>> nyse. yeah. >> takes too long. >> what about cnbc >> that's why you have to say it out. that's no good shorthand. >> all right well off the session lows. >> sticking to my guns. >> thanks for watching "power lunch. "closing bell" starts right now. ♪ and live from the nyse -- welcome to "closing bell." i'm sara eisen. >> i think got my habit of nice-y from kelly evans and that's the first time i was corrected. >> they don't like it. >> i'll change from now on and i can't really apologize for the past until today i'll change. from new york stock exchange, i'm wilfred frost. former starbucks ceo mulling a run for president in 2020 we'll talk to walter i sacson and steve forbes coming up.

>> she is called one of the most powerful women in finance, joyce chang. she'll join us to weigh in. >> looking forward to those interviews check in on the market, declining by 4% on the dow 240 points, the low of the session was more pronounced than that, some 400 points and tech leading things lower hence the nasdaq down 1.2%. >> let's begin with the markets. morgan brennan has more on caterpillar's big drop bob pisani at the nyse and then bert bertha coombs. morgan >> cat down 9%, this is a big miss revenue was in line but the outlook really taking center stage. a modest sales increase. that's versus the 16.5% revenue growth that investors

anticipated. takeaway, higher costs coupled with slower global growth and the u.s. is strong china comprising 5% to 10% of sales for cat especially in focus after strong growth in recent years the company expects that market to be flat this year and as other areas grow latin america still very weak and political and economic uncertainties in europe, middle east a watch item for them as for higher costs, materials and a tight freight market have meant it costs more to manufacture excavators, the heavy machines cat's been raising prices so far and they haven't offset the costs as expected and does as the earnings call today believe it will happen this year nonetheless, investors are mulling what's next for this company, whether they have hit a peak in terms of this cycle for machine sales and that's why you're seeing shares down 9% right now.

>> thank you very much down sharply sara, one thing to add, i heard you talking about that a difference between high ticket items and the mass market items like starbucks. >> as it relates to the chinese economy slowdown. >> there's a difference. the more high end items and that's this was not a revenue miss this was an eps miss so again, slightly different aspects at play when people are -- generally putting everything in the same bucket. oh gosh, china's slowing down and nuances underlying the company misses. >> all the sectors in the industry different and if you are in a category of lower priced items, even sneakers, not feeling it at all. >> yeah. i still think revenue miss is more worrying. bob pisani here on the floor of the nyse with the stocks trading lower. >> 45% of the earnings overseas not a good sign from invidia and

caterpillar for global growth in stocks but look at the key point here is look at the other industrials in the dow we got caterpillar down about 8% and boeing, some of the other names, 3m, not done as much and they get a lot of money from china and far east, as well here the other dow leaders, somewhat more defensive jpmorgan having a great day. in fact, the banks are all outperforming. the etf at the highest level since december and looks like a little bit, guys out of the industrials and into bank stocks good sign for rotation >> all right bob, thank you other big stock story is invidia crucialed today after lowering the guidance let's send it up to bertha coombs at the nasdaq with more. >> that's right. but also bio tech, the two sectors have seen the biggest gains since that christmas eve

selloff. chips are still up nearly 14% even with today's selloff. bio tech up 17%, twice as much as large cap tech over that period with today's decline invidia is up about 5% from its low in december but trading at like 3 times average daily volume seen a number of sharp selloffs today. invidia is an apple chip supplier in its graphic chips for laptops but the iphone warning earlier this year really took down semiconductors hard and looking at today it looks like maybe priced some of that news in for some of those suppliers. skyworks rebounded 8% to date. and you can see the results today are kind of mixed. >> bertha, thanks very much for that. let's discuss all of this.

very good afternoon to you all i'll start with you. clearly sentiment soft today is it led by stock specific factors opposed to macro >> i think it's hapartly micro but i think there's that back -- they shut down the shutdown but they didn't do it very effectively and it looks like it might erupt again in three weeks. so there's the usual amount of recent chaos in washington and i think that inhibits people from having any real faith in the rally and that's why you're not seeing really big volume here. you did get protected. you bounced off the support in the area of 24,350 in the dow jone jones. that's held up pretty well as i said last weekend, a close below 24,300 would put the whole

rally from christmas eve into some question. >> so we'll watch the technical levels there are so many event risks this week. earnings today earnings this week we have got a fed meeting including a news conference. we have got china trade talks. what is most important >> well, i think what's interesting this week is the fed meeting. normally january is relatively inconsequential but this time we might hear them talk about the federal government shutdown and what the impact on the economy had. we heard earlier today out of the white house and c.o.b. $11 billion was the actual cost. look earnings, brexit, china slowdown, unlikely to get a trade pact by the end of the february, march 1st which is the deadline so to art's point there's questions with a backdrop of a strong u.s. economy. and that's to push and pull. i would also add that we have

rallied some 11% 12%, 13% at the high before the selloff today since the december 26 open so that's a pretty steep rally to go through in four weeks and taking a breath is not the worst thing. >> we were versold and now overbought. >> i would not say overbought but we think in the absence of a crisis equity valuations around fair right now if things improve they're still inexpensive but deteriorate then they're expensive and that's where we are. >> rick, an extra press conference this week, of course, we'll be hearing from the fed chair. that's more likely to yield a shock to markets or reassurance? >> my guess is probably a little bit of the latter but not much i think all the reassurances and the moon walking back of some of the more stiff components of a stencilled forward look by the fed has been nullified i really think that it's not

that big of an issue and i wouldn't suspect after all the walking back that's been done that they're going to carve out a new intensity with respect to the balance sheet or rising rates and as for the closure, i always hate to disagree even a little bit with the sage mr. cashin but truly the people i talk to have not let the closure affect them or their trade or how it was resolved. what is affected them is politics in general. and that's what's underscored by the way the partial closure opened up this new term of congress let's all harken back to november of 2016 before the president was sworn in, i still say if you understand that rally you understand a lot it was the notion of a more business friendly environment. does the current environment of democratic hopefuls for president sound business friendly to anybody out there? no i think that psychology is weighing on the market i think the u.s. economy isn't

doing bad and i think anybody who expected more than caterpillar was able to deliver probably had their head in the clouds anyway. >> it is interesting to see such sharp moves for a stock like caterpillar beaten up so much. invidia and the semis, as well what does that tell you about the market versus the fundamentals of what's happening in places like china and global growth >> well, i think it tells you that the markets are concerned that it could be really big swings here and also going to have a meeting with the chinese trade representative this week that could be critical could be critical for people like caterpillar again because a good deal of what's going on is foreign trade and you're going to have three or four central bankers speaking and will probably have to spend wilfred across the pond. >> if it's for every brexit vote, he would never be here. >> oliver, in terms of what

stocks you're investing in here in the u.s., lots of tech reporting this week. you favor amazon >> amongst them. to us, that's a category can i recall -- category killer. the future looks bright. it is insulated because it's effectively a reseller we like amazon and exxonmobil here so while all the insecurities here, companies like southern company as a utility we think has a terrific yield and don't necessarily expect a lot of capital appreciation it is a great safe place to put some money. >> okay. we'll leave it there thank you very much. still ahead, much more on the turbulent start to the trading week and after the break, former starbucks ceo howard schultz

weighing an independent bid for president. we always want to hear from you. you can reach out to the show on facebook, twitter or an e-mail "closing bell" will be back after a break. ♪

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we're working to make things simple, easy and awesome. i am seriously thinking of running for president. i will run as a centrist independent outside of the two-party system we're living at a most fragile time not only the fact that this president is not qualified to be the president, but the fact that both parties are consistently not doing what's necessary on behalf of the american people and are engaged every single day in revenge politics. >> that was former starbucks chairman and ceo howard schultz talking with "60 minutes" of a potential run for the 2020 presidential election. >> joining us now walter isaacson and steve forbes.

very good afternoon to you both. walter, if i start with you, do you think this is a smart idea >> well, i'll leave it to steve who's actually done it before to talk about running for president but i think it's a very good idea for america to at least have a chance to say this polarization, this division has gotten so bad we want to see if we like the option of a center party. now, that doesn't happen often last centrist new party to win was abe lincoln, you know, running back then. but we have had third parties before i think that it's dangerous because it could tip the balance of the electoral college but if somebody like howard schultz who has a very good, smart centrist appeal, if he doesn't catch on after the debates, he can drop out of the race and do no harm on the other hand, if the people really rally behind it, i think it's a great idea. >> well, i don't know about the

do no harm part, steve you have been here we are in a two-party system do you think this will resonate? >> that's going to be the really big question because third parties because of the system don't succeed. the only third party candidate who did success we donald trump and he did that with a hostile takeover of the republican party but the key thing as walter indicated what kind of appeal will he have after several months or a year or so on the campaign trail if he gets traction, we should have learned in the last few years, the old rules don't work anymore. and so, for example, what he says about medicare for all, you're not going to win a democratic primary on that what he said about immigration, taxes, not bad stuff so the key thing is, after a year, year and a half, he's got plenty of time to establish his credentials, whether he gets a real traction or not and if he does these things build their own momentum

the key thing is will he have enough traction to get in the debates and the summer and fall of next year then he's got credibility. >> steve, clearly a billionaire is president at the moment looks like more billionaires will be running. do you think it's correct of mr. schultz to think it was impossible to get the democratic nomination or, do you think it's plausible and do you think bloomberg is considering doing exactly that >> all the indications is former mayor of new york is considering it i don't think the american people care as they demonstrated with donald trump what your net wealth is. what are you bringing to the table? what views that are going to be breaking the kind of political deadlock that we have today? and so that's what people are looking for. what can you bring obviously, schultz demonstrated he can run a major enterprise. you think of coffee. most common commodity around airlines still serve a version

of it for free everyone sells it and turning it into a high margin venture >> we get the point. you know, walter, it brings up the question of whether this has an implication for starbucks clearly, he's a self-made man with an incredible story to tell and hired a lot of workers on the other hand, he's inviting controversy. look at this tweet from president and center of the american progress. if he enters the race, i'll have a starbucks boycott. does starbucks as a company need to be worried? >> well, i admire neera tanden a lot. he'll have to sever all his ties we have seen donald trump keep his ties to his hotels

it's got a stench, a stench of sort of sleaziness to it i'm sure howard will not do that steve forbes' name stayed on the magazine that the wonderful family had and the trump name stayed on the towers i do not believe that shulchultz would get himself in a position of making money of starbucks nor do i think it destroys democracy and that's a wild charge to disrupt a two-party system, that at times has become dysfunction. if the mayor gets into the race, runs as a democrat and he gets a nomination, that's great but if it's polarizing election, he should at least try it out and if he's not going to succeed, if he's going to throw it into an electoral college deadlock he can still get out at

the end of the race and people can choose between the two parties. if he catches on he should keep going. >> steve - >> by the way, i suspended my ties to forbes when i ran legally. so there was no connection when i was in the race. >> no conflict of interest at that point steve -- >> i admire steve for that. >> we should and we do steve, your take on what centrist republicans would think if there was this middle way option, assuming the democratic nomination goes to somebody that's not palatable to republicans, further to the left do you think centrist republicans look at the cent er candidate? >> it depends. trump has another year and a half, the president, to define the agenda for the 2020 race what if he comes up with something like the flat tax? what if he comes up with a - >> that's your idea. >> keep pushing it but what if he comes up with a trillion-dollar trade deal with

china? huge breakthrough. i'm old enough when nixon had a great breakthrough with china. he could have won it without watergate and depends on what the president does in terms of agenda and people's feelings about the economy when 2020 rolls around. >> would you rather have a business leader with zero government experience in the presidential role or a lifelong politician >> what i'd like is somebody that stands for the right principles i don't care what their background is. if they have ability, i'm for them this is very fluid and wide open and perhaps schultz is a candidacy to get the democrats to be more central i doubt it who knows? >> steve, ultimately, you think starbucks coffee is a little expensive? >> sadly, i have to confess, i got my starbucks gold card so i get my free drink after 15 so yeah. i'm one of the people who have a

starbucks -- >> one of the converted, as well we have to leave it there. great conversation of course, tomorrow further insight into this. andrew speaking with howard schultz on "squawk box" tomorrow i wonder if it's the ultimate confirmation at the moment it was still a - >> i think he wants to see if joe biden is running or someone for centrist in the democratic party and not seeing right now we have breaking news to tell you about on venezuela contessa brew we are the details. >> we have been wondering whether the united states would move forward with sanctions against venezuela's oil firm and marco rubio giving confirmation saying that, indeed, the trump administration will impose sanctions against the venezuelan oil company. here's the statement from senator rubio. the maduro crime family has used pdvsa to buy and keep the support of many military

leaders. the oil belongs to the people and the money earned will be returned to the people through the legitimate government and president trump has recognized the opposition leader as being the just leader of venezuela more to come as we get it in here, sara. >> all right contessa, thank you. we have little over half an hour to go before the "closing bell." take a look at the levels caterpillar is dragging down the index by 77 points some bright spots in the form of consumer staples. still ahead, apple gearing up to report earnings tomorrow after the bell we'll tell you what to watch from one of the most important reports of the earnings season so far. later, "the financial times" said saudi arabia is slashing the exposure to tesla. th'll speak to the reporter at broke that story coming up

edward jones came to manage a trillion dollars in assets under care by focusing our mind on whatever's on yours.

all right. we have got about half an hour before the closing bell. china worries reflected and corporate news of invidia and heavy machine maker caterpillar hurting the major averages and the mood on the markets ahead of the federal reserve, trade talks with china big week ahead the dow down 231 points. >> a great voice to discuss those topics after the break,

jpmorgan's global head of research will join us. china, brexit, shutdown, the fed. all of that and much more coming up

♪ it's a beautiful day welcome back to the "closing bell." two pockets of green in the overall market that would be looks like real estate and consumer staples. more defensive tone to today's trade. communication services and health care that are leading the market lower time now for a cnbc news update with contessa brewer. >> here's what's happening denmark is erecting a 43-mile fence along the german border to keep out wild bores, trying to prevent the epidemic of african swine fever. the fence will stand five feet tall people flying out of charlotte this morning ran into extremely long lines after a brief shutdown of all tsa check points they were all closed at 6:00 a.m. for a security inspection by 7:30 a.m., the lines were back to normal. nevada regulators finished the investigation into how wynn results handled steve wynn

finding executives failed to follow up on complaints. wi wynn there's changes to leadership and board and company policy and agreed to pay fines in the amount of the nevada gaming commission decides to come. a new study says lowering blood pressure may prevent some memory problems in old age but not dementia that's your cnbc news update this hour. back to you, wilf. >> great stuff thank you very much for that. 28 minutes left of today's session. let's check in with the market movers bob pisani is here and bertha coombs bob? >> we cut our losses in half i want to point out one group that doesn't look like it should belong here in the defensive, financials bank stocks have a terrible start. jpmorgan, bank of america,

comerica, the regionals, the kbe, the bank etf, the baskets of the big banks in the s&p 500 is positive on the day not only that, sitting at the highest levels since going back to december 3rd. that's when the market started turning south with a big turn downward and chatter of maybe switching industrials out. this is an early call but the action today is very encouraging. back do you. >> all right bob, we'll take you to the briefing room at the white house where sarah huckabee sanders is talking about trade. >> we have spoken out against the corrupt and illegitimate regime of nicklas maduro he must do what's right an allow for credible elections in accord dance with democratic principles into speak more about this and to take your questions i'd like to welcome national security adviser ambassador john bolton, secretary of the treasury steven

mnuchin and director of national economic council larry kudlow and then i'll take other questions of the day thanks, guys. >> thank you very much, sarah. as you know, on january the 23rd president trump officially recognized the president of the venezuelan national assembly as the interim president of venezuela. venezuela's national assembly invoked article 233 of the country's constitution to declare nicklas maduro illegitimate this action was the statement that the people of venezuela have had enough of oppression, corruption and economic hardship since then, 21 other governments in the region and across the world had joined the united states in recognizing quaido as venezuela's president. i'll turn the podium over to steven mnuchin to announce

sanctions against the state-owned oil monopoly we have continued to expose the corruption of maduro and his cronies and today's action ensured that they can no longer loot the assets of the venezu a venezuelan people. we expect that today's measure totals $7 billion in assets blocked today plus over $11 billion in lost export proceeds over the next year we also today call on the venezuelan military and security forces to accept the peaceful, democratic and constitutional transfer of power and to a certain extent this has begun. we have seen venezuelan official and military personnel heeding this call. the venezuelan defense attache here in washington recognized

president guaido a few days ago and the first consul in miami has also declared for interim president guaido i call on all responsible nations to recognize interim president immediately. maduro made clear he will not recognize guaido or call for new elections. now is the time to stand in venezuela. i reiterate that the united states will hold venezuelan security forces responsible for the safety of all personnel and the president. any violence against these groups would signify a grave assault on the rule of law and will be met with a significant response now let me give the floor to steven mnuchin who will describe the sanctions that we're imposing >> thank you

today treasury took action against the state-owned oil company to help prevent the diversion of the venezuela's assets by former president maduro the united states is holding accountable those responsible for venezuela's tragic decline we will continue to use all of our diplomatic and economic tools to support interim president guaido, the national assembly and the venezuelan people's efforts to restore their democracy. it's long been a vehicle for embezzlement, for corruption, for venezuelan officials and business men today's designation will help prevent further diversion of venezuela's assets by maduro and preserve the assets for the people of venezuela where they belong the path to sanctions relief for

pdvsa is through the transfer of control to the interim president or a subsequent democratically elected government dedicated to taking actions to combat corruption today's actions against pdvsa follows my determination that persons operating in the venezuelan oil sector may now be subject to sanctions today there's an issue of general licenses that authorize certain actions and transactions with pdvsa to minimize disruptions and support of ongoing assets citgo assets in the united states will be able to continue to operate providing any funds going to pdvsa goes into a blocked account in the united states refineries in the united states have already been taking steps

to reduce their reliance on imports from venezuela we have also issued general licenses to ensure that certain european and caribbean countries can make a transition in order we continue to call on allies and partners to join the united states in recognizing interim president guaido and blocking maduro from accessing pdvsa funds. thank you for that i'll be happy to answer questions. >> you mentioned significant response how do you define significant response >> well, we are not going to define it because we want the venezuelan security forces to know how strongly we think that president guaido, the opposition and most importantly american peril are not harmed this is an unequivocal statement on our part. >> is there any circumstance under which american forces would be involved? >> the president made it clear

on this matter that all options are on the table >> thank you, mr. secretary. you explained there's actions here to mitigate the action on the american oil market. can you explain how imports will be affected? what will happen with the money and where do you think that will have impact on the oil market globally >> sure. well, let me just comment we'll be releasing faqs with the general licenses to explain a lot of these issues. but effective immediately any purchases of venezuelan oil by u.s. entities money will have to go into blocked accounts now, i have been in touch with many of the refineries there is a significant amount of oil at sea that's been paid for. that oil will continue to come to the united states if the people in venezuela want to continue to sell us oil, as long as that money goes into blocked accounts, we'll continue to take it otherwise we will not be buying it

and again, we have issued general licenses so the refineries in the united states can continue to operate so i expect in the short term very modest impacts on the u.s. refineries we have been working with them closely on these issues. >> and also -- through what will happen in advance -- >> hearing about this now but i generally say we have obviously made a press release recently and indicated certain things and we had not disclosed the sanctions in advance but i think people have been preparing for this over the last month. >> mr. secretary, with the blocked accounts, what would be the mechanism and what would be the timeline if there is in peaceful transfer of government? how would the money go back and would guaido receive it back if he's put into power? >> so, let me just comment that in general, okay, as we have said in the past, the purpose of

sanctions is to change behavior. so, when there is a recognition that pdvsa is the rightful rulers, the rightful leaders as president, then indeed, that money will be available to guaido w >> could you explain to the country what this strategic interest the united states are in venezuela now and the immediate future that's at stake for us and the significant response if the transfer of government isn't achieved >> well, we think stability and democracy in venezuela are in the direct national interest of the united states. right now under the chavez/maduro government civil society is disintd grating the economy is in a state of collapse something in the range of 3 million to 4 million refugees fled the country for neighboring countries and the united states.

and the authoritarian regime of chavez and maduro has allowed penetration by adversaries of the united states, not least of which is cuba. some call the country now cuba-zuela we think that's a strategic, significant threat to the united states and there are others, as well, including iran's interest in venezuelan's uranium deposits. >> let me just comment this is a country that's very rich in oil resources. there's no reason why these resources shouldn't be used for the economic benefit of the people there there's no reason for the poverty and the starvation and the humanitarian crisis. >> can i ask both of you -- united states has taked a llkedt about the potential embargo on oil and stopping selling of oil products to venezuela.

why haven't those been considered yet >> there will be limitations on selling oil products as part of the sanctions. as regards to an embargo, we won't make comment on future actions. >> thank you, mr. secretary. mr. maduro seemed to anticipate the actions that you have announced today in the briefing room he warned that citgo is the property of the venezuelan state and said we are the only ones who can decide its fate. what is your response to mr. maduro >> it is the president of the venezuelan people and the proper and rightful leaders of the country so we agree with that. he's not the proper leader of the country at this time and i have said these are valuable assets that we are protecting for the benefit of the venezuelan people. >> mr. secretary >> if i could focus on the question of the impact on the markets. what do american drivers need to know about the price at the pump

if any at all? >> let me say there's been a big reduction in the overall price of oil and particularly since we instituted the iran sanctions think you know we have been very careful in making sure that these costs don't impact the american consumer. gas prices are almost as low as they have been in a very long period of time these refineries impact a specific part of the country and i think as you said we're very comfortable that they have enough supply that we don't expect any big impact in the short term. >> can you -- emboldens your position or do you feel the united states is able to take these measures as a result of low gas or oil prices and does that increase the united states' leverage in this debate? >> i would say we're very determined whether it's in the case of iran or it's the case here to use sanctions to use them in the right way. and we're very comfortable that we have coordinated with the department of energy and other people on this mechanism >> thank you, mr. secretary.

there have been reports that there are an estimated 25,000 cuban troops in venezuela, troops or secret police which is a clear violation of the oas charter about troops of another country in a sovereign nation. will the united states raise a complaint if nothing else with the havana regime -- >> as you know secretary of state pompeo addressed the general assembly we expect other meetings on this and related subjects in the coming days because as both secretary mnuchin and i have said we know what the legitimate government of venezuela is and it's our mission now to make a full reality in venezuela. what the people of venezuela themselves want. >> do you have - >> what is your obsession -- >> that's correct -- >> if you don't mind me turning

your attention to the talk that is will take place at the end of the week the statement put out just before you came out. where do the talks with china stand? are you comfortable with progress that's been made in the last couple of weeks larry kudlow said that the talks over the next couple of days will be determinetive. >> i think we have had very productive conversations going back between the meetings of the two presidents i think you know we sent a team over to beijing. there were very significant discussions for that period of time we have had conversations since then ambassador lighthizer and i are looking forward to the two days of talks president trump is going do meet with vice premier liu he we have another 30 days after this so my expectation is that we'll make significant progress at these mettings but i would just emphasize these are complicated issues we have a time line of how we have mapped out the 90 days.

>> how much progress is made in the last month >> again, i would just comment that i think there's been significant movement and we're working through what are still very complicated issues. >> mr. secretary - >> mr. secretary, i want to go back to gas prices can you quantify that you said the gas prices are low now but in the midst of this with what's happening in venezuela, how long do you believe that this will -- gas prices will move up to a modest impact on the oil industry and can you quantify by how much cents, by tens of cents or even by dollars what's the modest impact you expect >> let me comment that in general i've said this before. markets are not always efficient. they move in different directions soy want to be careful and not speculate on markets i think kind of oil went up a lot right before the iran sanctions. we were surprised it went up so

much president trump was on the phone with world leaders the u.s. is a big exporter of oil. so there's a balance here and, you know, i think oil prices are now reflect the supply and demand in the market and as i've said we're dealing with venezuelan oil that is a rather modest part of our overall supply again, we are a net exporter of energy we are particularly concerned that there were a handful of refineries that had a dependence on venezuelan oil. i think they read the tea leaves and reduced that dependence significantly along the way. most of them have in the neighborhood of 10% or less of the dependence on venezuelan oil. i don't expect that people will see an impact on the gas pumps. >> have you talked about -- from venezuela. sweet or sour crude? >> i'm not getting into the specifics of the different oil markets but let me just say that

most of these refineries, this is about 10% or less there's plenty of supply at sea. that's already been paid for so there's inventories. there's been excess oil. i'm sure many of our friends in the middle east will be happy to make up the supply as we push down venezuela supply. let me just again emphasize the right outcome is a transition for pdvsa and the people and to have these companies rebuilt and to make sure that they get out of poverty it's a complete tragedy that have the crisis in a country that has veryrich resources. >> mr. secretary >> no, no. >> ambassador bolton, a question here. >> we were recognizing her and then you can go next. >> mr. secretary, on china, if you would just address the -- what you believe is the -- we have heard this word enforcement

quite a bit. >> it is enforcement will be one of the topics that ambassador lighthizer and i have on the agenda and we want to make sure that we expect when we get a deal that that deal will be enforced and i would say in the conversations we had previously with them there's been an acknowledgement with china that they understand that now, the details of how we do that are very complicated. this needs to be negotiated. but ip protection, no more forced joint ventures and the enforce r enforcement are three of the most important measures. >> can you start that over again please >> has the president spoken personally with president guaido how safe does the president believe the diplomats are currently? >> the vice president had several conversations with

interim president guaido he'll be meeting with interim president's ambassador here in the near future. in terms of american official personnel had been an absolute top priority for president trump, the vice president, secretary pompeo and myself. we have drawn down significantly personnel at the embassy, all dependent personnel are gone we believe we are now prepared as prepared as we can be we're re-evaluating the safety conditions at all time and why we have said we presented credentials to interim president guaido and recognize him as the legitimate president he asked for us to stay. we have made very clear to what's left of the maduro regime we hold them responsible and we take their commitment to do that very seriously. >> in the back yes. >> ambassador bolton, what is

your assessment of the relationship between nicolas and maduro and do you believe the russians are playing a role of supporting the military? >> assessment based on numerous contacts on the ground is that the rank and file of the venezuelan military is acutely aware of the desperate economic conditions in the country and we think they look for ways to support the government the officer ranks are the same and also aware of significant contacts between general officers of the venezuelan military and supporters of the national assembly. so you may have seen a statement last week by the defense minister, vladimir pedrino flanked by generals in uniform what they didn't know is how many of them were already talking to the national assembly. >> we'll take one more here.

>> do we have a timeline we're going to reassess of whether or not the sanctions are working? can you speak to the administration's critics who say that since the government shutdown the administration is in disarray? >> well, let me first say on sanctions we always evaluate sanctions continuously but existing sanctions as well as future sanctions so we'll carefully be looking at the effectiveness of these and whether we need additional sanctions. i would just tell you speaking for treasury i want to thank all the large number of government worker who is came in. i will tell you as it relates to specifically the sanctions area, people have been working around the clock and we couldn't have gotten this down without the support of the people that came in so quite the contrary we weren't in disarray >> very briefly, i'm going to

have larry kudlow come up, give a quick economic update and then i'll be back up for the rest of the questions of the day. >> good, thanks. i'll just say as i have for a while that i think the economy's very strong. i know there's some disagreements but i think as the numbers shake out commerce department is reopening. we'll get a gdp report probably next week, a jobs report this friday so that will work out based on things we have talked about here, unemployment claims low. industrial production strong business investment strong holiday sales very strong. i still think we're on a 3% trend line growth rate i'm proud of that. i think that the program of lower tax rates and reg regulatory rollback and opening up energy and so forth is working and continuing to work and i think frankly the optimists, the guy that is took the over are going to be right

yes? major? >> do you consider valid the estimate that is the shutdown cost the u.s. economy between $8 billion and $11 billion? >> i looked at them. i think you're referring cbo numbers that came out today. we frequently disagree with cbo. they're doing the best job they can. i get that i won't acknowledge any of that right now. and, you know, in a $10 trillion economy it is hard to make the best guesstimates of those kind of small fractions of snnumbers here let's see how it rolls out we'll get a gdp report in about a week for q4 and takes longer for the first quarter. as i have said many times i think you have just a whole bunch of very temporary factors and now that the government reopened the switch goes right back on. certainly no permanent damage to the economy. >> larry - >> again, with the greatest

respect of friends at cbo that often disagree with us, no, i don't really agree. >> can i just say from your economic perspective, how disruptive was this? not at all >> look. the hardships for individuals was always the key problem here in my judgment and as steve mnuchin said, no, i'm glad we're back to work. i'm glad the federal employees, the people furloughs, tsa, go down the line, i think those individual hardships were the big issue and everybody's glad to reopen and put folks back to work regarding the macro economy, major, i don't think it was a factor john >> if the negotiations did not bear fruit and the government shuts down again, if a lengthy shutdown, reopening and another shutdown, could that compound any economic effect or hardship affect on the federal employees?

>> yeah. i don't want to speculate on what ifs we have a process laid out here. let's see if it bears fruit. i don't want to speculate on the what ifs again, you know, the state of the economy to me, my colleagues, looks very strong. and i don't think that was disruptive i don't. i know things have been written and there are individual hardsh hardship cases you know, the numbers we saw, low unemployment claims, the industrial production number from the federal reserve, business equipment went up a scattered look at the kinds of data points suggest to us that we're still in a very strong mode right now and i use the 3% as a longer term view but i also think it pans out in the short run. we'll see. yes? >> the chinese talks this week,

is it possible a framework of a deal will emerge >> i don't want to say anything about that secretary mnuchin is correct these are very difficult, very, very important the only comment i'll make is -- i said this before, the scope of these talks will be the broadest and deepest in u.s./china history. we have never had anything this comprehensive and i regard that as a big plus. how the things are worked out we'll have to wait and see the president expressed some i think guarded optimism about the talks. liu he is coming with the top people and that's important and our top people will be negotiating but it's encouraging to me everything is on the table. that's a cliche in other areas but in trade talks it is, too. having said that, i want to reiterate. i don't recall whose point it was. enforcement issues will be very important and i know ambassador

lighthizer said that and key part of this discussion. yes? >> yes, sir. a favored government contractor furloughed getting back pay? >> i'm not sure how -- some of them do. i think the defense related ones will but i'm not sure. i'm not an expert on that. i'd have to go and check that. i'd have to take a look at the scope of it. i honestly don't know. yes? >> i want to get back to the cbo because they also looked at projections over the next decade saying the deficit for year 2019 is roughly $900 billion. 2029, 93%. that's gdp saying that it is simply unsustainable the path we are on does the white house agree with that if it is unsustainable, is the white house planning to do anything to change it? >> you know, we have a

fundamental disagreement with that agency regarding the growth outlook. economic growth is the single biggest factor of compiling these numbers so they have had a very low growth estimate in response to trump policies on taxes and deregulation and we have had a much higher one about a 1 percentage point differential more or less. so did differential over ten years is very significant. could be as much as $3.5 trillion in deficit reduction if we are right all i'm saying is that in the first two years of the trump administration our view has essentially been correct and their pessimistic view has essentially not been correct again, i'm not here to rail gins cbo. they have a point of view. they're professionals. i respect that i would say one other matter

we anticipate a very strong, tough budget coming out to hold down spending. president's talked about this. at least 5% reduction in the nondefense accounts across the boyd and i think that's going to help and then finally my own view has always been economic growth is absolutely essential to reducing the deficit share of gdp which is the burden on the economy. and if you look at our numbers, which are moving some up and not enormously, we anticipate a much lower deficit share of gdp and that's probably another reason we disagree. >> thank you, larry. today both caterpillar and invidia said a slowdown in china negatively impacting their businesses is the administration worried that there's a slowdown there to spread to a slowdown here? >> well look

you know, we are -- the kind of trade openings that we are talking about and other structural factors are all pro growth every one of them. if the trade negotiations, you know, turn out positively insofar as lower barriers, let's say, and, you know, much better treatment of private property rights and as steve mnuchin before, ending the forced transfer of technology, we'll export i believe this strongly. give our people the chance to sell to china and we'll roar roar and it will be much greater if they open their markets and help china's economy and help our economy. i have always believed that. and, you know, the question here is fairness and reciprocity. but it's also a matter of economic growth.

lower barriers united states, in my judgment, is most competitive economy in the world today. the hottest economy and most competitive economy. i think davos survey pushed us back to number one spot and proud of that. so the china talks, when's at stake here, i think, is the possibility of spreading prosperity, frankly, in both countries. all right? along with the need to make, you know, legal reforms and reciprocal reforms time for one more. >> you talked about hardships. >> yes, yes. >> at the end of three weeks, february 20th, february 15th, if there is no deal, will you counsel the president not to shut the government down again >> i just don't want to make any comments on that we'll see what happens as i said before there's a process. that's if the -- see if it works. not my place

thank you. appreciate it very much. >> thank you tough group to follow but i will give it my best shot john >> thank you, sarah. is the president really willing to go through and -- >> we'll pick it up there after hearing from white house economic adviser, national security adviser and treasury secretary. the latter two just on to discuss new sanctions against venezuela's state-owned oil company to put pressure on president maduro as they back the interim president and then larry kudlow talking about the strong economy, a few jabs at the cbo for saying there will be a multi-billion dollar hit to the economy from the shutdown and not giving credit to the trump policies on deregulation and tax cuts and boosting the economy. let's bring in john harwood on this as we heard from a trifecta of administration officials.

john, what stands out? >> well, it was a double barrelled approach as you mentioned. one is to try to announce they're increasing pressure on the maduro regime in venezuela the administration is wary of military action. that's always difficult and the president's promised to keep the united states out of foreign military entanglements and what he's done is recognize guaido as the interim president. now put sanctions on the state-owned oil firm tried to announce those in a way that suggested it wasn't cutting off venezuela and the oil will go into a blocked account. they don't want the proceeds to benefit the mad yuro team john bolton was there warning if anything happens to u.s. diplomats or guaido the u.s. military would take that very seriously. and with larry kudlow, i think

trying to counter that downbeat forecast from cbo today. not only did they say that the shutdown had cost the economy around $11 billion and larry said that's a trivial amount of money in the context of an economy our size but he also disputed assessments of the long-term growth rate and what cbo has found is that deficits over the next five years will be more than a trillion dollars higher than they were before the president took office. and that economic growth in the long run which the administration had promised would be lifted by tax cuts and deregulation to the 3% level they're actually forecasting 1.8% as a long-term growth rate and larry as we are quite familiar with is on the sunny side upside of all those arguments and kept saying that the people that take the over in the dispute will be right and he said that with respect that they

had a philosophical disagreement with cbo and they believe we are on a path to 3% growth and we'll find out probably as early as next week whether or not that was achieved in 2018 as the administration had hoped. >> john, thank you very much we should mention, as well, of course, that the markets closed during that press conference, down 208 for the dow the nasdaq was the laggard down 1.1% >> and the big story is china weakness and glad aemom javers asked the right question referencing the invidia report and the caterpillar report, is the administration worried of the weakness in china hurting u.s. companies kudlow's response was, hey, we are having productive talks and they're pro growth for china's and u.s. economy and to take something positive out of this,

how they look at the trade situation, both confirmed the talks are ongoing, and trump is scheduled this week on thursday meet with the chinese deputies. >> looking forward to that meeting, progress is being made. expects more progress and don't expect a full deal this weekend. kind of making sure the market does not sell off if they don't -- >> they're the two that have been more encouraging of a deal. let's talk about this and the market decline jo joining us is barry and joyce chang. also, mike santoli is here it's 4:00. >> i am here. >> ten past 4:00 little late on the intro >> mike, give us a sense of how much of the news today was related to those two warnings of chinese demand from invidia and caterpillar? >> a lot of it but the market as

a whole absorbed it as you might expect we have a pattern taking hold in the last couple of weeks of the market throughout the day kind of firnls up and it happened again today. we were down more than 400 in the dow. bank stocks up today it just had the same feel of, fine, we have to mete out the punishment and the adjacent stocks and didn't spill into something broader. for now it still seems like the market is doing better than one might expect after a 13% ramp in 4 weeks. >> joyce, how much is the chinese economy slowing and how much is easily improved if the trade deal is done >> we have chinese growth down from 6.6% last year. it is a slowdown we think the trade deal makes some difference and the chinese economy is slowing and even though there's stimulus, it's not the shock and awe stimulus of china in the past

the market is expecting something on tariff. it is the nontariff issues that seem like they will be much harder to address. >> i mean, barry how do investors navigate the next 30 days secretary nmnuchin said there'sa plan but, you know, it's a risk that they can't get it done and the tariff rates go up. >> no. it is for sure i think stepping back from all of this and thinking about the broader picture in china is important because caterpillar really is business dependent upon chinese investment. there's a hard landing from mid-2014 to 2016 earnings of plus 10% to minus 20%. they then tried to restimulate it a bit and investment is slowing in china throughout the better part of the last year and not going to rebound and caterpillar's business is 5% i listened to the call today the real issue with china right

now is the export sector so the number last night that was probably more relevant than any of this is hong kong export and import data and it was weak in december we knew that, though i would think there will be something of a rebound in j january and we will have a lot of uncertainty with respect to the trade channel. the good news, though, about all that is it's just not as important for the rest of the world as their investment. the investment is drawing products out of everywhere in the world. so this impulse is not going to be nearly as much of a shock and that's i think why mike rightly pointed out the market rebounds from this because the market gets that this is not as big of a deal as '14 to '16. >> the market looks as the nuances of individual reportis s and there were differences

and again, that kind of differs a little bit from the apple guidance we got that so spooked the market at the start of the month. >> i think caterpillar's guidance for the year is downbeat and also by the way both of these stocks up significantly off the lows certainly not nearly where they were at the highs last year and the game we are in i think the tone and rhythm of earnings season changes as it goes along and last week almost everything got rewarded unless it's a huge miss and i think that the market is essentially traveling in different directions based on what the results were by the way, today's the lightest day of the next four for earnings so i think we get more of a critical mass next three days. >> right now, earnings alert on whirlpool. contessa >> we have a miss on revenues here coming in at 5.66 billion versus 5.76 billion estimated and a beat on earnings per

share. adjusted versus 4.23 that was the consensus the company is offering some full-year guidance for 2019 of $14 to $15 compared to estimated $15.99 the real concern here was these emerging markets the middle east and africa and it appears that they had delivered some quarterly improvement on that front saying in line with expectations. and expecting this year free cash flow of between 800 million to $900 million. the stock off now more than 5% as you can see in extended trading. w wilf >> thank you for that. mike, another sort of stock specific one and again market seemingly should be able to shrug it off. >> i would think so. not exactly a bellwhether but housing related. it took the punish again from the steel cost going up a while back so it's been a

stock under pressure for a while. guidance being down scaled for the year is not great and i don't think it's one to steer the market. >> let's talk more broadly about the u.s. economy the government reopened but the bee row of economic analysis announced that key reports including wednesday's initial q4 gdp number will be replayed. how will the backlog impact the market also, how will the shutdown impact it? joyce, what is your take on how much q1 earnings and gdp will be affected by this >> we took the estimate down to 1.75%. we did take it down and what we have seen is most of the shutdowns have had a temporary affect although this one did last longer than expected we're still seeing that for most companies, 60% of them, are beating revenue expectations those are china demand suffering more now and we had a very strong rally what many people were expecting

over six months happened in the first three weeks of the year and some pullback isn't that surprising. >> on this, the cbo released a report today nonpartisan. saying $11 billion hit in terms of the economy because of the shutdown 3 billion permanent. larry kudlow said nonsense we don't believe the cbo which is it? is it already factored in? >> i don't think it's a meaningful amount of money with respect to the economy i think the nature and mix of growth is more important has the capital investment boom that took place last year slowed it doesn't look like it to me. but the really more interesting question is that long-term debt trajectory and like three major pieces productivity outlook that the cbo is down beat on and what larry speaks about there's the spending piece, right? spending's averaged 6% since gdp. averaged 2% since the 2011

budget deal but the deal last spring bounced back to 6%. if spending grows at 6%, there's no way out of the debt trajectory this is really the most important issue so if they can truly slow did growth of spending they have got a chance to keep that under control. >> joyce, we have touched on china growth u.s. growth. what have you done with your european gdp growth outlook in the year ahead is that looking more worrying? >> it is looking more worrying we have seen on the manufacturing data softness in that data just like asia trade data we have seen the softness and taken the european growth forecast out and don't see the ecb doing anything until december at the earliest. >> fed expectations for this week >> we think the fed is on pause for the first half of the year and more data dependent the second half and penciled in moves by the fed in the second half of the year and see growth returning to trend right now so we thought the recession risks were excessive and priced into

the marketplace. we have recommended risk on at the beginning of the year and some pause is not that surprising. >> do you agree with that? risk back on right now. >> yeah, no. i think that's right i mean, i think that we have another version of 1988 where we had a shock that is not going to reverberate through the economy and the market will recover through the course of the year and make a new high. we have had a huge move so that we should get a pullback, particularly in front of this week is hardly shocking and be a buyer on weakness. >> okay. thank you both very much. >> thank you. up next, preview apple's big earnings due tomorrow and whether the results will be able to turn around the struggling stock price. down 27% in 3 months. >> off more than 30 from the recent highs more than a trillion last time to report ahead of those numbers. more trouble for tesla after saudi arabia slashed the exposure to the electric

automaker. we'll look at the llfaout for this stock coming up tech sector. beyond t it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

the global investment management amazon prime video so when you say words like... show me best of prime video into this... you'll see awesome stuff like this. discover prime originals like the emmy-winning the marvelous mrs. maisel... tom clancy's jack ryan... and the man in the high castle. all in the same place as your live tv. its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome. apple set to report its q1 earnings after the bell tomorrow the company down about 1% since cutting its first quarter

guidance remember, earlier this month, on concerns of lower than expected iphone revenue and china slowing economy. >> joining us to discuss, tom forte and walter piek. very good afternoon to you both. thank you for joining us what do you think the key thing to look out for, tom, this earnings season is given those changes we got to how they report last quarter? >> sure. so i think the big thing for apple is they indicated they no longer give you unit sales and given it looks like unit sales weak in the quarter what are they going to tell us, for example, to what extent was it limited to the 10r among the devices? i think more important thing for apple is looking ahead to the future near term basis what does the april quarter look like and then divest away from the smartphone. >> walter, what do you think is

going to be the bigger factor? >> clearly about the guidance. consensus is just under 60 billion. people pile on in terms of how bad to get in the march quarter so i if they can deliver on the guidance also, how much is china down an excuse is how bad china was and the economy. people trying to weave a tale of replacement cycle. so if we see that china was really bad that may be lessened the concerns about the replacement cycle. lastly, services right? everyone's focused on services now, as well how much -- because there was a beat on all the other sectors. so there's a lot i think to unpack for tomorrow but obviously the key one is where the guidance is for the next quarter. >> tom, what's your kind of estimation of what at this point is priced in for apple even if on a longer term basis and a relatively weak bounce

given how much the stock was down into the lows into early january. obviously the valuation is back down toward the lows of the last several years. what do you think right now is captured in this valuation >> so first off i think that's an excellent question and i think that's the most important question for all of our companies in consumer tech innin earnings season. apple is weak and the smartphone is weak. if you looked at the performance, 19% growth in everything that wasn't a smartphone in the december quarter. so i would argue that weakness in china and weakness in iphones is priced in and to some extent weakness in the march quarter isalso price in so i think we'd have to see something really ugly out of china or smartphones for the stock to be under more pressure after earnings tomorrow. >> walter, for the nondeveloped markets point of sale for the iphone china was a big portion of that. and we know clearly their

smartphone saturation already in developed markets like europe and the u.s. does that mean they know how to bring in some kind of lower priced phone and have a fuller suite of options like a samsung does or is that something that the stock price would react negatively to? >> sure. they haven't grown iphone units for three or four years now. it's not a new phenomenon. they have leaned heavily on increasing price for revenue in that segment, particularly over the past year. we need to get through the next year it will take a couple of quarters to diverse china and then in a year's time look out to maybe low to mid single digit growth with share repurchase to 10% earnings growth and then recapture the selloff of the pe multiple. >> i mean, the company, tom, came out and said it's china

concerns, the weakness of china and yet that prompted all sorts of other concerns and lots of discussion of whether iphones peaked and whether they were just charging too much and not innovating enough. how do they answer that tomorrow if they're not willing to put out shipment numbers >> i definitely think that of greater importance than other quarters it's going to be the company's strategy going forward beyond smartphones and beyond china that i think's going to have a big impact on the performance of the stock if they aren't going to come out with a lower priced device for emerging markets what will they do to drive growth going forward? are they going to try to figure out a way to offer a lower cost smartphone in some of the emerging markets to take share >> okay, gents

thank you both very much tom and walter. >> thanks. we'll be here for it tomorrow this time. up next, we were going to break down the charts to see whether the market will be able to withstand the steep dropoff in earnings growth rates from a argo he u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

some firms estimating a drop in the earnings growth rate over the next few quarters. mike santoli headed to the telestrator to tell us more about that. >> yes so we all know we have been talking about the earnings

slowdown and historically puts it in perspective. from morgan stanley strategist group. first of all, look at how dramatic the beats were in the first three quarters of calendar 2018 everyone says, oh, the s&p 500 was trading at 18 1/2 times earnings a year ago. yes. that was 18 1/2 times what we then thought earnings would be and then in fact 16 1/2 times what the inninearnings ended upn and it's important to know the earnings next few quarters here and this step down is very unusual this late in the cycle to see going from 20 something percent growth and then 13 and then right here this is under 4%, these right here less than 5% for the next three quarters. and the big question is, can the market absorb this i think in general on the whole the aggregates are fine talking about earnings growing a little bit. valuations not punitive but

getting this, first quarter of 2016 that was a true earnings recession. plunged into that. the market bottomed and sniffed we would get better. the dollar was a much more benign force after that. so i do think this is the world we're in for a while and almost no way that these numbers can kind of reach double digits in the next three quarters and why i think the market is hesitant going into this environment. >> were they higher three, six months ago >> they were. >> they've come down and essentially that's the market pricing in the slowdown already? >> exactly for calendar year 2019 the estimates for s&p 500 earnings are down by 67.5% since october. so that's why people say, well, the market is almost overdiscounted the idea of earnings coming down

you cut earnings estimates coming into the reporting period you had to race to price in the tax cut and global growth. surprising on the upside. >> does the market necessarily reflect earnings projections because sometimes the market goes up faster. >> this leads and lags all over the place. if we are getting into the middle part of this year and doesn't seem like the cycle is over in 2020 then this could be fine. >> okay. great stuff, mike. thanks very much. time for a cnbc news update. contessa brewer has it for us. >> insurance claims topped $11. billion. the fire in paradise killed 84 people virginia teachers are pressing state lawmakers for pay raises another increase is in school funding. hundreds of teachers rallied at

the state capitol protesting low pay and inadequate spending. veteran walker laid to rest in texas this morning. no one was expected to attend because he had no family but when word got out a large crowd came out to pay respects at the central texas state veterans cemetery. disney ceo tweeting out that the movie "black panther" to return to the big screen to celebrate black history month. the tickets will be free at participating amc theaters disney will donate $1.5 million to the united negro college fund i'll send it back to you, wilf. >> contessa, thank you very much. now last summer elon musk claimed saudi arabia could help take tesla private but now they're cutting exposure to the company. that means for the automaker's future straight ahead. and whether another government shutdown could be on the horizon if congress does not

fund president trump's border wall proposal.

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welcome back have a look at how we finished on wall street s&p down 0.8%. nasdaq down 1.1. techs weighed within the nasdaq. >> looking a lot better than earlier this morning financial times reporting that saudi arabia slashing exposure to tesla via a hedging deal and the public investment fund. >> elon musk e-mailing "the financial times" saying to the best of my knowledge there's been no communication with pif for months i thought they had probably sold their shares we don't know if they own any at all. joining s joining us is the reporter that broke this story thank you for joining us. >> thanks, wilf. >> so, sum up your take in this particular whether it's specifically what musk said to

you or more broadly which is that the saudis who had been thought of as being perhaps the biggest shareholder now don't have exposure at all is that right? >> yeah. maybe it's just better to begin where the story started. i was talking to you another story saying that saudis built a stake within tesla and then musk said funding secured and led to the wild summer that was with respect to whether he had actually did or didn't have the funding secured and then civil charges from the s.e.c. leading him to pay a fine. what we have learned now that the saudis built that stake in probably april and may in 2018 potentially taken the view that the stock is too volatile and effectively locked in a price on tesla shares and they began that process of locking in a so-called hedge on january 17th after the market closed.

now, that was an important moment because on january 18th elon musk revealed that the company was going to struggle to turn a profit for the quarter and anoupsed to cut 3,400 jobs and ultimately a series of maneuvers that sent the shares tumbling at the time of the hedge was 347. in the reporting today we explained that saudi sovereign public wealth fund locked in a hedge with the help of jpmorgan beginning around the market close on january 17th. >> so, are you suggesting that the timing was fortunate or was guided in some way >> it was definitely well timed. we have no guidance or belief or reason to believe that there was some sort of communication you see the e-mail of mr. musk to us today. what we are saying is basically it was a well-timed hedge put on and it looks to have put the saudis in a position where they're up on the stock but effectively freezing the bet on

the stock and if so we're confused because if it's a long-term play as a part of the economy and diversification off oil why not be long and frozen the position so that's sort of why we find interesting. they perhaps find the stock too volatile perhaps they thought it was going to fault w -- fall. we can't speculate the source did not give us the reason for why the hedge was put on. >> do we have a reason why, you know, way back when when they originally decided to buy the stock what the thinking was? that changed in that whole belief and thesis in tesla. >> well, there's a couple of thing that is happened if you remember in late march of last year crown prince mohammed bin salmon came on a tour of the

u.s. and around that time they approached elon musk saying, listen, we want primary shares in tesla musk said no i only find out about this in august when i break the news on it and mr. musk makes a tweet. you know what happened after that and then also in october there was a horrific murder of jamal khashoggi in turkey. and what that did was set off a chain of events with questions in new york and silicon valley and the world where the saudis were major investors of what it meant, meant to take saudi money and i believe musk did an interview in november saying he probably wouldn't be further money of the saudis. i can't speculate what led to the hedge on the tesla stock. >> thanks very much for joining

us mike, very quickly, what's the difference between having a roughly 5% stake fully hedged out and that company wanting to fully sell those shares in due course >> i wouldn't say it puts downward pressure and when the initial reports came out it was a mild positive for the stock but very hard to disentangle from the tweet to take the company private and not a sustainable positive effect in terms of supporting the stock. i think seen as another shareholder and i thought of it as a way to hedge, right the oil exposure. >> yeah. to gas. >> feeds into the negative news flow the tide has turned for tesla. >> completely. we have breaking news out of washington >> hi, sara. the state of the union is not going to take place tomorrow night on tuesday night in fact, it looks like now it's a week from tuesday night as a result of the government shutdown nancy pelosi's office, speaker of the house office, put out a

statement, a letter from nancy pelosi to president trump in which she says she and trump spoke today and agreed on february 5th as the date for the state of the union and she is officially inviting him to give the state of the union on that day next tuesday we expect that the white house will accept that invitation. we know that the president has been anxious to give the state of the union he likes the venue and the backdrop of the house chamber. despite his recent disagreement with nancy pelosi. and now she has extended that invitation for tuesday, february 5th to give the state of the union. guys >> thank you very much for that. more breaking news on huawei >> hey, wilf the department of justice says that it is formally the extra diction of cfo to the united states also unsealing 13-count indictment against huawei and meng for bank and wire fraud and

on strublgti obstructing a grand jury and a week where we see the chinese trade delegation involving vice premier liu he in the united states. shees been she's been in custody in canada. here we have it now. the u.s. indeed canning for her extradition, a new chapter in u.s./china relations back over to you guys. >> okay. fascinating. now with more on this, let's bring in kayla tausha. what's the latest take from d.c. on this? >> reporter: it's interesting to hear the acting attorney general to hear that the u.s. had a commitment to the rule of law. there was some suggestion that perhaps this extra diction could have been a pawn in the u.s./china trade talks set to happen in d.c. this week the president said last month if

potentially not extraditing mentiong wanzhou then he was open to negotiating. and not sought for political reasons and asked to step down from the post and the u.s. is saying that it's committed to pursuing the rule of law in the united states by unveiling these charges against huawei and its cfo and in seeking her extradition and the acting attorney general was very careful to say that in the united states everyone is presumed innocent before proven guilty but, of course, this sets quite a difficult backdrop for those talks set to happen here in just a couple of days >> i mean, it is interesting because we just heard from larry kudlow and secretary mnuchin, kayla, about how talks are ongoing and been productive and significant and building on some sort of framework for some sort of agreement they would not agree to it

it's complicated >> reporter: last week larry kudlow said that this week's meeting was not the end of the road for china talks and in my talks they said to look for any sort of deal to start coa lesing in several weeks and not this week although it is notable the president is meeting with china's vice premier that is the most high level meeting that we have seen since the g20, since this truce first came together and it was president trump who essentially signed off in theory on china's offer to lessen the u.s. trade deficit in goods with china and certainly we have seen officials talk tougher since then saying we need enforcement and china to become a more effective policeman on intellectual property and taking the technology so we'll see how those debates continue to be shaped over the next several days. >> okay. kayla, great stuff thank you very much.

now up next here on "closing bell," shares of troubled utility pg&e volatile as an investor group offers billions to help them avoid bkrtcanupy. the details coming up. t. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ your mornings were made for than psoriatic arthritis. as you and your rheumatologist consider treatments, ask if xeljanz xr is right for you. xeljanz xr is a once daily pill for psoriatic arthritis. taken with methotrexate or similar medicines, it can reduce joint pain... ...swelling and significantly improve physical function. xeljanz xr can lower your ability to fight infections,

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memories. what we deliver by delivering. we have got an earnings alert on ak steel. hey, eric. >> that's right. the stock up as much as 10% after the bell here because of earnings reporting a beat of 16 cents on the adjusted earnings, better than 11 cents the street

expected a couple of things to note from the earnings report. they're getting rid of quarterly guidance and getting rid of a factory that will save them $40 million a year but they're taking a $80 million charge because of that$80 million char because of that and they say the administration's policies to address unfair trade practices will help them facility long-term growth in the years to come so that's ak steel, quick jump up 6%. back to you guys. >> but down 60% over the last 12 months. up next, we have the latest details on investors trying to rescue eatedg&onmbtl pe a bankruptcy filing. we're drowning in information. where in all of this is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you partner with a firm that combines trusted, personal advice with the cutting edge tools and insights to help you not only see your potential,

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troubled utility pg&e is on the verge of bankruptcy because of liabilities over the deadly california campfire but a group of investors are reportedly trying to say the company. aditi roy has the details. pg&e's self-imposed bankruptly zi filing is tomorrow but paul singers el s elliott management sent the company convertible notes maturing in five years and condition griffin's citadel is pitching a finance option that would prevent a chapter 11 filing the news following activist shareholder blue mountain capital that it will nominate a new slate of directors in the coming weeks ahead of the utility's may shareholder meeting. pg&e shares have had some wild swings, causing the stock to be halted numerous times a day, closing the day higher by 2% new developments follow last week's ruling by cal fire that pg&e was not responsible for the

2017 fire that would lower the amount the utility would be liable for despite that finding, pg&e indicated it will still be moving forward with a bankruptcy filing in less than an hour, the state's public utilities commission is convening an emergency meeting to make a decision on pg&e's request for dip financing, that's the move which helps along the process of a chapter 11 filing. we should note that process is a formality and pg&e can still move forward with the bankruptcy filing with or without that approval guys, back to you. >> keep us posted. thank you very much for the update there on pg&e up next, senator elizabeth warren blasting wells fargo ceo tim sloan. we'll tell you why she's calling fohitoe rer m bfid. ♪

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in patients with diabetes. everything looks good. you have beautiful eyes. ♪ senator elizabeth warren went on an eight-tweet rampage against the wells fargo ceo tim sloan earlier today saying, quote, he should be fired and that it's, quote, clear that tim sloan isn't the right person to try to clean up wells fargo. his hands are too dirty from overseeing years of scams and scandal. this rampage was triggered by jim cramer's interview with mr. sloan on friday where jim asked him directly about the fact that

senator warren clearly wanted him out. >> the debt -- she can have that opinion, jim i think i'm the right person to run this company today and i believe that, one, because i care deeply about this company i think if i'm not doing my job as opposed to somebody having an opinion about me, right, that isn't always informed, that opinion, then of course it would be appropriate that i'm not in this role if i'm not getting things done. i work for our shareholders and i work on behalf of the board. they have high expectations for me and i'm exceeding those expectations >> the company today responding to senator warren's criticism saying, quote, over the last two years ceo tim sloan with the full support of the wells fargo board of directors has been leading a transformational change at the company and echoing that they, of course, remain in full support of him.

i think this just elevates the temperature ahead of these hearings we're going to have, of course, we haven't got the date yet but put wells fargo on the top of the list the difference, though, financial services committee in the house would not include senator warren >> cynically, i think having tim sloan remain in the job serves everybody's purpose. it would seem like senator warren doesn't mind having him there as a villain. >> especially she decides to run for president. they better watch out. i don't know how they're preparing for that. >> and the stock trades at a discount where it used to trade at a premium. >> and i reiterate what i said on friday. it's hard to see how the company can face more punishment the fed imposed asset cap is as severe as it comes to so it's bad noise and not something tim sloan welcome bus it's difficult to see the stock price itself -- >> and everybody more

incremental bad pr how much does that have at this stage? what are we watching tomorrow, apple? >> apple, 3m before the market opens because it has been disappointing last year and industrials in focus after caterpillar. >> that does it for "closing bell," thanks for watching >> "fast money" begins right now. >> "fast money" starts right now live from the nasdaq market site overlooking new york's times square, i'm melissa lee. tonight on "fast," a major moment for the market with earnings, the fed, trade all weighing on wall street this week meanwhile, stocks are stuck in the danger zone. wall street's biggest bear will explain why he thinks there's more trouble ahead. plus, it's been a rocky start to the busiest week for earnings but the chart master says there is one unexpected stock. we start with earnings arm ma ged don. caterpillar out with