that the president is capitulating, we're not going to get real reform, he's not being hawkish on trade, that's the -- why i worry about it being a trial balloon. >> 13 points off the highs of the s&p 500. we'll continue monitoring this thank you for watching "power". >> "closing bell" starts right now. ♪ >> good afternoon. welcome "the closing bell. i'm wilfred frost. >> we'll tell you what you need to know ahead of the results >> we'll talk to john calamos. he'll lay out his latest market strategies for this environment. >> and microsoft announcing it is making a $500 million investment in affordable housing. president and chief legal officer of microsoft brad smith will join us on cnbc first up, though, check out the intraday action in the markets

a big pop just in the last few moments or so. picking up where "power lunch" left off, on the report out of "the wall street journal" that the u.s. is looking at lifting u.s./china tariffs to speed up a trade deal by march 1st, a strategy put forward by the treasury secretary whether it is real or not, whether it is going to happen or not, investors certainly give their approval the intraday spike, the dow had been up at the height of the day, 27 points, now rocketing up more than 100. >> has come back since the story broke. the headline, if you read the story, more encouraging than the content of itself. let's get more of the detail and what we can expect, what might be true, what migh eamon javers has more. >> i spoke to steven mnuchin in the west wing, heading apparently toward the oval office, just a few feet from the oval office door when i spoke to him. i asked him about the wall street journal report. he said he's not going to be making any statements at this time the report suggests that he has been advocating behind the

scenes lowering or ending the tariffs on chinese products as a way of offering some concessions to the chinese side. a spokesperson, however, for the treasury department says this, neither secretary mnuchin nor ambassador lighthizer made any recommendations to anyone with respect to tariffs or other parts of the negotiation with china. this is an ongoing process with the chinese that is nowhere near completion so the official line here, from the treasury department itself, no official recommendations have been made here by the treasury secretary. even though the wall street journal is reporting that it has apparently come up in strategy sessions as a talking point at least. the secretary of the treasury telling me directly he's not going to make any statements on it at this time. we'll wait and see what he says when he emerges from the west wing >> the other point "the wall street journal" piece makes, this idea, if it is just an idea, hasn't even got past mr. lighthizer yet either. there would be conflicting voices at best within the west

wing trying to convince the president if this was indeed a tactic on the table. >> right the president always had conflicting voice oz s on this. there is a sharp difference of opinion on how to proceed on the tariffs. the president has been getting that conflicting advice since the administration began and has been making his decisions based on all of that input he gets. so this is an indication he's continuing to get that kind of divided input here the question is what is the president going to decide to do with this? if secretary mnuchin is in with the president right now, he might be walking through all of the arguments that he's making here behind the scenes as well so we'll see what the treasury department has to say about that this afternoon but for now, they're saying none of this is final yet, no final recommendations have been made and the process is ongoing they're emphasizing that >> well, there is also a line in the story saying, mr. lighthizer has shown some signs of easing his position, say people involved in the talks, including raising the possibility that tariffs be eliminated. if you put it all together, what

it is hinting at, this does gibe with what we heard from the president and his advisers lately they want to make a deal. and they want to make a deal in time for march 1st. >> march 1st is looming, right the question is what happens if they don't get a deal by march 1st. the administration is really in a box. they're in a box on the government shutdown right now, they're in a box on the chinese tariffs, a lot on their plate here inside the west wing that they're trying to deal with. this is a president who would like to cut deals on both of those fronts if he can find the deal acceptable. the question is, what would they get from the chinese side if they're willing to offer this. is there a concession big enough, substantial enough that the white house can say, you know what, we're declaring victory here and stopping this tariff process >> thank you very much for that. what does it all mean for markets? steve grasso is with us. pretty much backed away the s&p was before this news up about 0.3%. it is currently up 0.4%.

spiked but pulled back again. >> you hit it on the head, the headline was a lot more positive than the actual content of the story. so what happens when you see a headline like that pass, is that traders on the floor get more aggressive on the buy side and you wind up -- the machines pick up on it, tape reading algorithms pick up on it that's why you get the exacerbated spike higher and come back in >> there are some important levels that people have been watching today the initial spike took us above the 50-day moving average. for that to be a positive factor, we need to close above that level >> you need to close above that level and also have retracements, and what is really odd is that it brought us right to that level of the upper end of the limit on the sell zone where you bounced off that low so you still have a little bit more room to go, but i would expect that resistance to be a lot tougher to breakthrough as the day progresses as the weeks progress, honing into that trade

deal. >> one thing this tells me is whether it is true or not, this is clearly a market that is sensitive still to headlines around trade and has some expectations that they're going to be able to make a deal and clearly part of the risk, and part of what was causing so much pain over the last few months in the market had to do with the trade. >> i think that's an excellent point and when you turn around and look at this,we got that blip off of one headline can you imagine when the market sees a deal has been done. >> if. >> if a deal has been done, you know it is going to be done, right? >> i don't know that >> something is going to be done, whether it is a weak deal, strong deal, medium deal a deal is going to be done you look at potus, he likes results and even if those results, people will pick through that and might not be a great deal when the deal gets done, this market will pop and then it will retreat, the same way you just saw. >> this is a good preview of where to look for some of that action the industrials are still on the top of the s&p a name like boeing, intraday

spikes, off the highs, still higher on the day, basically anything tied to the china story, the global growth story. >> think about what sawed off so much in september. any one of the names to your point, the names trade related are going to rally anything beaten up, atrociously in december, will leave the market they will be the first to turn around when you see market sell off as it has. >> thank you for being here on the breaking news. steve grasso other big market story today, bank earnings. morgan stanley reporting a big miss sort of breaking that winning streak in terms of the stock moves. what are you watching in this report >> so as you said, they reported a messy quarter, both eps and revenue behind expectations. but the ceo james gorman said -- >> we do not believe the fourth quarter is a new normal. in fact, while it is early days, the first quarter started on a similar path to the start of the fourth quarter of 2018

>> the main disappointment was wealth management, close to 50% of that business revenue $4.1 billion behind forecast of $4.5 billion and the much watched pbt margin 24.4%. analysts were looking for 26.5%. but gorman reiterated 2019 full year targets here he is addressing client behavior in light of the recent market volatility. >> declines, move more money into cash, the answer is absolutely deposit numbers go up, cash levels are -- i don't want to say historic highs, but i don't have the full history, but as long as i've been doing this business, which is almost 30 years, these cash levels are high and people are sitting on the sideline number two, declines pull assets out during the financial crisis, i think we lost 2.5% of our client assets during the financial crisis and that was, you know, very, very, very different world from where we have been in with a little market turmoil here so, no, there is no issue there.

>> equity trading was solid. they were number one ranked for the full year. investment banking beat thanks to m&a, like piers fixed income trading disappointed the environment in q4 was always going to be tough for morgan stanley. that came through in their numbers. but if we hold where we are at the moment, down 3.6%, they are still up weak to date, just nothing like the double digit gains the bank of america, goldman sachs and citi have for this week as a whole >> why was their trading loss so much bigger than the others? >> their trading loss wasn't fixed income was disappointing >> down 30%. >> yeah. so down 30%. a small part of their business the equities was pretty good overall trading wasn't too bad the disappointment relative to expectation in sizable terms was definitely in wealth management. i would say both for trading, but particularly for wealth management, the theme from the call was, q4, we feel like was a one off. they didn't have some of the

other positive themes that came through for the other banks and being marked down accordingly today, but still up weak to date >> yeah. down almost 4% let's get more on today's market comeback, thinking big picture what do you do joining us on the cnbc exclusive interview is john calamos. the firm has $22 billion under management thank you for joining us nice to see you. >> thank you good to be with you. >> so the market right now is reacting to the "wall street journal" report that the u.s. as a strategy option is looking at lifting china tariffs to hurry up a trade deal by march 1st i mean, clearly the market got a jump off of this, unclear whether it is actually going to happen how much of a risk factor is the u.s. trade war with china now for you? >> well, i think -- i think what we look at the overall market, you know, that's a big factor, the fiscal policies that have been put in place have been very

positive for the market. and fiscal policy on trade is that as well what makes the market nervous, of course, is it could be done or isn't it going to be done, the headline news, so what we're seeing coming out of this is, of course, volatility and markets are going up, markets are going down, so -- but the fiscal policies have been very positive for the market and obviously for the economy. >> john, clearly we had a very big pullback from sort of october to mid-december, late december, we recovered about half of that level how are you thinking about overall market valuations at the moment buy or sell? >> when we look at it, the valuations are pretty fair in here so it isn't like, you know, it is trading at 30 times earnings or that. i think the valuations are fair. and what we're looking at for

2019, i don't think recession is eminent. i think growth is still there in the economy. the economic numbers seem to be doing well so i think probably for the first six months, maybe a sideways market, you know, but overall for 2019, i think we'll have an upturn on the equity market, maybe even close to double digits. so from that point of view, we're very positive. >> why is that is that just on the idea that you don't think we're going to recession? >> well, we don't think we're going into a recession and the economic numbers are still very positive and valuations are not extreme it is going to be much more of a, i think more of a stock picker's market this coming year because of valuations in that. so from that point of view, i think we like the market it is going to be tough in the sense of what happens with this

volatility i think people bail out and then when you get back in, this type of thing that's a difficult part of it. so you need to think a bit longer term in here in that sense. >> does the volatility push you therefore towards more defensive assets >> yeah, we favor more defensive equity strategies in this market you know, that's kind of what we have done for many, many years is have the defensive equity strategies where we can cushion the downside so obviously the convertible security strategies, you know, the alternative strategies had worked well in a volatile period like this. and i think that volatility is going to remain here in 2019 >> john, you said that it should be a right time for stock picking. i always thought of you as an active manager, stock picker

wonder how as we are all remembering jack bobo and his legacy, you think he made an impact on this market and how big of a contribution did he make and what was your relationship to him? >> well, the -- obviously we're an active manager, so we think being active in this market is very positive going into it because the volatility is not going away the volatility is still going to be there >> do you have any memories of injure peer, your colleague, jack bogle do you think the impact he made on the investing space was a welcome one, even though it was to sort of boost passive investment which is not your area of strength >> yeah. i started in the business in the 1970s as well as jack bogle did.

back in the '70s, he created the vanguard index fund. if i remember back then, a lot of small investors, it was very expensive to buy individual stocks so what he did with his creation of the index fund, he helped small investors invest in the mark markets. that was a very big positive he was truly an innovator for the financial industry and allowing investors to invest in the markets i may not have agreed with him on active versus passive, but i valued and respected his contribution to investors and to the industry >> john, thank you for joining us this afternoon. good to see you, john calamos. >> thank you. we have 45 minutes left until the close. we did see that pop about 30 minutes ago on the "wall street journal" headline that the trump administration was possibly considering easing the tariffs

on china optimism faded since then. we're still high, but off the highs, the dow is up 0.3%. microsoft pledging $500 million for affordable housing in seattle. up next, we'll talk to the president of microsoft, and chief legal officer brad smith that's a first on cnbc later, are new auto tariffs on the horizon why president trump may be moving forward with tariffs on imported cars. i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. microsoft announcing plans to commit $500 million to tackle the growing housing crisis in seattle. joining us to discuss, brad smith, president and chief legal officer at microsoft welcome back nice to see you. tell us how this money is going

to get spent. >> well, we're going to put $475 million of it towards loans in both the low income and middle income spaces. $25 million into philanthropic grants to address homelessness it addresses a problem that has been important in puget sound, but across the country in a number of tech hubs. prices risen low and middle income people are pushed out it is bad for the community and that makes it bad for business. >> brad, tell us how we got to this point because i read in your op-ed when microsoft first picked the puget sound area 1979 is your hq you had less than 30 employees. >> well, we have really seen explosive growth in parts of the economy, perhaps in the tech sector more than any other part of the economy that has absolutely reshaped the economy of greater seattle or puget sound. it's reshaped northern

california it's reshaped the research triangle in north carolina it's reshaped the area around boston and you start to see some common trends. jobs rise. people move in but housing doesn't necessarily keep pace. and of course, when that happens prices rise and so it really calls for new strategies in our view it requires more capital, changes in public policy perhaps more than anything else, public/private sector work together to start to turn this around. >> is part of this half a billion dollar pledge driven by a sort of sense of guilt at microsoft at being in part a cause of the probables that have arisen >> i think it's a sense of responsibility and, frankly, gratitude. microsoft has enjoyed enormous success in part because of broad community support. we have almost 50,000 full-time employees in the greater seattle area and we couldn't have succeeded

without great communities, great schools, first responders. they're the people that make every community healthy. and i don't think you can necessarily say that it was the private sector's responsibility to build housing you hope that the marketplace will go to work. that's usually what has worked over american history but when you have a problem like this, when you have a deep hole which we now confront in this region, a gap of over 300,000 affordable housing units it calls on the community to come together we have a strong balance sheet. >> but - >> and we can put it to work. >> does it call other businesses together when mark benioff started to campaign for prop c, the business community was against him. he won and now companies have to pay a tax to fight homelessness. is that something you would advocate in your area in seattle or would you prefer moves like

this i mean, are amazon and starbucks going to do this after you >> i think you always have to ask two questions. are we addressing the right problem and are we addressing it in the right way the first thing we have to do is bring people together to all focus on the same problem together affordable housing once you do that, there's always a set of options to pursue certainly public funds play a role but the truth is this problem has gotten so deep that there's no way the public sector can solve it by taxing and spending. doesn't mean taxes to be avoided but they can never be sufficient in our view to solve this problem. we immediate market increptives, zoning changes, incentive lower and middle income housing. we need capital. we bring capital to the table. different solutions may make sense for different communities and businesses we get to take the initiative.

one of the key things we did today in puget sound is partnered with local mayors, with the county and with the state all coming together around a common framework and plan for a combination of private and public action. >> brad, i wanted to switch focus very quickly to the core business microsoft currently in market cap terms i believe the second biggest company in the world behind amazon. of course apple had that title the middle of last year. is that something that you and your colleagues watch closely, whether you're number one or not? >> not really. it's nice to see market cap rise but i think as your question captured, you know, if you're number one you are for a day and then you get up tomorrow i think what you really want to do is focus on your customers first and foremost what problems can we help them solve? you want to take the long term view that's one thing that's characteristic of microsoft since moving here four decades

ago and build sustainable businesses if you do that, you know, you hope people recognize your successes and invest in you. but, you know, you can't build a great business looking at the stock price. if you build a great business, other people will look at the stock price. >> and are you feeling -- how are you feeling about the year ahead? there's been fears of a macro economic slowdown. do you think your customers ar starting to feel that, as well >> i think we are at a very interesting point in time. the years have been interesting. and the question is always can the economy keep growing despite that suddenly here we are it's january the economic data out of china in december was not as encouraging. we have new challenges in the uk with brexit. we have a federal government in the united states that's closed. that means we have three

potential geopolitical or economic challenges in three of the most important markets notice world frankly, one of the things we hope will happen in the united states is that people will figure out a way to reopen the government we can debate forever how much damage a closed government will cause to the economy but there is one thing that is indisputable it doesn't help. we have companies not getting proposals approved to go public or to get new products to market so, you know, i think we got some work to do to put the geopolitical house in order to continue to try to grow the economy around the world. >> quickly, is it hurting your company at all you have some contracts with the government. >> it is too early to say. you know there are large parts of the government that are open you know certainly parts of the government that we work with but i think we worry, as well. here in seattle, like everywhere else, you have people who are

responsible for the security of our airports that are not getting a paycheck you know we are involved in the philanthropic community here in seattle to get food stamps this is not good for the country. it is not good for business. the sooner we can the come together the better off we'll all be. >> brad smith, thank you so much for joining us >> thank you. >> to talk about your investment in seattle affordable housing and much more. brad smith of microsoft. all right. little more than half an hour to go we have a 100-point rally here on the dow s&p 500 up about half of where we were when we spiked on that news from the journal that trump was considering cutting tariffs from china. we are a little half an hour away from netflix reporting numbers. we will have complete coverage with shareholders, analysts, reporters. we'll be back after this short break anth bd enig set of earnings american express coming, too is the fund built to sell or built to last? etfs are only part of a portfolio.

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welcome back time for a cnbc news update with sue herera. >> hello, everyone democratic representative cox and his democratic colleagues unveiling the immediate relief for federal workers act. that is a bill that would allow the treasury department to provide zero interest loans to federal workers impacted by the government shutdown. >> this is not a pie in the sky legislation. this is the logical next step to legislation that's already been passed we have already signed into law that these workers are due and

we are obligated to pay them their back wages this just turns that commitment into cash. into cash they can use today at least nine people were killed and another 20 injured at a car bombing in colombia. ambulance and helicopters rushing to that facility witnesses said they heard a loud blast that destroyed windows in adjacent apartment buildings. buckingham palace said prince phillip was in a two-vehicle car crash on his estate but he was not injured. the bbc and sky news reporting that the prince was one of the drivers. not hurt but shaken up we wish him the best you are up to date. >> we do, indeed an the pictures, sue, suggest it fully overturned. >> it was on his side. it was the green range rover on the side and no more details than that. but i'm sure he was very shaken up. >> glad that he's not more

seriously injured. thank you. >> you got it. 29 minutes to go in today's session. still got a rally and it is pretty broad based bob pisani on the floor and bertha coombs at the nasdaq. >> the administration considering lifting the china tariffs, it did have an impact on the trade names boeing was from 355 to 363 and see it comes back now and don't have confirmation on that. good day with boeing up 6% all the trade names up caterpillar. same story 131 to 135 and now come back a little bit down to 134 what's not moving is more defensive names. for example, proctor & gamble. down most of the day really didn't get any kind of reaction at all. finally jpmorgan up for the week all the bank stocks trading positive back to you. >> thanks very much for that let's send it up to bertha coombs at the nasdaq.

>> the trade sensitive sector here we watch the chip sector seeing that spike after really flat trading for much of the day. came off of the highs and holding on to those afternoon gains and chips did well since the december lows. up about 9%. take a look at the big movers here apple, of course, having talked about china being part of the issue with the negative outlook for the quarter. but skyworks, invidia with substantial exposure to revenues in china, as well. bio techs continue to be on fire and a two-year high on positive analyst note out of ubs. bio techs are up about 24% since the december low back to you. >> okay. thank you very much for that. now republican senator chuck grassley telling reporters on wednesday that president trump is inclined to move ahead with imposing up to 25% tariffs on imported cars and parts. of course, slightly different

theme to the news we got last hour but nonetheless bring in jim press, former president of chrysler thank you very much for joining us what do you make of senator grassley's comments? do you think that is possible? >> thanks, wilf. yes, you know, this is part of a negotiation process that's going on bilateral communications and negotiations with europe european trading partners and, you know, in a way we are seeing this sort of realtime. instead of what goes on behind the scenes so i think it's part of that process but yes they are trying to get improvement in tariffs from europe. right now, the european countries have a 10% tariff against u.s. made cars our tariff is 2.5% and so, we're trying to get a trade agreement that allows a level playing field and that is something that's an appropriate goal the way it's going about is that they're using the same kind of pressure that i think they were using in mexico, canada and then

china and maybe working in china so i see it as a technique for negotiation but not necessarily a stomach to go forward with tariffs. that's probably not a desirable path for anybody to take >> so i get that we want to level the playing field but, jim, would it lead to more europeans buying american cars phil lebeau points out the fact that american automakers make suvs and trucks and crossovers and that's just not what they want on the roads in europe. there's a different culture and there's a different demand picture and that could be a big reason why we're not seeing as many cars on the road. it's not just the whole tariff thing. >> you're right, sara. that's very true we have seen a lot of news reports lately about the u.s. manufacturer stopping to produce cars and the reason they're doing that is the car demand in the u.s. is down for their

volume but if you think of the global volume for cars, it's about almost a third or more of the total volume globally of 60 million sales a year but the u.s. companies aren't competitive in supplying cars to those countries or even the countries like china where the demand is growing so the fact of the matter is you're right structurally and maybe it would allow our manufacturers to become more competitive. you know >> jim, i guess the other side of this is whether the threat would even work because so many of the sales in america of the likes of bmw, audi and volkswagen are manufactured in canada, the u.s. and mexico. already. >> that's true a lot of them are but the bulk of their profits still comes from overseas production and the other aspect of this, wilfred, is that the hidden part of a tariff, you know, it is

about a $83 billion increase in how much we pay for cars and trucks about $4,000 a vehicle for everything even the cars that are built in america have parts that come from foreign countries and those will be taxed. and so it does put a burden on the consumer and it may actually put a slowdown on the economy. and that's one of the reasons that gm and ford had such disparate earnings reports. >> what would be the impact on the u.s. economy if president trump goes through with the tariffs on imported cars >> significant not only because we would be paying more for cars and we still need them, but there's a trickle effect that goes on. the parts are more expensive so you pay more for the insurance because the repairs and the body shops cost more. warranties cost more interest payments on used cars would go up because the used car prices would go up because it

follows where the new car prices are and so it will be a drag on the economy and that's one of the reasons there's so much uncertainty right now about what next year's sales forecast are going to be. because it's unknown. >> you mentioned the ford and gm outlooks what was your take on those? and do you think u.s. auto sales are peaked >> u.s. auto sales have peaked they were 17.3 million in '18. the forecasts are running 16.8 to about 17 for '19. uncertainty because of the tariffs. brexit has an impact interest rates there's some head winds on car prices so the fact is it's peaked but at a good level ten years ago we would have never thought we would be at 17 million and peaked at this level. there's plenty of demand to go around and the real focus is going to be adjusting our costs so we can

build cars profitably at the 17 million level and not just accelerating level but a plateaued level. >> jim press, thank you for joining us. >> my pleasure thank you. >> with your take on autos. find out why walmart is abandoning plans for a new video streaming business. and weak holiday sales we have the details and new comments from the ceo coming up. alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager.

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and our inventory. what went wrong here well, signet owning kay and jared and mall-based jewelry stores, mid range, is facing a very promotional environment an when you have department stores who have been pushing aliinto jewelry it's more pressure on signet to perform. >> bottom line or not yet? >> threat from online and she told me a few times if you're buying a diamond ring, an engagement ring, you want to try it on and also pushing the company into e-commerce. >> not try it on. >> you do have to try it. >> look at it. >> you do have to look at it and try it. >> you can't take them. >> old school. these days often the woman goes to try the ring, as well or they go try out a bunch and then the fiancee can surprise them either way, an effort is e-commerce to engineer a turn

around plan, path to brilliance, part of it is better, refreshed product lineup and not happening fast enough and the legacy businesses are holding them back i guess your fiancee will get a total surprise. >> of course down 25% you're saved we're out of time. i was going to do a french bank for the stock to watch. >> too bad. >> no time for this. >> i think we did an american bank. be,"arosg cotom on "clin ll enings of netflix and american express due after the close when we come back. 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.

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including nights and weekends. so you can do more of what you love. my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. welcome back breaking news on trade >> reporter: yeah, that's right. more context here for you on the reaction to this "the wall street journal report" earlier in the afternoon which suggested that steven mnuchin had been raising the possibility privately in strategy sessions of pulling back on the chinese tariffs. i just spoke to a senior administration official who participated in a trade meeting here at the white house yesterday with the president this official said that he was puzzled by this story. and told me there's no discussion of lifting tariffs now. the official said that the

chinese vice premier is coming to washington to negotiate with the u.s. side on january 30th and 31st and that the president has no incentive to make any decisions before that meeting and even after that meeting the official insisted there's an entire month before that march 1st deadline so this official pouring cold water on the idea there's any movement here of any significance and suggesting that the president doesn't have any incentive to make any decisions right now on chinese tariffs and something to bear in mind as we talk about this. the official said if the president were to make any decisions now he would be in a weaker position so he doesn't want to do that just now, this is coming from a senior administration official in the trade meeting at the white house with the president just yesterday so a mixed picture in terms of the reporting on the "the wall street journal" story as the white house begins to react to it, guys. >> thank you very much forgot to say welcome back great to have you back with us. >> thank you.

we are just minutes away from netflix earnings due out after the close. julia boorstin has what we can expect hey, julia. >> reporter: well, wilf, when netflix reports, it's subscriber numbers. 9.4 million forecast in the quarter and wall street analysts expect 9.3 million tuesday's price hike announcement for netflix may bode well for trends as analysts say the company's decision to raise prices would signal confidence in consumers' willingness to pay more. the street expects revenue to grow by 28% and analysts with earnings weighed down by content costs to decrease by 42% and investors looking for update on the content spending as well as commentary on the landscape with so many rivals launching this year and insight into netflix's movie strategy on the heels of successful films of "bird box" and "roma.

>> thank you waiting for the numbers after the bell. >> always a big mover, as well >> netflix, up or down yeah walmart it turns out is abandoning its plan for a video streaming service. bring in alex sherman, broke the story this afternoon what did you learn >> so walmart already has a streaming service, sara called vudu and the streaming is more in the realm of apple and amazon's pay per view where you go on and pay for something to rent it or buy it and they have an advertising, free asiaing based service that's associated with vudu. last year walmart had talks with former epix ce o of an additional streaming service and those talks i'm told broke down last fall and walmart not going in that direction and focusing

on the vudu service with drips and drabs of original content and not the $15 million in content spend of netflix for them to announce maybe for next year >> alex, i mean, this was a slightly odd one when we first heard about it but i guess amazon proven it can work and gain a lot of subscribers for a retailer when we look at the streaming landscape now, is it the traditional media companies committing in a big way to this? >> i think that's why this story is so interesting at first will other retailers look at amazon saying you know what? we can use content to get people into our ecosystem our retail ecosystem online and now that they're there and enticed them to come in they can buy all sorts of things and the amazon playbook and if walmart copied that and maybe let's say attach it to a free shipping service with jet.com you could see sort of wheels spinning

there and other retailers need to do it and then all of a sudden retail companies in the streaming game if walmart says, you know what maybe that's not our thing and don't want to spend billions of dollars on content like amazon then back in the world of apple will have a service, amazon, netflix and then more of the traditional guys and speaks to the larger point that, sure, seems like everyone's getting into content and streaming but actually maybe there is finally a limit to not every company will get in streaming video. >> it's not cheap. alex sherman, thank you for joining us check out more of alex's piece on cnbc.com. we'll be back with the close shortly. because your investments deserve the full story. t. rowe price invest with confidence.

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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. welcome back to the "closing bell." s&p 500 up as we approach the close. one big market moving moment in the day, of course, the possible trade news of easing tariffs on china. big rally on the back of that. we pull back and then splitting the differences approaching the close. industrials, materials, looking at sectors, done best. off the back of the trade-related news and interesting to see all sectors are now positive the gains really not that big but it is broad as you can see and even banks and financials are higher despite morgan

stanley declining quite sharply. here's a week to date chart, goldman sachs and morgan stanley on it. stark differences. will earnings matter will company stories matter? and they do. morgan stanley giving up the gains of the week today. bob? >> i think important to note morgan stanley, a specific story, not dropping the other banks. >> absolutely. goldman sachs, citi, bach of america up 10% this week. >> that's right. very important for that trade story here, we got as high as 2644 on the s&p 500. that's a -- where we were december 14th, exactly a month ago, from 2644 to 2350 and back to 2644. it's a perfect "v" and quite remarkable two thirds of the decline we saw has been retraced overall. now people are stable on the earnings situation

the numbers are about 5%, 6% for 2019 people were going to zero. that's gone away a little bit. i think it's premature to get resolution on trade. >> nice close, though. up 155 on the dow. around 0.6% s&p. not too far from the session highs at the close, up 161 on the dow. sara, back to you. welcome to the "closing bell." i'm sara eisen wilfred joining me in a moment with mike santoli. let's take a look at how we finished the day on wall street. up across the board. the dow closing higher 162 points or .6% and officially out of correction territory. meaning, the dow is now only off about 9.5% from recent highs hit last year.

s&p 500 up .75%. all groups ending higher materials, industrials leading the charge communication services is the loser by all of them green nasdaq composite up. the russell 2000 index doing better than the rest again that's a constant theme. earnings from netflix and american express any minute now and bringing it to you when it happens. ed loo with us for the results but first, there he is, at his computer ready let's get to the latest on the story that moved the markets late in the session. eam eamon javers with more >> reporter: "the wall street journal report"ing this afternoon that in discussions secretary mnuchin proposed the idea of ratcheting back tariffs on the chinese ahead of the march 1st deadline the white house is responding in

various ways in the afternoon on this i spoke to treasury secretary mnuchin briefly in the west wing and headed to the oval office and said he won't make any statements on the story and i did just speak to a senior administration official in the trade meeting with the president here at the white house yesterday on this issue. this official said that he was puzzled by the story in wou"the wall street journal" saying that the president has no interest in making decisions right now because it would put him in a weaker position and all of their focus here in the administration is on this meeting with chinese vice premier liu he on january 30th and 31st and a statement this afternoon from a spokesman over at the treasury department who had this to say. neither secretary mnuchin or ambassador lighthizer made recommendations to anyone with respect to the tariffs or negotiations with china. this is an ongoing process with the chinese that is nowhere near

completion so, sara, the line that you are getting through all of this from the white house is that there's nothing official, nothing been decided yet and the president doesn't have any incentive to make any decisions on chinese tariffs until much, much closer to that march 1st deadline so anyone who had the sense to get close to a deal or announcement walk way back from that the implication of the administration is that that's not coming any time soon and got to get through the meeting at the end of the month before decision making is made here at the white house. >> all right an important clarification thank you very much for that netflix earnings are out julia boorstin with the numbers. >> that's right. earnings beating by 6 cents, adjusted earnings of 30 cents per share. revenue missing estimates coming in at 1.49 billion versus forecasts of 4.21 billion. shares down and appears because

of the all-important subscriber numbers. the company added 8.8 million paid memberships 1.5 million in the u.s. and 7.3 million internationally. both slightly lighter than what wall street expected the street account consensus estimates for domestic 1.77 so that 1.5 is lighter than that. and the international total net adds is 7.5 and paid 1.4 million. higher in terms of paid net adds and the company making a switch of reporting total additioning to paid additions. so that could be a reason it's lower than the headline number than wall street expected. the stock trading down about 3%. the company saying that for the full year paid net additions grew 33% to 29 million versus 22 million added in 2017. one other nugget here digging through the report

in terms of the growth of the viewership, there's controversy and conversation about how much people are actually watching these netflix films and they say in first four weeks of "bird box," the company estimates viewed by 80 million member households and a lot of conversation about how much people are actually watching and they say about "roma," an oscar bake type film they made is exhibited in theaters and played on over 900 unique thscreens in the world. you see the stock recovered a bit and down just about half a percent. >> julia, on that content point, you went through the numbers, they say people love films and they talk about their feature length films is that typical of the earnings released suggest a shift of focus for

them away from tv towards films? >> i would say it's very atypical in fact, they don't have any history of sharing viewer numbers. this is something they stayed away from and drawn criticism for. the fact they release any numbers for "bird box" is unusual. the fact to give more viewership numbers is doubling down on the fact that tons of people are watching to continue on that end, i want to bring you to what netflix says about competition here in their report in the u.s. they earn 10% of television screen time and less than that of mobile screen time. in other countries, lower percentage due to lower penetration of the service and talking about competition and they say we compete with and lose to fortnite more than hbo they said when youtube went down

globally in october, our viewer an sign-up spiked for that time indicating that youtube is a competitor the growth is compared the experience this is all from reed hastings saying the focus is not disney plus or amazon or others but improving the experience for members and notable trying to say they're competing with everyone and many ways more with the free services like youtube and also things that are very different such as video games. very interesting stuff here. i'm going to continue to dig through. >> all right julia, thank you very much. on the fly reading through that reed hastings letter. let's bring in ed lee for more i love how netflix gives the letter to chew on, including name by name competition and approaching them. >> right you know, i think the other thing to point out here, late

lynette flix has been doing the best to really appeal to hollywood talent with everyone else getting in the streaming game, also getting into it, there's that much more fight for talent and you have apple and facebook and youtube doing their thing to get original so i noticed this interesting in the letter is highlighting instagram followers that their netflix stars gather before and after they became -- on the service i think that's an indication that like, look, hey hollywood, we are a good place for you to be with. feature film or tv series, they want to hit the next generation. the other number to note, the top of the letter, streaming content obligations. 19.3 billion up from 18 billion in the last quarter so the amount of money that they're committed to content keeps going up doesn't seem like that stops any time soon. of course, they hiked their prices they announced that a few days

ago. all of that is getting in line with each other. >> ed, thank you very much. >> sure. >> we'll be back to you in a moment let's bring in stephanie link. and chris retzel mike, i'll come to you first clearly we saw the shares sell off initially. recover a little bit. >> somewhat smaller move than was anticipated by the markets often it's a $25 i think that was the range plus or minus in the share price. what sticks out to me is negative free cash flow projection for 2019. they're saying similar to this year $3 billion know roe no erosion for that. so i think maybe investors are looking at that saying, okay, it looks like they have a decent read or decent amount of confidence to maintain this level of subscriber growth with the new pricing and q1 with fourth quarter pace. it seems okay.

that's an on-course type of story and also after this year saying lower free cash flow burn because they think margins are better maybe they see that tilting toward profitability on a cash flow basis in the not too distant future. >> why they were so excited. this is an inflex point. the sub misses minor. >> yeah. the stock up 50% post-christmas. no that they were going to print to be up huge unless it's blow away. >> are you surprised >> no. i think the first quarter numbers are better than what a lot of people were thinking. so that's encouraging. the big questions, though, are really what's this price increase what does it do to churn down the road they don't expect material impact and throughout the year we're constantly monitoring subscriber numbers and always been the metric and now more

obsessed to see if it leads to further churn with the competitive environment. >> julia's got some more julia? >> yes just want to talk to you about guidance the company provides guidance for its first quarter and the forecast for both revenue and adjusted earnings per share is lighter than expected. the company guiding to eps of 56 cents per share. wall street expectations were for l83 cents per share but what's notable, though, is forecast for net additions for the first quarter, actually higher than wall street estimates. netflix projects global net paid additions, i want to highlight here, paid not total, start excludeing all those free trial services they gave out was 8.9

million. that's 8% higher year over year, higher than the 8.38 million that wall street analysts had been projecting and want to highlight the lower than expected revenue and earnings outlook for the first quarter whereas subscriber additions for the first quarter better than wall street analysts had been anticipating >> and when do we expect the price hikes to start to take effect, julia? >> some of them roll out immediately. if you're signing up to netflix for the first time, that was effective tuesday. for the rest of the subscribers, they're rolling out over the next couple of months so between now and two months or so so what's interesting is depends on when you start -- when you started your subscription and paying and last time they raised prices in fall of 2017 they didn't see a meaningful impact there's a comment here talking about the price hike he said we changed pricing from

time to time as we continue to invest in great entertainment. we want to ensure it's a good value for the money and the entry price is affordable. he talks about increasing the pricing. says it will be fazed in for existing members over q-1 and q-2 and anticipate will lift revenue. he talks about how they are going to continue growing their content and increasing the revenue faster to expand the operating margins. and grow over the course of the year so he's definitely talking about this -- the price hike and all about having more content to make it worthwhile >> okay. thank you very much for that chris, talk us through how you think about this company and its valuation. >> sure. the stock's up a lot already this year. there's always going to be noise in these bets on the future. so, some noise here is probably not going to be a bad opportunity for long-term

investors. you know, the management team over years proven that it's been able to fight through head winds and changes in pricing with their customers. i think they have proven to be flexible and they have seen the future where owning content is more and more important so if you look at the cash flow in their reinvesting in the business that's probably not a bad thing because they're investing in the future and good for long term investors. >> ed lee, what else is standing out to you >> i think it's actually very notable not giving us the total subscriber number like they had for years. i'm reminded of apple discontinuing giving us information on the unit sales and still getting less information. of course, the paid sets are the most important thing and to stress the point they have this nice little chart showing the projection in paid subs. that's going to be important i'm missing the data point and important to know in terms of a sense of churn and how the marketing is working and they want us to look at a

different number now or focus on a dirfferent number. >> is it as big of a factor as when apple switched how they were reporting >> not quite the same but it's telling. going forward i think they're looking at trying to find a way to -- that growth will level off a bit and i think this is an anticipation of that and notable they're missing on the top line and beat on the bottom line. it's similar to q3 for the big tech giants with amazon and alphabet and facebook having similar situations where their top line miss but their profits we are actually better so there's a bit of a slowdown in terms of topside of this international is going to be the most important parent for netflix going forward. >> julia >> okay. just want to add in here if you look deeper into this report that netflix actually does disclose how many people do the free trial previously a total user number

with free trials as well as paid subscribers and what it has in this appendix is there are just as many paid net additions internationally as free trials 7.3 million paid net additions internationally. 7.1 million free trials internationally. in the u.s., they added 1.5 million new paying subscribers in the u.s. and right now 2 million people in the united states doing free trials so that could give us an indication of how it translates and not guiding to how many people doing free trials next quarter. they're giving the guidance for the paying subscribers of next quarter. >> to ed lee's point, about that slight change in how they release numbers and a slight slowdown in the top line, will that alter how people value this >> i don't think so. i think ultimately knowing that trajectory of paid subs their guidance is still there with regard to paid subs. i think you want to dial back. the company is girding for an

ongoing, you know, battle here right in they know that their membership is very much tied to how much and how compelling new content is and trying to build the arsenal of cash and cash flow to fight that war and try to get little bit of a price initiative out there before they have, you know, even more competitors in the market. >> stephanie, how are you thinking of this >> positive side is paid subs. that's the most important number and came in ahead of plan. opposite side is that they're heavily investing. they have to in content. that's been the case for this company and been able to see returns on that investment but now you have a year in which you have a lot of competition coming to the forefront and i think that there's a lot less visibility to this story as a result and at this valuation, look, you guys, two upgrades and goldman put it on the conviction buy list in the last three weeks allen and the stock up a lot as we talked about. high expectations.

i don't think it's a story of the fang that in my mind in terms of investing. >> though it is the winner. >> also the loser -- one of the losers in 4q. >> off the highs the international growth, that's what's so key and what they delivered, where the paid subscribe growth came from this quarter. international growth up 42% in the fourth quarter and that's really what has investors jazzed and why the success of roma i think which is meant to appeal to audiences outside the u.s. i think spanish language film is so important. >> it is kind of a whole story right now. that plus just exactly how much economies of scale, though, get. right? in theory, they don't need to ramp content costs in a linear way with subscriber growth right? some number of subscribers it starts to pay back we noedon't know the number and what investors like to know. >> let's get to another earnings

report american express >> american express reporting $2.32. that includes a 58-cent benefit from the tax cut and unclear if that compares to the street's estimates of $1.80 eps revenue a slight miss. 10.56 billion was expected as you can see. shares down 2.5% in the after hours and down as much as 4% not long ago we also have some guidance and amex seeing 2019 revenue guidance up 8% to 10% versus 7.5% 2019 eps of between 7.85 and 8.35 versus 8 prepondera.12. strong there listening on the call for any color on the strength of the consumer we'll continue to dig through the numbers. guys >> thank you very much for that.

down and seeing provisions of losses risen 14% from a year ago and always something to look out for in terms of credit quality mike, your take on this? the eps not sure on but revenue decent. >> slightly light. that might be a reason - >> i'm sorry. >> yeah. seems like it's roughly on target in terms of guidance for the full year. stock looks really cheap relative to the history and i think the street doesn't like it. >> gone nowhere. >> people love mastercard and visa 13 times down 11% from the high and put up the sixth consecutive quarter of 8% consumer spending growth that is very, very impressive for a company of this size the question is, they're heavily investing and a theme and when do you see the operating leverage 4-cent beat when you x out the tax. i own it i like it. >> how do you think about this one? >> it's an alternative for

people that don't want to be in the brokerage and other places of different risk but there's overhead resistance. it did break through the support and the reaction tonight is probably not great in the near term and probably more cautious at this point and wait and see where it filters out to. >> same bracket of banks or different? >> it is a nice alternative in some cases and seeing the global economy slowing and tied to that fed-ex was slow back in the earnings and probably not a surprise of weakness in the numbers. but we're bullish on the year and probably going to be a good entry point. >> what is the amex need to do to win that love that mastercard and visa get >> mastercard and visa are not lenders. a network. they get a piece of all transactions investors love the cleanliness of that. this is heavy marketing spend

and credit risk and people don't want to deal with. but it's cheap relative. >> do you own it >> i do. it actually held in well in the fourth quarter relative to banks and relative to other financials and so i think it's pulled back, again, this much trading at a 13 times valuation. new management team and i think this is a very solid report so if it gives back it's a buying opportunity for sure. >> we'll leave it there. thank you very much. up next, we'll have much more reaction to netflix earnings what to expect from the conference call and taking place later this evening. apple ceo tim cook expanding the privacy push urging lawmakers to take on the shadow economy of data brokers. we'll have more details on that coming up later on the "closing bell." every feeling. a product of mastery. lease the 2019 es 350 for $399/mo. for 36 months.

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past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. netflix shares under pressure after missing revenue estimates issuing weaker than expected earnings guidance let's bring in ross gerber, matthew harrington with a buy rating on netflix and tom dotan from the information ross, you first. what stood out to you as a

shareholder? >> i like that 30,000 people every day are signing up for netflix and that looks to continue even with higher prices coming the content just gets better and better it seems every year and people don't watch tv anymore. they watch netflix so, you know, i never seen a company with such a big, you know, revenue base grow so fast for so long and continues to do this on a global scale. so i think we have a lot more to come with netflix and i'm very excited for the future. >> but do you need to keep seeing that growth, ross, if it justifies the valuation? >> yeah. >> you would see a big move down in the share price >> yeah. in our investment meeting this morning we were talking about netflix, 110 pe and an arbitrary number it's sort of the voting mechanism that investors love. netflix, a topper forming stock for years but, you know, if the

pe was 50 you could still argue it was overvalued and the pe 150. so, you know, the stock is basically trading off sentiment towards the company but i just don't see that changing, you know and their earnings grow and grow, too. >> matthew harrington, one thing that people are pulling out to do with the cash burn. they project same next year and then it looks like it's going to start to get better. is that reassuring enough to investors that are looking for a turn in profitability? >> well, you know, one thing we called out is that you have material 13% to 18% price increase and not seeing hnidy minnishing in cash burn and channelling more of the sales receipts in programming for heightened competition so trying to be agile with new programming and i think makes a lot of

sense. in terms of numbers of q4, it was up from 2017 so i thought that was extremely encouraging. i think you have a huge global total addressable market here and, you know, overall relatively pleased but this trades on animal spirits. we try not to fall in love with it we had a buy and sell on it until two months ago and, you know, i think this is a great long-term story and certainly require patience along the way >> matthew, do you think that the company's free cash flow burn guidance for this year and next year fits with what investors were thinking about? >> i think it absolutely does apart from you could have made an argument with that material price increase to tweak the free cash burn earlier in the year and holding it constant telling you that you're spending even on the programming spend is increasing a little bit more, as

well. >> tom, some fascinating statistics of one of the foreign programs, elite, and the growth in media and social media following the stars have got from the recent release of that show s. that something that's important for them long term in terms of attracting the best talent to the platform >> yes i think -- sorry. >> sorry, tom. >> yeah. sure i mean, this is a company that is trying to internationalize its programming, making shows that have appeal in the u.s. and international and having a measure of success and cultural significance outside of a region is a proof of the concept that this is an international entertainment programming service. so that's what they're pushing for all the time earlier you mentioned "roma" which is the big oscar movie this year doing well in the u.s. and they want to see a lot more of that, as much as possible, to

prove that this is really an international service. >> so, ross, competition always an issue i like how netflix, reed hastings goes directly to that talking about fortnite and did well with youtube was down not worried about disney plus. how's an investor as a shareholder do you think about the looming threats? >> well, you have time limited in life. we get 24 hours a day and video games are a legitimate competitor and i found it incredibly interesting that that's what he said because i do think that's the competitor to netflix because that's what i play when i'm not watching netflix is video games, not watch other services, per se i think netflix also has levers they're not talking about as much they mentioned in the earnings report which is putting the movies in the theaters they have "the irishman" and easily do $100 million in the theaters if they launch it and i think what they learn is putting

the good movies in the theaters a month before release on netflix nobody on netflix will care and they could rake in, you know, hundreds of millions if not billions of dollars in the future from the same con tent if they leverage it like disney does we think disney competition is not really going to hurt netflix as much as hurt cable companies more but because i think everybody will have disney and netflix so i see video games is netflix competition and in reality when people sit down to watch a show they watch netflix and not concerned at all about that. >> matthew, you mentioned earlier and we can see from your history on this you're quite nimble with the price targets. what are you thinking about at the moment >> i'm actually reassured on this i mean, i don't think there's any significant change from where it is right now but i think that this acceleration of paid members in q4 does tell you

you have a nice global runway particularly with the critical acclaim on the programming you are talking about and it's interesting, reed also is really nimble in terms of defining the total market and the competition and i think you can see that his vision has kind of gone beyond kind of a closed landscape of some of the older media companies lock themselves into. >> guys? >> it's so funny, mike just looking through the coverage the headlines are completely different. half say they beat half say they misses revenues. strong subscriber growth, missing estimates. >> it was both strong and perhaps missed and they did beat on the bottom line and nobody seems to trace this company that way and saying the main competition of fortnite hastings said it was sleep. >> anything you do besides stream. >> thank you for joining us. >> the other thing is i googled the film "the irishman."

scorsese with pacino. >> in limbo for a long time. >> bring it on. >> interesting back story. >> i don't care. i want do see it sounds good. j j time for a news update sue herera has it. thousands more migrant families may have been separated from the families. a report from the hhs inspector general's office found that family separations were occurring before the administration announced its zero tolerance policy. a judge has acquitted three chicago police officers of trying to cover up the 2014 shooting of black teenager mcdonald jason vandyke was convicted of second-degree murder last october and will be sentenced next month. former cbs ceo les moonves is demanding proceedings to challenge cbs' decision to deny him his severance package

following the firing over sexual misconduct allegations. and there's a winter weather advisory for today and tomorrow for the entire state of montana. it's expecting up to six inches of snow in the valley, 12 inches in the mountains and, of course, a major winter storm also expected in the northeast this weekend. bundle up. that's the news update this hour back downtown to you. >> bracing for the snow. sue, thank you. >> you got it. netflix is not the only big name out with earnings we'll get reaction on american express trades following the results just out. but first, a look at what the bounce back in treasury yields is saying about fed rate hike expectations. mike will go to the lerar.testto we'll be back in a couple of minutes. duncan just protected his family

with a $500,000 life insurance policy. how much do you think it cost him? $100 a month? $75? $50? actually, duncan got his $500,000 for under $28 a month. less than a dollar a day. his secret? selectquote. in just minutes, a selectquote agent will comparison shop nearly a dozen highly-rated life insurance companies, and give you a choice of your five best rates. duncan's wife cassie got a $750,000 policy for under $22 a month. give your family the security it needs at a price you can afford.

mike santoli has made his way to the telestrator to look at what the move in the 2-year treasury yield is saying about the fed rate hike expectations you have done this before. >> we have an inflection point here perhaps this is most sensitive to fed hike expectations or in general. i marked it up last six months in the 2-year note yield the record high print in the small business optimization

index. october 3rd the supposed gap by jay pow knell a forum saying we're a long way from neutral with short term interest rates market nervous there here's the november rate hike right in here somewhere and still up to that point, wasn't a rate hike. the meeting in november. afterwards we thought on track for three rate hikes this year and then concern that we had recession risk going on and this is the december rate hike and powell didn't cool those fears of the markets so but what happened this year first week of january a very strong december jobs number and now we have had risk on sentiment in the markets. >> ugh going so well, mike. >> and then gotten this yield back up here and pushing 2.7% on the 2-year and we continue to get good economic data

claims look good is the fed off the board for 2019 the way the market wants to pretend? >> i'd ask, for most, say, three quarters of the chart and the time line there, the fed was the biggest factor influencing it. aren't there other ones now? people have pushed back expectations for hikes >> it is for sure but i think it's related because how much more risk on can we get? before, in fact, in a scenario where the fed says we have clearance. >> though we haven't had any change in the fed funds futures showing expectations of a hike. >> no. we are taking back the fear trade but i do think if you're back up in this zone i think it's time to kind of talk about this and i don't think the fed is uncomfortable right now with one to two hikes on paper at the moment given the way the markets have come back. >> we'll see what patience really means i guess mike, thank you. up next, american express

shares have fallen after reported -- they reported their numbers. we'll discuss whether that's a buying opportunity. plus, apple ceo tim cook leading a charge to protect your privacy from companies that protect and sell csur onmedata details next

welcome back shares of american express lower after hours after the company missed on revenue and earnings per share and better than expected guidance. for more, let's bring in chris sotan. colin plunket. chris, why are the shares moving lower? >> i think first it is a bit of an earnings miss when you adjust for the tax benefit that they reported coming in at 6 cents below the street thought and the guidance is good, in line and you have to put it in context of the company had raised their guidance for the full-year 2018 back in october so i think expectations were that they would beat for the quarter and then maybe guide to a number above consensus for 2019. >> colin, your own take? >> yeah. i mean, revenue came in modestly

below our forecast but, i mean, the thing we are looking at most closely is the rewards environment. rewards really is what drove expenses higher in the period. and really where most of our concerns are over the next few years. >> why what's happening on the rewards front? >> well, the rewards environment, it is really heated right now and despite some talk of it cooling off in recent months, we've really seen no signs of that. american express' larger competitors using rewards to really access customers and sell them additional products and american express doesn't have the same ability >> okay. got it thank you. >> chris, we did see provisions go up, as well, during the quarter. is that something you're worried about? i guess for most of the bank's earnings we didn't see any risk of worsening credit quality.

is that something you're focused on >> we are watching closely for us the provision higher than we were expecting and i don't think it's a cause for concern american express is growing the loan book faster than other u.s. cardishers and i think they have a lot of runway because for the spending they do they have a dispropo disproportionately small share of loans and we haven't seen it in the month lisa that, either in terms of net chargeoffs. >> colin, i mean, aside from the rewards expense, essentially making their customers a bit less profitable over time as that race continues, what do you think about how it's positioned just relative to where the economic cycle is? it seems to me when's dogging them is the sense that, look, we have seen the best we are going to see for credit loss provisions and how long can we bank on that does the stock have a discount for those reasons?

>> perhaps i mean, yeah american express is growing faster later in the cycle than some of its rivals but i mean, we look at the credit quality data and we see pretty steady delinquency data and the best indicator for charge-offs and making taking more risk later on in the economic cycle it is not something that greatly concerns us. >> would you buy the stock here? it's down 3% on a narrow math. >> so it's trading at a modest discount to the fair estimate of $110 so it's modestly cheap and we think probably there are less or greater discounts out there amongst some of american express' rivals. >> all right guys, we will leave it there for breaking news. >> thank you.

right. we have some compensation information for jpmorgan's top executives their chairman and ceo jamie dimon with a pay rise for the year past up 5% from $29.5 million to $31 million 1.5 million is a base salary $5 million is a cash bonus that's flat from last year a little bit of a tick up coming through in the restricted performance shares and equities. similar size percentage increases for the rest of the top executives daniel pointo the head of the investment bank up 5%. 22 million total gordon smith also the head of the consumer bank, both co-presidents up and the others all up about 5% to 10% mike, i guess a strong year for the earnings for the banks. >> yes. >> no question about that. both in the underlying pretax earnings and the after tax

earnings given the tax cut share prices down over the year. jpmorgan was down i think 8% or 9% and one of those ones you factor in he paid $30 million. the ceo and chairman it's understandable slight pay increase. >> basically in the zone you expect and because all the comp formulas off of relative stock performance and very heavily weighted toward stock in terms of the performance bonus. >> highest paid of the big bank ceos >> i would say he was last year and probably again this year i think they have ticked up from the low 20s to high 20s in the last couple of years daniel pointo and gordon smith promoted to co-president and coo an paid $22 million each if we look for the ranking after that, maryann -- sorry, head of the asset management division

gets paid 20.5 the cfo and the head of the corporate bank 15 and 13 respectively looking for the long-term next successor outside of them, mariotos >> very interesting. >> they have all been paid well. >> profit center. >> absolutely. i'm just saying. >> different job. >> they've all been paid a lot >> yeah. >> there we go congrats to them i guess. still ahead on show, apple ceo tim cook calling for a plan to regulate tada brokers what that means coming up. the future of technology investing

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tim cook taking aim again. the apple ceo floating a plan to put some controls on what he callthshowcomy at story next. , covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

apple's ceo tim cook once again sounding the alarm an privacy. this time in an op-ed for "final" magazine -- "time" magazine. >> reporter: tim cook writing here in 2019 he says it's time to stand up for the write to privacy, yours, mine, all of ours cook's game plan, he reiterated

his call for congress to pass federal privacy legislation but put forward a new proposal too the ftc, he says, should create a new clearing house requiring the registration of so-called data brokers these are companies that collect information about consumers and then resell or sell that information to others. for example, when consumers buy a product online, the retailer might sell or transfer information about that purchase to a data broker, which then packages and sells it to another buyer. cook writing all of these secondary markets for your information exist in a shadow economy that's largely unchecked, out of sight of consumers, regulators and lawmakers. cook is focused on this issue for some time now, positioning his company as a champion of user privacy and often reminding consumers that his company's business model is very different than peers he's selling hardware and services, not the ad-based business models of facebook and

alphabet which have come under so much scrutiny from lawmakers and regulators so will congress heed cook's call will we see legislation that could hit big tech's bottom line or is washington too dysfunctional right now to propose and pass legislation without any real meaningful bite that's a real question for tech investors in 2019. guys, back to you. >> josh, thanks very much for that josh lipton in san francisco. up next, we'll discuss what investors want to hear on netflix' conference call following earnings 3w4r57 move to the enterprise-grade cloud that's built to handle all your apps. ♪ ♪ the ibm cloud. the cloud for smarter business. the ibm cloud. oh, wow. you two are going to have such a great trip. yeah, have fun! thanks to you, we will. aw, stop. this is why voya helps reach today's goals... all while helping you to and through retirement. um, you guys are just going for a week, right? yeah! that's right. can you help with these? oh... um, we're more of the plan,

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it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through february 28th. only at your authorized mercedes-benz dealer. let's recap some of the headlines making news after hours. netflix under pressure after reporting an earnings beat revenue came in slightly lower than estimates netflix gave light first quarter earnings and revenue guidance. subscriber growth was close. a little light on domestic, better on international. is that the headline >> subscriber growth was more or less on trend. they're projecting similar for the first quarter. i would imagine on the call people want some granular projections of how the price increase is going to be absorbed an how many more might be coming behind that. quickly on american express,

they had their earnings out. a little miss on the revenue line, the stock is down 2.5% the guidance was fine. more analysis on that coming up. and tomorrow morning as well that does it for "closing bell." thanks for tuning in >> have a good night, everyone "fast money" begins right now. "fast money" starts right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. we start off with netflix reporting earnings moments ago the streaming giant under pressure after missing revenue we'll have full team coverage as we gear up for the conference call which starts in about an hour julia boorstin is working to get reaction gene munster is in los angeles and the chart master is here to give us instant reaction on the stock move we'll check in with the team but right now we'll start with guy netflix is up 50% from december lows and we're giving back just a little, not too much.