there has ban bit of mania around vernmo. we'll look for commentary from the company during the call. the second one is this is the first quarter they are rolling off their credit business. it is to move off the balance sheet. there has been uncertainty about how it will hit the numbers. it looks like it came in in line if not better on the bottom

line there is sort of the release from the constraints of that relationship the announcement today was a big one. walmart last week was another big one. that's the other factor i would call out >> a lot of story lines to follow thank you for breaking them down on the fly for us. >> thank you >> yeah. instant analysis another tough day for the market the dow about 6% below the most recent record highs. what should you be buying right now? we have paul david, your focused on financials goldman sachs is down almost 12%. is that where you would be looking to pick up some of the damage or you looking elsewhere within the group >> i think the market struggling with what rates are going to do and that's a recuring theme.

there's nothing new there. the market is always reminded of that i think his desire to push into lending, i mean that's okay but if you look at the other lenders out there they are not trading itat very high multiples the problems that you're battling, earnings season has been okay. now the nonfinancials are reporting and they are okay. it is partly cloudy to maybe almostrainy.

>> which side would you come down on? >> i think at this point the market has at least one more leg higher it would be really hard to throw all of those high fliers down. i'm a nonfanger for the most part i think it is not places i would go i wouldn't abandon large cap growth for sure. i think at this point the market is down. pullback is not over it is a complex pullback there are a lot of beaten down names that are so out of favor unless they are going to zero i think you have to look at. >> we showed some of those names like gap, newmont mining >> they are gobbling up all of

the competition. it is the big 800 pound gorilla. smart money is buying gold that is a wonderful thing. it doesn't dance with the stock market it is kind of on its own it gives you a hedge but something else in a portfolio oel old navy is doing really well. a lot of people confused it has been around a while it has thriving business here. they extract the thc and put it into pulls to help the key here

is it is very volatile and aggressive i see it as a buy outfor a huge pharmaceutical company it is higher than the stock is now. this one is 1 to 3 year story. it is phenomenal >> all right you said high quality financials what would be top of your list in terms of a single name? >> i think i have given your visa, bank of america, you know, i think it is sort of the paypal it is issues that the market is dealing with now after having sort of clear sailing. it is getting complicating you to hide in the names that you're most comfortable with >> all right thanks very much

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let's take a look at how we finished the day on wall street. the dow closing lower by about 327 points still, lower across the board. s&p down almost 1.5% the nasdaq dropped 2%. it is down by about 1.8% the ninth session lower in the last 11 days new data out this morning suggesting the u.s. economy suggest a growth growth. just momentarily >> yes >> being around a long time. a pretty good sense of the past of the economy i want today highlight a couple of other things.

the you look at how long before a recession it is an average of 45 months and 55 months before the stock market peaked. the market and economy are insulated from the big downturn. is that always going to be the case is there some sense in which maybe the data has changed a little bit i will say it is sort of future expectations so to me sit a level of comfort and saying is the market telling us that a recession is eminent or not it would suggest no but you have to be flexible >> unless we are peeking out >> the shortest distance between a peak and a recession in this index is like four months or 11 months by that time the stock market is going to be picking up the signals. that's why we have some

suspense >> they said the economy underlying growth looks pretty good corporate confidence is higher the market was up several months into this. >> the u.s. market is more global right in terms of input and what it maers tters to us. >> hi. >> hello everyone. here is what's happening at this hour three americans were wounded and three top afghan officials were killed in a shooting in afghanistan. the taliban claiming responsibility saying the target was the top u.s. commander in this country he was at the meeting and not hurt russian president putin hailed new missiles in the military arsenal but emphasized the country would only use it in response to an incoming missile

attack a collision between two ships off the island caused that oil spill. the beaches have been closed to the public while workers clear the debris and drones are being use today deliver food to hurricane victims across the gulf coast. they are delivering meals ready to eat to people in mexico beach. the drones were donate bid dash systems, a company that specializes in aerial delivery you're up to date. that's the news update i'll send it back downtown to you. >> all right thank you. let's get a market flash now. we have details. >> that's right. the stock is down more than 3% as the company preannouncing the global catastrophe losses. that comes from multiple events in japan as well as hurricane

florence and revisions to loss estimates on the california mud slide. many events here causing the stock to go down as the company preannouncing global catastrophe losses back to you guys >> thank you very much another volatile day for stocks. we'll tell you which names were hit the hardest next tech was certainly the sector hit the hardest bill mcdermott, his take and more coming up [ upbeat music ]

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take a look at caterpillar 25% of sales over in china they stabilized in the last few days today they dropped to new lows we have concerns about higher rates. home depot is a good example you might not think it is. it has been down all month on this we are concerned about higher rates. it is down 13% we talk about margin pressure and sealed air today we lowered the guidance. they talked about higher raw material costs they talked about higher freight costs. this is what other companies have talked about in the industrial space we had other things to worry about warning italy not to bust their budget he is never going to not go to italy's health it is down 30% of sales. mcdonald's also was down

bob. thank you. let's go uptown now to naz dock we have the big winners and losers there >> it was reminiscent of what we saw last week. the selloff was wide based technology, bio tech stocks and chip names like don around 2%. the names have had a strong year we are down about 2 to 4%. so can earnings provide some refuge here? it will be a big question for the markets going forward. another market of weakness some say it is not justified

give tenness given the revenue growth it is pushing to rethink their exposure to chinese names about six hours until we get that china gdp report i wanted to end on a one week chart on the nasdaq. you'll see despite today's losses we are higher by 2% since last thursday. back to you! yes. >> an interesting story right now. >> yes coke making some sweeps. cathy waller is retiring so kind of got lost in the shuffle a little bit the company is evolving and changing the coo role is evolving

it will allow to focus on the long term. he has been making changes already. i did talk to quincy this afternoon. here is what he told me. he told me it was a signal of a continued transformation and excuse of his vision application of company vision through talent he says investors are always wondering where that comes from. he said it has to do with refranchising over the last year it made results very messy did talk to him about some of the changes. i asked him if the new appointments both from international divisions know anything about his strategy. he says it is a big part of who we are and opportunity for where we are growing everyone wants to know about whether they are looking into

that no plans right now here is what he said we have a broad approach but no plans to use it right now even -- i didn't think -- he didn't really go there >> they are not ready. >> yeah. >> they reported they were looking into this. they are always looking into everything >> coke is famously secretive about their ingredients. zb he was pretty open about it shares falling after reporting earnings tech got hit hear we'll hear from bill mcdermott next

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earnings despite raising double digit growth in the cloud business joining us first is ceo bill mcdermott. >> thank you >> obviously it was an ugly day overall. maybe concerns around margins despite the double digit growth.

>> the best way to describe it is we grew 41% in the cloud and sap has become the fastest growing enterprise in the world. so business software we are the fastest growing software company in the worl. as you rightfully said we had double digit growth across the board and we raised guide ans. if there was any criticism what so ever you would say when the revenue mix moves more heavily to the cloud in the short term meaning like in our case 90 days the margin rate is slightly lower because you to wait a little longer for the mono other than that you can only say it is a growth quarter growth investors tend to come right in when they have a buying opportunity. >> there is some talk of another stage to the build out of the cloud that perhaps it is a more competitive one. where is it going in terms of

business demand for cloud services and kind of winners and losers in that mix >> it is amazing how fast growth is in the cloud. what we are doing is obviously our cloud business as you rightfully know is growing faster than anyone else's. we are also partnering so microsoft has been a great partner for four decades now you look at aws or look at google cloud platform we have partnerships with all of these so our reference architecture can also run in their cloud which gives us another set of distribution channels around the world to expand on market leading software they are all going to grow fast. we are going to grow fast. i think it's all about an open initiative for customers customers need to manage their business in realtime the cloud is a great way to do it it is lower cost and faster

innovation, easier to consume. >> a lot of it depends on the global economic environment. you a great window what are you seeing right now? >> it is really amazing. i have been all over the world you know, if you go to china right now things for us and all solution oriented tech companies very strong. we met with 35 ceos that could not possibly be more positive about the economic scenario. shortly there after i was in israel with nett israel talking about tech investment yesterday in canada and the day before with prime minister where there is a huge a.i. opportunity in canada with people highly

skilled. every place should go. >> trade tensions aren't making this tougher >> no. the trade tensions are obviously is concerning. business people don't like uncertainty. so naturally you're feeling that i'm sure in the interviews what you see in the capital market reaction but in terms of real impact on the business volume, new orders, global pipeline, i don't see any effect at this stage for tech and the industry we're in. >> reassuring. bill, thank you for coming by. >> thank you for having me sarah. >> bill mcdermott the ceo of s.a.p. social media stocks falling hard today as we just said tech slammed. up next we spoke with the new york city comptroller why he is pushing for mark zuckerberg to step down as the chairman of at nt.ok th'sex moments can change everything. you can't always predict them, but you can game plan for them.

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up next we talk to the new york comptroller why he is calling for mark zuckerberg to step down as the chairman of facebo xtn the "closing bell.

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. facebook under pressure today as more investors including public pension funds and state officials join the call for mark zuckerberg to step down as chairman of the company. new york city controller scott stringer is one official he joins us here at post nine to discuss this what's the premises here what would be accomplished by having the biggest controlling shareholder and founder of the company not be chairman. >> look, i want mark zuckerberg to do what he does best and that is run facebook. but the chair and the board oversee the ceo. so if you are the chair and ceo then no one does the oversight while this company is pretty remarkable, there's been some real issues. russia's meddling with facebook. there is the issue of ads,

excluding people of color. the list goes on and on. i think we need a board that's going to oversee the ceo and the company so they make smart decisions. we as a public pension fund invest in facebook and as a share owner we have the right to ask the questions and to say how can this company do better we don't want to sink facebook we want to make it stronger. >> but to mike's point he has 60% of voting shares no matter what he is calling the shots. that's why a lot of people see what you are doing as symbolic. >> the truth is when you look at google, microsoft, twitter, the ceos have come to the conclusion that it's better to separate the chair and the ceo, create two positions, transparency makes a better company and also makes better decisions. part of what we are doing with our strategy, public pension funds around the country, is to sort of push the company to start taking this seriously. i'm under no illusion he is suddenly wug in and say that

city controller was 100% right but when you think about other companies and the unique problems facebook has had. this is a company needing oversight, independent directors, smarter decisions about going forward. look, we have had a data breach of some 30 million individuals in the country facebook is part of our lives. and wet to make sure they continue to make smart decisions. >> does not not seem that fischer management, given all the pressures, given all the bad eepts has gotten the point and is refocusing on the longer term issues >> what are they refocusing on what's the governance structure goog forward it's a legitimate question to ask. they may at the end of the day conclude the structure is okay but we should talk about it. we need transparency we need oversight. >> does it work though yes, facebook had a tough year and on on the issues you outlined but if you go back the stock is up over 300% with mark as chairman.

>> i have tremendous respect for mark zuckerberg. far be it from me to tell him how to run his company, except we have the right to start talking about those issues that are about transparency and making sure the company stays strong we're all in this together again, my job as controller is to invest in companies that's going to grow the pension fund, protect teachers, firefighters, police officers that's my job. so i have to ask the questions and we have to think about in light of what's happened there we think about the long-term the other thing is facebook is good today we are long-term investors we want to see a governing structure not just about today but about 10, 15, 20 years from now. any -- by any measure can be companies that split the chair and the ceo -- that is considered the best practice, good governance for major companies. >> thank you for joining us to state your case scott stringer, the new york city comptroller, your nickname, the money man money man of new york city. >> yes. >> final thought as we head

toward tomorrow with another big selloff on wall street i guess we are watching the chinese. >> watch the overseas markets, chinese markets, you are having a lot of people looking at the pull back and say is it part of what happened last week a retest relast. >> jitery. >> unstable. >> that's it for "closing bell." "fast money" begins to you. >> life from the nasdaq market site overlooking times square i'm melissa lie tp we have dan nathan guy adam, karen finerman the momentum trade is losing moments up tech stocks are cracking and a top technician says two names are about to break out he will be here plus the new ceo of goldman sachs david solomon speaking out for the first time. he tells you what could have investors excited about the stock. but first the big selloff process. the dow sinking nearly 500 points at the lows of the session as threats from around the world hi