months and leaving a lot of stock options on the table our guest said that tells you where that person thinks that stock could ultimately go. >> why walk away from free -- >> if it's going to go higher. and if you don't think so, then maybe you're not losing anything thank you for watching "power. >> "closing bell" right now. welcome to the "closing bell." i'm sara eisen. >> and i'm wilfred frost a big day for banks earnings we'll break down the key numbers for you. plus jpmorgan ceo jamie dimon speaking out about what he worries about most. >> the government shutdown is another self-inflicted wound. >> we'll have more comments from him coming up. and later bill cohan joins us we'll get his take on alexandria

ocasio-cortez. >> could that be a little bad news for the banks we're right near the session highs on the dow at 185 points the high was 220 the dow leads the charge in part because banks are doing so well. goldman sachs is one of them >> banks are having a good january. >> they're having a good january, good week and certainly a good day goldman was up 9.6% a moment ago. >> sort of digesting the headlines from the beige book. modest to moderate conditions in all of the different parts of the country. let's begin this final hour of trade with the top story steve liesman with more details on the beige book headlines. willem marx has the latest on brexit and leslie picker has more on black rock's earnings. steve, we'll start with you and

what we got out of the fed this afternoon. >> as you said, sara, eight of the 12 districts saw increased growth at a moderate amount but four districts, including kansas city, new york, st. louis and cleveland saw somewhat less robust growth. it was flat in kansas city, it leveled off in new york. outlook was pretty positive, but many districts said their business contacts were less optimistic because of four reasons. financial market volatility, rising interest rates, falling energy prices and elevated trade and political uncertainty. shutdown mentioned only once this report goes through january 7th, so didn't pick up a lot of it mentioned only by chicago related to farmers not receiving government payments. tariffs, 20 mentions, down from 39 in the last report but it was linked to rising uncertainty and higher prices. now, one piece of good news, several districts reported higher christmas sales, though, auto sales were flat if you get this idea that there's something good, something bad in this report

that's pretty much the way it reads. manufacturing expandinged xpana majority of districts. services growth was slow in a few districts and the agricultural sector struggled with low prices. good news again in the jobs market it was up in most districts. labor markets were tight companies were having trouble finding staffers only modest wage gains throughout the country, although intro level wages were up. big part of this report is what's going on with prices in the country. they increased only modestly higher input costs but very mixed ability to pass along those higher costs overall there's still growth in the country but the pace of growth is slowing, sara. >> you mentioned the sort of the something good and bad in this report a lot on the sort of decreased optimism out there among business so what are the policy implications for the fed >> well, i think the fed will monitor this and see how much of

this reduced -- i actually was looking this morning, sara, at some of the confidence measures. for example, the business roundtable and the confidence measures about how much of the, what we call the trump bump remains. a lot of it still remains. so far what we have is we have a decline off of high levels, but still considerably up from where we were in december of 2016 or november 2016. so off the highs, but not necessarily at levels that suggest concern at this point. >> steve, thank you very much, as always. steve liesman in washington for us turning to brexit, theresa may's government has won the parliame parliamentary vote of confidence willem marx is in london for us. >> reporter: she did it very, very, very narrowly. she won 325-306 and that's

partly because of the small northern irish party and essentially formed a majority in the house of commons she responded immediately to the vote with this >> on a point of order, mr speaker, i'm pleased that this house has expressed its confidence in the government tonight. i do not take this responsibility lightly, and my government will continue its work to increase our prosperity, grarn tee our security and strengthen our union yes, we will also continue to work to deliver on the solemn promise we made to the people of this country to deliver on the result of the referendum and leave the european union >> reporter: she also promised that she would be willing to work with any member of the lower chamber of the house of commons to try and deliver that brexit that she thinks involves certain elements what she also said she's going to be willing to meet with leaders of her opposition parties as soon as tonight if they're willing to sit one on one with them.

what we saw was a response from them, including jeremy corbyn, with some conditions attached to any meeting. corbyn trying to insist she rule out no deal as a possibility another insisting that she had to make sure that both a reversal of brexit through a referendum is on the table and an extension of this two-year negotiating period that we are coming to an end right now, guys. >> willem marx, thank you for the update from london so what next in terms of risk around the market? >> clearly we've seen the pound rally the last 24 hours with all these general developments i think that's fair, although i think what's being overstated is the likelihood that we get to some kind of newer, softer compromise in the short term there are still so many unsettled questions, most notably jeremy corbyn and the labor party failed to get the general election they wanted why now does he have an

incentive to negotiate in good faith for the good of all versus push for a second referendum and try to burst the bubble and secure a win that way. what i do think is legitimate for the pound rallying over the last couple of weeks in general is the prospect of no deal has fallen dramatically. the prospect of a second referendum probably has increased, but i don't know that we're any closer to a compromise. >> wouldn't a second referendum be positive for the markets? >> absolutely. >> so that increases the odds of a potential extension which people are talking about, even governor carney mentioned that this morning in testimony that that's what was being factored in some of the negatives get removed a little bit. >> i think the main point is the prospect of a no deal has lessened whether or not a short-term compromise softer deal is likely or not, i'm not so sure. but the chance of a no deal has lessened significantly in the last few weeks >> because there's lower risk there. >> of course.

turning now to the banks, some big stock moves there following earnings reports from goldman sachs and bank of america. what are the highlights on these two? >> so both banks managed to beat on the top and bottom lines in a way that the other banks hadn't done earlier this week their share prices have responded accordingly. bank of america's numbers were very strong. the operating leverage continues to drop through as expenses once again declined since only 13% of revenue is in trading, they weren't too hurt by a tough area in that quarter, this quarter goldman sachs also had strong numbers and followed them up with a very good earnings call the ceo promised more transparency going forward including in the lending part. he gave various updates on the 1 mdb scandal. >> it's very clear that the people of malaysia were defrauded by many individuals, including the highest members of

the prior government tim wisener, was a partner at our firm, by his own admission was one of those people. for his role in that fraud, we apologize to the malaysian people as detailed in the government's charging documents, he purposely concerned his scheme with malaysian officials. i think people here are extremely angry and upset about the fact that we had a partner of the firm involved in such a significant fraud. i would say the impact on our client franchise at this point across the globe has been de minimus. >> goldman up 9.5% and that has dragged the sector higher. >> that continues the theme we've been getting from other big banks, that it wasn't as bad as feared. i don't know what the market had priced in. it looks like some blips on bond

trading. >> i totally agree we came in with very low valuations and that's highlighted. if you look at the week-to-date performance, which is the least best performer, jpmorgan which was on premium valuation. >> outperformer last year. >> whereas citi and goldman sachs, which were the cheapest, were up 10%, 11% for the week as a whole. yesterday we talked with mike are these big growth stocks. there might not be structural growth stories in the way netflix might be, but the returns have improved a lot over the last year. so bank of america, for example, had 8% roe last quarter and yet they were priced very up attractively so i think that's what we're seeing a big reaction from a low bar. >> relief. black rock also had earnings before the bell. leslie picker has details of that for us. >> i think sara's comments about how the bank's earnings were not as bad as feared could also be extrapolated to black rock's earnings with investors ignoring their bottom line miss today

with a focus on inflows. you can see the stock up 3.6%. about $81 billion of inflows into the firm's etf business offset outflows across retail and institutional funds and strengthed the etf business. it seems to be holding in the new year with $17 billion of inflows in just the first two weeks. those figures helped bolster the investor case or the asset manager despite the volatility in the fourth quarter that dragged down the industry. the ceo said the firm was still able to grow during the quarter even when his competitors could not. >> we have benefitted as a firm over the last ten years with rising equity markets. we believe over the next ten years equity markets will be higher, but we'll see those types of swings. we all know the fourth quarter was a pretty severe downdraft in the equity markets but we had organic growth, unlike the majority of the

industry >> despite the inflows, blackrock's assets under management declined 5% to just under $6 trillion as stocks, bonds and commodity prices all fell, guys >> what's the big problem right now, leslie, asset managers in this kind of environment, where it's been such a rocky period with the layoffs and the stock decline for a company like blackrock? >> fee compression that's a huge issue across the industry we're seeing a lot of consolidation in the asset management industry as a result, and a lot of analysts look at this and say these are going to continue needing to come down. part of that has to do with performance. blackrock spoke on the call today about how their performance actually exceeded their peers. the performance across the industry, they're just not beating the relevant benchmarks like they used to and investors aren't will to pay for it anymore and that's a huge, huge issue that we'll continue to see play out in 2019. >> all right, leslie picker, thank you very much, on blackrock support. joining our exchange to

discuss today's market moves we've got eugene profit from frost investments and rick santelli at the cme group in chicago. so eugene, the bank earnings, are you buying >> i'm not, sara i would have taken it today, but last year the banks were pretty weak i think the earnings were good and interest margins are higher but you would expect that with interest rates being up. loan growth is growing i'm not convinced goldman won't have a big hit as a result of malaysia >> rick, what's your take on the beige book >> you know, the beige book, i think, is in sync with the trends that we've seen in the domestic economy, many at the expense running off from the global economy i think the market is pretty much in sync with it as well i think that's why there was very little reaction, even though the day in its entirety was actually a pretty interesting day. the dollar continues to fight, mostly at the behest of a

weakened euro with regard to how investors are eyeing the future of the eurozone and their biggest two or three economies, not necessarily firing on all cylinders. i think on the interest rate front, the highest yield close of the year is about 2.74. if you look at an intraday chart for all of 2019, we've been bumping against it we did it again today. i think we're chipping away at that i think what i specifically like about how the markets are in sync with the beige book, that things are okay, just not as okay as they were, is because i really think that the long end to break out here, there's a lot of channels on why people would sell the long endin, but the biggest is economic fundamentals the partial closure may not be a big deal when it comes to gdp, but it's a big deal because it does rob investors of more signals at a relatively important juncture with regard to rates for the rest of 2019. >> eugene, how are you reading the economic data and the

corporate earnings that are coming through as they relate to what's in store for the market and the economy for this year? >> yeah, i think that this earnings period is one of the most important of the last few years. i think that economic data has been weakened to some extent i think the government shutdown, the global concern or uncertainty is really causing a situation where corporate earnings are going to be challenged you still have the trade war issue going on with respect to china. and so at profit, we've been actually looking to take advantage of the sell-off last year to reposition to some better names that are -- but also well suited for a downturn in the stock market which in the second half of the year we think we will see. >> nvidia for a downturn >> last year nvidia was down 60% and it's growing at a 30% sales growth rate. it had a bad earnings announcement a quarter ago, but yetwe think investors aren't

looking at the autonomous driving segment of the market, the gaming sector, and essentially you're looking at a stock that's at a 21 p.e. but with 1.3% dividend yield. it's not a cheap stock in general, but just based on the fact that we think the sell-off last yore was much too great. >> rick, very quickly, i missed your santelli exchange earlier i had one of the banks earnings calls plugged in instead what was your take on brexit you thought the market might still have this wrong? >> yeah. i'm a real outlier on this, wilf i personally think if we could go back in time, people that could actually step off the titanic before it sailed, i think they might think, oh, my god, i'm missing a great voyage but they don't know what lies ahead. i personally think it doesn't matter how it turns out. separation from brussels in my opinion will be a messy event, but i think all of them will be rather messy

i think in a quarter or two, the healing begins i think it's an alternative that not enough are giving a fair crack to to at least assimilate it in a plan and delaying, i jufst think tha brussels will never make this easy it's a bureaucracy of all bureaucracies and i think a delay would extract a price. they couldn't pass it without that price, whatever it may be i think a messy, hard brexit is a higher probability than many believe. i think in the bigger picture, it's not necessarily the worst course the uk could take. >> really? it could lead to 8% contraction in the british gdp according to the bank of england and a crash in the property market >> no, a weaker pound is fantabulous because they'll be able to compete with their feet running in an export economy at a time when the other big export economies like germany are faltering a bit. i really don't think brussels will make this more palatable.

certainly it could be messy, but i think there's a bit of a y2k to this. the fear may not be necessarily warranted, and i do believe the uk can stand on its own. sometimes messy isn't horrible we'll never know the counterfacts on the credit crisis maybe if we saved less and had more pain, maybe the healing process wouldn't have taken us out close to a decade. >> rick, an interesting perspective. thanks very much eugene profit and rick santelli. still ahead, a new potential challenge for wall street. we'll discuss how the now democrat controlled house financial services committee could impact the banks. and after the break, ford sinking today on fresh earnings guidance we'll tell you how that stacks up to gm's forecast and what it says autheta othau industryf e to

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city they're trading lower because of the new guidance it brought up regarding the 2018 and fourth quarter earnings they will release next week. the guidance was between $1.30 and $1.50 for all of 2018. they came in today and said it will be $1.30. widely disappointing for analysts out there earnings, sales, cash flow,the could be higher, but there was no guarantee there was no range given for earnings per share when you look at ford right now, this is a company that is very much in the midst of a transition, a turnaround although, people are wondering where is the end of the turnaround when do they come out of this? their sales could rise next year, or this year, i should point out, due to the new ranger pickup and ford splrer they showed us just last week in detroit. sales last year down 3.5%. the market overall was up fractionally so they did not perform up to the same standards as the rest of the market. take a look at shares of ford and general motors over the last

year these guys tend to trade in tandem they always have many people believe they always will notice the split i want to go back maybe three months ago and the reason they started splitting is because when you look at gm's guidance, especially when it comes to things like mobility plans for the future, modernizing, ride share program, analysts are saying i like the future with general motors if i'm an investor a lot more than i like with what i'm seeing with shares of ford. last six months you start to see general motors outperforming or performing better, i should say, than ford. ford down 23% in the last three months while general motors is slightly negative. ford's dividend for the first quarter remains the same it has not been changed, and that's certainly some good news for ford investors this is the summary that i think really hits the point in terms of the difference between ford and gm right now

adam jonas widely followed many consider him the best analyst on the street. he says about ford, significant suggestions remain about the near-term and long-term direction. we believe investors must exercise extreme levels of patience with this story as it unfolds. that summarizes why ford continues to struggle much more so than general motors. >> absolutely. very interesting to get those two divergent pieces of news from gm and ford in the matter of the same week phil, thanks. >> you bet nordstrom the latest retailer to warn about soft holiday sales and the stock is plunging what that retailer got wrong. plus netflix, can they keep up the momentum after a massive run in the last month? we'll debate ♪

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coming up, shares of snap plunging today, as another executive heads to the exit. full details on the latest departure ahead. and up next, we'll dig in to today's big bank earnings. top analyst lays out his favorite names in the sector arndk ou we're back after a break with the dow up 213 looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here,

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welcome back to the "closing bell." the dow is right near session highs up near 00 points. goldman sachs is making up a little more than half of that gain the outperformer in the overall market as you can see in the s&p but also fwreen in groups like materials, real estate, energy, technology all doing pretty well today. the two losers are consumer

staples and communication services sue herera has our news update questioning his commitment to fighting climate change acting administrator andrew wheeler previously worked for the coal industry. >> the climate change is real. i believe man has an impact on it. >> the president has said that climate change is a hoax do you agree with him? >> i've not used the hoax word myself. >> groundbreaking ceremonies for a new airbus facility taking place in mobile, alabama the new a-220 aircraft will be produced there it's expected to bring new jobs to the area by 2021. most of the nearly 32 million americans who think they are allergic topenicillin are actually not patients are encouraged to speak with their doctors and go to an allergist to be tested before

they take the medicine that's the news update this hour. >> double-check first. >> absolutely, double-check first, always. >> sue, as always, thank you so much. >> you got it. >> shares of first data rallying on news of a deal with technology provider fiserv dee bosa has all the news. >> wilf, you know this, especially as players like square and paypal encroach on traditional banking territory. this deal brings together two of the biggest players in fintech and payments fiserv is offering them a 29% premium per share based on prices the past few days first data ceo frank bisiganano

will become ceo of the combined company. acquiring first data will help banks better compete against the new companies offering more and more banking services. fiserv's ceo acknowledged that threat earlier this morning. >> a lot of banks, especially in the community spaces, are worried about companies like square, and what do you do where square has a growing -- rapidly growing point of sale ending business and that is going to take money out of the revenue line of the banks. >> for them, they cut big deals like this one. d.a. davidson says it's a david and goliath situation, newer players like square to become what he calls a one-stop shop. wilf >> dee rather than it being a direct threat necessarily to the

big banks, fiserv labels it to big banks already. >> uh-huh, exactly so fiserv helps banks but it is competing increasingly against the squares and paypals of the world. so, fiserv provides these fintech services to the banks but on the other hand paypal and square are providing these services to consumers and smaller businesses. >> deidre bosa, thank you. ceo david solomon on the earnings call, characterizing the quarter. >> recently there's been quite a disconnect between the weak market sentiment and the optimism we continue to see in corporate board rooms. fourth quarter, particularly december, was charactered by a decline in investor sentiment with respect to the global growth outlook in addition for now the absolute level of activity in the real economy remains fairly robust and this is reflected in broad

ceo sentiment and our investment banking transaction backlog. >> joining us now with what to do with the banks, david allison of the hennessey fund and from kdw, a steel bolt company. david, did david solomon put those concerns to rest >> i'm not sure about that he's talking about the quarter and the business we'll see how that develops. i think that's a totally separate issue i don't know enough about what's going on with that to really make a judgment that it's over, but the presumption is that the current business conditions are good and they had a good quarter. i guess there's good volatility and bad volatility. jp morgan had bad volatility there in investment banking numbers and, of course, goldman had the good volatility. volatility isn't always good it certainly was evident in the quarter. >> so when he says that there

was a diminimus effect as a result of the scandal, this is a pretty big move in goldman, david, up almost 10%, lifting the entire dow would you buy or are you still wary >> well, i own the stock and the funds. i think it's one of the premier names you have to own if you want to be in financial services, but, remember, the stock was 275 not too long ago so again the whole group has -- was doing nicely in september, got incredibly beat up into year end or into christmas and now it's rallying. so what, is it up 17, 18% for the year we've had full year performance in, what, 20 days or 17 days of the year so it seems a little bit like we got ahead of ourselves on the downside around christmas and now it seems like we're ahead of ourselves on the upside. business is fine the question now is, you know, the stocks are now reflecting everything is good again, which is what they were doing in

september. the stocks move so rapidly up and down, it's hard to make sense of it sometimes. >> fred, the returns we've seen from some of these banks have improved a lot over the last year or so does that suggest the share price performance and does it suggest moving forward regardless of whether we see an economic slowdown that they can keep making money? >> i certainly believe they can. i mean, this is -- the big move, year over year, had a lot to do with the taxes you don't want to get away from that the growth rate of earnings was slow the balance sheets of the financial system today is in much better shape than it has been really ever in many ways and the underwriting since the financial crisis has been strong that's what wasn't reflected and what david was talking about, that downdraft in the fourth quarter, and we're getting that back. >> what is your top pick, fred, at the moment? it's been fascinating to see the size of the moves this week, jp morgan outperforming last year is the relative underperformer

of the big banks this week. >> right at this point, i think it's best to position more towards the smaller and mid-sized banks. we knew coming into this quarter, we were pretty optimistic on loan growth. that's coming through in the big banks. as was talked about a little bit all over the place, the trading. we really like mtb right here. i would buy a basket of the smaller banks such as kbw are, our regional bafrg aal bank etf. >> david, you mentioned you have goldman in the fund but much more sizeable positions in jp morgan, bank of america. why is that? >> right well, i think the -- i'm not a huge fan of the trading business i've been on this program before saying that's a low business the bigger banks offer a better mix. you know, i've been saying somebody like goldman, they need to buy a wells fargo to compete

with a jp morgan and bank of america, to some degree citi corp they won't do that but that's the asset that's allowing these banks todo so well now you look at the large banks, they've got roughly half of their cost and liabilities at 40, 50 basis points because those are the core deposits. and so that's what's allowing them to expand margins and make these kind of numbers. goldman doesn't have that. they're trying to build it on the internet and so on and so forth. it just doesn't have the same value as these large banks have. >> fred, talk to us about whether fintech is an opportunity for the big banks or a threat i guess we saw another little merger, a deal today we also saw in the bank of america numbers some remarkable digital banking numbers. so does it help the big banks or hurt them? >> i think it's really both. what we're seeing in this industry happen is there's an integration of the new

technologies into the big legacy players. one hand there is some disruption going on. the other hand the way that disruption is playing itself out is it's being incorporated into bank of america. overall, we think that big banks, and even the small banks with the merger today, can be pretty well positioned to continue to serve their customers well by adapting and incorporating this technology. >> what about morgan tanley, fred, very quickly, coming tomorrow do you think they can beat in the same way goldman sachs has >> as david was just saying, with this trading it's very difficult to say that said, i think all these institutions have been set up pretty well to beat very low expectations coming into the quarter. i'm hoping to have some foll follow-through tomorrow but we had an awfully big move today. >> thank you both very much, david and fred.

>> definitely joined in on the party. >> certainly has dee bosa has details. >> according to the wall street journal, federal prosecutors are pursuing a criminal investigation of the chinese smart phone maker huawei for allegedly stealing trade secrets from u.s. business partners. the report cites a specific technology for robotic device that t-mobile used to test smart phones, according to the people that the journal spoke to. we've reached out to the doj and huawei and will update when we have more. this is more pressure on huawei, biggest smart phone worker in the world, it comes in the wake of its cfo being arrested in canada and growing concerns here in the u.s. and around the world. >> clearly, deidre, doesn't help the feeling and mood when it comes to u.s. and china when it comes to trade talks this has become a lightning rod in terms of that relationship. >> that's right. it has broader trade

implications, so certainly hu e huawei has been a tech company that has been caught in the middle of this it will be interesting to see how this shapes up remember when the cfo was arrested and released on bail in canada, president trump said he wouldn't hesitate to use her as a bargaining chip. this specifically is about intellectual property rights what's interesting about this report, it cites a specific case involving tapi, something that t-mobile developed and i'm not sure it has gotten that far at this point but with something to point to, an actual technology, this story could have new legs. >> deidre, thank you for the update there 18 minutes to go before the closing bell took a little steam out of the major average. >> 20 points or so. >> dow up 175 points, s&p up a third of a percent, nasdaq up .2% russell 2,000 up more than .6%.

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welcome back 15 minutes left until the close. we are higher 175 points on the dow. let's head uptown, though, to the nasdaq hi, bertha. >> one of the big moves is the nasdaq closing or set to close about 7,000 for the second day at a one-month high, along with the russell 2000 today it's very much the small caps that are out performing but take a look at one of the largest caps, apple. apple has made a pretty nice recovery after its warnings from january 3rd today. of course, the news, our christina farr talking about the fact that apple is pushing hard to try to get the apple watch to be underwritten by insurers. if the telecom folks won't do it, maybe insurers will. finally the tech decliners today include fiserv with that payment. take a look at paypal. it's moving lower right along with it. meantime, regional banks among the reasons why those small caps today are so strong, getting a

lift from those bank earnings. wilf, back over to you. >> bertha, thank you very much for that. >> nordstrom moving lower today, hitting a new 52-week low after getting two downgrades on some news we'll discuss whether retail is in trouble next on "closing bell." [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. this round's on me . hey, can you spot me?

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snap down 14% after the company announced the cfo would be leaving the company after only eight months on the job the departure is not related to any disagreements and he will remain on the job until a replacement is found the important line is that it's not related to any disagreements or issues relating to accounting and the fact that that has to be stated is what i think spooks people, given he has only been on the job such a short time. >> also they've had a talent exodus and he is the second cfo to leave without any upswing in the overall business not particularly encouraging for investors. i'm watching the retailers downgrading nordstrom from

neutral to buy after disappointing holiday sales. both firms also called out weaker trends at nordstrom's department store business. nordstrom down almost 5% for what all this means for the retail sector, courtney reagan and oliver porsche welcome to both of you courtney, nordstrom having the same problem as macy's >> i don't know that it's totally true it is interesting that the numbers are similar when you saw holiday numbers up between 1 and 1.3% they did grow but disappointing. and i think the pattern we saw might be similar we saw the strength early around that black friday, cyber monday time and then we saw that lul, which we usually do, but it got deeper sfwaed that way even when you had that final big weekend it wasn't as big as it could have been because of everything else going on in the world. you guys talk about it every day, with what's going in the

market and the government shutdown that hits nordstrom particularly hard because that's a higher-end customer they may be more sensitive to that economic uncertainty than some of the others and this could be a continuation of the weakness in that full line business from the quarter prior. that's the bigger concern, that this is a continuation and not a blip. >> although some of the lowest cost retailers, though, doing fine and you are one of them, in particular. >> yes for us it's about having an online strategy. biggest diversion in terms of holiday sales increases between a target, that had a great online strategy and a macy's that didn't, that explains part of it. same with amazon, a growth stock, obviously but terrific online presence wholesale costco is probably what you're referring to it's a great holding the valuation is very attractive after the sell-off in december it's something that will be a little bit less sensitive to an economic downturn and other

higher end retailers as courtney mentioned. we knew coming into 2019 that global growth was going to slow. that picture has been accelerated by the government shutdown here in the u.s becoming more defensive makes all the sense in the world. >> how are you differentiating right now, courtney? department stores versus everyone else or do you have to go name by name, strategy by strategy and look at where the growth is in e-commerce to see who is winning and losing? >> in a way, sara, i think you have to go name by name. i'm trying to think about this thoughtfully they all did have growth yes, it's small. oliver is talking about having an online strategy almost everyone can argue they have a very strong presence yet had this disappointing quarter i think we just need to learn a little bit more and i want to see more of a trend one way or another to know if this is more than just a couple weeks and i think that's the tricky part to evaluate all of this right now. is this a moment in time or is

this the beginning of a new trend? for most of 2018, retail was starting to look restrengthening. is it falling off or what's going on here? >> oliver, you tempted to top off on any of these retail stocks at the moment >> not right now we want to wait and see how long this government shutdown will last the white house announced the economic impact will be double what they originally estimated gdp growth being 2% in 2019, chip away .2 a week, it doesn't take long to get to flat then we're concerned about that. there's still a lot of positive momentum strong earnings have come out. no question a fourth quarter was strong overall in terms of earnings looking ahead, there's too much insecurity if you have dry power, hold on to for now. >> wages are up, unemployment is down this is supposed to be the best shape consumers have been in, in years, and yet a lot of these --

>> because there's insecurity. you're not going to overspend if you don't know what lies ahead you're going to go through your holiday season shopping. i don't think anybody was deterred or detracted the week leading up to christmas. thereafter you have to cool your jets a little bit. and that's what's happening. >> okay, courtney reagan, oliver porsche, thank you for joining us five minutes left to trade. after the bell, vanity fair's william cohan will join us we'll get his take on the newest mbmeer of the house financial services committee closing bell after a break [knocking] ♪ ♪

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don't get mad. get e*trade, dawg. welcome back to the "closing bell," couple of minutes left to trade. s&p up a quarter percent goldman sachs is up close to 10%, bank of america, 7% dragged the whole sector higher. also morgan stanley due to report tomorrow morning, already moving higher. jp morgan is the worst performer of the big banks it was the best performer last week also bear in mind some of the moves have been based on valuations jp morgan already had the previous valuation, partly why

it's underperformed. bank of america, goldman sachs very solid results the sectors, financials by far the best performing sector given that only really the one secter that has significant gains over 2%, real estate doing all right, as well as material. there is a bit of red on the bottom half of the screen. what does this mean for the four major indices? the dow is the biggest performer of the four indices because of goldman sachs. >> since earning season has really started we're up. we were having these fears of recession. we had fears of china. fears of government shutdown it's been replaced in the last couple of days as earnings started by, i'm going to call it, fear of missing out. fomo they seem worried about getting behind they underperformed last year. they can't underperform in january. the market is up 5%, they're not

in the market t drags more people in. bank earnings are gold they're not amazing but certainly good enough and black rock up 4% today. >> bank of america, i think, was better than that, but i agree in general valuations have a lot to do with it aberdine nbc of sorts at the nasdaq that does it for closing bell. sara, back to you. >> welcome to the "closing bell." i'm sara eisen willfred frost joining me as well as mike santoli let take a look at how we finished the day on wall street. off the best levels of the session but the dow gaining half a percent, closing up 137 points keep in mind, goldman sachs was about 110 of that gain big rise for the bank after earnings today s&p 500 closing up .2%

financials real estate, utilities, industrials and technology all ending in the green. staples got hit the hardest. nasdaq closing higher. .10% steam there around the closing bell of the earlier rally we had throughout the day russell index, small caps outperforming everybody, up more than .6% on the session. stocks rallying second straight day in a row dow inches closer to exiting correction territory just about 10% off the highs at this point. strong earnings from bank of america and goldman sachs helping to fuel those gains on wall street and jm morgan ceo jamie dimon once again warning investors are too focused on short-term results we will tackle all of those subjects first, from douglas elaine and associates, mike, better earnings that massive injection of liquidity from china overnight certainly helping to bring some buyers in here.

>> it seemed like it i would say it's a financial story almost entirely today. financials are one-seventh of the s&p 500, they were up 2.5% basically the rest of the take was flat that's fine because it's after an 11% move in three weeks where you regained half of what was lost in a 20% bear market. it maybe telling that the market seemed to get a little fatigued right up around these levels and needed something extra to push i feel like we've burned off most of the super negative sentiment we got at the december lows and a flush of flows in here with a little bit of a global liquidity move and more money moving into equity products in the u.s. it's a little bit of a test for this market to see if we can push on from here. it's a logical place. >> it's good momentum in terms of what we saw. >> apple, amazon, microsoft up that helps, too. >> really it started with citi

coming with expectations that were so low. banks, jp morgan okay but the others have been better. we were pricing at so much negativity in december that maybe the market was thinkin this recession is here banks have told you otherwise. and i think at this point we have to see next week what's going to happen in terms of industrials and the other sectors, what are they going to say about the economy and will that then follow through >> more detail on the banks. bank of america and goldman sachs higher on strong earnings beats. morgan stanley, of course, on deck tomorrow. mike, we talked about this they were attractively valued but if we were sitting here yesterday and thought we would get almost 10% move in goldman sachs, 7% in bank of america, we can't put that purely down to valuation. >> no. >> good fundamentals there. >> valuation just sets the scene. forget about what the published estimates were the expectations embedded in those stock prices were quite low.

i do think that there really wasn't any specific thing to worry about in any of these results, wep regard to the consumer and credit quality and all the rest of those things that you would be looking for, for some kind of inflection point. you have an underowned sector that the fundamentals are coming in on. they look relatively cheap you do have that extra boost of people saying i need to participate. >> you own bank of america. >> yes. >> pleased by today's move is it profiting? >> it's been sold off so much. it hit $24, basically using it as a source of funds people saw stability and, to your point, they actually did pretty well across a lot of its businesses and growth was not that bad credit quality was not that bad. people are coming back to say there's value here, strong balance sheet and dividends. why not own these for the longer term >> it also helped that you had a higher -- rates were higher across the yield curve today, 30-year sort of popped up. that's quietly been happening and fueling the risk sentiment

and the recovery in the banks. >> right. >> part of that was when rates were going lower, was that forecasting something? nobody really knew the fed is not really in the picture. that's a better picture economically and the banks benefit. >> prime minister theresa may will make a statement from downing street in an hour's time we don't know what that's about but certainly something we will keep an eye on. >> didn't she call talks for tonight with members of the parliament >> i don't know why that would warrant a statement from downing street british pound didn't move off the back of today's vote t did yesterday. it hasn't moved off the back of this announcement. trading has been soft throughout most of the banks but goldman sachs managed, despite that, to outperform and morgan stanley has been pretty cheap, not as cheap as bank of america or goldman sachs.

>> no. how did this hold up in the quarter where you have the big downturn were they able to increase assets and billings? where is that going to go? that's a different franchise. >> despite the share price performance, mike, anything else stand out to you inside the earnings picture for the banks >> really it's the amount of steadiness i think that's what's being appreciated right now. if you're willing to, almost across the board, saying december, fourth quarter in trading was something to forget about and we can look beyond it, then it's just -- you know, this is the kind of environment if you're still in a 2% economy, where these banks can be fine. the tax cut kind of completely put them over the line in terms of bank of america has an 11% ore really because of the tax cut. that's going to continue on, right? that doesn't go away in terms of the earnings. >> the only thing we'll really know for sure in a year, two years time is digital stats for bank of america are fantastic.

is that a bit of a sort of advertisement? is it a bit of a we'll save that or is it really the bottom line? hair operating leverage has been good we'll know in a couple of years whether the big banks are still making lots of money or the paypals of this world but the rhetoric is encouraging. i don't think people are fully paying up for that yet we'll see if it continues. >> the institutions are hard to displace the question is that digital push mostly defense or is it also, as you say, going to recruit their returns? >> speaking of the big banks, jp morgan chief jamie dimon spoke today in new york. he voiced some concerns about short termism. listen. >> too much focus in the short term i look at -- do you know what's important to me? market share number of clients, products and services, new branches, not nim and whether expenses were higher or lower that quarter. we can't forecast trading any more than anyone else in this room can. >> the point on this, i have to

say, we hear this from him every three months what he's doing is saying -- the question was you missed on fixed income trading but he said yeah, analysts estimates are what we're concerned about in the long term we often criticize him for that. during that earnings call we saw jm morgan stock turned around because people took from that, okay, there's been misses on the top line if it is only one quarter, one month, december, then that's encouraging. >> it is encouraging i think he's articulating the way he looks at the business, his role and what he can control. >> right. >> so, yeah, it's kind of an easy thing to say. he also has the advantage of, you know, having been ceo of this and the predecessor institutions for, what, 14 years or something like that it's not as if he needs to prove he can make the numbers. i feel like it's a good political line, good strategic note to strike and it also maybe kind of diverts a little bit of attention from the wiggles and the numbers.

>> and also gets us back to that debate about whether short termism is harming the economy and these companies are trying to make their numbers. wasn't trump going to get rid of this wasn't he going to go to every six-month reporting on the advice of ingenuity? what happened to that plan >> to that point he's focused on franchise value. if yoor jamie dimon you're saying you're buying my company, you want to own shares because we have this diversified stream of revenue across businesses and we keep on growing that focus of hey, i missed this one quarter, et cetera, in the long term really doesn't work. >> short termism, it's a very easy thing to decry, but less information to the market is not necessarily better than more and certain companies really need to use the three-month sign post and some get the benefit of the doubt. >> don't analysts come up with their estimates and numbers based on what the company is constantly talking to them about? >> what they've done. >> and information they give you.

>> yeah. >> dimon also spoke about the shutdown and what worries him most at the moment. >> i worry about most today is bad policy you know, just bad policy, that we don't get things done that this country desperately needs like immigration reform. we need to get a good trade deal legitimate complaints about china. i worry mostly about our own public policy. the government shutdown i put in the same category, another self-inflicted wound. >> this was actually a little encouraging. yesterday, of course, he was quoted as saying we could go to zero growth. he kind of clarified that comment which i reported was more of an off-the cuff thing. that was his only complaint, policy otherwise he said yeah we've seen a bit of a slowdown in global growth. the u.s. is encouraging, other than the shutdown. >> it's just a timing issue, presumably everyone gets backpay. it doesn't seem like it affects much unless -- air travel is the one thing you're really going to see as the focal point.

>> i think that idea of manmade problems that we're dealing with right now, it's not just the shutdown brexit i would put in that category and the other major risks, trade war that the economy is facing. we can get out of, right, because we got into them. >> i think he's saying they become self fulfilling and all of a sudden you get negative sentiment because you don't see where the light is at the end of the tunnel hopefully, you get some of these things feksed and the economy can get back. >> morgan? >> wilf, that's right. free railroad posting top and bottom lines, 101 per share. that's the gap number. two cents better than expectations revenue, $3.14 billion, slightly better than expectations, representing a 10% increase in revenue over the prior year thanks to fuel recovery, broad-based volume growth, pricing gains higher

supplemental revenue and favorable mix says the company operating ratio, a key metric to watch with the railroads, lower better operating ratio is 63% also csx initiating a new $5 billion share repurchase program following theearly completion of the existing $5 billion authorization. nonetheless take a look at shares of csx, they're down in the after-hours trade. we'll be getting more from this company on the earnings call at 4:00 p.m. eastern. wilf >> thank you, morgan some of the key metrics did come in light. >> and the expense ratio that morgan mentioned that seemed to be a little bit of the reflex move down anyway for that reason. it's still well off its highs. a lot of the transports in general outside of a couple of airlines have really been hit

pretty hard. even the airlines have, too. >> what are you getting out of the action in transports, including the rails? >> when you look at companies like csx, x airlines, i think they're talking to you about the trade and things are slowing down right now with uncertainty, businesses are not really doing that much with their products. >> do you feel that global growth, though, is priced in now, the global growth slowdown? excuse me. >> i do. cyclicals and transports it's been pretty much priced in the question is, are we decelerating from here or will we see some type of stability and say we'll get growth in a quarter or two once things get satisfied? >> and your top picks the rest of the earnings season >> financial have been the pick. >> well done. >> they were the ones beaten down the most the last year and industrial companies like ksu or honeywell will be interesting. we own them. they're down almost 20% off their peaks.

>> how much bad news is baked in there? would a guidance cut be a surprise >> no, i don't think a guidance cut would be a surprise at this point i think what would be a surprise is if you see deteriorating fundamentals in the balance sheet, expenses getting out of hand. those would be some negative surprises. >> guys, we'll leave it there. sarat, sorry, we'll leave it at that sarat setting sarsethi, thank you for joining us now that alexandria atcasio-cortez has secured a se on the committee, should banks be worried you're awesome and xfinity would like to say, "thank you."

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[shouting] it's all on us, and it's all coming soon. you've got some serious watching to do. we've got an earnings report we've got bag pipers here. >> how did you say that? front and center. >> aberdeen is here in celebration of their etf and we had a performance here at the new york stock exchange. >> thank you for the setup shares of alcoa lower even though its eps beat 60 cents

adjusted 50 cents, revenue topping expectations at $3.34 billion. now in 2019, it is expecting an aluminum surplus, driven, as it says, by china, where refining expansions are expected to outpace demand growth from smelting that is certainly some comments that analysts are pondering over and china certainly the big part of supply and demand, shares down .6% sara, sending it pack to you. >> seema mody, thank you very much it's quiet here now. >> newly sworn in congresswoman alexandria occasio-cortez tweeting out she's excited to dig into shalls like student loans and exploring the public and postal banking.

>> maxine waters. >> during the 2008 financial crisis, large wall street banks subject to strong oversight and safeguards to protect our economy can do a lot of damage we will be keeping an eye on the big banks and their activities, included by holding many hearings. >> joining us now to discuss what wall street can expect from this new leadership on the hill, bill cohan, vanity fair, and analyst from the american enterprise institute good afternoon to you both do you feel this will be a new sea change and pressure on the banks? if so, on which banks in particular >> i don't see it. i don't see a big sea change there have been several sea changes, tsunamis of sea change, dodd/frank law, volker rule imposed much-needed regulation

on the bank. then president trump comes in and begins to roll back a fair amount of that but really for smaller banks, not the big wall street banks that we think are still heavily regulated and fairly regulated i don't think the change in the house leadership is really going to have a big affect on that although maxine waters will hold hearings and, you know, that will probably result in -- >> do you see it as annoying for them >> well, i mean, not annoying because you can't use that word per se it's important they have to be taken seriously. she's a very astute politician. >> i mean for the big banks that get called in for hearings and subpoenas and all that >> yeah, they're going to have to deal with that. that will have to be part of their new reality, which they haven't had to deal with in the last two careers. >> jimmy, how much power does the house financial committee actually have when it comes to regulating banks >> listen, some very important legislation can begin there.

do i think that is a today issue? i think it's headline risk today but real risk for the banks tomorrow listen, what -- ocasio-cortez is good at doing is putting issues into the agenda, raising their profile where they weren't big issues before, this green new deal idea or raising the top tax rate to 70%. she's someone who ran on a really progressive populous agenda, break up the steigle those ideas, she can get those back into the spotlight on the democratic agenda where you'll see presidential candidates talking about them and maybe trying to institute them if they win the presidency and more in the near term, i'm sure the student loan issue if you're going to create a bill to start bailing out student loans, that's where it would start and she may be the kind of person that would try to put that into play. >> when we think about the actual share prices for banks

and the facts is it affects that, both houses of congress switching will be much of a worry. we're not likely to see waves of legislation that really changes the course. >> unlikely. i do think, though, it does reflect the thrust of the democratic party as it is right now. therefore maybe these will be issues that are more surfaced in 2020 but those share prices you refer to are not really embedding some great deregulated future that people are banking on they are really cheap. if people thought there was going to be free wheeling higher returns to come, even though we had the consumer financial protection board sidelined at this point, i don't see that as a risk mostly because the stocks don't embed any of those expectations. >> bill, remember when president trump came into office, pushing deregulation he basically used banks as his main example. >> personnel office. >> he was saying -- that, too, but also dodd/frank has been too strict, we're going to look at ways to roll it back

they need to lend more that was supposed to be very helpful to the banks. >> he did roll back. >> has that actually happened? >> a lot of that has happened. as i said, most of that has happened for banks smaller than those with $50 billion in assets so, most of what we think of as wall street that we're surrounded by here, this doesn't really -- it didn't really affect them. but the tenor in washington was much better the last few years and better for banks and that might be changing but not in a material way it's hard to imagine the big banks actually being more regulated than they kind of are now. i mean, there are real curbs on their liquidity, on their leverage they have to have a lot of capital. there's restrictions on what they can do. maxine waters can talk about what she might change but i'm not sure what she could do that could pass both houses of congress and get the president's signature that would result in more regulations for big banks. >> i think you underestimate how imaginative politicians can be

on some of these issues. if democrats decide they want to raise capital levels further, you would find some republicans who thought that would be a good idea there is this sort of anti-bigness, anti-monopoly stuff going on in both parties right now. it's not hard to imagine, maybe not under this president but a future president where those two sides come together, whether it's banks or big tech. >> jimmy, does bashing big banks still score a lot of points for politicians? >> i think there's sectors in both parties where that works. certainly you have this progressive kickback on the left where they felt the obama administration went way too easy on the banks, it should have been nationalized. you should have seen more ceos go to jail he listened too much to tim geitner, who they viewed unfairly as a creature of wall street there was a blowback against that you're seeing that now with progressive politicians who said wait a minute, we missed an opportunity to do something about inequality and concentrated corporate power and

maybe we should do something about that now since we didn't do it back under president obama. >> jimmy pethoukakis, thank you for joining us. >> bill, we wanted to ask you about another story that was out today. report from citi group, addressing the wage gap issue, women who work at citi group is 70%. 93% for nonminorities. the point here not that women aren't getting paid as much as men for the same job but that wenl aren't in senior positions. only 37% of senior positions are between the level of vp to managing director. so they're not getting promoted enough i'm sure citi is not alone i'm sure it's an industry-wide phenomenon kudos to them for making it transparent. i think that's the first step. how big of a problem is this at banks? >> i think it's a big problem

and i think it's good that citi group is addressing it goldman sachs has addressed it jp morgan has addressed it but we need more than addressing that we need more than window dressing we need women to actually get into the senior roles. and, you know, people of all stripes should be able to get up into the senior roles of these banks, not just white men. and we're still in a white men phase. and, you know, probably within the exception of credit suisse, you know, it's white men city. it should change and should change rapidly part of the problem, as you said, sara, women are not being promoted into the top levels of these firms in big revenue areas. there's -- yes, there are the general counsel at goldman is a woman and maybe the head of investment relations in x, y, z. mary erdos at jp morgan. there are plenty of examples. >> jamie dimon likes to talk about this, doesn't he >> 50% of his direct reports --

it's fair to say that she's one of his direct lieutenants but it's not equal. >> not enough. >> you make a good point what's a reasonable timeframe to hold them accountable to this where it should be matched >> david soloman goldman sax has talked about 50% of the incoming junior class being women kind of immediately. they can do that it's like an admissions office at a university. you can pick the people that you want they really want to do it, they can do it. i think the talent is there. you also have to make banks an environment where women want to work. >> i want to switch focus and talk about david soloman quickly, bill. did you listen to the transcrcal >> i read the transcript good for him starting off a conference call that a goldman ceo has been on.

i'm glad that he did that. i'm glad that he addressed it up front. it's an important issue. it's an important thing he has to deal with you know, they're going to have to deal -- they've going to a big problem on his hands there at least he's dealing with it forthrightly. >> it did imply they have now provided for any financial penalty they believe they could get. >> they believe. >> could be worse, yeah. we'll see what happens thank you so much for joining us, bill as always, pleasure, bill cohan, correspondent ativanity fair we'll explain why the cheapest stocks are starting to outperform the broader market and what that could signal en, is taking another look at your overall financial strategy. you still thinking about opening your own shop? every day. i think there are some ways to help keep you on track. and closer to home. i'm all ears.

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put your data to work on the cloud that drives business. the ibm cloud. the cloud for smarter business. >> time now to get a cnbc news update with sue herera. >> hi, sara. here is what's happening at this hour two american service members, one civilian and one american contractor were all killed three u.s. servicemen were injured from an explosion in northern syria isis is taking responsibility for the attack, saying that it is the work of a suicide bomber. house speaker nancy pelosi says it was security concerns that led her to request president trump delay his january 29th state of the union address. she says it is impossible for congress to meet the security burdens while the government is shut down. >> this requires hundreds of people working on the logistics

and the security of it most of those people are either furloughed or victims of the shutdown, the president's shutdown but that isn't the point the point is security. >> and a new study says older people may be able to maintain their memory by being more active those who exercise more on a daily basis had better cognition and memory than those who were not active, which makes a lot of sense. that is the news update this hour, guys i'll send it back down to you. wilf >> sue herera, thank you so much mike is looking at whether the backdrop might be more favorable for those active managers mike >> wilfred, no guarantees. hunting ground, in theory, should be a little more rewarding for hedge funds and other stock pickers. bank of america, merrill lynch, little more confusing. the blue line here is the

dispersion, the divide between the most expensive and least expensive stocks in the index. you can see it has curled upward lately obviously a couple of fits and starts but basically since 2017, it has gone up that should suggest that plaerhs buying cheaper stocks and shorting more expensive stocks there's more fruitful activity there. the bottom line is the relative performance of those cheaper stocks you can see also that has turned higher it does seem as if a little bit of the volatility we've had, fed tightening cycle sometimes create a bigger split between the winners and losers you can still pick the ones that are going to lose in the future if you try to make this call one more observation look at when the dispersion was highest and when the cheapest stocks did their best, that's here, bear market. that's here, bear market that's when hunedge funds reall make their money, if they can actually score it correctly. >> you're saying there's more and more evidence that cheap stocks are the way to go

>> cheap stocks are performing better and also that there is a greater split between the most and least expensive stocks there was a time, if you go back here to 2015, everything in the index was bunched together around the same evaluatation it was almost as if the whole index was being treated as one block. >> when this does best it's in the bear market. in a bear market, people looking at long-term analysis perform best the people who get the asset allocation right rather than the stock -- >> that is true. >> high cash balance when they're falling, low cash balance when they're rising. >> or participate on short side. if you have a short allocation that's always going to do it there's room for alpha, fruitful stock picking. final observation, look at the '90s, owning cheaper stocks, that's when you had to play the momentum that's not the kind of environment, at least for now, that we're in. >> thank you very much can netflix shares stream to

new highs following its earnings tomorrow apple giving a boost to its new iphone lineup by launching battery recharging cases details coming up.

netflix is expected to report its fourth quarter earnings tomorrow. the stock has been an o outperformer since its sell-off christmas eve. again netflix pops again after announcing its biggest ever price mike. >> joining us now to discuss what they'll be looking for, david trainor a what it will mean going forward as opposed to past quarter numbers. >> that's right. this price hike represents key dilemma for netflix. they have to raise the price in order to keep from running out of money and keep the bond holders happy. every time they raise their prices, it makes their competitors more viable. so it's a catch-22 for a business model that when you look at the fundamentals really just doesn't work.

>> that's a pretty negative take you could also say that they're raising prices because they have pricing power and they're growing so fast that they're able to pass along higher prices because consumers have an insatiable appetite for their content. >> sara, that's right. you can make that argument we have to look at, what does the stock price imply in terms of valuation to justify $350, that means they'll have to have 500 million customers paying 20 bucks a month. at 20 bucks a month do you really believe that they're going to have such a monopolistic share of the market that force out disney, hulu and these other folks? it's an unrealistic set of expectations for future cash flow baked into the stock. not many people pay attention to cash flow so it hasn't really mattered. >> indeed, most people focus on the subscriber growth. tom, is that what you're looking out for tomorrow >> absolutely.

the name of the game is always subscriber growth with netflix if they can show in the fourth quarter a significant up dtick d projections for the year as you're referring to, that's the big question when they're raising their prices as substantially as they are, if they can still show ample growth over the course of the year that pleases wall street, they can start justifying that valuation and you can start to see a little bit of a pullback on their cash burn, which is significant i do pay attention to that it is something that people will be watching very closely. >> i mean, i have to agree with almost both sides here but it seems to me that the market is taking from this decision on pricing that subscriber growth numbers are probably fine. netflix is always a huge mover on earnings, and it could swing either way right now you have the street pretty comfortable with what it looks like and so, in other words, this is under the old pricing regime we don't really know if trends

are going to stay this way but to me it's flexing muscles and saying before competitors flood the market we'll lay our claim on more of the streaming dollars out there. >> tom, does it all still rest on their unique netflix original content and how does the slate look for the year ahead? >> yeah. it rests on it more and more we'll be entering a very new era for netflix where a lot of their big suppliers like disney, warner media will be pulling back on their content from the platform it's going to take some time and not be an immediate impact you can see netflix very much substantially increased in the amount of original content on there. there are still big question marks, the whole story around "friends" and whether or not they were going to reup their deal to continue with "friends." "the office" is another huge performer on netflix and really to be determined whether nbc universal when they roll out their streaming platform, whether they would want to make

"friends" -- excuse me, whether they would want to make "the office" exclusive to their platform you'll start seeing their original content becoming central to their consumer appeal. >> david, i didn't want to let pass your kind of calculation of what the market cap currently implies. 500 million subs paying 20 a month. right now you think this company needs $10 billion a month in revenue in order to make the valuation work today >> that's what the valuation imply. >> that's a $150 billion market cap right now. >> if you run it through dcf -- this model is on our website you can see it just run the numbers that's what you've got to do to justify 350 bucks a share. that's where the valuation has always been. people aren't usually looking at this stock through that lens because it's a whole lot harder to sell the stock or sell the bonds, which is what wall street is doing, right? and so our take is unique, but it's comprehensive, it's mathematical it is what it is

that's why people want to focus on subscriber growth let's not worry about cash flow. they've lost $10 billion in cash flow, burned $3 billion in the first three quarters of last year and so replacing the content that they may be losing with new content is a very expensive endeavor and that's why they have to grow the way they have to grow to justify the price. >> you mentioned the higher prices opens the door further for competition. who are you betting on do you have a pick within the sector that you like their streaming, anti-netf lichltfantx strategy >> disney has the capital, the ability to merchandise, another way to monetize content that netf lich netflix does not have. they distribute content online what's defensible about that disney has a track record of

successfully creating original content. not many firms have. the number of firms that over time have successfully monetized original content it's an expense iive endeavor they have big, competitive advantage versus netflix at end of the day it's a one-trick pony, like the oal of ttm. there's really nothing there except this growing subscriber base, analysts on wall street focusing on numbers that analysts can shield while everybody turns a blind eye of the cash flows and the expectation is baked in the stock price. >> we'll leave it there. david trainer and tom dotan. >> quick final thought tomorrow when we get the numbers, immediate short-term focus will be on the sub growth. >> it still will be, and they presumably modeled it out, what they think it will be at the new

price point. it will be both of those -- if you look at the chart of their sub growth in the last few years it's a steady aascent like this the stock can do whatever it wants even in the middle of a subscriber growth. apple, is it recharged apple announced new powerful accessories for its newest phones we'll discuss that development next eep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. i'm brad castillo. did you know that americans who bought gold in the year 2005 quadrupled their money by 2012?

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following weeks of speculation, apple announcing battery packs for its latest iphones. josh lipton in san francisco josh, what's behind the move >> sara, new accessories for apple fans iphone maker has released new smart battery cases for its latest and greatest iphones that give useers longer battery life. according to the company, the case increases talk time up to 33 hours on the 10s. the cost, $129 they come in white or black and they're compatible with wireless chargers cases will contribute to apple's so-called other products segment, which generated more than $4 billion in revenue in apple's fourth quarter, up 31% from a year earlier. batteries have been front and center for apple investors lately the company reportedly replaced 11 million iphone batteries last year as part of that battery replacement program that allowed some iphone fans to replace their batteries for just 29 bucks, 10 times more than apple

typically expects and tim cook says that's one reason apple saw fewer than expected iphone upgrades in its holiday quarter, forcing the company to make that very rare move we saw and cut guidance back to you. >> these types of extra battery packs that get built into the case around the iphone they're not new, they're just new for these models is that right? >> yeah, right apple has delivered these kind of accessories before, you're right. apple knows that batteries are very important to people battery tech can often be complicated. you can see what can go wrong there. we all remember the galaxy note 7 fires. batteries are important to folks. they're right up there with displays and camera tech in terms of what they look for in new devices. it's interesting that apple knows that they came out with these new devices, they highlighted that the 10 s max, they were quick to point out you would get up to 90 minutes more than you would.

so an important accessory for some folks looking to extend that battery life, guys, and goes into that other segments category that's seen that growth that division would also include the watch and airjosh,thank you. my view on this, it could delay people from getting the more expensive iphone. >> in theory it could. i think it's what happens in a mature product category. as you accessorize, you try to get more revenue from existing owners because you've already kind of concluded that the upgrade cycle has been lengthened and you almost kind of acknowledge that that's the way it is right now. >> apple stock, though, was higher today by more than a percent. you just wonder how much of that news, that sentiment -- >> i don't know if this was the mover. i know the stock got right back up to where it fell off a cliff. so either it's progress or it was just tagging that level again. all right, it is time for the 2019 nominations for cnbc's annual disrupter 50 list up next, we'll see how previous

disrupters that have gone public have fared as public companies. tonight on "mafast money" t man who moves markets says the lows are in. he'll explain.

welcome back today we're opening the call for the annual 50 disrupter list. our ranking of fast growing private companies. 30 companies from previous lists have gone public with some surprising results so far. julia boorstin in l.a. with a look hey, julia. >> wilf, the disrupter 50 graduates that have gone public have on average outperformed the market last year the disrupter 50 index gained 16.6%, vastly

outperforming the s&p which lost 6% the disrupter 50 index is equally weighted of all 30 publicly traded former disrupter companies. we add new companies at the start of the quarter after their ipo. gains were bolstered by big winners. the biggest gainer, twilio it's stock is higher by 280% the stock is up another 11% year to date. the second biggest gainer is mongo db their gain was 182% last year. the worst performer in the disrupter 50 index, blue apron its stock falling 75% last year followed by snap, whose stock declined over 60%. last year's disrupter ipos have had mixed performance. adgen shares have gained nearly a third but survey monkey lost more than 20% last year. we expect to see a number of

last year's companies join the index this year. uber, airbnb, lyft, palantir and pinterest. to nominate companies for our 2019 list go to cnbc.com/disrupters. sara, back to you. >> one thing is for sure, julia, a lot of them end up going public. >> that's right. that's what we're trying to do here, give you a sense of which ones will be the next big ipos. >> julia boorstin, thanks. up next, the white house reportedly considering former pepsi chief for a major international post we'll have the details, next 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. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. the global investment management

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let's get a check on the headlines making news after hours. csx moving lower after reporting better than expected earnings and revenues some metrics did miss estimates, including volume and operating ratio. the company also announcing a $5 billion buyback. alcoa reporting a beat on the top and bottom lines that stock pretty much flat in the after hours. and we're also awaiting a statement from uk prime minister

theresa may after her government survived a vote of confidence today. a lot of talk on twitter that the lectern is out with the governmentes logo on it. that's a statement as pm not as leader of the conservative party, which means that she's not about to stand down. >> you're going to stick around and cover this >> it's likely a reassurance that i'm still your prime minister. one story that caught my eye today, pepsico chair, indr indra nooyi, the white house is considering her as a candidate this coming after the current world bank president announced his retirement early, saying he's going to step down in february we know that ivanka trump likes indra nooyi. she congratulated her when she stepped down as chairman and ceo. sources close to nooyi tell me she's not that interested in the

job but she does have a lot of experience running a domestic company that operated internationally and she grew that international business, so would actually be a pretty qualified candidate. the tradition is the u.s. treasury department picks world bank president, europeans pick the imf. emerging markets are not that cool with that. >> that does it for "closing bell." >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. tonight the man who moves markets is here. marko kolanovic says you won't believe how high he thinks stocks will go. uber, lyft, pinterest and airbnb get ready will the government derail this ipo stream goldman sachs surging