this is a very concentrated play it will go south >> absolutely. thanks for watching. >> closing bell starts now >> welcome to the closing bell i'm michael santoli. this is the hour >> i'm ready >> we have been jumping around a lot. >> i'm in a space plane to the edge of space. >> as people are doing today >> we begin the final hour of stocks well off of session highs. the dow is the only index in the green slightly by one tenth of a percent. the s and p a little bit below yesterday's close. the small caps have been

conspicuous today. >> transports as well. >> starbucks announcing a new partnership with uber eats. >> yale is hosting a ceo summit. it is including jim who shared with us his new short on the las vegas casinos. we go deep on what he is expecting and why he thinks they could be victim to the u.s. china trade fight. we talk about his get against dunkin brands. we have an update for you. also the chairman of dunkin will be joining us and a lot more including his new book on

leadership we are also going to talk to mark fields, eager to hear from him. this is his first time speaking out in an interview since he was fired from ford last year. gm will not be treated well. it is talking the president and talking about the future of ford among other big names ceos to talk about the general economy and this market volatility that's coming your way over the next few hours i'll send it back to you >> a lot of great voices we'll talk to you in a little by >> turning back to the markets now shares of general electric moving higher as he his tune on the stock. you covered ge for a long time this call as well. break down the upgrade for us. what is it about >> let's put it in perspective a little bit you're talk about the $6 price

target staying away here why it is moving ge shares so much today which is up about 7%. steven at jp morgan downgraded the stock in may of 2016 when it was still a $30 a share stock on cash flow and other concerns around the company his calls have largely been right. for the analysts to call a potential bottom here. investors are taking notice. his reason, key to the story is the outcome of the knowns and unknowns they are better understood and around which the debate is more balanced it is w40holly owned.

it would get a new board of directors. ge is going to sell a majority stake in the service software business that news is adding for clarity to the digital assets which had been a big bet under previous ceo. shares are up about 7% right now. it is only about a 50% increase. they are still down about 60% year to date >> it doesn't get you that far back in time in terms of where ge traded before in the last month or so it was traded up. it is interesting the analysts saying the challenges i have been talking about seem like they are in the market they might be in the price of these levels >> sure. joining our closing bell exclang tode exchange today we have our own rick santoli good afternoon to all of you how would you characterize this

market we have volatility but in general dows hovering around the flat line. >> yeah. you would say really calm day. it is anything but and it's a continuation we have seen since it started we have had 76 days. it's something we did not see. we are seeing the sector today it is really taking it on the chin again today what does it say about business and the consumer going forward i think that's the biggest indicator of today's market move >> are you concerned about the fact that it has been underperformi underperforming? >> i certainly am. it might be a chance to start getting involved on that side. >> also, banks again weak today. they really can't seem to get a lot of relief. there's two ways of looking at this environment sentiment has become very sour you know, stocks have become more modestly valued this is how the market signals

there's a bigger transition going on >> that's what we see. we expected global recession to unfold heightened risk, if current indicators stay on this path it's hard for stocks to ignore expect more of that. when we get to about a year we see a reversal and international versus u.s. those are the opportunities right here not back to the leaders of the last ten years but embracing the laggards >> and we had the ecb this morning. you know, basically signaling that it's tightening it's monetary policy but maybe a little more. how would you sum that up? is. >> i think that the time line for europe to get healthy is a long long long time line listen, if you just look at what's going on with regard to the ecb let's frame it this way. mario's term ends is end of

october of 2019. most likely there will be no increase in interest rates by the time he exits. they said middle of '19. many assuming it would be a bit longer than that consider with that much time what did our guest just say he thinks a recession the next 16 to 18 months i'm not saying i agree with that but let's be tire kickers here what is his encore performance with respect to u.s. markets our central bank may have waited too long maybe they are trying to make up for lost ground. the life insurance gives them a lot more latitude to deal with the slow down and the east being in the current position in japan anz well should we go into global recession in i would look at our economy versus everybody

else as a spread we may deteriorate a bit >> yeah. maybe how exactly do you think this high risk of global recession plays out >> one% away in the u.s. and jer any and the u.s. i think it is a global downturn. how you play it may be defensive in the downturn. maybe look to buy treasuries if you have a good asset allocation and you ride up you may be prepared. >> hey rick is here jeff, rick is here what if you use it as your unemployment rate?

would it change some of your returns with that particular strategy and the u.s.? >> it depends. the inflation rate have not intercepted in the same way. the last three you see the u-3 and the inflation rate equal to each other before they unfolded. >> yes >> and you could make the argument it has been hard to get 1% or get the unemployment rate down in the u.s. too, right? who knows how much time you have >> that's right. we are in the 6 to 18 month window i could see it happening >> all right we'll leave it there thank you for joining us still to come on the closing bell we have sarah's exclusive interview. he'll explain why he is shorting that's next. starbucks coo brewer will join us. we'll ask her about the company's new delivery partner

with uber eats as well we'll be right back. place, the xfinity xfi gateway.

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he was saying he is short c casino wins. sarah joins us with more >> yes we talk a lot about the new shorts and what it has to do with the u.s. china trade night. i started off asking about the volatility and downturn we have seen in the markets. >> one of the things that worries me is how fragile we seem to be to small rises in interest rates if i i were to tell you that it was recently 6% with record low unemployment and good jobs numbers, good wage numbers and you would say you had a problem with 3% interest rates you would

say i was just in the summit here you know, people were talking. i can't name names interest rates has entries we are talking about what a slowdown they have seen in the last twomonths >> so something seems to be a little bit off if we can't handle a ten year which normally trades about a full point below nominal gdp that would be 5% right now we certainly if it went to 5% i think people would probably lose their minds. >> a lot of freaking out >> yeah. >> so it's -- i don't flow if it's because of the build-up of debt or what it is we seem to be basically very

sensitive through higher interest rates >> i always think of you as a famous china bear. you were betting against it for a long time. >> are you still short i thought you hadn't been taking advantage that the fact that the shanghai basically melted down this year. >> we were probably the least short than we have been. it is just that there were better opportunities elsewhere it has gone basically flat for the last ten years but more recently we added some new and old names. one area i was scratching my head about is the casino guys. what's fascinating is whatever your views are the u.s. operators trade at a premium to the chinese operators. while that has normally been the case i think in light of the

trade tensions that doesn't make a lot of sense right now particularly because the trade deal not with standing the licenses are coming up for renewal with chinese authorities and negotiations start into 2020 the licenses expire typically 2020 and 2021. >> so you think it will be a political punching bag for china? >> it could be if you examine the nature of the concessions and you read the disclosures and sec documents the chinese government holds all of the cards it could put them out of business >> so who are you shorting >> we are basically short the u.s. guys. >> when? >> particularly their congress congress listed asian operations

we are lowing the chi thenese operators. >> having said that, you know, these are still not cheap stocks they have come down a bit. >> have you been short >> we have been short since the summer i think that what's interesting is that the chinese have come down as much as u.s. operators it is more general concern about growth than it has been political. >> so is this a bet that the trade war is not going to be soon resolved? >> i think it's more that could happen it's not being priced in the stocks it will happen but i could also certainly see we walk in one day and people point out to the world that the u.s >> the licenses are up >> the u.s. licenses are up. >> one of them is being run by a guy that's the biggest donor >> yes >> and how can that not -- how can the chinese not know that?

>> how much further do you see -- >> i don't we are going to follow the news. as i said, their businesses, it's not as if things were great any way. there had been a general lowdown because generally being up against good numbers a year ago. >> you for so long were sounding alarms on their growth now they are actually in that china play betting against u.s. companies that operate there instead of chinese companies >> there is another issue there. i think the chinese are boworri about their currency.

>> yes >> and one of the corollaries is that they begin to worry about money leaving the country. capital play many. >> exactly in light after what we are seeing, money coming into foreign real estate markets like canada, all of this stuff is inner linked it has to be political when you talk about china because it's a state-run economy. they are not separate. >> the problem is you have ra president that is worried about a market fall and that intervenes on a daily basis to change the mood of the markets and the narrative around the china trade talks. it looks like he wants to make it better. >> i'm sure he does. >> how hard is it on this trade? >> we'll see china has an interesting way they know that, right? they know the president is obsessed with the stock market so it's also there just to wait him out if that's your logic i don't know that i would want to predict what he will do any

given day anyway >> is this your highest conviction >> it is up there. it is -- we have a lot of trades on >> anything else you want to share? >> i think that's enough >> guys we did talk about some of his other high conviction trades including tesla and how about with high expectations for profit b prof profitability and why he is about the fundamental improverments. we talked about another one of those diunkin brands we will talk about it with him and with travis, the chairman coming up here from the summit book you >> yeah. those are two that obviously have caused a lot of pain. you know, it's interesting to

hear him talk about when, you know, they would look at accounting irregularities and all of these other factors these are geo political shorts right now. >> kind of he did say the evaluations are still elevated despite the slow down he talked about some of the weakness in las vegas and wondered whether there were structural issues and it not being that popular so other fundamental reasons but you're right, it is certainly -- it sounded like that the central part of this thesis is that china has all of the power when it comes to renewing licenses and nobody is paying attention to the fact that they are up for the first time in several years. it could do a lot of dodge framm the subsidiaries he also mentioned are saddled with debt. there is definitely a financial

sort of thesis here mike to your point. >>sure >> you're right. it's not like he was questioning that he does see a lot of downside ahead. >> stocks are down 30 plus percent. >> thanks. we'll talk to you again soon starbucks holding the investor day today it is uber eats. we'll talk about the operating officer next on closing bell when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today. well wait. what did you think about her? it's definitely a new idea, but there's no business track record.

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>> sheer what's happening at this hour. nancy pelosi says there's no negotiations ongoing as a partial government shutdown looms on december 21st she mopped president trump's tweet claiming a trade agreement means mexico is paying for the border wall. >> basically what he is saying, any benefit our economy might have from a trade agreement, a revised trade agreement with mexico and canada would be spent on the wall instead of growing our economy and increasing paychecks for workers. >> california state regulators

are proposing a flat surcharge for text messages. that money would potentially go towards supporting programs that make phone programs accessible a decision expected in january melania trump paying a visit to childrens national hospital taking a tour of the neo natal intensive care unit. she later read from the book, oliver the ornament. you're up to date. that's the news update back to you. >> thank you very much he talked about one of his key shorts, dunkin brands. listen to why he is maintaining that position. >> we are short a number of franchise differences. we think they are suffering. mcdonald's has a meeting

starting today where a majority of their franchises are showing up to protest mcdonald's >> they are not short mcdonald's are they >> no. but if they are the gold standard are open set with economics and relationship relationship we know it's true at dunkin and other brands as well >> sarah is there with dunkin brands >> all right thank you very much. i am here withnigile >> dave will be a terrific

leader into the future, he has our franchisees behind him we have a road map of growth we go next generation. i think the key thing comes back to the book. i talk a lot about franchise relationships and how important it is to listen to each other. so i think what he doesn't get by the way, he is here today >> i saw you guys shake hands. >> i don't think he understands the power of that partnership, understanding each other's differences. >> they are facing pressures and wage growth has picked up for the first time really to levels we haven't seen since before the recession. it has got to put pressure on their profit blt >> one thing i did and certainly dave will do is focus on two things, franchise relationships and economics.

earlier we launched our plan to make it much easier to run our stores we are very focused on economics and continue to be that's why we will continue to be one of the big developers in the industry. >> there is such frenzy of deal making how does it change now that a giant like coca-cola is in it and competing? >> we have a great relationship with coca-cola >> are we going to see more deals than coffee? >> we may. i think the key thing is people

love the relationships between big brands and we have a great relationship with coke i think the key point about vending machines is convenience. no one is more convenient than dunkin no one is faster than we are so that convenience element will be the driver i think into the future >> what are you seeing there was so much optimism spending looks great now with the recent market volatility it is coming into question is it slowing? what do you see for 2019 >> at a conference here i think most feel the consumer is in a good place they have the tax cuts there will be refunds early next year i think the consumer is in a pretty good place. by the way, if they are out and about there are plenty of dunkin deals there. >> very promotional as always.

i also want to ask you about papa johns and what do you think that the founder is liability and can stand in the way of this company recovering given his name on the company? >> i think it is all very sad. we built a great relationship. being the leader in digital i'm sad to see that after i left the thing kind of collapsed but it is a great brand i think it will come back. i have spoken to friends over the last few months. they are very concerned. >> you do think it will come back >> it is a terrific brand but something needs to be done i'm not a magician but something needs to happen. >> thank you for your thoughts >> thank you, sir. > >> yes it will be good with him

>> the former ceo and current chairman back to you guys. >> thanks to you sarah as well we have got about 25 minutes to go before the bell dow is currently up 34 points. the s&p on the other hand is slightly negative. it is down about 4 points right now. nasdaq is also lower >> up next sarah will speak exclusively with bob diamond >> and mark fields will talk about how china's move could impact the auto sector close are bell is back after this only half the story? at t. rowe price our experts go beyond the numbers

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starbucks announcing a partnership with uber eats this is a first on c flrnbc interview. >> thank you so much for joining us >> thank you for having me >> so you announced a big

partnership today with uber eats we all know delivery works well with food. how do you get it right? >> we had a great trial in miami. we chose it because we know what the temperatures are in miami. we have seen really 2k3w50d leverage on the ticket we are seeing both being ordered. we are seeing much larger ticket when we see a delivery from starbucks and we are pleased we are doing this we are learning a lot about the technology and that's the resolve here is making sure that the technology comes together and we deliver the best product for the customer >> and you have been working on this in china. what would you say are the biggest lessons learned and what are you using from that and applying here in the united states >> we are use ago lot of learni learnings from china we are seeing that it is bicycle

delivery as well we are understanding what is the offering so should it be the full menu or what drinks do best, you know, when they have to be delivered >> so i would love to get your take on the state of the consumer we have our own data oucht. optimism is down but they are spending it higher this holiday season what is your take through the starbucks lens and are you concerned about a potential stl slowdown >> we are seeing that we are really comfortable in this season ly tell you one thing about our holiday season we are in right now, we learned a lot from what we did last year and we are encouraged by the reusable red cup we used this year. we are doing marketing campaigns. every time we see the starbucks name mentioned we get a pop in our performance. we are pleased with what we are

seeing we are less corned with the turn down >> she has a question for you, morgan >> yeah. i just want to dig into that a lit buiit more. it is not just here but really globally does that have any impact on condition sumer confidence in terms of wanting to go out and spend money on a cup of starbucks coffee or is there a point at which it would? >> we are zil opening new stores there is still a lot of market for us to participate in you'll see us be pretty bullish on the work we are doing with new stores we are adding which is all business so at this time there's opportunity for us to continue to grow. we are watching carefully some of the things that are happening globally >> i wonder if this new delivery

offering, is it meant to be profitable is it going to earn you mown on a small ticket or is it a way to keep customers engaged and another element of convenience >> so the question around is this a profitable opportunity for us, it is one of the things we are evaluating. it costs more to dldeliver to dr coffee >> the average ticket is really what we need to see happen as we approach a delivery. you have this opening. what will be the biggest driver or the bottom line for the company moving forward >> 2 biggest would be our beverage innovation. you saw us bring more of our

learnings in terms of what can happen with our beverage innovation you'll see us talk more about our platform, things like our cold brew and some of our other beverages that are doing so well for us right now >> thank you so much for joining us right now >> thank you >> back over to you. >> kate rogers, thanks to you as well all right. tomorrow jim cramer will speak with the ceos of starbucks and uber about their new delivery partnership. tune in at 9:00 a.m. and mad money at 6:00 p.m. theresa may is back after narrowly winning a no confidence vote within members of her conservative party today while she will remain prime minister they are refusing to renegotiate the withdraw can the deal get down? sarah is joined there an

exclusive interview with bob diamond. >> thank you very much bob, welcome back. >> thanks. >> we start are brexit it looks like a mess even though theresa may won her confidence vote how do you think it plays out? >> it is not simple. you really have to start with europe if you look at the three most important economies across europe, each have officials who are in office but not in power so she has announced her stepping down. i think we all watched what happened in france over the weeks and months in my opinion yesterday was a victory for prime minister may

so the leadership is a real concern. i think in terms of brexit the impact of leaving is probably more serious than we are thinking about many people audiocassette abota. it might be a little bit smaller but it will be one of the four most forever >> what do you mean? >> so what we are noticing is particularly with you are investment which services small bazs in the u.k. and from the time i was there and we would visit small companies in york and birmingham, every business in the u.k. has trade. every business in the u.k. is doing business with ireland and mainland europe. i think the potential kplik ecoc impact is probably greater than is in the u.s. right now

>> we want to talk about the banking sector my cohost is on a plane right now. he was wondering from you how damaging it would be in particular if britain crashed out with no deal and ambitions to become an investment bank in the u.s. >> i think the impact, as you said, the u.k. crashes out i think the real question is the one that's going around right now is should we have a second referendum i think what's clear is they are not going to soften brexit terms. i think the question is it enough to offer softer terms on remaining? when he was talking about the first referendum he had been negotiating about a hard stay on immigration for a fixed period of time. maybe it is that question question or maybe it is other questions. >> you want to see another with

further specificity. >> you would have to have a different question or different terps. i think it is unlikely europe will offer new terms but it may be possible to offer a new question >> how much worse shape are they given the brexit drama, super low interest rates it's happening across europe right now. >> so in the u.s. the program really repaired pretty quickly it said fix your balance sheet and until you do that. >> yeah. >> and europe didn't have that we are seeing stories which was within of the premier banks across europe where the government is potentially going to force a domestic merge ri >> i think it shows the difference in the health of banking across europe.

>> why are u.s. banks acting so miserably in the market? >> i didn't notice >> financials are down 12% for the year and at first it was concern about, you know, steepness in the flattening yield curve and now there's all sorts of concern about the economy. it feels like banks can't catch a break even though fundamentals aren't all that bad in terms of results. >> i think so. i think it's positive for financialinstitutions. i think there are a number of challenges that the banks are facing monetary policy was one. can we manage getting back to more normalized rates which is et essential without a crack in credit i think it's all of the concern about trade as well. there are imbalances in trade with china

people worry about an accident in terms of the way it is being held >> so you think it should be gradual? i think the direction is clear that we need to get back to a more normalized yield curve and more normalized level of interest rates without that rerun the risk that if there is an accident monetary policy will not be one of the tools that can be used i also think with proliferation of easy credit that's host of reasons why it's appropriate for us to go back to a more normalized level of interest rates. >> probably music to the bankers ears >> yes on some of the big picture and banking problems out there back over to you guys in the studio >> thanks a again.

you know, the question, can rates be normalized? that's what the market has been trying to sort out for months now. >> we have over ten minutes left the dow and is s&p up a little bit. still, a little bit of a fragile picture. the russell down 1.4%. next hour we'll speak with cay koplovitz, what she said and if she will ever take the helm of that network later we'll get earnings from adobe and costco after the bell th'somg othclinat cinupn e osg bell your brain is an amazing thing. but as you get older, it naturally begins to change,

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welcome back we have seven minutes to go until the market closes. the dow is climbing up it is up about 63 points we are at about a quarter percent. the nasdaq is down let's check on individual market movers trading lower today. airline forecasting it will earn $6 to $7 a share next year which

is below analyst expectations. it is leading the transports lower. that and american airlines as well having its investor day it seems like the outlook is pretty strong in terms of air travel >> yes fuel prices a big piece of the story. >> it should be. the market not really hearing it at the moment. i'm watching stocks at proctor and gamble this goes on top of the strong trend. it is up from early may. clearly dayi clearly saying we venn cully they will beat numbers it will be executed and it is going to work. it is also helping that very

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welcome back the dow is up. another day. another morning rally attempt. another fade over the course of the next several hours it is in the a washout day but still nervous trading. small caps down more than 1% also look at the banks they have been really a weight on this market for so long they suffering again today not getting any relief transports in other area there was a big short selling call on logistics. it is having an effect on the transports it has been to the downside as well it is a mixed picture. you have had several days in a row now where indexes have traded well off their highs.

>> i don't think a lot was resolved it was weaker and lighter than usual. you mentioned the bangks and i agree, the big super regional banks all down again and all sitting at 52 week lows and the retailers which is mens warehouse. they talked about weaker sales it is the same problem we have been dealing with all year expensive to do online and margin pressures continues to hurt these a lot of these sitting near 52 week lows. remember we thought the online sales are getting better for these guys >> yeah. >> it turns out there are other issues you have maybe peak consumer maybe peak earnings for the consumer cycle it may be a bigger problem than amazon right now

>> another several days before we get that. not sure what we will be here on >> yes >> thank you very much ringing the bell here up at the nasdaq animal planet network. i'll send it over to morgan. >> thanks. welcome to the closing well. i'm morgan mike will rejoin me here in just a moment stocks settle. the dow is finishing higher up about 67 points or about a quarter of a percent higher. it is 24594 is your level right there. it is after being up as much as 213 points so another volatile session. it is down just about a point.

2650 nasdaq also ending the day in the red. 7070 you're down about 28 points. the russell also lower today >> we have two for excloosive interviews coming up we'll hear from mark fields and founder of u.s.a. network. it will be another busy hour leading the dow today proctor and gamble general electric was the leader on the s & p 500 and monster beverage, joining us is stephanie and portfolio manager. mike, let's start with you

>> sure. >> pretty inconclusive you closed exactly flat on the s & p 500. it is a level people seem to care about the continued weakness is hard to argue or ignore to money on a given day. it seems like this market every day has a rally attempt and has a selloff. i don't know i don't know what we were going off of >> it has not been a by the dip mentality. we should be rallying. a little bit on trade but the reality is that october and november were so hard from the performance point of view. people are taking risks off because they don't want to take risks in the next two weeks. they are trying to preserve what they had at this point we still have question marks

about growth i don't think they are valid but they are out there it could have that discussion point and you don't have great data points, sure. it will pack it down and we'll start next year in a better frame of mind. >> what do you see as the next potential catalyst >> i think it's the fed next week and their kplen tear. people really think they may not go next week it is a little more important than we thought. it will be what they do for 19 you focus on -- i say this a lot. you focus on fundamentals. earnings weren't that long ago and especially technology earnings tech has pulled back to much that i am slowly getting overweight because i think it will matter. when we rally those are the stocks that matter more.

earnings are going higher. i am trying to pick away at a few of those and nothing heroic. >> and guess we'll hear from adobe today. it hasn't really kicked in >> right i if he thinksed i mentioned we have had a lot of things going on. we should have already rallied by now the fact that we haven't, sentiment is so negative and people packed it down i don't think it will take much.

>> what do you think they have underperformed >> some of them have done quite nicely look at the rails. they have held up remarkably well i get why some of the higher bait that transports haven't done well. i totally understand how they are performing there are so many holes to poke at fed ex reports next week by the way, they don't really do a consistent job in delivering, right? they may have a good quarter and the next they always struggle. i understand why there's some he has dhesitancies. >> it costs them >> right >> well, let's talk about

another big household name shares of ge upgraded the stock from neutral to underweight siting balance risk and reward they put out a note in may 2016 when the stock was above $30 concerned at the time about earnings and cash flow it has all come to pass. in addition to the upgrade ge announced it will have things, software businesses. what did you think of the substance of the call and the kind of reaction to it >> first i own it. it is a very small piece when i bought i thought it is a two-year commitment. i don't like thinking about that i know this is going to take a long time. i bought it because i thought the management team will eventually get it done we'll have a lot of question marks and last conference call we have even more than i expected which is why the stocks fell

i think that when i saw the call today i applaud steve. he got it right. it is a call of a lifetime he should cover. everything he is saying is kind of out there i thought everything was in the stock at 10 which is when i started buying it. everything he has been saying and everything else piling on it's about the sacme things. we know about their liabilities. we know free cash flow is a little bit weaker. >> you a great management team that has proven themselves to actually deliver great shareholder value and you a lead director that knows thousand turn around a company. he would have said it's not a company that will be going to zero type of thing you have to downsize the company and what it means to earnings otheralverall >> i know he has 15said no.

we should be okay. >> so when he was he did two equity raises. he has proven it will do it when it makes sense >> so if he can't sure, he might. i think if he does i think the stock goes down and people buy that that's the all clear sign. if he doesn't that means he sees that better value in the sales that he is going to be getting nobody talked about that >> i did >> yes you did. >> you have been on top of it. the point is nobody was really focusing on that piece that is one tiny piece of what they can do. so i think there's a lot they can do i think prior management wasn't rg willing to do it or do it quickly. >> wlhy do you think -- what do you think in making it the own sort of independent ge company >> they could spend it off if

they need to >> you get five to six times that you get about what they are expecting re expecting revenues to be this is not a power house part of the company it is one avenue one way he is trying to create shareholder value and shore up the company. by the way, improve the culture and the sentiment of the country. can you imagine what it is like to work there? it must be really challenging every day. she is trying to do a job in rallying the troops. you to get them motivated and get the sentiment better here is what he had to say about the stock. >> year over year it is up 6%. it is about 350 one year ago it is 370 something now. >> hanging in there? >> i'm still short, of course.

>> you have as mump conviction with the company now profitable? >> it was profitable for one quarter. they have had an enormous loss >> the expectation is that fourth quarter will be profitable again >> i understand that but understand that it turned from a mass iloss to the most profitable car company in the world in one quarter to say that i'm skeptical would be understating it it had a lot of leverage it could push but basically an average price of $60,000 i hope it got sustainable. >> they are trying to fiction fix that it is remarkable in a year where he got in trouble with the fcc there were questions about his behavior, demeanor, going after analysts and all that and the stock remained so resilient. >> again, i take issue with that the company reported a third

quarter profit it was about 30 or 40 cents a share. so you're talking about a company that was pulling out all of the stops and selling a car for 35,000 for 60,000 off the backlog and still leaving at 50 or 60 cents a share on fully taxed no one times item basis and the stock is trading at 180 times that number. >> so your issue is still at the financials >> yes >> it looks like they cut the warranty reserves. we don't have time to go into the issues but suffice it to say they went all out in the third quarter and if the best they could do is less than $1 i'm fine with being short. >> do you think musk violated husband agreement with the sec during the 60 michbs intnutes i? >> he seems to -- i think it's

fair to say be thumbing his nose at the agency. i don't know if that's that smart thing to do. for whatever reason he thinks it is an okay course of action. i'll leave it to advise him on that >> does it matter? >> he clearly thinks it doesn't. and so far maybe it hasn't but this is a throw down to chairman clayton as to whether or not he is going to represent the interest of the agency or if he is going to take it >> why is there such a large disconnect between the way you view this company and the way the market views the company and how does this get resolved >> again, this has performed fo the last five years. so this is a -- this company had its big move in 2013 and 2014. it has been pretty much sideways since. like the market is giving him

the credit and benefit of the doubt for the future i think that's where it gets problematic. what he was so successful in innovating and bringing to the market high priced electric vehicles that were sexy everybody else is now coming and they are coming down the pike. >> a lot raising price targets and many of them noting that the kpaf competition has been slow and less impressive. >> yes they have been uniformly bullish from the beginning number two, this company, by his own admission was near death when the stock was at this price in june. >> how did that go from weeks away to -- >> you tell me >> we know they asked for money back the other problem is if the you go into the tesla motor forms

and see what the owners are reporting the model 3 has a lot of issues. we are not going to know what they are for maybe a year or two down the road. if you're setting up only a $2,500 per car and it turns out this car is in the shop every six months then it may not be as profitable as it was >> do you think 2019 will be a turning point? when does it play out? >> again it is trading at $370 that is marginally profitable. at what point do we sigh vw trades here. mercedes trades here they will all have their lines tesla is not even increasing capital spending for the next product lines. i was kind of wondering when is the next generation of vehicles

coming it can't support what it is doing. you have got to believe that the semi, roadster are all coming soon they are $10 a share sarah is back with us. car ra, it is amazing to hear the argument that jim is laying out. we have heard this from other short sellers as well. >> tesla burning the short sellers at the end of a rocky year which got in trouble with the sec and said he had funding secure to take his company private. yet again another year that's been painful for the them, some

of the more famous short sellers there. wanted to bring you an update, that he is shorting the ka keen notice we'll keep you posted on those but beth of those ending lower today. their permits are coming up soon he sees that as a good chance to say we could threaten this if the u.s. trade tengs continues with china they certainly had the leverage there and all of the chips to pull when it comes to licenses and really important business relationships. >> yes you know, both of those are down 30 something% from t percent fr high i don't know what you think about those.

>> they are not that expensive they are about 16 or 17 times earnings they are very shareholder friendly it is to really invest in these companies. i find it really hard to believe that the chinese will pull away licenses from these companies. i think they are going to try to give an olive branch out so they can continue the trade discussions. they pull these out it is kind of like a trade war kind of mentality i would think. that all said it is slowing. that's the reason stocks are down maybe a little bit on trade war. numbers have been revised down considerably not that expensive. you to think about the consumer in kline that. it has been kind of slowing. zb what do you think about tesla? >> it is a cult stock. if you believe in it and believe in the $10 an earnings power if you think there's computation

earning it could be a lot less i have always had a problem we valuationment i can own about one or two of these where i believe in the total address and secular growth i do see real competition coming down the pipe. that's kind of difficult not to mention the balance sheet issues i'm putting my bet on amazon we have another earnings alert on another tech company. adobe and josh has those numbers. >> stock moving here in the after hours back and forth $1.90 on 2 pn.44. she was at $1.88 on 2.4 billion. forecast is calling for $1.60 on 2.54 billion for the year 775 on 11.15 billion.

again, unclear how exactly it compares the streets forecast digging to the segment just quickly here digital media segment was up 23%. back to you! all right. thank you it held up a lot better than many >> interesting to see how it trades adobe will appear tonight to discuss results. he will break it down for us don't miss it. >> it held up pretty well. what do you think in. >> not a company stock if you look at the recuring revenue story it is in line. that is what people want to see, that's the story that keeps ongoing. so it's not -- i don't own it. if it ever were to pull back what a great management team >> thanks to you for joining us

and breaking down the topics >> thanks so much. up next we'll head back to discuss the outlook for the auto market with mark fields. plus they say everything is bigger in texas and that includes apple's new plan to build a $1 billion campus in austin we have details later in the closing bell some moments can change everything. you can't always predict them, but you can game plan for them. for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions to help them reach their goals. being ready for wherever life leads. that's the power of pacific.

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welcome back stocks trading lower for costco on a miss on the top and bottom line it was compared to $1.62 they wereestimated. on a comparable basis it is for fiscal 2019. they reported comps that beat estimates. it has been up about 20% year to

date we are seeing weakness after hours. >> thank you what do you think? >> if you look at it as a target it has held up well. the market is in the mood. retailers weak and looking on the dark side of what could come next year if in fact we see a consumer fatigue >> every time goi to that store. >> yeah. >> president trump firing away at gm today for proposed plant closings the president said gm will not be treated well and added they are making a big mistakement joining us now is mark fields with sarah in an exclusive

interview. it is is also his first interview since leaving port, sarah. >> it is we are thrilled to hear from mark fields. thank you for being here >> thank you >> first time since leaving ford you have been away it has been an eventful year including what we just heard from president trump gm is not going to be treated well how much pain can the government infli inflict on gm? >> at the end of the day i think what they did was basically look at their business and understand, listen, they need to get their cost structure in line the business is coming to the end of a cycle they have lots of challenges every ceo needs to do what's right for their stake holders including shareholders etcetera. they will have to work their way through it any time you close a plant around the world you'll get attention from the government because it's so important to the

economy and jobs >> you read part of the deal would you handled this differently? >> it is easy to sit on the sidelines and have opinions. i think at the end of the day when you take these kinds of actions you need to make sure that you are doing it in a way that allows you to tell what the story is and at the same time make sure you a narrative around why it is good for the business or the medium to long term, why you to take the short-term pain. actions. >> we haven't heard from you since you left the company there have been so many stories. you left abruptly, missed opportunities. now you have a chance to set the record straight. is there anything you want to say about the departure? >> no. not really i spent over 30 years at ford. there are terrific people at ford we had record margins.

we had laid a strategy out the board decided to go in a different direction and i decided to retire. >> any regrets on the shift from cars to suvs and the speed at which you movered the company? >> we were moving in that direction. as i said burg that time period the financial performance of the company was very good. what the team is dealing with now is trying to define that future, define what that transition is. it will be a challenge for the entire industry because you're coming to the point now where the cycle is ending. they are starting to falloff interest rates are up. you can't use incentives whether it is extended loan securities or higher leasing to keep volume going. there are two new unique things the industry has not had to fac before one they have to keep investing and secondly when they introduce these they will be at a lower

margin than internal combustion engines. it will take probably 5 to 7 years between a battery powered car and internal combustion engine car they will have to deal with that which takes it back to every ceo across the globe making sure they are working on that >> how far ahead is ealon musk has done >> he has really purposed the industry to em brags electrify case it is a fantastic experience great power and torque this challenge this next year is how does he and his team balance rolling out cheaper models of the model 3 to boost sales but at the same time not sacrificing to sustain profit blt. that will be the challenge >> i was talking to him earlier who you flow very well

he has this great graphic of the stock performance of ford under various ceos it hasn't done much better since you left i think the stock is down 20%. do you feel vindicated by that >> i don't look back i think at the end of the day ford has -- down in the ranks they have a great team they will figure it out. you know, the market, you know, the market changes over time it is as your make your way but at the same time there will be a large portion of internal combustion engines it will take a long time and take longer than people expect >> a lot of people look at the auto makers and wonder what it says about the overall economy and whether it's a specific

problem related to the auto industry >> i have a good perspective with my work i am on the boards of a number of different companies and different sectors. i work with a family office in florida. ton positive side you have wage and income growth. you unemployment at a half century low. you consumer confidence very high you're looking at these flashing red signals down for six months. you have interest rates going up interest rates is reflective of a strong economy you also have business investment data software you look at those things and it

does say we need to prepare for the future because at some point the cycle is going to turn >> i think that's what the market is grappling with right now. how hard has the auto industry been hit >> well, it is -- obviously it hurts from a financial standpoint more importantly it hurts from a planning standpoint. with businesses like the most is certainty because the automotive companies have put their manufacturing footprint around the globe. when those are in a state of flux as you're investing and you're wondering where are you going put that product and where are you going do that you have to understand what is my assumption of the tariff environment and can you make money on that product? that i think is the real impact on the uncertainty from a planning standpoint. >> are you supportive of the

president's actual goals here? the auto industry has to want a more fair playing field anyway >> i agree with what he is doing. i think she working on the right things we can debate how he is going about that in terms of the actual -- >> do you think he the succeed >> he has already had some success as the north american mca, new nafta has been negotiated i think at the end of the day it will succeed but be a lot of white water. >> good to hear from you back to you. >> thank you very much really taken all together it

seemed the picture he presents is of a structurally challenged industry i think the market kind of priced it like this. it is the last cycle we'll see and these companies aren't just retrench in a downturn they have to keep on for all of the rest of us >> i thought comments were interesting. >> let's take a look at how by finished the day on wall street. the dow, what's the stand up with about 70 points the broad market, the s&p basically flat nasdaq down and russell 2000 down 1.6%. average stock also down.

kind of a soft underbelly of what looked like a under listen >> sharesov of starbucks down they have come back a little bit after the company reaffirmed the targets but presented long-term financial targets that seems to have the street a little spooked here they changed the eps guidance to be higher by 10% previously it had been higher by 12% plus so despite reaffirming the fiscal year targets you can see there's weakness in after hours trading on those long-term targets. back over to you >> thank you >> of course the ceo will be on squawk on the street tomorrow morning. we have breaking news on president trump. we have those details. >> more legal difficulty this

time on an entirely new front. this is just crossing within the past couple of minutes the journal reporting that the trump inauguration, the spending is under questioning it partly out of materials that were seized in the investigation of michael cohen, the president's former lawyer who was sentenced this week to a prison term. the journal also reporting that this investigation is in its early stages but federal prosecutors are looking at two different issues one is whether any money was ic inappropriately spent and also whether or not they were donating in order to buy access or clang trump administration policies, both of which could present legal challenges to the president and to the administration we'll see if the white house has

any excellecomment over the nexe of minutes it did tweet quite a bit about his side of some of these legal issues as well >> what we haven't been seen before is the trump inaugural committee. that's why this is a new area. so much focused on the trump organization, the trump campaign in 2016. remember, those communities are sort of one on instead of set up as nonprofits and accept donations to fund the entire inauguration that is sort of a new front here >> thank you >> you bet time nowfor a cnbc news

update killed in the city after 9:00 p.m. local time. the senate saying crown prince is responsible for the slaying and recommend top stop supporting the war agreeing to plead guilty dpguilty prosecutors say it is likely she will be deported after her sentence is completed. and a bird brain smuggling scheme falls apart at a new york city airport border patrol finding 70 pinches, poor little things, stuffed inside hair rollers.

a passenger was arrested the finches were quarantined but they are okay. illegal bird smuggling that is the news this hour back to you. >> thank you >> you got it. up next, we'll break down the charts to find out if improving measure evaluation could be signaling a market bottom and u.s. networks cay koplovitz joins us the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners.

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coming up am is setting up shop deep in the heart of texas. find out what is behind the investment in austin later on the closing bell

welcome back to the closing bell apple announcing a new campus in austin, texas. they are investing $1 billion and promises to create as many as 15,000 new jobs there >> joining us is ed lee. i guess there's a lot of things happening here apple needs a lot of people. has already had some presence in austin and is on the record saying it is going to invest a lot in the u.s. and create a bunch of new jobs. how do we fit this all together? >> i think you're right. i they larger context is the trump administration he has been pressuring apple to bring jobs back to the u.s. or to bring manufacturing back to the u.s.

they are adding about 50,000 new jobs it will be 5,000 to start. these are service people it is technology it is ip, creative stuff it is services i think that's where the future is going it is nod and a jab. it is certainly good for the u.s. economy and it is not going to move it for apple or in a lot of ways. that's the context that's what you have to consider here >> it is interesting we get this news from apple 24 hours after you had lawmakers here in new york city grilling about the decision and benefits it is getting for putting it here in

new york city. how would you compare how they have been navigating >> it is an interesting contrast because they did this beauty contest across north america and everyone sort of knocking down their door apple did this entirely under the radar. you kind of barely knew they were looking for it. we didn't know what for and it was going to take. here is a little chunk of that apple had so much cash had to much many money to begin with i think they had sort of the luxury to take it bliel they didn't need a ton of subsidies it looks that i can they are get maybe 20 million plus. they are getting something back but not a ton, not like what amazon is getting in new york.

it speaks to different needs so much of its base is in asia in the u.s. i think it's more about services that's where the trump administration or any administration could put more pressure on it a way into it is you need to open up your app store a little more >> great to get your thoughts and on a day when apple ended up 1% up next the founder of u.s.a. networks will tell us who she thinks is the next takeover target we'll be right back.

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misconduct they said ceo should step aside and in september he indeed resigned raising questions abouo at the yale ceo zblumt and kay received a leadership award from the team at yale business school congratulations. >> thank you. >> there appears to be a bit of a leadership void in the industry right now that you helped pioneer. >> i think there are leaders but i think we see some of the challenges at leadership, at cbs. >> who should lead that question. >> that's a good question. i think they are bringing in somebody from the outside. i'm not on the board i don't have any information that is not public so i can't really say. but i think that they may be looking for leadership from oud the company at this point in time because there's been too many accusations within the company and not just les moonves

but a number of people, charlie rose or other people at 60 minutes. i think they have to think hard about the kind of leadership that they want it's a great company it really need to have great leadership. >> what's its future and the on again, off again speculation about joining up with via com? do you see that happening. >> there is a stand show according to the agreement between national amusement and cbs. so nothing is going to happen in bringing them together in the next two years unless there is a change of that ruling -- or that agreement. so i think that there is going to be more consolidation in the industry and i think it's possible that both of them will be sold atom point in time before they are merged that's another opportunity in the marketplace. the companies are becoming smaller and smaller, especially via com are becoming smaller in

the industry that is really consolidates with some of the big companies. >> at&t, disney, megadeals. >> and megadeals and deals made by o.t.t. members. we talk about the size of companies. i don't believe facebook or google is going to go out and buy cbs or viacom. but the companies that have come recently into the marketplace on the digital side, on the top side are. >> like who. >> are larger than brought industry today. >> and you think they are continuing to scoop up. >> i think there will be changes emerge. >> you think live nation is one of the names in play. >> live nation is interesting. because it's a $10 billion-dollar market cap company today. but it has really dominant position in performances, live performances, not only in the united states but in europe as well they have a strong position. they may continue to buy up companies as well. >> also, i wanted to ask you

about advertising, because there's been the shift obviously, long running shift to digital with facebook and google dominant however, so many scandals in the news, testimony on capitol hill. do you think that ultimately shifts the advertising equation in favor of the traditional broadcast companies? >> i don't think that's the reason but i think you see right now a shift back for brand recognition, still television or television-like delivery systems rather than pure digital. >> why >> our big are brand -- they just prove that people know the brand name out of traditional television i'm on the board of ion media, a broadcast company actually and we are seeing that there is really a strong shift back to some of the branding of television in television that advertisers are exercising, because while you have great data connecting on the digital

side -- so you have a lot of information about the viewers -- the brand recognition is still strongest on some of the broadcast and cable networks you have so we see somewhat of a shift back you take companies like proctor and gamble, leading in the advertising markets. they shifted a lot to the digital advertising. now they're tuning back somewhat so, look, you can't -- i'm not count broadcasting or cable networks out of business tonight. inches there is a consolidation in the marketplace. >> always good to hear your thoughts and congratulations on the award. >> thank you. >> from the yale ceo summit. >> thank you it has been fantastic, the interviews you brought us the last two hours our thank you to you for that interesting content. >> that's nice. >> coming up we look at whether stocks are looking cheap after the recent soleoff

well stocks are looking cheaper. but are they cheap enough to handle higher rates? mike santoli at the tele-strator with more. >>s in free cash flow yield for the s&p 500.

the catnip indicator free cash flow is what's left after you pay for everything else this is in percent this is a free cash flow yield almost 5.5% right now. you see higher is cheaper. this is the inverse of price to free cash flow now we know what we are looking at you can see the market was cheaper back in 2014, 2015 but it's about as inexpensive almost as it was -- this is the diamond bottom, january, february, 2016 right before the 2016 presidential election. so you see stocks got more expensive peaked, came back. it looks like valuation is a little bit less of a headwind, maybe even as a cushion because returns were pretty good when you bought stocks in this range. but look at the next chart which shows kind of a related effect corporate bond borrowing costs corporate borrowering costs. this is triple b corporate bond yield. lower investment he had grade. what you have to spend you see back here when stocks were similarly cheap it was low. here it's higher clearly this is going to affect

the valuation of equities. usually if you have the corporate bondside being a little richer in terms of yield it's going to restrain valuation. this is the push/pull the market is deal with. >> these charts are interesting. we go back for the other one that's the bull case for stocks like boeing we have seen hammered recently high pressure. also apple a lot of bulls point together the free cash flow. >> it's fair point big companies, dominant companies do have record levels of froh cash flow, high margins. the question is what multiple do you put on them? >> that is the question. all right. >> so what i would say about this too is it's essentially related to -- is the market oversold enough you have the technical side saying it looks oversold the fundamental side is it chief enough it's about next year's earnings because if this falls off the cliff it's not cheap anymore this is backward looking but

suggests stocks are moderately volume wrapping up the last couple seconds departing thoughts on the markets. >> i'm off tomorrow. no i don't have -- i'm kidding look, nevds trading, defending the bottom end of the trading raenl. i think that continues for a while. >> i shoep you enjoy the three-day weekend. >> thank you. >> that does it for "closing bell." we have "fast money" beginning right now. "fast money" starts right now. live from nasdaq market site overlooking times square i'm melissa lee. trade remembers steve grass an pop karen finerman dan nathan guy adami. a top strategist says stocks are cheap and the best chance to buy. he is here to explain. general electric soaring after jp morgan says the worst is over for the industrial giant but is the turn around in the cards? the traders weigh in first we start off with the bank inferno heating up the financials under pressure again today. the sector heating a fresh 2018 low. and it's been a rough week month and year for