both are saying this shouldn't happen so thanks for joining us great to have you speaking to this issue, guys obviously, the shares went - >> thank you. >> creamed when they were trying to come out of this and came back a little bit with the financing lined up. >> we hand it off. thank you for watching "closing bell. ♪ ♪ good afternoon welcome to the "closing bell." i'll wilfred wilfrost. >> i'm morgan brennan. great to be here especially with led zeppelin playing. coming up, national economic council director larry kudlow joins us to talk about the economy, today's selloff a first on cnbc interview. plus, valueact jeffrey ubben talks at the world economic forum. ibm reporting after the

bell instant reaction to the numbers with the cfo jim kavanaugh let's get to the markets we are very close to the session lows with one hour left of trade. there's the s&p 500. down 1.8%. the low of the day was 1.9 you will see the dow is down 406 points at moment the dow in the dow was 435 and the nasdaq down 2%. >> every sector in the red consumer discretionary worst performing and the latest headlines of u.s./china trade talks may be hitting an impasse right now. but we're going to begin today with a latest on those trade talks. kayla is in washington with those headlines. kayla? >> the development that the market is watching so closely is the u.s. decision to call off a meeting expected to take place this week. two of china's vice ministers were planning to visit the u.s. to essentially lay groundwork for a higher level delegation

still planning so far as we know to visit the u.s. to flesh out a trade deal next week this is my reporting according to people briefed on this discussion but according to these people, officials from the u.s. trade representative and the treasury department essentially felt like china hadn't offered enough in the way of opening up its markets to international firms and stopping chinese companies from stealing u.s. technology. they want china to come back with a more substantial offer and just as a dynamic that illustrates the challenge of getting china to agree to make long-term changes to its economy and not just be willing to write a big check as china offered at the g20. one person i spoke to cautions that the week's talks may happen over the phone and the white house seems to be saying that the high-level meeting of vice premier lui he to come to washington will still happen and a white house spokesperson telling us that the teams are in touch in preparation for that

visit and does appear something deteriorated over the last several days saturday afternoon the president told reporters the talks with china were going really well and that a deal may very well happen and then yesterday the president tweeting about the gdp growth saying that china needed to stop playing games and that he essentially said that maybe they need to come up to the table for a real deal. unclear what that real deal would entail and certainly doesn't seem like the talks as rosie as they may have been coming out of the g20 at a point where at least u.s. officials feel comfortable going much further at a staff level this week >> kayla, how damning for the tone of where these talks are is the cancelation of a face to face meeting canprogress still be bhamade ov the telephone, for example >> reporter: it could and you never know what china is prepared to offer behind the scenes the buck stops at president xi

and depending on the growth situation in china and the pain they're willing to endure there ian the pain for the u.s. to endure if the trade war goes on. you never know the breaking point. but i'll say that the cancelation of a meeting doesn't bode well for the optics of a potential meeting for vice premier he to come next week chinese delegation came to the u.s. in july 2017 with the expectation of a deal that the president sasessentially rejectd a press release was canceled and a bad look for both sides involved i think both sides want to avoid that this time around and now watching to see if next week's meeting plays in place. >> thank you very much don't forget to tune in in half an hour's time for insight from larry kudlow let's talk about this for the markets. senior markets commentator mike

santoli is here. clearly weighing on sentiment. >> without a doubt why the market is doing what it's doing today is how much of a buying stampede we had up 13.5%, over 17 trading days going into the weekend so i think once you had the idea that the market was due for a pullback, in fact, sunday night futures were open and pulling back a little bit and this is a market that was geared i think to basically take a breather but yes. you had the trade headlines and then also a lot of reminder that is the global growth story remains squishy from companies, the chinese data and in combination we're pulling back in the s&p 500 to a level where everyone thought we should start a pullback and right here where we are 2620 something like that. >> we had moves lower in europe and asia over the last two days because we were closed here over the last 24 hours. >> yeah. >> i don't think it's something that's necessarily about investors saying, okay, game

over for the trade talks and an expectation built into the market to move in a direction where it seemed like a deal was likely but i don't say that today's principally about trade. you have a little bit of cautious guidance from big global companies not helping. >> thank you, mike stay with us we'll keep having the conversation joining us, barry knapp from ironsides macroeconomics and rick santelli in chicago good afternoon to you both barry, i'll start with you the fact that the dow down 400 points on these headlines and that this envoy before the envoy is now not coming here to d.c. are you surprised by that? >> no. not particularly i do think in general that the asian markets picked up on this slowing global trade trend six months before it occurred and it occurred in the fourth quarter it was particularly pronounced in november and december there's a likelihood that there was orders ahead of projected

tariffs and then you saw a slump in november and december you'll probably see something of a rebound in january if only to get ahead of the chinese new year holidays at the beginning of february. nonetheless, the broader trend is that global trade is slowing to a level much closer to global gdp. unlike the prior business cycle and that's with us through the course of the year there's a whole host of reasons for it the new business model that most major corporations will try to move towards over time is to manufacture where final demand is so that's where the trend is going and nonetheless as the numbers come through it's not shocking that the market reacts negatively. >> we are at session lows, down over 450 points. rick, looking at the data in this balance of who's hurting more from the trade war, i guess existing home sales suggest the u.s. might be playing catch up

to the downside. catch down as it were. >> well, we definitely lost the 5 million handle on existing home sales down almost 6.5 piston6.5% so see where you're going there's a lot of issues there that i think transcend some of the global slowdown that we have been discussing. i continue to like to use the uk as kind of a canary in the coal mines sort to speak. you figure first of all, many people on this trading floor wondering if brexit will go better than our partial shutdown will we get the deal done with china before we open the government i'm looking at the weak links and the pound verse the dollar, you know, it's hovering at 130 very close to 130. basically the best level since first half of november but more important, if you look at the euro versus the pound, the euro is weakest since mid-november you know, if europe can't hold

on to the relationship with regard to its currency, with the brits, i think that gives you a good look of how mario draghi will sound this thursday so in the grand scheme of things, it is difficult especially with the partial closure in the u.s no data coming in. for the u.s. to kind of hold off on its own and continue to do better and i would think that the pressure, the gravity of the global slowing, is going to have a bigger and bigger toll on the sessions ahead for u.s. markets. >> rick, the uk had strong data today, as well for once at least. decent wage growth but i get your point but, barry, to that main point, is that an important point to note that it's not just the fed realized it can't tighten as quick as it planned to and global banks stepping off that tightening pedal this year >> i was thinking a year ago how the theme, the market narrative was global synchronized growth

an saying it is not so synchronized you will see the weakness and now global slowdown. the markets priced that as i mentioned six months ago we are in a global synchronized pause and that pause i think will have huge impacts on the tone of the markets over the next course of the next six months so i think rick was really getting to that point that we just have thrown central banks aside for a while now and not dealing with the liquidity and work through the incoming growth data but as i said the markets, markets have been pricing this and deeply priced it you could argue u.s. priced a full-on recession and a median decline for a stock market around a recession going back to world war ii is roughly 20%. that's what we went down >> key point there is a pause is different than a recession one of the things you noted in your notes is the fact that this reminds you of 1987. >> right, no

that's absolutely true i mean, the whole set-up coming into last year was so similar inasmuch as we had a huge rally in the market after a supply driven plunge in ole prices in '85, '86, and mid-'14 and '16. we had a new fed chair tightening tax reform bill. a closed capital account and big trade surplus and a strong dollar and that all reverberated out and the great lesson of '87, i was new in the business in those days, there was no leverage associated with it. there was no big fallout there was no recession it was a crash and then the market stabilize and rallied through the course of 1988 that's my scenario for 2019 is that we just grind our way back through the course of the year. >> final thought, mike >> yeah. i mean, it's certainly plausible.

a lot of analysts, mentioning 2015, '16, central banks said we'll bank away. not tighten. the market canible rehabilitate. what's interesting is everybody bear or bull said the market should pull back after three weeks ago everybody saying the market should bounce here and not proved if what we have gotten is more than a really strong bounce and now's the time to sort that out. >> thank you for joining us for this discussion. coming up, national economic council director larry kudlow joins us to discuss trade negotiations with china as it appears the talks stalled. and going to davos where sara eisen is speaking to some of the biggest names in business sara, what's on deck >> coming up from switzerland, jeff ubben shares his thoughts on where he is iesng a hnvtindow he thinks about the long run when the "closing bell" returns.

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just off the session lows. down 430 on the dow. percentage terms, 1.75%. s&p just shy of 2% the annual world economic forum kicking off in davos, switzerland. our own sara eisen sitting down with jeff ubben. here's what he had to say about the state of the financials. >> it seems like at the end of the year because of yield curve would invert the computers were talking to computers and the active investors kind of ran out of money and they just -- there was some sort of sell financials at any price so you have a situation where you have companies almost utilitarian in nature with so much regulation and actually they're low risk entities and they're pretty fortified against a lot of macro risk.

>> it wasn't foreshadowing a global recession or crisis >> very nonfundamental price and now you have this idea that they're really overcapitalized trading at six times so there's tremendous value to create just by, you know, getting your -- reinvesting in yourself at six times earnings. >> for the banks >> yeah. >> it is funny hearing you talk about it reminds me of investing in utilities which you have been doing. a little bit in this new sustainable spring fund. it's actually a monster up i think 50% or so in the last year. >> yeah. i mean, that's been fun. we moved to this kind of purpose driven business. you know, up to now it was kind of this idea of having a -- i think the vision of the company was safe, reliable and affordable energy and in roughly march of this year we changed our mission to impacting lives

through accelerating greener clean energy >> i mean, you have totally shiftedthe focus. >> clean energy few you are. there's lives, accelerate and future with the spring fund it is kind of being the problem, have your core competency collide with an environmental need. >> back to aes and the recent investments in the spring fund, are they more vulnerable for more safe in volatility like we experienced at the end of last year >> because you're in the problem and you're part of the fix, if you're proactively addressing the environmental and social needs, and in the long term you're making your product or service more affordable and more accessible and we are invested in for profit education and the spring fund. we are invested in oil burning

utilities. we are invested in petroleum based fiber manufacturers. these are all businesss that are in the problem but they have the technology to be part of the solution and this technology is cheaper than existing technology with time and with investment. >> i wonder if pg&e was a cautionary tale on that front. >> yeah. pg&e is the first company to go bankrupt from climate change it turns out. >> they did not change their model. >> that's a complicated situation. i mean, they were made -- insurance company of last resort by the laws of the state and the regulation so they were almost vexed. >> in general, what are your thoughts on the current market environment? everyone here is talking about the global growth slowdown the fact that u.s. growth may have peaked last year. how does that set us up for 2019 >> i just don't think that way

you know this whole idea that we're late cycle. i mean, it just plays to the idea that, you know, the markets are more of a video game than they are -- there's not a company behindmost stock prices it seems in terms of who's trading. >> active management is dead >> trying to kill it, for sure feels like last man standing to a certain extent and so, you know, you get these macro proclamations. we're late cycle and people trade etfs according to a macro thesis we're late cycle or, you know, there's some sort of information, macro information news flow that causes one computer to try to beat the other computer to the punch. ultimately the active -- there's a company behind the stock price and, you know, if we can drive long-term earnings and make the company more sustainable we'll do fine.

some guys aren't getting the other side sort to speak. >> jeff ubben talking to our own sara eisen in davos. interesting take on the general market at the end and in particular where he started on financials really pointed to the attractive valuations, six times earnings must be referring to goldman sachs. buy back the stock and create shareholder value. >> of course you see the financials part of that interview. >> i did. >> i seized on the comments of technology is coming, you know, to bear fruit in industries and sectors and sort of went to a discussion of pg&e and of course following every single day given the wild stock moves there and all the uncertainty around the bankruptcy and whatnot. >> absolutely. down significantly over six months, 81%. up 8% today. a brief flicker in the scale of the declines that they have seen. now back to today's markets, down 402 on the dows off the lows of the session.

more than 2 first nasdaq. coming up, larry kudlow to join us to discuss the latest trade discussions with china and have weighed on the market today as the u.s. canceled a meeting with chinese officials. and later, we'll head back out to davos for a first on cnbc interview with the ceo of adidas stick around the "closing bell" will be right back after this break. alerts -- wouldn't you like one from the market

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welcome back to the "closing bell." we have 35 minutes left of trade. let's send it uptown to bertha coombs at the nasdaq for a look in the biggest decline of the major indexes? >> and basically seeing here is all of the large cap tech sectors dragging things lower. although bio tech looking at that, decliners. the large cap tech with exposure to china baidu trading on large volume. the search engine in china jd e-commerce platform and others with exposure there if you look at the gainers today they're bucking the trend.

starbucks is higher despite the fact that it also has exposure to china and is looking for growth there el pollo loco seeing a high. but they're few and far between. >> thank you very much for that as we just mentioned 34 minutes left to trade. down pretty sharply. the dow improved down 390 points. coming up next, larry kudlow in a first on cnbc interview to discuss the latest trade headlines with china we'll ask larry what the administration's planning to do next. and it's a big afternoon for earnings with ibm, capital one, td ameritrade and more due out with results after the bell. full coverage and analysis and an interview with cfo of ibm as ons e mbhis t.

welcome back to the "closing bell." 31 minutes until the closing bell s&p 500 down 1.6%. every sector is in the red led lower by excuse me

discretionary, communication services and tech stocks right now. in terms of what's outperforming relative to the broader selloff it's safe haven utilities. time now for a news update with sue herera >> here's what's happening at this hour. house speaker nancy pelosi making a surprise visit to the world's central kitchen in washington, d.c. where furloughed workers have been getting free meals restaurantaur jose putting together the meals for people with government i.d.s. >> i'm here to thank the volunteers and to praise the federal workers for what they do and to praise him for being an angel, really, to feed the hungry los angeles mayor announcing a tentative deal to end a week long strike in the nation's second largest school district the teachers with a pay raise and a cap on class size.

it is expected to be approved and should be back in the classrooms tomorrow morning. soccer star ronaldo pleading guilty to a tax fraud and received a two-year suspended fine and accompanied by his lawyers and partner. you are up to date that's the news update this hour back downtown to you, will. >> not the first of the big european soccer players playing in spain at the time. >> that's right. >> slightly strength in numbers for the defense and all avoiding jail and paying big fines. >> big fines, absolutely. >> but that stems from being paid even more. >> a lot of money, yes. >> sue, thank you very much. >> you got it, wilf. now the major indices lower after the u.s. canceled this week's trade meeting with chinese officials with weak chinese economic growth and fears of a slowing global economy. down 1.6% on the nasdaq.

joining us is ken fisher to discuss more on the move ken, in particular to those stories, in fact, as i mentioned weighing on the market, do you think slowing global growth whether caused by trade or not is already priced into u.s. stocks >> i think so. it's hard to be certain about such things but the fact is that if you take, for example, today's imf forecast numbers, the downgrade in their estimate is .2% which is a change so small that it's much smaller than the likely margin of error around that and people right now are too prone to look at kind of a little things and extrapolate them into big things i think where we are is that we have climbed back up the very steepest part in response to what i have told you before was the v-shaped move off the bottom to the early december levels and now a more grinding pat enmoving forward as we move kind of back

up to the early october levels >> ken, how much do you think hinges on trade deals getting struck this year between the u.s. and china, what happens with brexit? some of the other deals that are being worked out right now how key is that to how investors should be positioned for 2019? >> i've said for a long time that the biggest point about brexit is to finally get clarity and what i hope happens is that we finally do. relative to the other ones, they're actually smaller and i have said this for a long time if you actually look at them as a percent of global gdp regardless of their outcome then people want to talk about and therefore while they have a positive and or negative outcome it's less than what people want to extrapolate we have been in all of last year making mountains out of mole hills kind of a view and this is the year i think where we

reverse that slowly over time. >> ken, what do you make of the earnings season here in the u.s. so far i guess it's differentiation from individual companies and in a way that we haven't seen so clearly for the last few quarter, the same sort of trends sinking all boats. is it a stock picker's market once again >> clearly the beginning of the year is not a stock picker's market i think it gets to be more so as the year progresses but the most important differentiation tied to the earnings and earnings announcements is the tendency to talk down for future estimates for future earnings so that managements can exceed them. we play this game off and on regularly where earnings and aggregate stronger than expectations and then management talks them down to make it easier to beat them in the next cycle and that we will be doing and that will contribute i think

to that jagged seesaw pattern for the next few months of stocks moving up with downward wriggles and likewise right here, right now i think davos and the next couple of days will contribute to that as folks at davos in a kind of corporate bureaucratic mode talk things down which is what they normally do at davos. >> ken fisher, great to get your thoughts thank you for joining us. >> thanks for having me. we have 25 minutes left of trade. we are down 430 on the dow so it's been below 400 most of the final hour of trade. that means around 2% declines for the s&p ian 2.4% for the nasdaq coming up, director larry kudlow to join us first to discuss today's market moving headline as trade talks with china stall. who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market!

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welcome back to the "closing bell." the market selloff accelerated on the news of cancelling a trade meeting with china this week larry, great to see you. thank you for joining us. >> thank you, wilfred. appreciate it. >> so let's start with that market moving story, larry

our own colleague kayla reporting that the u.s. canceled an offer from the chinese to meet with two of their trade party because there's not been enough progress. is that true what was the factor behind the cancelation of the meeting >> with respect, the story is not true right at the top wilfred, the story is not true. >> there was never a planned meeting that was canceled. >> that is correct there was never a planned meeting. look the big meeting, everyone's moving towards, will be vice premier he's coming at the end of the month as i think everybody knows. that will be a very important meeting, a principle's meeting and everyone was looking towards that there were no other intermediate meetings scheduled look we are in constant communication with the chinese officials okay that's part of our negotiations. i don't know where people got this idea. i'm here to deny it.

you know let's have more reporting, fewer novels, please okay the story is unchanged we are moving towards negotiations these will be as i've said before the broadest and deepest scope of negotiations with china in history okay president trump as you know has pressed the case hard, all right? we have unfair trading practices. we have ip theft issues. we have got structural technology issues. ownership issues as well as tariff and nontariff barrier type issues. president trump pressed this case and is working with president xi there is good chemistry between them i saw it in argentina and so forth and so on. the meetings held in beijing at the deputy's level covered all the ground, absolutely all the ground and as i said, also, vice premier he is coming here with the top deputies and will

engage that's the story there's no cancelations. none zero let me just try to put it to rest. >> okay. larry, well, listen. we hear that loud and clear. the issue of ip, you mentioned it yourself and forced technology transfer and seen as the most tricky and difficult issue to get sorted. is there much progress there or still a long way off >> well, look. there is an fulsum discussion. the scope of the things is deeper and broader than anything we have had before so the discussion is there the discussion points are there. i acknowledge the degree of difficulty but it is a crucial point. for the united states side look president trump has said, he's been rather optimistic about the china trade talks but they have to be in america's interests and in order to achieve that goal, we have got to deal with these vexing problemsof ip

theft and the forced transfer of technology the lack of american ownership of its own companies in china, cyber interference with various corporations along with various tariff and nontariff barriers. so, we are looking at this in great detail as i said, this is the -- you know, the deepest we have ever gone i'm not here to predict. that's up to president trump and what he can accept and not accept i'm just saying it's all on the table and we will see how it comes out, particularly the meetings at the end of the month which i think are going to be very, very important myself. i think that's going to be determinetive of the future and what progress we make. >> larry, this is morgan investors will be listening to what you have to say right now we have the dow -- >> morgan? >> yep go ahead >> morgan, let me -- i don't

mean to -- there's a little bit of a lag here and want to add an important point regarding the talks. enforcement is absolutely crucial to the success of these talks. enforcement. ambassador bob lighthizer our lead trade noeshnegotiator saids we want deadlines and timetables and full coverage of the various structural issues we just discussed so please put that in your quiver of issues. enforcement is vital will it be solved at the end of the month? i don't know i wouldn't dare predict and want to make sure people understand how important that is to put it on the table. >> i'm glad you brought up enforcement because that's a key issue not just for this administration but previous

administrations, as well, this tried to handle the issues and really arguably failed how do you enforce what is the methodology and how would you like to see that played out in a trade deal >> well, i'm not going do get into details you know, these are very complex issues they're also historical issues as you suggest so let me stay away from the details but, you know, i'm an ex-ronald reagan guy i was here in the reagan administration many, many years ago. he coined a phrase trust but verify that's going to apply in the china trade talks. and i'll leave it up to mr. lighthizer and his team and others to walk through the details of this. but enforcement has to be worked out. again, i think part of that story is going to be deadlines, right? that's very important. and nothing is open ended forever so we'll wait and see. it is not my job to negotiate here or elsewhere for that

matter but to put it on the table how important it is to us. it has to be -- end of the day, every time i talk to the president it has to be in america's interests. it has to be in the interest of american workers and farmers and ranchers and small business people and our entire economy. unfair trading practices have to come to an end reciprocity has to take over these are difficult issues but they can be solved and they must be solved to have a good trade deal >> and, larry, are you and the president feeling a little less lenient towards china given the rally we have seen in equity markets since christmas eve? does that give you more cover to push harder on those key tricky issues you have just mentioned >> oh, i don't like that phrase, wilfred. you're my buddy but i don't like that phrase. less lenient i don't know what that means these are crucially important issues for our economy

i presume for the chinese economy, also. listen let me say this. these are pro growth issues. one thing i want to get in here, two years at the two-year mark of the trump administration, our economy is growing at a 3% plus rate we just had new news, industrial production business equipment spending and so forth last friday retail sales strong. holiday spending strong. we can go through as much as of that as you want but my point is this we argued that lower tax rates, we argued that rolling back onerous regulations, we argued this opening up the energy sector, we argued a number of these reforms, pro growth and would generate much faster economic activity than we have seen in i don't know how many years. maybe a couple of decades to be honest with you. excludeing the first quarter 2017 which is president obama's last quarter, we're basically grown at 3% plus at an annual

rate for 7 quarters and i'm proud of that achievement. and along the way we have had record increases in blue collar employment and blue collar by the way their wages are rising faster than the white collars. high higher but faster that's very important. unemployment rate is down. all the different demographic groups showing the lowest unemployment in years. we are proud of that and in my judgment although we will have a glitch with respect to the temporary shutdown, the economy is very strong the private sector is very strong and i know there's a lot of pessimism out there. i do not share that pessimism. >> let's talk about the shutdown for a minute the partial shutdown we are in unchartered territory with this going on for a month now. steve liesman last week reported that the administration had doubled the estimate of the economic impact looking at contractors and the ripple effects. how are you thinking about that as this continues on in record

territory right now? could that economic impact get worse? >> well, look. all i'll say is this it's a shutdown issue. it's a temporary issue okay and whatever we may lose, whatever we may lose in the first quarter, by the way, the first quarter's always a problem because of bad seasonals but i acknowledge, i acknowledge that we'll lose some in the accounting of gross domestic product. okay i do not acknowledge that the fundamental economy will be adversely affected, as well. this is temp tori stuff and when the shutdown comes to an end and the negotiations are completed for the administration and others, we will get it all back. my own view, some may disagree but i'm strong on this we'll see a snapback right away. we've been through this before i acknowledge it's longer than sometimes in the past. i lived through these in the

reagan years and the '90s. there will be virtually an immediate snapback that is my judgment, morgan. >> larry, whatever the cause of the change in tone was is the president pleased to see the fed softening up its stance and rhetoric toward rate hikes in the year ahead >> well, i think there's a coming together here where the latest fed statements regarding patience, i like that word patience, i don't want to have to define it too closely the fed is an independent agency we are not trying to break any walls down the president had his point of view a lot of people, myself included think the president's point of view was absolutely correct. what you've got here again from low tax rates and a big regulatory rollback, you have got a supply side growth going on in the economy. we are producing more goods and services, factories and manufacturing and so forth that is not inflationary

more people working is not inflationary producing more business investment and increasing our nation's capital stock, probably the best rates in 20 years couldn't possibly be inflationary so, therefore, the president has point of view there's no inflation but strong growth. i think is correct that's just my personal opinion. now, again, the fed is independent. i understand that. nobody's breaking the walls down that's never been the purpose but it sounds to me like the federal reserve has come around, more closely to that view and i want to commend in particular not only the fed chairman jay powell and fed vice chairman clarata with speeches on this subject. more people working, more fact rils being built, better trade deals to protect americans like the u.s.m.c.a. is not

inflationary and the data points show the inflation rate if anything is coming down lower in the last, what four, six, seven quarters so the fed is the fed we'll see where they go. i like the word patience. >> larry, great to see you thank you very much for joining us. >> thank you appreciate it very much. >> larry kudlow there. we should mention the market did bounce off the comment from larry that there have been no cancelation of trade talks with china making the point there was never a physical meeting scheduled for this week that was ever existed to be canceled. the dow down 386 points at the moment we have a jump little bit pullbacks and down 1.5% off the session lows we have the details on ubs when "closing bell" returns ♪ slap on some cologne ♪ i'm 85 and i wanna go home ♪ ♪ just got a job

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that was down 13%. a lot of the u.s. banks were flat on equity trading and even though they had a tough fixed income trading and wealth management, a driver of the business $3.6 billion of outflows wealth management was tough here in the states. banks where we didn't see outflows of that size and the main point to make sheer is coming into u.s. banks earnings everyone said it's cheap expectations are low that's the only reason why they're able to beat expectations last week the point with ubs and others last week is expectations were even lower and failing to beat that expectation so far and it. >> heights that difficult environment that european banks have more so than u.s. ubs down over 30% over 12 months and it just goes back to that story, the u.s. macro position much better than european and i think we'll see that as europe continues to report the numbers. >> yaurpian slowdown playing a

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welcome back to the "closing bell." 90 seconds left to trade start with the nasdaq 500. below the day more than -- larry kudlow gave the markets sot reprieve saying no cancelation of meetings with china and softened again into the close. off the session lows but not far off and as you can see a pretty steady decline throughout today. the nasdaq down the most about 2% the dow seeing that as well down less 1.5% 360 points on the dow. the low of the session 460 sectors for you, trade related the industrials are bottom i think my mike's not working. the industrials bottom also tech sectors suffering and one sector positive utilities flirting with gains, bob, approaching the gain. >> mine's fine here's the important thing i'm a little concerned by the commentary from halliburton and stanley black & decker

it's been good recently. today was a first day it was a little off and other macro issues involved. tomorrow watch united technology that will be a big bellweather >> goes there the bell the s&p down only 1.4% having been down 2% about 20 minutes ago. the dow's down 290 getting a bit of a jump, as well that does it for the first hour of the "closing bell." morgan, back to you. well, thank you, welcome to the "closing bell. i'm morgan brennan wilfred frost will join me and mike santoli here and here's how we're finishing the day on wall street it was another volatile session. we finished lower and off the lows of the day with the dow down 1.2%, down 298 points

the s&p 500 finishing 2633 or down 1.4%. the nasdaq composite down 1.9% and the russell 2000 also ending the day down 1.7%. ten of 11 s&p sectors fin ibed lower. utilities was the outperformer, concerns around u.s. china trade talks and heard larry kudlow bat down the driving forcing for the markets. we have stocks selling off as i mentioned on the concerns around u.s. china trade talks and top leaders warning about the markets and earnings on deck ibm, td ameritrade due out any moment we'll bring you those numbers as we get them. joining us to talk about the market day, charlie from ariel investments. how would you characterize the trading today? >> obviously a pretty sharp,

little pullback when people expected one i think coming into this week, the market was a little bit overstretched and almost everybody would acknowledge that so right now, i don't think this pullback really extended beyond what would be considered a relatively routine pullback but it also is a reminder that the market hasn't really gotten escape velocity off the december lows and caught in this -- in the gravitational pull of the things we were worried about in december and steeper than expected growth. people guiding down and all that stuff in the mix i wouldn't necessarily think this urks you kn this, you know, after going up 13% in 3 weeks, you don't raise any alarms but a reminder that this market was not really healed it is really just a very, very strong rebound. >> trade fears with china, of course, a big factor for today's decline in markets i asked director larry kudlow

about reports the white house cancel add trade meeting that china that supposedly due for this week. this is what he had to say. >> with respect the story is not true right at the top, wilfred. the story is not true. there was never any meeting. okay the story is unchanged we are moving towards negotiations these will be as i've said before, the broadest and deepest scope of negotiations with china in history >> mike, as you were saying, a lot of factors at play in today's market and this is one of them and the market did catch a bit of a bid off the back of those comments. >> i did i have to say, you know, hard to see why, frankly we have had a lot of this back and forth before was there a meeting? not a meeting? denying no net progress. whatever was to me the only real takeaway from what larry said is the fact that larry came on showing that the white house

remains intent on making sure that the market likes whatever comes out of the u.s./china negotiations not about the details of a meeting or was one or was not one. the white house being so intently focused on the incremental move in the dow to get something done to me, the only reason the market would have bounced on this. >> charlie, what do you think? i mean, first we saw the market take a leg lower on those u.s./china trade headlines and then kudlow came on and pared the reactions. overreaction here? >> yeah. i would say the market was more down on the lousy earnings this morning. for the first time we had some industrial companies come out with some numbers pretty disappointing. i own stanley black & decker and what they had to say was not pleasant we were off for that and then the chinanus sent us down another couple hundred china is one thing, face it, we the it's noise, short-term worries of short-term problems

trade wars and a breakdown in global trade is not a small issue. that is a big issue. so if we can get that behind us, an agreement that improves intellectual property rights in china, that's a big positive. >> mike, clearly there's focus on earnings last week and little bit today and more to come in the week ahead what is your overall takeaway from what we have seen so far? >> cautious. i think expectations were low enough in the pockets of the market to accommodate just okay numbers being fine for the way the indexes trade and now i think with the globally exposed industrials trying to say, well, the rest of the year we don't have a lot of visibility and don't want to extrapolate too much but it does seem as if there's going to be i think a lot of these cross winds that the market's going to have to deal with in other words, what's priced in and not priced in and after a run like we have had in the

market, i do think it raised the bar just a little bit for some of these stocks. >> charlie, do you think we could see a earnings recession this year? >> i am so glad you asked that because i think the answer is no the market is acting like we could have an earnings recession and there's been talk. i love your network but there's been a lot of talk of flat s&p earnings in 2019 we do not think that's going to happen we think we will get mid to high single digit earnings growth this year. people bought back a lot of stock last year. so to get flat earnings or down earnings you would have to get a real decline in operating earnings and will have growth and the market factoring in flat earnings. >> top business leaders gathered in davos and some are sounding the alarm on what could be ahead for markets. >> there's a high likelihood of a significant slowing in 2020. >> the u.s. economy's slowing

from where it was. i don't see, you know, any recession. i don't know where that came from the last two months of the year. >> the peak happens typically about four to six months before the recession starts so i would say that, you knowenings sometime in the latter half of 2020 and from here we probably have upside for the time being. >> mike, i guess the encouraging thing is those sound bites aren't new the market heard them and perhaps priced them in. >> yeah. that's the way i would read it we have been marinating in this slowdown talk for months right now. i don't necessarily think that the imf trimming the estimate of 2019 and having people voice concerns is necessarily fresh information. doesn't make the issue go away and change how it pressures what we think earnings can do in the later part of the year and you are right. if you look at the bond market, it is not coming as a surprise to anybody that we are in a very modest kind of growth set-up right now where you have the

ten-year trayed at 270. >> charlie, what would happen with not just a trade deal of the u.s. and china but u.s. and europe and the other deals that are getting worked out this year, as well? >> yeah. that would be really spectacular. i would be cautious because i think at this point the market having seen progress on nafta is probably expecting some kind of trade deal with china. so i think the architect is already factoring in reasonably good news on trade and that's why the possibility of bad news with canceled meetings and all had a negative reaction today. >> mike, in terms of what to expect going ahead this week in earnings and companies, ibm is one of them, big factor for the banks last week. >> a huge factor i don't know if there's a strong theme we all hinge on at moment except the general tone and the way the market reacts to them because honestly that's the only way to know when's priced in to be honest is to see the stocks

react afterward. >> last week big drivers for the banks. we'll have a tell now. ibm numbers are out. hey, dee. >> that's right. we have ibm beating on revenue and eps. $21.76 billion eps of $4.87 versus $4.82. so that's a five-cent beat i want to focus on cognitive solutions. that coming in above expectations, as well. $5.5 billion for that business unit also mention of 2019 eps guidance above what the street was expecting. $13.90 that's about nine cents ahead of where it finished in 2018. the stock is popping about 4% but i really want to note though that ibm's revenue rebound is not lasting. first half of 2018, it did start

to grow revenue again. this quarter and last quarter revenue is shrinking again and continuing to digest these results and look through the numbe numbers br numbers and bring you more as we get it. >> the revenue and eps for the quarter and guidance for the year ahead on eps all just slightly ahead of expectations and what we are seeing in the share price move up 5% we'll be talking to the ibm cfo jim kavanaugh coming up. before that, lisa ellis for reaction to those numbers. lisa, thank you for joining us what is your take on this? >> the quarter looks okay. five-cent beat on eps as you heard. the revenue number is solid. maybe the surprise positive is cognitive solutions back up 2% that was the number thaches really weak last quarter but maybe where the numbers look like they came in light their

cloud revenues only up 12% in the quarter and their strategic imperativ imperatives growth business up nine i think closer to 20% and light numbers. >> the fact of light numbers is a big focus for investors as this company tries to turn itself around. how important is it that this company hasn't necessarily hit that 50% threshold in terms of those high margin businesses as half of sales? >> yeah. important. important. because that's exactly the crux, the question is are they going to be able to pivot when they hit that number or is it more a question of it's like an overall customer budget and so -- if that number never grows, if the total pie just always goes down a little bit, you can shuffle from one bucket to another bucket the question is whether the whole thing can grow and so far we haven't seen that. >> mike, what about valuation for ibm? >> it looks cheap. it's priced for little overall

growth and been the story for quite a while. and it has been a little bit of a value trap i think and i don't think these numbers will necessarily change that story for the positive or the negative but i do think it's incrementally probably better than feared and the stock is up to where it was trading in late october let's say right now. >> lisa, what is your take on this 5% move to the upside and the long-term price target >> that's -- yeah. so we're right around -- sell rated on ibm and around the price target right now and that's not a surprise move with the headline beat on both revenue and eps and with 2019 guidance looking a little bit better than the street. >> charlie, what is your take on ibm? >> yeah. unfortunately, i'm a reformed ibm shareholder. i own id it 2005 to 2012 and the numbers are right at 2013 earnings they have literally had no growth in this business in five

years. they made a bad mistake of selling off some slower growth businesses at diluted prices and not able to replace the earnings power and haven't done a good job of maintaining the portfolio. >> well, they have, of course, bought red hat and something we'll discuss with the cfo coming up exclusively here on cnbc lisa, thank you for joining us. >> thank you. td ameritrade earnings are out, as well >> a nice beat on earnings 1.11 ex-items. analysts looking to see where whether the recent volatility is helping. revenue beat expectations and first quarter average climbs up 20% over year over year saying there's a strong start to 2019 mentioning an uptick in mobile trade and the stock up 3.5% here in after hours

up about 10% so far this year, as well. wilfred and morgan >> thank you mike, what do you think of these results? >> they were able to capitalize on the customer volumes of the environment back in the fourth quarter. i would like to see net new client assets and a big question you have how fast those assets are turning over so it seems like a net basis it was a bit of a beat and, you know, probably some reassurance. the stocks whipped around not just on how the overall market has done and earlier last year on the jououtlook of fed tightening. >> tomorrow on the show talking with td ameritrade ceo tim hockey here first on cnbc. meantime, though, charlie, what do you think of td ameritrade? it's incredible volatility it seems like that's benefited their business in terms of earnings and what we are seeing in the numbers so far what are the other key things to keep an eye on here?

>> i think mike hit it on the last point which is interest rates have a big impact on this business they own -- they have huge customer cash balances they don't tend to pay the customers as much in interest rates and they can do very well. that's sort of a hidden business model with schwab and these people and when interest rates came down late last year that put some pressure on expectations here and so i think that's the hidden factor that's going to affect profitability next year. >> net new client assets for the quarter 32 billion above expectations of about 25 so that's probably also helping the stock. >> all right we have shares up about 2.5% after hours right now. charlie, thank you for joining us today and breaking the market action down. coming up, is the market grappling with uncertain fundamentals mike will explain next. plus, ibm earnings out and the company's cfo jim kavanaugh

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this bounce back means for stock valuations mike >> yes, morgan particularly relative to treasury yields. this is the equity risk premium. a measure of equity risk the earnings yield of stocks compared to the treasury yield the 10-year treasury yield when this is high, stocks are relatively compared to treasuries and you see back here this was around the early 2016 lows stocks did look cheap and performed very well from these levels when were they expensive last year. obviously stocks did struggle to get returns from there there's no particular magic to the absolute number. it changes over time as a matter of fact, this reading would not have looked expensive in the '90s. we spiked up for just a moment to what seems like a very cheap level of relative valuations for stocks to favor buying stocks over bonds and come right back

down to neutral and morgan stanley strategists saying this is not an edge to say priced in good news or a valuation cushion underneath of equities but it's worth watching because you really don't have too many measures of exactly how the asset allocation decisions might be driven by relative valuation. >> what is a better long-term indicator of value for equity markets? pure and simple pe valuation >> a pure pe valuation over very long periods of time like ten years is fine. works very well. the starting valuation determinin determines your 10-year time line when it's in a certain range, this looks cheaper and actually a cheap levels in 2012, 2013 and the earlier part of this bull

market. >> okay. great stuff. thank you very much. we have a news alert on the shutdown >> wilfred, the senate will be taking two key votes on thursday on the shutdown. one will be on president trump's plan to reopen the government, fund $5.7 billion for a border barrier system and also include some protections for undocumented immigrants. if that proposal fails in the senate, it would need 60 votes to pass, the senate will take up a plan from democrats to reopen the government at current funding levels through february 8th. that would also need 60 votes to pass now, the republican plan was likely not getting the votes from democrats that it needs to move forward the democratic plan to open the government through february 8th, that is an open question senate republicans supported this in the past the democrats want do see if they'll do so again and unclear if that will be the path out of this government shutdown that is

now lasted over a month. but clearly, two very contentious votes now coming the senate floor on thursday, wilfred. >> very quickly, the general consensus is not expected the pass is that right? >> i think for the republican proposal that's definitely right. for the democratic proposal probably not and the dynamics are different and they know that it's something president trump would not support. >> kay thank you very much for that insight. when we come back here, we'll get reaction to ibm's numbers. the cfo will be joining us at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside...

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welcome back ibm shares popping after hours up some 5% the company reported a beat on the top and bottom lines and issuing guidance for 2019 that was above estimates. jim kavanaugh, the cfo at ibm, joins us thank you for joining us >> thank you for having me, wilfred. >> jim, let's dive into this quarter first of all rev nigh slightly beating estimates. talk us through why that was possible but on the headline it's a year on year decline in revenue. >> yeah. well, let me put it in perspective first of all because i think we had a solid fourth quarter that really capped off a very important year for the ibm company. we started the year and we said that we were going to grow revenue and stabilize margins

and we were going to actually grow earnings per share and operating profit and we executed within the year. we grew revenue. we grew operating pretax profit and we grew operating earnings per share and the first time in over six years so it is a very essential inflection point for the ibm company. and within that in the fourth quarter you see how it played out where we grew pretax operating profit 50 basis points and actually expanded for the first time in over three years our gross profit margin. that is enabled us to deliver strong free cash flow and very important to us now as we continue to invest in our business and return value to shareholders and now to your specific point of fourth quarter, we still see significant, strong demand in key emerging high value segments of the i.t. industry that is around data and ai,

hybrid cloud, that's around security and that's around digital. and if you take a look at that book of business, that book of business we exited the year at roughly $40 billion worth of revenue. growing 9% and i was listening to the discussion with you and morgan that is now consistently over 50% of ibm's revenue and when you get underneath it, our fourth quarter we saw strong execution in software. we returned our cognitive solutions and our total software business back to growth. and it was pervasive, wilfred. pervasive across our portfolio and we continued to accelerate our services base of business led by strong growth in gbs capitalizing on digital cognitive and cloud and in our gts book of business we actually had the strongest signings

quarter that we have had in well over many years. growing 21% and we had 16 deals over $100 million and you saw some of those play out most recently today with bmparibas and we are very pleased. we think we're exiting the year on strength and that gives us confidence to go out with a guidance of at least $13.90 for next year. >> yeah. certainly, investors are very, you know, happy to see this right now looking at shares up nearly 6% in fact after hours trading. in terms of strategic imperatives, jim, and specifically the cloud business, revenue came in lighter than expected why was that >> well, if you take a look at our cloud business, let's look at that. our cloud business on a full

year is $19.2 billion up 12% to be exact and when you look at our cloud in the quarter, our cloud actually accelerated when you take into account the product cycle of our very successful in fact, most successful mainframe cycle that we have had in quite sometime. we came off of a mainframe cycle in fourth quarter 2017 we grew 71%. and that mainframe cycle is continued to accelerate throughout '18 and now wrapped on that product cycle dynamic which, by the way, was expected. when we started the year, we talked about how we needed to continue to accelerate our software and service base of business to overcome the second half of '18 expected product mix but when you look at our cloud to your question our cloud accelerated across all of our segments from third quarter to fourth quarter and without

mainframe up 19% overall and we see that continuing as we move into 2019. >> jim, i wanted to ask about the red hat acquisition. $35 billion back in october. what was the main driver for that was it changing market conditions was it an acquisition of a position of strength or a position of weakness in what was the main thought process and how's it going, the integration? >> okay. yeah we are very excited about the acquisition of ibm and red hat coming together to really accelerate the leadership position in hybrid cloud we had a lot of work to do within ibm over the last few years through our transformation and we talked about where we're at with the strategic imperatives consistently over 50%. but we are at a point in time right now where we've built out our ibm cloud architectural, our data centers around the world,

invested significantly in capital expenditures we came out with a whole new set of offerings around ibm cloud private, around cloud migration services, cloud application services and we think right now the position ibm is in and more importantly the position our clients are in and what they're telling us about moving through the first phase of cloud which really was dominated based on pure public and economics to now the second phase of cloud is going to be really around the tough work it's going to be around shifting workloads, mission critical workloads on real business value and looking at the second phase we think that's about 80-plus percent of the workloads ahead of us. why is it so important with the power of ibm and red hat one, we have been investing to continue to transform our business and two, when you look at red

hat for the first time ever linux surpassed microsoft in operating systems on the onprem and in the cloud and we believe with the combination of all of us we own the starting point and we now own the destination point. and we are very excited and we're working through the regulatory approval process and we expect that to close in the second half of 2019. >> got it. we're in the fifth week of the partial government shutdown, jim, as well ibm has a number of contracts with the federal government. how's it impacting you >> well, obviously, we have been monitoring the macro economic environment, not only the united states in the shutdown, but also, trade and uk brexit amongst others and i would tell you, first of all, it has diminutive impact. but more importantly, when we look at 2019, yeah, there's a lot of volatility in the market

and truly as a cfo what we want is we want certainty and looking at the overall market for i.t. the market for i.t. has always been about a balance of leveraging technology for both productivity and for growth. and during different economic cycles, that balance might shift over time but, you know, the integrated value proposition of hardware, software and business models capabilities we bring together we feel we're well positioned to capitalize it and moving forward and embedded in the 2019 guidance. >> jim, thank you for joining us jim kavanaugh, ibm cfo. reports of the kacancelatio of trade talks with china today tanked the market but larry kudlow appeared here less than an hour ago and challenged the

reports. >> with respect, the story is not true right at the top, wilfred. the story is not true. there was never any meeting. okay the story is unchanged we are moving towards negotiations these will be as i've said before, the broadest and deepest scope of negotiations with china in history >> for more, let's bring in kayla tasusche in washington. >> i think it's safe to there's semantics of the talks between the u.s. and china larry kudlow did deny an official meeting planned with the two vice ministerins from china that the u.s. had chosen to call off according to our sources but safe to say that whatever official announcement that you normally get about these types of meetings that's the tip of the iceberg and the preparation behind the backgrounds of the officials from departments, lawmakers,

stakeholders, that's the rest of the iceberg and involved in and in the know of these meetings that were potentially going to take place this week that we have reported are now not going to take place. two important thing that is larry said he said that the focus is still on the meeting with vice premier he that will as larry said take place later this month and going to be crucial to see how these talks will proceed but he also acknowledged the other facet of our reporting. the reason that meeting was pulled from the schedule or otherwise canceled is because the u.s. wanted to see more movement from china on some of the thorniest issues on trade, intellectual property theft, forced technology transfer and any sort of enforcement mechanism, what happens? how do they bring china to account on that? that is still on the table, still trying to be worked out. larry acknowledged there's difficulty inherent in the talks and he said that he is not a

pessimist about them but he did acknowledge that's the case. >> and overall, as well, the topic of enforcement i guess you throw into that list of thorniest issues, kayla. but the theme and the tone upbeat to be on track and clearly a sign that this administration does care when the market starts selling off based on negative headlines around trade. >> it does and it should also be noted, wilfred, we began reporting this story first thing in the morning. during that time, during a course of several hours, u.s. trade representative, the treasury department and the white house did not deny this story that we brought to them and that we were reporting it was only just before market close that larry kudlow appeared on cnbc and refuted an official meeting that was on the books that had been canceled so that is an important detail here, as well. we know that the administration is watching the impact of these talks on the market. and on business. very closely and so, certainly perhaps

today's selloff might have played a role in that, too >> kayla, thank you. it's a been busy day and appreciate all of your reporting. thank you. still ahead, sara eisen in davos with the ceo of adidas discussing where hse te eshe biggest risk in the global economy. stay tuned how do you gauge the greatness of an suv? is it to carry cargo... or to carry on a legacy? its show of strength...

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welcome back time for a cnbc news update with sue herera. >> hello here's what's happening that the hour. as we have been reporting the senate will vote thursday on two separate bills on the partial government shutdown. one backed by president trump which includes $5.7 billion for his border wall. and another that would extend funding for shuttered agencies through february 8th senate majority leader mcconnell had this to say. >> the opportunity to end this is staring us right in the face. that's why we'll vote on this legislation on the senate floor this week. all that needs to happen is for the democratic friends that agree it's time to put the country ahead of politics. the kansas city chiefs fired defensive coordinator bob sutton

following the team's loss to the patriots in the afc championship sources tell espn that former new york jet head coach rex ryan could be a possible replacement. and a new orleans car dealership bought two billboards on busy interstate 85 in atlanta saying the saints got robbed and nfl blew it. they're upset about the missed call that cost them a chance in the super bowl in atlanta. you are up to date that's the news update, guys back downtown to you. >> sue, great stuff. thank you very much. >> that was a tough piece of tv and riveting sue back in hq, thank you. up next, we'll head back out to davos for a big interview with sara. >> coming up from davos, switzerland, ceo of adidas with a ewvi into did global consumer and where he sees the most risk when "closing bell" returns.

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welcome back welcome back to "closing bell. i'm sara eisen at davos, switzerland. joining me is kasper rorsted of adidas welcome. >> great to be here. >> what is your level of optimism heading into 2019. >> i think i'm more optimistic

than most. i see a sound economy in china and the u.s. somewhat more sluggish in europe but we expect '19 will be a good year for our company. >> imf downgrades the global forecast this year and takes down a number of european companies. what are you seeing from the consumer >> we saw a slowdown in the consumer last year and a potential of a brexit because it's very often discussed as an isolated event but it will have an overall impact of the european economy europe is about 30% of our business but we're getting most or entirely all of the growth outside grurp so for us as a company it's less real haven't. >> you mentioned china as actually a bright spot so when tim cook of apple cuts guidance for revenue and warns about the impact of the u.s./china trade war on the chinese economy, what were you thinking? >> i was thinking he is in the different business than we are we are selling sneakers and t-shirts and 2018 was very, very good for us in china.

we expect very strong '19. we have not seen that. i can't speak for his business but we continue to see an uptick of our products in china and also our expectation. >> no impact >> very little it was not like came into q4 and can't speak about and didn't see anything that makes us worried at this stage. we believe that china's still for us represents a huge opportunity. >> what about the u.s. are you seeing any impact of the government shutdown of consumer confidence in spending >> that i can't comment on but say that christmas was very good and we don't believe that our numbers in the u.s. will be impacted by the shutdown. >> christmas spend mixed picture. department stores didn't give anything to be excited about. >> ours was very much according to plan. >> very good last time here in davos last year you actually were part of a group to meet with president trump. he is not here but if he was what would you tell him? >> i would say open trade is good and we told him last year

that super important that u.s. and europe have a strong relationship and we are long-term concerned about the development between the u.s. and china that's probably the three sentences i would say. >> in other words, no more tariffs? >> we don't believe that tariffs is good for world trade. for our econoindustry it's no i but eventually it will buy less sneakers from us and we don't subscribe to tariffs we don't think it's a good thing for the global economy and we as a company, adidas brand, profited tremendously from the globalization of ten years the explosion of growth in asia, the middle east, latin america, a cornerstone of the growth of the company. >> you are not a fan of brexit and warned a mistake we're heading toward a march 29th deadline without a deal in place. how does a company like yours prepare for a no-deal brex it? >> we continue to repeat if you look financially this is

not a wise decision. neither for the uk or europe irrespective of whether the vote is done two years ago and whether it takes longer to find a resolution the best thing is a revote on the brexit it is weakening the economy and the english economy and very, very bad decision and will have very severe consequences in the long term. >> your sense is a second referendum would produce different results. >> that's pretty much what the polls indicate and i hope it takes place. emotionally i would like to have it i don't believe it will happen but i encourage any politician in europe and uk to have a revote. >> you're here talking, plastics is very hot issue at davos this year and you have been talking about the success of the plastic shoes. >> we migrated a number of products to what we call plastic or made of ocean plastic three years ago. last year we sold 5 million pairs of shoes made of ocean plastic, 55 million plastic

bottles. this year we sell approximately 11 million, 120 million plastic bottles removed from the ocean it is ahuge environmental issu and we believe that we are in the unique position to pak plastic, make products, whether it's shoes, t-shirts, bathing suits and that is a push to make and resonate with consumers all over the world because plastic is a global industry. >> finally, how is arsenal and the partnership? >> so arsenal partnership was starting in the summer they beat chelsea 2-0 over the weekend. >> my husband was not happy. >> man u is back on a track. we're happy with the bigger football clubs man united or arsenal. they need to play and be better off with better products. >> thank you very much. >> thank you very much. >> back to you guys. >> i'm pleased sara asked about arsenal and sent a long list of

more specific questions. >> was it the correct answer that he gave >> generic answer. he remains pretty upbeat and listed the concerns out there and not out there so it's not le he's unaware of any of them, but including on the chinese consumers. it depends what kind of product you've got. >> clearly benefitting from the fact that the category in general is doing so well everywhere in the world. if you look at adidas stock relative to nike, it's lagged but it's been the same trajectory vastly outperforming the rest of the german and european market so it seems as if it's the right place, right time with the product as opposed to anything else going on brandwise. >> a new concerns about the european economy that he did point to. >> i still wanting to know wha plastic t-shirts, feel like, look like. >> you know, ken langone handled

some out >> did you put it on was it comfortable >> yeah. it's like a nylon. it's nothing crazy. >> we'll have to try them out, along with the self-tying shoes we did last week. now, executives behind bars. we'll finding what's ahead for carlos gohn. and coming up on "fast money" stocks llg dafaintoy but rebecca patterson says the u.s. market is still your best bet. she'll explain the future of technology investing

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huawei's cfo and phil lebeau has more on denied bail conditions. >> canada's ambassador to the u.s. has already met with senior white house and state department officials about the case and the u.s. will be filing a formal extradition request. now, the u.s. has until next wednesday to do so that's 60 days after he was arrest on december 1st and that could shift the pressure to the u.s./china relationship. so far canada has paid the price in terms of blowback since her arrest, china has detained two canadian citizens an given the death sentence to one found guilty of drug smuggling. >> canada is a country that abides by the rule of law. and when you have an extradition treaty with a partner, you honor it that's exactly what happened and there will be due process. there was no political interference in that decision.

our judiciary is independent that's the signal that we're sending to the world and much of the world agrees. >> huawei and chinese officials have been careful not to threaten the united states for its role and requesting the arrest in the first place but that could change soon today in beijing china's foreign ministry spokeswoman said beijing would take action against the u.s. if washington goes ahead with its demand that could inject more uncertainty in negotiations. let's get over to phil lebeau. >> earlier today at a courtroom in tokyo, carlos ghosn's latest appeal for bail was denied this means that he remains in detention in a japanese jail and his trial is not expected to start for several months while he's in jail, he has no contact with his family. he's had no direct comment for some time. here's what's next there is a board meeting scheduled on thursday.

this is the beginning of the process for removing him as ceo and putting another person into the ceo job. for nissan, they remain focused on the alliance. >> two different stories with similar themes within both. after the break, shares of capital one sinking after hours. we'll tell you why next. don't go anywhere. ♪ you should be mad they gave this guy a promotion.

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welcome back let's get a check on the headlines making news. ibm beat on the top and bottom lines. the top line beat was really fractional, but also guidance for the yore ahead was a little ahead of expectations, up 7%. capital one sinking after hours. they reported fourth quarter revenue below expectations but tdameritrade reporting after the bell tomorrow on "closing bell" we'll speak with their ceo tim hockey about those results. mike, how would you sum up

today? >> a short, sharp pullback the earnings look okay but it's all about what was baked in already. so i don't think earnings were the driver today it was much more about how extended the market was in the early term. >> we closed down 301 points which was well off the lows. that does it for "closing bell" today. thanks for watching. >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square, i'm melissa lee. tonight a sea of red on wall street today but one top strategist says don't go running scared just yet. we'll tell us where the best place to put your money is right now. plus ibm soaring after hours, capital one under pressure to the tune of 4% we'll be monitoring those moves as those conference calls kick off. we start off with the market selloff and it was the china stocks sparking that sell-off. th