need ya or playing games like fortnite >> probably. my dad would have been in the crowd. never misses a high school game. ever show up to work without your shorts on that's what mr. beasley did last night. those are his warm-up shorts beasley was recruited by lebron then he had to put the shorts on. >> he had shorts on though thanks for watching "power." >> and "closing bell" right now. ♪ welcome to "the closing bell." i'm sara eisen >> and i'm wilfred frost i want to know who won in tyler's game he didn't tell us. drop me an e-mail, i want to know now shares of tesla tanking after announcing big job cuts. we have the details of that coming up. >> plus ufc starting a new deal with a sports powerhouse we'll talk to ufc coo lawrence epstein.

>> first let's check in on the markets. stocks jumping on potential progress in trade negotiations you can see the moves there up over 1% for the dow and the s&p. we're pretty near the session highs, but it's been a solid session throughout and week to date, we're currently up over 2.5% for the s&p and the dow. >> it's the fourth week in a row that stocks are higher they've jumped about 12% from that christmas eve low still off around 9%, 10% from their recent highs the report that's moving the markets today, it has to do with u.s./china trade progress potentially. kayla tausche is back. >> welcome back, kayla >> and she's got more from washington >> thank you so much, guys it's great to be back. it's great to see both of you. i want to put the emphasis here on the word potential. china is proposing more u.s. imports as a potential olive branch for trade talks it's something the white house has mentioned before as a way to mitigate trade issues. this time it comes with a twist. china at the g20 offered for the

purchases to last six years according to two people briefed on the proposal. through the 2020 campaign and through the next presidential term bloomberg is reporting that the current offer is $1 trillion for the total price of the package that would cut the deficit between the u.s. and china in goods in half over the next six years. it's unclear whether that's the size of china's offer at the g20 that led to the recent truce or whether that is a revised offer since the g20 that the u.s. had asked for or would potentially signal more bullishness on u.s. acceptance of that deal. china's hope here is that a trillion dollars would be a large, round number for a president who favors them and also a president who wants to boost the economy into the election of course we have those talks between china and the u.s. that will reconvene in washington in two weeks. we'll see which, if any, of these trial balloons end up on paper if a deal is still in the works. >> i want to ask a question, a

snapshot question on trade do you feel like the tone is a lot more positive, a lot more negative over the last four or five months compared to when you went away for a bit? >> well, i went away in september. and i have to say, we were having a lot of the same conversations then as we were now. the difference is then there were escalation and now there is de-escalation. it's a bit of deja vu. the u.s. and china struck a trade deal in july 2017. talks fell apart that deal was focused primarily on chinese purchase of u.s. imports. so exactly what we're talking about now. then you had another deal in 2018 that fell apart remember that was a may 2018 deal secretary ross went over to beijing, tried to hammer out the details. the president didn't want to do it so we'll see whether it is different this time and whether the dynamics of the u.s. economy and the chinese economy light a fire under either of these economic superpowers to do a deal this time around. >> i feel like kayla mentioned

the difference is the leaks used to be about the u.s. administration -- >> going to get worse. >> and being more tough. now the leaks are actually about solutions. kayla, quickly, do we know anything about the meeting between treasury secretary mnuchin and president trump on the next world bank chief? >> well, we know the treasury secretary held interviews with multiple candidates to lead the world bank throughout the week this week. and that he is briefing the president midday today on those candidates and where the search stands right now a couple of the names that i had heard from sources who were keyed into these talks previously before going into this meeting were dina powell, the former deputy national security adviser, the leader of usid as well as the private investment corporation david malpass who is one of the top officials at the treasury department then a couple of other folks as well so it does seem like as far as we're hearing from u.s. officials, that u.s. names are

toward the top of the list and a lot of those are familiar names to our viewers >> kayla, thanks very much again, welcome back. great to have you back on the team joining our "closing bell" exchange today, michael santoli, lindsey bell, and our own rick santelli mike, if i start with you, i think the interesting thing from that brief rumor yesterday through to the ongoing discussion points today is if we do get a full deal, there's probably a lot of upside we always debate is trade already priced in. suggests it's a big issue still. >> it's a big issue in the context of a market that's already been looking for reasons to go higher that's what we have to keep in mind yesterday you did get the pop on the headlines about lifting tariffs. you didn't give it all back when you got the denial today the dow was up 150 points in the premarket before you got the trade headline and it acted as an accelerant. i think it's just one other thing. the market's reaction to it has

basically penalized risk aversion that's been the story of the first three weeks of this year yes, you got this snapback rally and the s&p is at a level where it should stop or pullback it didn't. maybe we'll sell the banks on the news it didn't. maybe a netflix mixed quarter is going to have that one come back people who were cautious thought they were going to get back, it hasn't happened. i think today was a capitulation people saying, fine, it's not going to pull back just yet. >> it's a total attitude change on the part of the market. look at brexit and this pound rallying that's far from certain. look at the market rallying on a potential trade deal >> look at the credit markets. look at oil up 3% today. it's a risk on feel because people were made to feel like things were too defensive in that overshoot to the downside >> lindsey, are the earnings backing up at least some of the enthusiasm and optimism in this market >> sure. we're at 12.4% for the fourth

quarter. it's really early days we've only got less than 10% of the s&p 500 reporting so far obviously the banks were the positive story there the numbers were just decent though i think it was the story of the consumer was really strong and these stocks are really beaten up. trading at under ten times as a group which is a very steep discount you're seeing stocks that have traded at a deep discount really pop on decent earnings even if they guide down. and that's the thing the guidance for 2019 is coming down sharply >> what do you make of within the banks earnings of what they said about credit quality? you've been keeping an eye on corporate debt levels and whether that's something to be more concerned about >> yes it was definitely positive credit quality is good from their perspective. i'm seeing between the large cap stocks they're seeing a lot more debt they're much more leveraged now than they were in 2009 which is the opposite for the large caps. leverage right now for the s&p 500. 3.9 times versus 1.6 tienmes fo

the s&p 500. the small caps as a total dollar value only are 3.5%. >> is this the year they get punished for higher leverage >> it depends what happens with growth overall if we see a significant slowdown, if we see interest rates continue to go up, that's all going to combine to make it a more difficult year for them potentially. >> rick, what are you looking at today? i mean, we got some -- a little pullback in the consumer confidence but i guess it's still elevated levels long-term >> yeah, no. that was actually a fairly large pullback but it is a preliminary number on michigan. to me the big story is we could talk -- and i loved kayla being here when kayla left in september, a couple things changed. the fed and volatility when you think about how much you really know about what's going on in china in terms of facts and numbers, we don't know

that much more add in the closure, i think mike hit it markets either can be pushed or can't be pushed. they have a personality and a direction. this market wants to do better in stocks. interest rates for all 13 sessions of 2019 thus far, all yields are at their highest levels of the year and the balance sheet of the federal reserve has gone from $4.5 trillion to just under $3.9 trillion many believe the fed's target was the $3.5 trillion camp cut through all the clutter. the markets follow balance sheets up, they follow balance sheets down. if we're going to level off and that has been communicated better, that is a fertile environment to get back to the type of trends we are seeing in current market moves >> kay, guys we'll leave it there thank you very much.

17-42 last night. >> what score are you talking about? >> this was the game tyler went to watch he finally told us still to come here on "the closing bell" -- >> high school sports. >> -- tesla cutting thousands of jobs we have the details of that next >> plus the ufc entering a new era with its latest big fight this weekend the company's coo will be joining us live to discuss the new place you can watch the fight. dow's up 278 we'll be right back. i am a family man.

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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. welcome back tesla shares sinking on news it's slashing thousands of jobs. it's down 12%. phil lebeau has the details for us >> this is a big day because when you look at the history of tesla, as long as it's been publicly traded going back to 2010, there have only been 11 days in all of its trading where it's been down greater than 11%. today being one of them. here's the reason why. the company announcing it will be shedding about 7% of its workforce. they have 45,000 workers president at the end of the third quarter. so approximately 3,100 jobs will be cut those cuts are due to the fact that they're trying to drive

down the cost and improve the efficiency of manufacturing the model 3. in an e-mail to employees, while we have made great progress, our products are still too expensive for most people. and at the end of the day, this is about making the model 3 more affordable therefore you've got to bring down the cost. we should point out the average model 3 right now, it sells between $50,000 and $55,000. if you're going to bring down the costs to something closer to $35,000, $40,000, you have got to dramatically drop the costs that's what tesla is doing here. as you look at shars of tesla, we should point out that elon musk said in the fourth quarter the company is expected to post a small profit though lower than the profitability they posted in the third quarter. and at the end of the day, that's the reason this stock is off so much. it is the increasing realization from investors that this is not going to be linear they're not going to go straight

up from here in terms of delivers it's a process and the process of improving manufacturing efficiency is not going to be easy but that's what they're trying to do as they ramp up deliveries of more affordable priced model 3s >> phil, i guess to bring down the costs the other way to do that is ramp up production, increase economies at scale. >> that's what they're doing >> and switch to more robotics >> not just robotics their employment increased by 30% last year as they were ramping up model 3 production. that's where you saw that makeshift tent there wonderful. you met the numbers in terms of deliveries you posted a profit. now you've got to do it where it's not costing you as much what they're trying to do here is not only increase deliveries especially with the lower cost model 3, but become much more efficient and drive up the profit per vehicle, if you will. and that's not an easy equation.

in any -- for any automaker. >> phil, stay with us, if you would. we also want to bring carl brower into the conversation from kelley bluebook does this raise any concerns about demand >> well, you do wonder if the higher priced model 3 demand is going to get satisfied and at which point he's going to need those lower ones phil's talking about to find buyers so there's multiple forces going on here. two, there's more competition coming in, too, right? you have the hyundai cona as well and more cars are coming so the competition is going up the tax credits are dropping for him. so pricing is going to become more critical this year than it's been before for tesla products >> karl, what about a more broad

global macro slowdown which of course we've seen impact broader auto sales are they slightly more excluded from that? do they have a niche area of demand or is it going to hit their bottom line more than the bigger names? >> i think it could be worse for them because a lot of people still see electric vehicles as a more kind of luxury purchase you know, a discretionary purchase if you have the means and want that electric vehicle, you can buy one. but there are a lot of alternatives that are less expensive. whether new or used. also don't forget china is a big part of their plan if there's a slowdown in china, that hurts them too. >> wilfred mentioned some of the weakness of the automakers it's not unlike some of the other announcements we've got

lately from gm and ford scaling back people, layoffs from europe, uk, here in this country mississippi plan i think nissan announced. is this related? >> no. it's slightly different. what you're looking at there tinds to focus on over-capacity. in other words, there are too many plants building too many vehicles they're not being utilized to their fullest. so the automakers have to right size that's what tesla is doing it's right sizing its operations the difference is they boosted their hires so much in order to meet the initial model 3 delivery targets even now as they're trying to increase those targets, they just have to be much more economical about it. you cannot have as many people building these vehicles as they have had it's just a matter of becoming much more efficient. and so it's a slightly different beast. >> got it.

phil lebeau, karl brower, thank you. 42 minutes to go before "the closing bell." we've got a 300-point rally for the dow jones industrials average. just adding to the gains we had seen coming into today market was up 1.5% on the week a new $1.5 billion tv deal for the ufc begins on saturday up next, the group's coo on why this deal may be a media game changer. >> and netflix trading down today after last night's earnings results we'll go beyond the numbers and have hhlhtigigs of the analysts' calls today. capital one cafes. inviting places with people here to help you, not sell you. and savings and checking accounts with no fees or minimums. because that's how it should be. you can open one from right here or anywhere in 5 minutes. seriously, 5 minutes... this is banking reimagined.

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♪ boom clap the sound of my heart the beat goes on and on and on% and on ♪ mywedding song you might remember i walked down the aisle to that. >> i couldn't forget that i'm afraid. >> reminding everybody espn plus will air its first ufc fight this saturday night. and espn will air 42 live events across tv and the streaming platform espn plus joining us to talk about this, ufc's chief operating officer and the closing bell ringer of the day, lawrence epstein. how do you define success? >> we are looking for growth,

obviously. the brand has come a long way since we bought it 17 years ago and espn is a step in that evolution. huge exposure play for us so it's going to be a great five years with espn. >> does espn make you more mainstream just that allegiance itself. >> absolutely. first of all, espn worldwide leader in sports second, parent company disney. obviously takes us to a different level talk about being mainstream. >> clearly with espn partnership both the subscription over the top and direct cable viewer kind of model and ability to distribute how do you see things in five to ten years? you launch this now and might be partnered with espn. are you direct consumer in that sense? >> i think there's always a mix. we have three great components to this deal we have the broad reach with the espn flagship networks number two, we are part oberto espn plus ecosystem and something they're promoting and we arethe featured content on the platform and the digital

ecosystem of espn offers to grow and enhance the brand and we combine wit the ott platform and we have a foot in the key distribution platforms. >> do you feel responsibility for more mega stars within ufc ronda rousey is a professional wrestler connor mcgregor, i don't know where he is. >> he is still with us there's a sport involved in the story and sports are fun and exciting and the story are what get people really excited. >> two of them mentioned there do you welcome them doing other things or come back? is that helping the sport, the flight with floyd mayweather >> obviously it opened up mcgregor's stardom to a whole new set of fans good for him and us, too. >> greg hardy, a top billed fighter this weekend pretty much lost his nfl career chances due

to a xhdomestic violence scanda. what is your policy? >> dana white said it. he made mistakes and deserves a second chance. what we can say in our experience we haven't had any issues with him. he has to perform in the octagon and outside of it, too he is held to a higher standard but we have a code of conduct for athletes and for example with greg, any athlete did something that's inappropriate, we take severe action. >> we have been talking on the air of netflix's earnings last night. last night the ceo hastings said he feels that the main competitor is people playing video games. not the -- >> or sleeping he said. >> exactly what do you see as ufc's main competitor traditional fighting boxing mainstream sports? video games? >> it is everything. he makes a really good point the consumer has so much wallet and only so much time so we are

competing against boxing, against, you know, video games, college basketball, what's on netflix. the consumer only has so much time every day and we have to get a piece of this attention. >> as you listed earlier, lots of ways to consume this product from home. do you think the balance in live sports of revenue percentage from ticket sales and direct attendance is versus people watching at home shift towards people at home it is a bit of a shame for live sports. >> the thing of content viewing is it's global sport reaching 1.1 billion homes broadcast in 40 languages. it is hard to do that at a live event. clearly, content sales are always going to be a bigger part of the revenue package and the live event's really important because that's where they're invested coming 'vent they catch the disease and become fans. >> that's the barkclay center this weekend >> this weekend. >> brooklyn.

>> on espn. >> thank you for joining us. >> thank you for having me. >> the coo of ufc. we have just over half an hour i believe where is the clock yeah 34 minutes to go until the close. the dow's up 301 points. near the highs of the day. over 1% of gains to the s&p. weak guidance put pressure on netflix. up next, whether it's a buying opportunity for the stock. later, alibaba feeling the pinch of the china slowdown. what they're doing to prepare. that's coming up by rootmetrics and j.d. power. buy one of our best phones, get one on us.

welcome back to "closing bell." we are up 291 points on the dow. the high of the session up 377 nonetheless, attractive looking session up 1.2% for the dow and s&p. energy, industrials, materials outperforming of optimism of improvement in tone and trade noirk negotiations with china. time now for a cnbc news update with sue herera. >> hi. here's what's happening at this hour, everyone. president trump meeting with north korea's leader at the white house for about an hour and a half to discuss denuclearization and a second summit with north korean leader

kim jong-un. the white house saying that that summit will take place near the end of february. the location will be announced at a later time. house speaker nancy pelosi accusing the white house of leaking information about a planned congressional trip to afghanistan. it comes after the president canceled the military plane that was to have carried her congressional delegation there pelosi saying they thenplanned to travel commercially. >> the fact that they would leak the commercial -- that we were flying commercial is a danger not only to us but to other people flying commercially very irresponsible on the part of the president we'll go again we'll go another time. and lindsey vonn is back on the slopes competing she skied in italy finishing tied for 15th place. vonn is scheduled for two more races this weekend

a remarkable recovery. you're up to date. that's the news update this hour >> sue, that video we just played could be a video of sara next week. >> yeah, right. >> in davos. >> that's right. >> almost that good. no >> i'm not i'm terrible he's making fun of me. scared of injuries thank you. >> sue back at hq for us. let's look at the biggest movers of the day. bob pisani here on the floor for us and bertha at the nasdaq. bob? >> wilf, just off the highs and a lot of big moves in industrials on this trade talk discussions. just take a look today essentially the industrials is a group up 2%, 3%, 4% in the last 2 days in the middle of the day yesterday, big moves up there. there's the big names. other major reason for the week's move up, the financial stocks have had a great week goldman sachs up 13%, 14%.

generally, the reception for earnings have been fantastic but overall the last two days what's mattered is trade talk discussions. 500-point move since about 2:00 yesterday. there you see the dow jones industrials. main concern now is that very much overbought right now and the market anticipating a trade deal that means there's a disappointment, we go down and maybe even if we get a deal who knows if the market will rally given how much we have been moving in the last several days? >> bob, thank you. let's send it uptown, the noises by the way - >> it's a three-day weekend. >> 3:33:33. >> yeah. but it's four the number we have been looking at here market up for four straight days fourth week in a row here when you talk about china trade it's the chips where you see that reaction. there's been so much concern about the chip sector and demand in china being an influence and an overhang.

they're the strongest day and not for the week some of the big movers today, western digital. some of the stocks gotten downgraded earlier in the week and on concerns not seeing a pickup in china. they get a big lift today. still not as biggest movers. large cap tech continues to be the big driver here at the nasdaq and now let's not look at fang but faam. apple up this week facebook, amazon, microsoft was the biggest heavyweight. microsoft the only one among those out of correction territory. now only about 7% from the all-time high. take a look at jb hunt a trucking company mixed report on the earnings it did manage to resolve a dispute with its rail partner and getting very nice lift back over to you guys. >> bertha, thank you very much for that trades of netflix trading lower today. the company beat on earnings and

subscription growth but missed on earnings. the chief content officer discussed the company's investment in original content >> our early investment in digitalcontent was betting tha this would be -- would come a day the studios not opt to license us in light of creating content. today i'd say the vast majority of the content watched on netflix are original content >> for netflix of all people i can never get my head around how poor the quality of the earnings call stream is joining us is two guests what do you think they're being unfairly punished, the share price down 4% today? >> i don't think so. i think the biggest reason it's down 4% today is that it was up

over 40% since christmas i think, you know, the stock has really put itself in a leadership position again after good performance around the golden globes after, you know, pushing through a price increase through the next couple of quarters so to me the big take away is netflix is doing a lot of things right in the short term. they have this engine where they're developing tons of original content they have a green light from investors to do that and that content's bringing in a lot of subscribers it is a nice virtuous cycle and won't stop any time soon. >> that's the bull case. you are on hold. why? >> i do have a hold. more for valuation reasons and it's a very good quarter they reported yesterday they beat on sub growth. the miss on revenue almost strictly due to foreign exchange they -- $183 million and then free cash flow which is

the other bugaboo people have, netflix minus 3 billion in free cash flow but 2 million of that for content. that's $2 billion of the $3 billion. >> one statistics i can't believe they have 2 million paying dvd customers. >> yeah. kind of shocking. >> kind of shocking. totally. i don't have a dvd player anymore. >> dvd >> what does that say about how many people have shifted on to this new streaming service and how many more people they can capture that are out there >> yeah. they have grown their subs each and every year so this year about 30 million. last year about 23 million the year before that 17 million. i think they continue to grow. growing in the u.s. about 5 million a year maybe less this year because the $2 price increase which was a pretty aggressive price increase but they're growing internationally much quicker. >> michael, a few headwinds. competition. always a story but the competitors are ramping

up strong dollar which we see can hurt how about higher interest rates? is that a big one? >> it's a very modest head wind to cash flow the lever is quite reasonable an not that much debt and, you know, qul you lowhen you look ad scheme of things and i feel like it's the tail winds to subscriber growth. it is an expensive stock for sure but that can be warranted when you have a subscription business model with recurring revenues, visibility toward that we think netflix doubles the paid subscriber base by the end of 2021. that's solid growth and so the stock is going to be volatile because of the valuation but we feel like the fundamentals keep delivering. >> what is your price target an recommendation on the stock? >> we have a hold and a $395

price target they're going to have the same head winds and the price increase doesn't take effect yet and revenue growth should accelerate each quarter as the year goes on. >> michael, the exclusive growth in subscribers and seeing that in international but are they as valuable on international? it is not as profitable. right? >> well, it is interesting because, you know, we are getting much slower growth in the u.s. now adding 1 million to 1.5 million subscribers each quarter and internationally adding 6 million to 7 million per quarter sort of consistently outperforming their guidance there. the interesting thing is that if you look at the vast majority of countries that netflix operates in and just look at the income potential in the most well think households, netflix is very early in penetrating most of even the higher end of those

demographics in a lot of those countries and price the product at a level on parody with the u.s. and in most countries that's really out of reach of most consumers so i think one of the thing that is netflix will have to do sometime in the future in markets like india where they might be a little more penetrated of the wealthy households to figure out how to tier the service for a lower priced tier. they have been reluctant to do that anywhere but it's something that might be on the horizon in the next year or two. >> on that note, for the u.s. subscribers do you think they're recession proof the way they have been able to push through the price hikes? >> i think so. last $2 price hikes with zero impact on subs a few years ago, a $2 price increase and 25 p% and that wasa slippage in the quarter. >> what about international? what is your feeling about pricing there? >> i think international can be as profitable as domestic. the rpo is less right now. they used to be --' revenue per

user. >> yeah. i think it's a bunch of cost allocation the profit per sub was pretty similar internationally than it was domestically. >> if there's one of the new other rival streaming services to watch that's potentially going to be a threat that you think can be most successful which is it? >> clearly disney. disney's the name. they have the brand. they have the content. they're going full bore into it. but i actually think it helps netflix. as disney and at&t launches, it may accelerate cord cutting to get more people on to streaming. >> having people get netflix and disney plus? both >> they would get -- yeah. netflix and disney plus and disney plus, eiger said it would be a discount. so i think you will get netflix and disney plus and then figure out how to get the sports.

>> michael, what is your take on the looming competition? add in there amazon and at&t's hbo. >> and nbc. >> and nbc, of course. >> sara. >> i very much agree with what alan said. you know i think that the real, you know, the folk who is are real trouble are the paid tv providers. i think we are going do get to a place where you're going to be getting most of the programming, content, own scripted content, anything that's not basically live, ie sports, you are going to be getting in large part from the streaming services and i think that we're going to see that trend accelerate and then come back to why is amazon such an advantage in e-commerce because they have massive distribution, a green light from investors to spend all that money. why is netflix hard to beat in the media? they have massive billions of dollars that they're spending every year on content. investors have given them the green light to do that and so they will have a real advantage

here moving forward. >> okay. michael and alan, thank you both for joining us great discussion. we have 18 minutes, 17 minutes before the close up 305 points on the dow 1.2% for the s&p nasdaq up 0.9 but up about 2.5% for the week as a whole. still to come on the "closing bell," what the government shutdown means for the economy. but first, shares of bf corp. surging on the heels of earnings we'll tell you why this retailer is doing so well next. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes.

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for $479 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. welcome back to the "closing bell" with the dow up 300. some individual stocks on the move one stock doing better than the whole market vf corp. soaring after an earnings and revenue beat and strong demand for two key brands in the portfolio north face and vans shoes which continues to do incredibly well. vans comping 27% higher growth and that was a lot better than

expected considering last year was a hard one to leap and north face growing 16% in retail, it's really a story of winners and losers. interestingly, china did very well for vf corp., 23% growth from 12% in prior quarter. like nike, not seeing much of an impact there of the slowdown and the story is growth in vans. >> and as you said differentiation in the retail sector in the moment. >> on that, the slip on vans have surpassed the old-school style in terms of growth contribution that's the one with laces. just ask mike santoli's teenage daughters. >> the one you can tighten with an app like nike. >> that's a nike thing. >> suntrust is my stock to watch

today with an earnings beat. lower expenses the credit quality wasn't fabulous but it was fine up 4.5% up 9% for the week as a whole. the regionals did well this week in earnings. a theme. core investment banking tougher. >> are they doing better at this point? >> well, no. but traditional retail banking was good this week in the big banks, as well these guys don't have trading. >> right. >> but suntrust doing well today up 9% for the week as a whole. we have a market flash leslie picker, watching that for us leslie >> these are shares of u.s. chicken producers that are jumping today in light of the recent thawing in u.s./china trade tensions and china sees some of the biggest demand for products like chicken feet and shut out u.s. producers over concerns of avian flu and trade

tensions there's a note, quote, the long awaited reopening of the china market would be unquestionably good news for u.s. producers as china's by far the largest and virtually only market for chicken biproducts like paws, wing tips, chicken feet like mentioned before among the individual names moving today is tyson, pilgrim's pride and sanderson farms. back over to you guys. >> this is a really big deal american producers ship a lot of chicken to china i think this was, though, it had nothing to do with the tariffs and not shipping was health concerns. >> avian bird flu, exactly but those discarded products, u.s. consumers don't really use them and so that was a key market to sell those items that they really couldn't sell anywhere else and just discarding as a result. >> yeah. chicken feet not so popular here

in the states. leslie, thank you. >> thank you. ten minutes to go before the closing bebl ta s&p is good for a gain of more than 1% today right now. building on four weeks higher for the major averages. the head winds alibaba sees and what it is doing to epe prar next here on the "closing bell." ♪ 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. tyou mighyour joints...ngagement for your heart...

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my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. al bah bah bracing for a slowdown of china's economy. we have the details. >> this is an indication they're ready for a sleeper slowdown alibaba's reportedly cutting travel and postponing new hiring earlier this week, the company's president acknowledged troubling head winds and in the last earnings report cut the full year revenue forecast kritding growing doubts about the economy. in regard to the latest report, a source familiar with the company said this is not new restructuring happens for the company once or twice a year and travel policy changes are also

common but a key question for investors, will alibaba be prepared for a deeper slowdown and what's the future? the chinese company reports the third quarter january 30th and markets looking for more commentary on the head winds and it's affect on the business. shares have held up quite well over the last few months relative to chinese tech and the fang basket. the stock is up about 10% over the last three months compared to flat returns of jd.com and a plunge for others. all the fangs are lower in that same time. the chinese government's growth efforts could actually boost alibaba and other stocks listed here in the u.s. and the next catalyst the gdp info out this weekend. guys >> thank you. up next, we'll be back with the closing countdown. five minutes left to trade

♪ don't get mad. get e*trade, dawg. welcome back to the "closing bell." it is a nice finish to what's been a solid week, indeed. up over 1% the nasdaq a little behind but nothing to roll your eyes at and for the week as a whole up 2.5% to 3%. today the sector performance is trade related and the likes of

materials, industrials, energy towards the top. but for the week as a whole, financials, blow-out performer only utilities in the red playing to that theme of a strong risk-on week that we have seen and earnings, individual stories do matter. here are bank of america, jpmorgan up 12% and 4% for the week you can do the same for morgan stanley and goldman sachs. there's differentiation based on the earnings the micro is starting to have an affect once again rather than just the macro dollar week to date. we don't want to see too much strength there or put those exporters off the cue. bob? >> why are we up so much here? up almost 300 for the week and remarkable if you look at the s&p. first importantly, you are right. it is earnings look at the great reception for

the financials down 25% in the fourth quarter goldman up this week earnings are not negative this week market said we were not collapsed like we were concerned about in december. nu number two, end of december people talking about we are worried about a recession in 2019 number three, all of the positive trade talk. as i said today, i'm a little concerned the market is ahead of itself on the trade talk because we could set ourselves up for a nothing response if we do get a trade deal or a negative response if the trade deal falls apart in some way. let's worry about that at a different time i'm in agreement with you. primarily about earnings this week and towards the end some positive talk about trade. >> and in terms of small caps versus big caps, bob >> great week for the russell 20 2000 it underperformed in the fourth quarter and now getting the

industrials, global economy a little bit more. i love to hear more from the caterpillar and the boeings. >> consumer sentiment soft today and up on a long term time horizon. there goes the bell. 330 points higher. s&p up 1.3%. that does it for the first hour of the "closing bell." sara, back to you. lots of buying there on the close. welcome, everyone, to the "closing bell. i'm sara eisen wilfred joining me in a moment with mike santoli. strong across the board. the dow gaining 1.5% more than 300 points there in the close. for the week, the dow is actually up more than everybody. up about 3%. s&p 500 closing out today up 1.4% everybody was up today than the

utilities. the winner of the week the financials nasdaq higher by 1%. good for a gain of little more than 2.5% for the week and russell 2000 up 1% it still is down the most off the recent highs and repairing here over the last few weeks of gains for the major averages her's the stories for investors. sources saying china is offering to increase imports by $1 trillion over 6 years to ease trade tensions tesla shares tanking after ceo musk announced job cuts saying the company faces a difficult road ahead and more head winds for apple as there's job cuts and a top analyst says there's shoe to drop for the stock first, let's get to bob pisani on the floor for a look at when's been a strong week for the bulls, bob. >> a strong month. hard to believe. remember how depressing december 24th was before christmas? hitting the bottom

that's certainly here. let's take a look at statistics for the week give you an idea how strong it was overall. s&p and the dow, the fourth straight weekly gain for the s&p and the dow on pace for a best monthly gain since october 25th. that would be for the s&p 500. best since october 2015 and not done with the month, obviously s&p up 6.4% so far in january. banks up 6.7%. why are we rallying? what's going on here three things are very important. earnings, lower but not negative particularly, favorable response to the banks we are not negative this year. the market is implying in overall earnings the dow moved 500 points in 24 hours on trade talk optimism you could see this in the dow movers this week it reflects what i'm saying here you have the financials rallying big time dow, dupont and caterpillar in the industrials rally and a nice

move up for microsoft and cisco. back to you. >> thank you. joining us is nancy tangler. and mike, a real lift there into the close. and a real embracing of what appeared to be positive headlines around the u.s./china trade situation. >> there's no doubt that added a boost to the market that's leaning higher and the market declined a bunch of excuses to stop and pull back after a strong rally and i think it's a much stronger run in the last four weeks than a typical bounce but in a way it's just december running in reverse how many times before the december lows was i saying the market's oversold and ought to bounce here? and it didn't. it got to more extreme extremes and we have used that up and i think because the economy hasn't changed that much i think people can live with valuations right here and not selling the earnings news just yet.

>> are we overbought now >> i think it's getting overbought and not extreme to december and in the zone right here where we're really getting equilibrium and almost hilarious the s&p closed today where it closed the last trading day of 2017 right? so we are talking about almost 13 months ago and shows you overshot to the downside, picked it back up and there's a chart of that. been a wild ride and all you did is an exaggerated "v". >> i was amazed by that when you tweeted that out earlier. >> works that way. but no i think also keep a couple of things in mind the strongest start to a year since 1987 and barely edging out last year and you had the sprints to start a year. today was an options expiration and felt like bears just giving up a little bit in the short term and maybe a culmination of the phase of the rally and i'm not seeing any kind of red flashing lights to say we have

gone too far. >> nancy, if you have an in-flow of cash over the weekend would you put it to work in u.s. equities tuesday morning >> probably. this is a period where you do want to not get ahead of yourself and some of the stocks that we own like a microsoft are relatively rich. but to mike's point i do think it's an opportunity to look around and pick away at the companies that haven't performed as well. so we have been adding to the portfolio and we would add to some of those names as we move forward from here. the market's been acting really well on not so great earnings. and so that's a positive for us. >> so, mike, what will you be watching to tell us where to go from here? if this is a giveback, a correction of a correction that we had in december, how do we know what the next move is >> i think the obvious thing is a very busy week of earnings

where you are going to have a wide variety of companies reporting. you have the global industrials and often in an earnings season you see the pendulum swing one way and people say we can buy the news and then stocks get repriced on the higher end going into the next phase of reports and we back off a little bit that's the main thing. credit reports and if it wavered -- >> i think it's so interesting that the market bounced so hard on these china trade headlines because they're not -- they're unnamed sources. right? i mean, a lot of speculation a lot of trial balloons i think the word kayla tused. >> 1% since last time yesterday. >> it's as a whole. >> the week as a whole is driven by earnings, banks, not been

driven by this -- yesterday industrials towards the top and materials. i don't think that's explaining the whole -- >> not the whole picture but shows like the market is starting to really price in a deal and far from certain at this point. >> nancy >> do you think the market is more surprised if it all fell apart and imposed another round of tariffs than a deal that resembles what's floated out there. >> nancy, where do you stand on that do you fear it could get worse and undo the good work more than us getting over the line and getting a deal >> i fear a lot with this administration but i will say that i do think at the margin china is going to be a more positive contributor to global growth in 2019 than it was in 2018 we have seen serious easing by the government in beijing, dramatic cut in tax relief, reserve, bank reserve requirements lowered now we are seeing this, incentives, increased infrastructure spending and now we are seeing this sort of, you

know, white flag of we'll spend a trillion dollars over the next six years. i think china is going to accelerate at the margin and that's going to be a surprise that the market has not yet priced in. ems are sniffing it out. with the weaker dollar i think we could go higher from here despite trade tariffs noise in the near term. >> you're seeing that in the chinese currency which is sort of quietly rising on things that -- signs of things looking better. >> but that bond market has not so that's still showing risk off slow down type sent. and i thi -- sentiment and dollar weakening. >> they're throwing money at the problem. >> they are. >> shares of tesla plunging after the company announced it will cut the work force. elon musk explained the cuts saying higher valium and manufacturing design improvements are crucial for tes that la to achieve the economies

of scale required to manufacture the model 3s at 35,000 and still be a viable company. there isn't any other way. big drop in the shares today. >> yeah. that quote we just read was actually like exhibit b of the bear case. six months ago >> they can't make this economically way work. >> is that people were saying, look, the sales are mostly skimming off the high-end demand haven't shown they can be profitable you know with a high enough margin. so i do get why the -- you had this gut check in the stock right here and seems to find the way from either direction back to $300 a share. it is an incredible pivot that's lasted for a couple of years and right now it's again a show-me situation because people thought profitability in the third quarter was the start of multiple quarters of that and not the case. >> nancy, what is your take? >> yeah. wilf, we owned it. we sold it and, you know, little bit higher than this but it's been higher than where we sold it.

our concern is sustainability of the management team, governance which is partially solved and also just the question of subsidies. when the subsidies are fazed out this is exactly what we expected to see and so, i don't see how you can justify this valuation when you have a management team now that's saying and telegraphing, we got to cut. and that's going to curt production and it just becomes a vicious cycle. >> tesla down 13% today. let's move on and talk about apple contending with a number of negative headlines today. taiwan semi one of apple's chip supplies saying the growth is slowing. and top apple analyst with a note saying that apple service revenue often trumpeted as the future growth driver may run

into head winds because of netflix and others threatened to stop paying the fee for app transactions on the databases and apple up 0.6%. when i used to manage money, we looked at the actual true bellweather. it was the ultimate chip supplier and i guess this is priced in, this story, because so many others whether they were the true bellweather or not -- >> started a year ago. it's confirmation of the story further confirmation and really, apple had a relatively weak bounce off the lows it's underperformed on the bounce only up 10% off its lows and i do think it shows an abiding doubt about the way that the hardware upgrade cycle gives way to the software and services story line and how that plays into the numbers because it's stale show-me situation. here as well coming to the

services side. >> apple up 3% for the week. nancy, what do you do with the stock? how much bad news is baked in? >> yeah. sara, it is hard to know with apple because it's an emotional leadership stock but i have been through this before multiple times and what tends to happen changing constituencies is that the growth managers who have been in are getting out an the hedge funds and it takes the value managers longer, more careful, they step in slowly athand then we get an opportunity again. you buy it cautiously. not the entire position. you ease in over time and wait for that dividend increase to boost things further stock buybacks and other investors will step in as the transparency comes through as to how apple will manage this change and i think they just might take a page out of netflix book and build in subscription services with hardware purchases and i think that may solve some of the slowdown in hardware

purchase >> mike, we always have that question mark about what should they do with the cash? spend it on acquisitions and it is interesting on the video streaming area because so many other companies launching the full service and apple considered for many years should they have bought netflix and almost things like now's not too late and should have done it already. >> yeah. i think you can make the case in retrospect that's so. what would apple be buying practically speaking if you bought one of the services what are these services? well, they're the places that hand money to content creators they have all the customer relationships. they don't have to buy a brand because apple is its own brand so i don't know why they spend tens of billions of dollars -- >> should they launch a streaming service of their own >> turn it on in itunes. did you want to commit the money to build the content library to

feed into it that's the whole decision point right now. so far, yes, we are hearing about one off projects and beyond that it doesn't seem adds if apple committed, you know, in its heart of hearts to being a studio. >> why then do we put weight on services revenue growing >> it's a lot of dirpt thinffer things for apple it's icloud storage and not that proprietary but steady. >> they talk more about health than - >> seems like a bigger push. >> nancy, final word in terms of market expectations for next week do you think earnings season is as encouraging as it has been for the banks? >> i hope so i think that what i'm watching is guidance and revenues much more than earnings at these levels and listening on the calls to hear what managements are saying about china andthe

shutdown now i don't think the shutdown's an issue yet. i think it's more of a reality show, unfortunately for those who are victimized by it but i do think at some point it can be one of those things that turns the market on a dime so we'll be listening closely and looking ahead to see where managements see the near term and the medium term. >> is there a sector that you think shows the best value ahead of earnings? >> yeah. i mean, listen i think tech has been brought back down to earth and i think there are a lot of places in tech like some of the semis where if you get net positive return or news, sara, that the stocks will bounce we have seen some of that but many of the stocks are way off their highs so i'm talking texas instruments, broadcomm i think intel even and cisco's been plodding and still has plenty of valuation room to grow so we're still overweight technology and health care and

industrials. >> nancy, thank you for joining us have a lovely weekend. >> thank you you, too. coming up, we will have much more on tesla's difficult road ahead when a bull and a bear debate whether it is time to get out of the stock. but first, we are getting new estimates on how much the government shutdown is impacting the economy. details from steve liesman when we come back ♪

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welcome back the government shutdown has lasted nearly a month and getting new information on how costly it might be for the economy. steve lies mans has the details for us. >> how costly it's been and will be economists following the white house's lead and downgrading the outlook for the economy in this quarter as a result of the shutdown here's the cnbc wrap it up day this is not a normal tracking but ask about the quarter and what's happened is they brought it down by .3 and that's the good news. to 2.4%. you see the range there. only a few economists in this survey so far have incorporated the effects of the shutdown and worst could be to come and the kind of as a foreshadow of that, look at a couple estimates where it's been incorporated

bank of the west brought it down today. make ro advisers, well respected forecasting outfit 1.4% and my friend at action economics brought it down and said what i'll do is bring it down by .1% from the beginning of the shutdown. and that's what the white house is doing brett ryan at deutsche banc said you could imagine negative growth in the quarter if it drags out and subtract meanfully raising the risk of a contraction in output. that's another way of saying negative growth or negative numbers on gdp some but not all the losses could be made back in the final quarter and some lost spending is never done. those that do business with the government may never recoup the losses, sara.

>> as the estimates go down, do the second quarter estimates go up >> i think because of the question you just asked it occurred to me this morning and we are having a mind meld to track the second quarter to see how much of that is recouped what we do as you know is the tracking forecast for the current quarter which incorporates the existing data and a forecast for the quarter ahead and it's not auchbl the quarter ahead is the news but it is because it keeps coming down. >> yeah. how much they think will be made up. >> excellent question. >> and how much is lost. all right, steve mind melding not the first time >> nope. >> stay there. we want to bring in julia coronado you are you on expectations? >> i think the estimate of the government seems reasonable. that's direct and indirect effects and the direct effects is made up in the second quarter and go like a seesaw and not all

of it will because some of that as steve just doesn't get -- doesn't happen so we'll have a little bit of pothole and we'll just -- i think the bigger question is whether we lose confidence, whether businesses and consumers get more cautious. just the broader sort of chaotic environment that we have been seeing whether that - >> for the quarter itself, just one quarter print of softer gdp boost the market because of what it might do because of fed expectations >> i think we are seeing it right now and the idea of a shutdown, i don't think you need to see the number for that psychology to take effect. basically people came into this year kind of hoping and expecting the fed to be on pause indefinitely or a couple of quarters perhaps this probably solidifies that view and i would be interested to hear and see what the fed thinks about it. if they feel it's a round trip and the numbers and make it up and doesn't necessarily change the broader outlook --

>> steve, it should give them another reason to be patient. >> yeah. >> yeah. definitely true. just by way of some news today, john williams, new york fed president, speculated it could be half to a full percentage point off of gdp and, mike, my read so far is i don't know if it's a yawn or a shrug or a get out of here we don't really care but the market seems to really not be that focused on the issue of the slowdown that would be the result of the shutdown i think they're focused on other aspects. the other thing is we are not going to know exactly how the fed incorporates this on a full-year basis. i believe julia can back me up on this. march the next round of forecast. >> right. >> we will get a chance to ask powell about this and how he thinks about it at the january press conference but not until march will fed officials make those forecasts public so -- and they might do that at some

speeches before now and then. >> i think that's right, though. the nice thing of a press conference is chair powell will have the opportunity to give their best guess and i think that they have been very clear that caution is the name of the game right now they're not in a hurry to do anything right now. >> does that mean the next move is a hike or a cut >> i think that they are not -- they're completely agnostic. john williams was the latest to say that they'll wait and see right now they have brought rates up to something closer to neutral and can see whether the market volatility has a signal for the economy. whether the government shutdown has a meaningful impact. whether they're done hiking. >> julia, if we -- hold on a second looking at the international picture, we have slightly softer than expected japanese inflation this morning do you think that if we were re-running the clock six months, anything of the boj is on hold

>> right. >> you might have expected a softer dollar and not like that environment is playing out. >> that's right. really the international picture is the key i think both to the ecb and boj own the fed because what we're worried is about contagion a slower global economy into the u.s. we had no warning signs that the u.s. was really slowing in a meaningful way the data have been very solid so it's really about how hard does china land and what are the ripple effects around the globe and takes time to assess. >> how many other apples will there be in terms of the warning? >> exactly. >> steve, thank you very much. julia kona do. up next, the charts to see if the market should be worried about the decline in consumer sentiment. tiffany shares rallying today. coming up, we'll hear from an

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the consumer sentiment indegs from the university of michigan and the precipitous drops ahead of a recession the shaded areas are a recession. this is into 2008 so 2008 to 2001 recession and before that in around 1989, 1990 we haven't seen anything like that right now it's a jagged trend. another thing to keep in mind is look at how low we were for about half of the whole expansion. very, very stubborn of the mood getting better despite the numbers showing us coming out of it so, this high to low drop is a ten-point or 11-point drop it's pretty significant but it would have to be followed by a few more to say there's something underlying in the economy with jobs or something tangible to get too worried about it. >> and has to fall a long way to

get worried about it and hard to read from here, how long from the peaks in consumer sentiment before the recession seeing that a year or so >> it varies a lot at least a year. again, much sharper. but, you know, the peak here, who knows? maybe that's seen as the peak. it was not just last month that was the peak we have db -- it's a thing to monitor. >> why it's a trump administration favorite thing to cite consumer sentiment was soft and started to ramp up around the time talking about tax cuts. >> it was the instant effect, actually even before that the election got it rolling, as well basically seemed to liberate us from that slow growth world. so we basically circle back to the october 2016 levels now. >> mike, as always, great chart. up next on the show, a tesla bull and bear go head to head on whether the slumping stock can rebound after musk said the

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time now for a cnbc news

update with sue herera. president trump's personal lawyer rudy giuliani denying that the president told his former legal fixer michael cohen to lie to congress about the details of a trump business proposal in russia giuliani responding to a buzzfeed news report house democrats say they'll investigate whether that report is true. negotiations resume today between the union and school district officials to getting a teacher strike in los angeles. thousands rallied outside city hall on day five of that strike demanding higher wages and smaller classrooms. mexican officials say 1,000 mainly honduran migrants crossed peacefully into mexico mexico has promised to allow people through as long as they're orderly. and after much speculation, pennsylvania democratic senator bob casey is not running for president. he released a statement saying

the best way to fight for america is to stay in the u.s. senate you are up to date that's the news update this hour have a great, long weekend see you on tuesday. >> you, too. >> enjoy the weekend right. shares of tesla closing down 13% on news the company will be cutting 7% of the workforce, 3,100 jobs, in part of an effort to keep the model 3 as a lower price. >> will the effort pay off for investors? romit shaw, you are the bear neutral target 300 on tesla stock. >> right. >> how troubling is this announcement for shareholders? >> it is a little troubling. i don't think it's company specific we are in a deflationary environment. we see limits to the pricing power and started with invidia in november. couldn't convince enough people

to buy $1,000 graphics card and we know what happened to apple in january and that's the environment we're in and tesla's not immune. >> comparing it to tech companies to cut production opposed to automaker's yeah. >> i'm a tech analyst by background and see it as a tech company. i think the one thing is company specific is second time in a row they mentioned the draw down of the federal tax credit and did not mention that at all last year. >> when they knew it was coming. >> right. >> you are saying it's an excuse not legitimate or foolish not to see it. >> the latter. $7,500 is 3,550 and then 0 this is having an affect on volumes. >> none of this concerns you

price target of 530. >> yes, absolutely yeah it would be unfair to say it doesn't concern me, of course. tesla is at a turning point and it's one that is difficult to negotiate. they have been able to sell fairly high volumes of cars only in the u.s., only at very high price points and $7,500 subsidy from the u.s. government so in q1, they will need to weather that to start shipping and delivers cars outside of the u.s. in order to compensate for a sharper slowdown in demand here second thing they have to do in -- during the year is to of course introduce lower price points, lower priced cars where large volumes are going to be. when's important for tesla is to keep growing production every quarter and, therefore, growing deliveries, as well. so what the company is doing is

taking prices of all the cars sold in the u.s. by $2,000 that's a bit less than 100 million cars every quarter and compensate for that and a reason why, of course, they have announced that the price cut is going to save them about $100 million a quarter and then they have to -- >> pierre, though -- >> uh-huh? >> i was going to say, i mean, is it not a concern that this point in the product penetration curve of this company, if you believe tesla, they believe it's tremendous demand, something like this price point they are seeing this much price sensitivity out there and having to cut back the cost base with it. >> no. i don't think it's a surprise. if you look at the way the companies -- the three, they want to sell 500,000 a year. and so, the normal level of demand in the u.s. is much below

what we have seen in the last couple of quarters so i think the company's well aware that long-term normalized demand in the u.s. at the price is selling today which is still price close to $60,000 is actually going to be much lower so in order to grow volumes they need to take prices down. they need to compensate for the fall in demand in the u.s. as a subsidy goes away. and all that's going to cause them four to five points of margins and they work hard on it and that's a context to me of the announcement this morning. what happened this morning -- sorry. go ahead. >> sorry, pierre the last time you've come on you've been bullish on the fundamentals and questions of the management >> i think it's long -- there's a debate that i have between long term and, you know, short term we downgraded the stock in september. i wasn't sure that elon was

going to remain at the company obviously had a good quarter there is this short term and long term dynamic, wilfred, that, you know, we are thinking about. in the short term going from selling model $3s north of 50,000 to shipping it overseas and then wait a couple quarters for them to launch the $35,000 so what i see now and through the second quarter is an air pocket and during this air pocket you have deliveries coming down. it sounds like if things go really well they might be break even or generate a slight profit in the quarter and that's, you know, that's a different message than the company was communicating a couple of months ago. and so, i just think while we are in this air pocket it is tough to own the stock long term, i think they're a lot bigger than they are today and the stock price probably higher but near term, i think i see volatility. >> we'll leave it there. thank you both very much.

>> all right thank you. meanwhile, in the auto world, of course, trade has been a big factor and the european union is ready to cut tariffs. that being reported, the words of the eu. let's bring in phil he blebeau r what this means. we had the opposite discussion to hike the tariffs. now we're hearing news that the eu might be willing to show and make a good gesture first. >> they've been wanting to do this for some time and a public negotiating point out there. look the eu needs the u.s. car market far more than the u.s. auto industry needs the european car market what am i saying about that? you are looking at the trade deficit if you will between us and the europeans. it's $36.5 billion that's how much more they're making shipping finished autos and auto parts to the united

states and it's a nearly 5 to 1 advantage and if you're the europeans you don't want to lose that access to the u.s. and saying to the u.s., what you think? we'll take away the 10% tariff, is that going to mean a flood of u.s.-built vehicles going into europe no probably some increase but not a huge increase and not sure that this is much of a deal mover if you will in terms of the negotiations look at the end of the day, i think the trump administration is using the threat of a higher tariff against the european automakers much the way he did with nafta it is the threat to get them to make a deal not just with autos but with a wide variety of goods. >> much more sensitive sectors like agriculture which they don't want to talk about, phil all right. thank you very much. >> correct. >> yes we'll keep that in mind. china's slowdown hitting 5th avenue hew china's giving tiffany t

blues. not color of the boxes

shares of tiffany finishing higher today >> joining us to discuss, david schick from consumer edge. what do you think this is? >> there's micro, macro,

strategy and expectations. you know, we had lowered numbers a week ago we looked at the factors and thought the business might be under pressure expectations changed a lot over the last week as a result of folks having these conversations. the results came in and you see, you know, part of what's important is people looking at the long game of tiffany trying to play and i think it's a little bit of everything. >> the stock was going down pretty much all of last year is it cheap? is that why people like it and buying it off the seemingly bad news >> it is cheap and that's a big part of it, valuation. it is also a weak dollar stock if you think about it. so u.s. headquartered luxury brands they like a weak dollar not the business but the stock that's part of it. it is also like many consumer

discretionary names, needs global trade and tourism and consumers to feel good a lot of those questions have been circling for three, four months and some of that relief in the market today on a day that tiffany frankly had to get the bad news out of the way and cleared the deck this morning. >> i mean, it is a weak dollar stock. also, weak silver stock. seems like you have to know a lot about when's happening in different parts of the world to trade it beyond just kind of foot traffic and what employment is in the u.s., at the lower end of the valuation wise and last five or eight years. you know, do you think that there's even further bad news priced in or where do you think it can get to from here? >> you said the trade and how does currency play out and tourism and macro? but the long term is valuation and the brand and so i think what's gone on tiffany the last several years with the new management team is replatformed

decision making, talking to customers, the newness the customer sees. that new level of energy but playing in it a very long term way is a brand term. it's a 175-year-old brand, as well it's valuation and the positioning and the power of the brand and i think you're right the trading is getting around currency or metal pricing or whatever and that was what we were trying to do a week ago with the numbers. from here, absolutely, valuation is supportive. our rating is overweight we think that getting past bad news is always important to tiffany and sort of a very long term focused company. >> and a very different market, mike, that would embrace news like this and bid up the stock 5%. >> six weeks ago might not have been the same story. >> david, thank you for joining us. >> thanks. u.s. equity managers harder outperform the benchmarks why that is. we're discussing it next

t. rowe price invest with confidence.

morningstar out with a report explaining why it's become more difficult for u.s. active equity managers to outperform their benchmarks. what now, leslie >> sara, as you know, it's only gotten more difficult over time to pete tbeat the market. the question is whether it will ever get any easier. in the last two decades, fewer and fewer managers are beating the relevant benchmarks. the so-called success rate was one out of every six in 2018 that compares with nearly 50% in the early 2000s. so is this a structural phenomenon or cyclical

can it ever be reversed? that new report says, no, it really can't morningstar points to research on greater competition with marginal investors leaving the field leaving behind a more skilled field of investors to scrap over every morse sel of excess return. as you can see, the chart shows the dispersion between different styles the best performing strategy compared with the worst performing as you can see it gets more crunched up over time, meaning that tilting outside of your focus, for example, a large cap manager picking up some small cap stocks, that strategy isn't really paying off. now, these structural challenges to active management has of course caused firms to slash their fees but morningstar says they haven't been cutting deep enough that average prefee excess returns have fallen at a faster

rate than the fees have, guys. >> leslie, i guess a week like we've had the past week or last month or so is something they're hoping continues with more stock differentiation and earnings playing a part. >> that's a key to this all, the fact that they need to see a lack of correlation between stocks strategies, something called factors, which are algorithmic ways people can trade in and out of areas like value and growth those things have been so correlated especially with all the liquidity that flooded the market that it makes it really difficult for stock pickers to differentiate between the wines and the losers so that lack of correlation, the more they see that disparity in the market, the better for stock pickers. >> you know, leslie, of course interesting to be talking about this the week that jack bogle has died that was his answer. but if everybody indexed, wouldn't it be easy to beat the

index? he said maybe at some point, but along the way the indexes are displacing the less skilled managers so it becomes that much harder >> exactly a lot of people in the active equity world will say that this advent of index funds and etfs where there's less pricing decisions being made, where managers aren't doing that fundamental analysis, the more that index funds and etfs penetrate the market, the less of that price discovery mechanism we'll start to see, which makes it even more difficult for the active managers to do their job that's just a continual lament that doesn't seem to be reversing any time soon. >> leslie, thank you good story. the world economic forum in davos getting under way next week xtwel have some big interviews ne, 'll talk about how the locals are capitalizing. bring financial stress to work. if you're stressed out financially at home,

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let's check in on the key economic data points next week markets will be closed on monday for martin luther king jr. day. on tuesday we get december existing home sales and earnings from johnson & johnson, ibm, travelers and ubs. >> wednesday features earnings from procter & gamble, united technologies and comcast.

thursday highlights are weekly jobless claims, earnings from intel, starbucks, bristol meyers myers, kwib and we close out with abby and synchrony financial. catch big interviews from davos. christine leguard, procter & gamble chief david taylor, valueact capital jeff ubben. a diverse group heading your way. >> you will be there for us. >> i will be there, very excited to share the highlights. >> there will be lots of snow in new york this weekend. >> i think there's much more in switzerland. some of the pictures are pretty intense. >> pretty daunting, yes. >> stay safe out there we've got a little fun story on that topic the influx of world leaders, execs and celebs going to davos drives prices higher for rent.

in a piece published in the "financial times" calling it a gold mine for davos homeowners some airbnb listings are reportedly going for eight times their regularly listed price, which is pretty interesting. >> not surprising. >> it is an odd location to live a load of people because it originally was much more secretive. now it's grown bigger and bigger and is not so secretive. >> thousands and thousands of people in the entourage. it is kind of fun because it's sort of the great equalizer because you're trudging along. there's not enough room for motorcades and having entourages follow you you're just trudging along in the snow next to heads of state and ceos of major corporations just all trying to hold their balance. >> good on the locals if they can make money on one week and then spend it over the next six months or eight weeks or whatever the stat is there good for them. >> what are you watching next week >> the sentiment out of davos.

last year it was easy in retrospect to say everyone was so enthusiastic and bullish and tax cuts were coming and the markets were at a high of that was a little warning sign that people were getting too exuberant. >> well, the administration won't be there. >> it will be the ceos. >> we will be watching that. safe travels, sara. >> "fast money" begins right now. have a great weekend. "fast money" starts right now live from the nasdaq market site overlooking new york city's times square i'm melissa lee. tonight on "fast" don't call it a comeback the surge off the december low is raging on as the s&p 500 climbs out of correction territory, but there's a number of interesting names sitting out the rally that could spell trouble ahead. we'll explain. plus tesla tanking after elon musk announces job cuts and outlines a difficult road ahead. is this stock too risky to own first we start off with the market rally the dow up 350 points on signs