as much share and getting back on their feet. >> is there different geography? >> not really. west coast versus east coast and not a meaningful fashion. >> peter, thank you. >> thank you so much. thanks for watching "power lunch" today. >> "closing bell" starts right now. ♪ good afternoon welcome to the "closing bell." i'm wilfred frost. >> i'm morgan brennan in for sara eisen we have got a big lineup of guests coming your way joel greenblatt, rick rieder and randy kroszner are here. let's start with the markets which you can see just positive at the moment. up .2% for the dow the high was up -- well, this is the high of the session. >> looks like. >> not a big spread. the best performing sector

technology up 0.3. it is a tight range. but let's begin today with the fed where, of course, chair jerome powell testified on capitol hill today cnbc's senior economic reporter steve lies mans has the latest for us. >> it's day one of the testimony, not closing the door on another rate hike this year and emphasizing the fed is in a wait an see mode. >> the committee has decided that with our policy rate in the range of neutral, with muted inflation pressures and the downside risks we have talked about, this is a good time to be patient and watch and wait and see how this situation evolves. >> well, if it sounds like he said that before, it's because he had powell stuck closely to the words of the january fed meeting and press conference the fed pivoted in that conference from a policy of gradually increasing rates to

patience powell offered an optimistic view of the u.s. economy. and powell suggested he did not see a threat from the economy running out of workers, that's important. economy is drawing in workers on the sidelines lessening the inflation threat day two tomorrow in front of the house. that could be more contentious with the house has several new committee members, investors get a chance to see how much support they have for the fed's new policy of patience or whether they have other policies that they'd like the fed to follow. >> steve, i want to get your thoughts on some of the details in testimony about the balance sheet. i know you pointed this out earlier today on cnbc. that probably the most disclosure in terms of that maybe trillion dollars of excess reserves on the books. >> right. >> in terms of quantitative tightening, you have economists and analysts thinking $3.5

trillion how does that compare to before the financial crisis >> right there's a thing of excess reserves which is the money that or the money that the fed created on deposit at the banks. that's one part of the fed balance sheet is excess reserves currency uncirculation on top of that the treasuries on top of that. it adds up to 3.6 or 3.7 trillion the fed wants to bring it down to $1 trillion what investors need to know is not all that forget i said it what they need to know is that the number that powell said today is reasonable is consistent with the fed ending its balance sheet sometime later this year. it's not going to linger into next year or go below 3.5. they're at 3.9 right now not as much work to do at running off the balance sheet as previously thought. >> pleasure.

>> let's discuss this further with randy kroszner. thank you for joining us we have heard through various different means the fed chair explain why he's pivoted including today. what do you think his chief reason for that pivot has been >> i think there were two things, one was the increased market volatility and they got a little bit worried of what is the market telling us. and given all the tumult that was there and could the tumult itself be self fulfilling that people lose confidence and so that could lead to lower consumption, lower investment. and then i think the other piece was just some of the data were starting to come in more mixed we had a pretty strong growth period last year and 2018. as the rest of the world was slowing, the u.s. was accelerating theis a real outlier

almost everybody else was slowing and quite significantly. we won't maintain that this year but i think there was a concern that we could see a little bit more slowing this year, concern that some of the market tumult to turn into a real headwind and i think that's why they pivoted. >> what do you think of make him change tact once again to go back in the other direction given the markets bounced back but the international outlook for the macroeconomy has not, of course, improved. >> i think the real issue is going to be inflation pressure and that was one of the reasons why during the testimony he focused so much on labor market, focused so much on the ability of the labor force to be able to grow, that more people are coming back in and we could be running at a very low unemployment rate of 4% or even less without seeing too much inflation pressure that's really going to be the key thing to be focusing on, where's the inflation pressure

and where are inflation expectations both of which are quite muted right now so it makes it easy to say let's be patient. but if that starts to tick up, that could change things. >> randy, just to dig into that more, this idea of reassessing or even changing the framework for how the fed assesses inflation, is that something that should happen >> so i think it is important to have a broader rethink because clearly the traditional way of thinking about inflation dynamics is not really having a lot of traction right now. we have an extraordinarily low unemployment rate. we have seen very low inflation pressure and relatively low wage pressure and rethinking those fundamentals, really whether's driving inflation and then also rethinking ant how the fed talks about inflation because inflation expectations are probably one of the most important factors for determining how price changes, how wage changes are going to occur. and one of the things they're talking about is saying, well,

rather than just this simple inflation goal of 2%, maybe we should have more flexibility about that, that if we have been undershooting it for a while maybe we should have more flexibility to overshoot it for a while. that's controversial but i think it's legitimate to be having that discussion. >> would that be mean that rate cuts if we did see a bit of an economic downturn to be more likely than otherwise if they're willing to allow inflation to spike up a little bit? >> exactly and so, they're willing to allow the economy to either, quote, run hotter, have more inflation. and so, they would be more reluctant to raise rates or reducing rates more rapidly and want to convey that's what they're trying to do because they don't want a japan-like situation. i think that's sort of the example that's in the background that if you undershoot your inflation goal for a long time, you might lose credit blbility

saying you want 2% inflation and in japan inflation expectations down to zero or negative and then extraordinarily hard for the bank of japan to revive inflation expectations. >> yeah. certainly don't want do see that play out here. randy, thank you for joining us today. let's get some more reaction from the bond pits rick santelli at the cme in chicago. rick, how are traders there reading through the comments and testimony from the fed chairman today? >> you know, there was a variety of comments. i tried to weed it down to general four that seemed to get the most traction down here. negative interest rates is a big topic and he did weigh in, chairman powell. said that they reflect a slowing global economy i would agree with that. i think maybe he should have tried to dive in more as to how the bank of japan and the european central bank maybe have overstayed the welcome and taken it too far but it seemed as though the headline that

generated the most interest was that the fed can affect and weigh in on every social problem. and the conversation on the floor was more that we didn't glean a lot of new information from the chairman but many of us down here gleaned more from the questions and the congressmen and the direction of their questions. you know, to bureaucratize the fed more and have them weigh in on the social issues as important they are seemed counter intuitive of the central bank and merits some thinking about, whether it's -- you can't borrow forever, even if you're doing it in your own currency. these are very fundamental issues but you can always see the direction. many of these government officials want to spend more than they take in and they would like the blessing of the central bank and if your pet issue is climate change, spend more money that is fine but it shouldn't be something that the chairman and the committee do, especially

considering how backlogged they are just trying to tackle balance sheet normalization. >> we have seen a reaction in the dollar further lower today is that off the back of the fed chairman's comments or international factors of a stronger pound, for example? >> i think it is more the latter you know, interest rates were stencilled in with the dollar index before soft before the chairman testified but it sped up a bit i think that's more of a technical issue. if you look at an intraday chart, wilf, you find that this is the lowest intraday session of 50 and drifting lower just like interest rates and reached a point of the logistics of those looking to stay long and for a challenge in '97 are putting up the white flag. >> rick, thank you very much rick santelli in chicago. turning now to tesla volatile today after the s.e.c.

asked a judge to hold the ceo in contempt over a tweet posted this month fill lebeau with the details in chicago. phil >> reporter: the shares come back today despite trading lower premarket after the news of the s.e.c. asking a judge to hold elon musk in contempt of court this all revolves around a tweet last week. tuesday of last week at night where he put out the following tweet saying tesla made 0 cars in 2011 and will make around 500,000 in 2019 and said, look, it is closer to 400,000, the s.e.c. has filed for him to be held in contempt of court. their issue? that his tweet was not preapproved which is part of the agreement of tesla, elon musk and the s.e.c. of last year and part of the complaint the s.e.c. pointed out that musk essentially told "60 minutes" in

december he doesn't get his tweets approved. here's the lip. >> have you had any of your tweets censored? since the settlement >> no. >> none? does someone have to read them before they go out >> no. >> so your tweets are not super vised? >> the only tweets that would have to be reviewed would be if a tweet had a probability of causing a movement in the stock. >> and that's it >> yeah. otherwise it's, hello, first amendment. freedom of speech is fundamental. >> how do they know if it moves the market if they're not reading all of them before you seasoned them? >> i guess everyone makes mistakes. >> so what's elon musk's reaction to the s.e.c. trying to hold him in contempt of court? twitter user tweeted him saying, hey look, s.e.c. moved the stock more than your tweet and he wrote back, exactly. this has now happened several times.

something is broken with oversight and he has until march 11th to explain his actions to the judge and why he should not be held in contempt of court guys >> phil, any insight of why the stock recovered despite this drama swirling today >> i think ultimately it's because investors look at this and say, whatever fine, whatever kind of agreement they might have to reach following this, whether there might be changes in elon musk's social media postings that the tesla board finally does implement, ultimately he is not removed as ceo, at least that's the bet of investors. they look at this saying, a lot of headlines and this is probably not good. he may have to pay a fine. but he's still running the company and ultimately that's what tesla bulls believe in, that elon musk continues to drive tesla. >> phil, in terms of the seriousness of the tweeting in question, compared to many over the last year or so from musk,

this one was relatively small, particularly how quickly it was corrected, came after the market closed but i guess the point here from the s.e.c. is a settlement is a settlement and you have to abide by what you previously agreed. >> correct correct. and you will hear a lot of people -- if you go on social media today, you see people saying, look, this was not e agr egregious. so he really was not saying anything that's ridiculously out of line. having said that, wilf, the s.e.c.'s point here is that you made an agreement all of the social media communications would be preapproved in terms of anything market oriented and that did not happen in this case and, in fact, they say that tesla responded to their inquiries about this and tesla said, no, it was not preapproved. that's where we are at this point. >> okay, phil. thank you very much. phil lebeau in chicago for us.

still to come here on "closing bell," much more reaction to jay powell's testimony. rick rieder joins us to weigh in ahead. plus, powell wasn't the only one on capitol hill today. big pharma execs faced questions of lawmakers >> we're all trying to understand the sticker shock that many drugs generate, especially when some of these drugs have been around for a long, long time. >> we'll speak with former ceo fred hassan of today's hearing mehae llher real cngwi co to the drug industry.

welcome back to the "closing bell." pharmacy ceos testifying before the senate finance committee of issues of rising drug costs. a senator asked whether a state's ability to negotiate would drive down prices and here was the response. >> the va would get a lower price and the states would get a lower price if you're willing to go into an environment where that's imposed by states. >> there's two affordability issues here, the afford bltd ab

to system and the patient. both have challenges but the affordability to patients now has really gotten out of hand. >> i will tell you what is absurd is the fact that you have a $6.3 billion tax break and you can't say that you're for basic market functions like giving people discounts when they're bundled and you get volume i guess we'll have a tough time coming to something. >> let's bring in fred hassan, contributor. great to see you today. >> great to be here, morgan. >> your takeaway from the hearings today >> yeah. unfortunately, more of the same. it seems like a regular thing. usually after an election, people want to be known and seen so not a lot of new stuff. problem with these hearings are they appear to be problem solving exercises but they're really opportunities for people to make individual points. and that's really what happened

today. >> but do you not think there's more of a political impetus behind the issue at the moment than for quite a long time if we can't solve it now will we solve it ever? >> absolutely. there's been a lot of pressure in the industry already starting to exercise a lot of self discipline, starting about 18 months ago there's a lot of pressure now and most of the mainstream companies responsible. for example, what used to be two list price increases in a year have become just one list price a year in fact, many companies are saying that their list price were up 4% or 5% and the net prices after rebates and discounts were down versus prior year so overall, inflation and drug prices is not the issues, 9 out of 10 drugs are generic and there is really no issue there. >> you know, it is interesting this is not the only hearing as health care was a topic of the

discussion and the fed chairman weighed in saying that he sees it driving fiscal unsustainability it is one thing to talk about list prices and the drug makers but shouldn't lawmakers be taking a critical lens to everybody else in the supply chain and pharmacy benefit managers >> we need to look at the ecosystem. drugs are 15% of the ecosystem the cost per person in the u.s. is about 30% higher than the wealthier countries in europe. we do believe if we manage the system a lot better that we could find most of that 30%. but it's not necessarily just the drugs. there's a lot of other stuff to be improved. two major issues that politicians didn't talk about today that they should have been talking about, what are that he doing to encourage prevention? 60% of the 70% of the costs are chronic diseases to be prevented

in the first place and then litigation look at the outlier status of our country defensive med sins and litigation two things they should have been talking about, as well. >> where do you stand in the balance of that fact that the u.s. should be able to make it more competitive like cheaper markets in europe or on the other side the fact that markets in europe benefit from the innovation of u.s. pharma companies? >> wealthy countries should be paying a fair share and they definitely get access to innovations from the u.s sometimes they come a little later but they do benefit and in this regard the u.s. trade representative should try to put some priority on this item unfortunately, right now there's so much conversation going on around china and other sectors of theeconomy but this is an american industry essentially. this is truly an american industry and i think that the u.s.t.r.

should treat it as such. we have a disparity in the ability to get the right reward forinnovation from the norther european countries and japan. >> you know, when you say that, i can't help but think that there is potentially a model to be had here from -- this is going to sound wacky but from the defense industry, right? you have american defense contractors that build weapons programs for the u.s. and sell them to allies and some of the programs the allies contribute to the r&d in the first place and thinking of the f-35. >> absolutely. >> because you have more buyers, more money coming from more allies, you're able to drive down the cost of manufacturing those jets much more quickly and effectively. couldn't we do something like that >> absolutely. that's a huge opportunity because the academic institutions in europe and in japan are very advanced and the scientists are excellent scientists many of them are really coming to this country to do exercises of science because nobody's

nurturing the good stuff out there. i think there needs to be more global cooperation because never before has science become so exciting as it has these days. you can do a lot more these days. >> thank you very much for joining us fred hassan. fascinating discussion no solution yet. but one day. >> we'll get there. coming up, caterpillar trading lower after a rare double downgrade from a wall street firm and what's behind the analyst move straight ahead. later, just how much trouble could elon musk face over the twitter battle two former s.e.c. lawyers will weigh in one of those folks who needs to connect to the traditional stock exchanges? then i'm about to show you something you cannot succeed without. literally! this cable. looks ordinary, right? (and it is!) but plug it into your trading systems, and... whoah... you open a whole new world of shockingly basic access to those fusty old exchanges and the data they distribute. we're talking monopolistic-levels of access.

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♪ after the break, joel greenblatt will join us for a cnbc exclusive interview, we'll get his thoughts on the poul el testimony and the state of the market and where he is finding value. also, shares of weight watchers parent down more than 20% so far this year and see if earnings after the bell can help ton things around.

welcome back to the "closing bell." we have little over half -- little under half an hour left to trade the high of the session was 59 on the dow as for sectors, you can see communications services and tech at the top materials at the bottom. >> loving that dire straits music. hat tip to the control room. time now for a cnbc news update with sue herera. yukrainian president holdin

talks. por sche poroshenko saying he was thankful for support. the daughter of the spokesman for russian president vladimir putin has secured an intern's job at the european union's legislator a right wing lawmaker defending the decision to hire the woman saying she is training law and flael relations in france. amtrak train with 183 passenger that is had been stuck for at least 36 hours on the tracks in the snowy oregon mountains has arrived in eugene. and they are very happy about that the train was traveling from seattle to los angeles when it got stranded on sunday in heavy snow o. officials decided to keep the passengers on board for safety reasons and hulu cut the price of the most popular plan by $2. starts today, charging $5.99 a month for the basic plan with commercials.

the commercial free version will remain at $11.99 a month you are up to date i'll send it back down to you and see you in an hour. >> we look forward to it thank you very much. yesterday becky quick sat down with chairman and ceo warren buffett and asked him why he thinks value investing is harder over the years. >> well, it's harder for two reasons. one of which is peculiar to us is we've got a lot more money so the universe of possible things to do has shrunk from thousands and thousands of things that i used to look at with small amounts of money to a relatively few things i have way more competition than when we started. >> leslie picker is at the third annual forbes shook top adviser summit in las vegas joined by value investor joel greenblatt from gotham funds. over to you. >> wilf, thank you so much joel, did you agree with

buffett? has it become more difficult to be a value investor these days >> tougher for him buffett is famous for saying fat wallet is the enemy of high investment returns he's right about that but we don't have as much money to manage as him and we don't have the challenges we does only looking at few top companies and there are opportunities. when you go back, my students ask the same question. it is harder for us. but i tell them go back 20 years learning to read and take a look at the most followed market in the world. united states. s&p 500. take a look at when's happened since you learned how to read. from '97 to 2000, doubled. from 2000 to 2002, halvesed and to 2008 -- to 2007 it doubled. from 2007 to 2009 it halved and

to today it's roughly tripled. >> where does it go from there >> that's my way of telling them people are still crazy and emotional and it's an average of 500 names. if you look under the covers, plenty of opportunity and the s&p today to answer your question, we value the s&p every day going back from 1990 bottoms up the individual stocks. in the s&p on a daily basis so we can contextualize where do we stand today? we are in the 20th percentile meaning market's been cheaper 80% of the time and from the 20th percentile in the past, not a prediction but from this level in the past an it's been up 4% to 6% over the next year, 11 to 13 and the next 2. so not so bad but sub normal sub normal but certainly not terrible. >> sounds relatively expensive

as a value investor, do you find opportunity in this market >> we are not buying the index we are buying the cheapest stocks in the index. so there's always things that are in favor and always things that are out of favor. and so we are trying to buy things that are cheaper than the market and sell things that are more expensive than the market those always exist the thing that's going for us that we have n't had for last 20 years is, you know, 20 years ago you got a quarterly statement and pretty much throw it in the garbage and now you check your stock price every 30 seconds on the internet if you're a long-term investor, that creates lots of emotions, lots of volatility in the short term but if you can keep your cool and actually value businesses and have a longer term horizon even two or three years now is longer, there's plenty of opportunities out there. >> you're long home depot

reporting earnings short of estimates. are you buying on the dip here >> yeah, sure. i mean, you know, stocks of home depot, above average business. trading cheaper than the market. huge returns on capital relative for the retail business. they only -- lowe's is only main competitor really hard to get a better setup or business than this and the market overall's expensive but this is a better business on average than the market and also cheaper so it's a pretty great deal. >> also long walmart and boeing. >> boeing is also a duopoly. it's got a -- earns returns on capital quite high for capital intensive business they -- you know, like i said only have one competitor air travel is, you know, continues to grow. certainly grows over time. so once again, above average business and below average prices and wall administrator's

a same story. >> also with - >> well, walmart has more competition. they're not a duopoly. they are a great business. they have, if you want to talk about economies of scale if you're a retailer, that's the name of their business they can do things cheaper, buying power is better they have loyal customers. they're in places where consumers, they're convenient for consumers. so they just built a business over time that does things better so once again, an above average business at a below average price. >> ford, align technology, monster beverage is this strictly valuation or something else underlying these businesses >> that's a great question they're all more expensive than the market align technologies is a fine business they do invisalign for braces. >> smile direct club is other start-ups getting into the fray. >> like any business there's a lot of competition and coming

off patent, you're particularly vulnerable so it's a question of what price are you paying, you're paying a high price monster beverage, you know, they're high priced, too coca-cola is a part of the distribution and coke's going into the energy drink business so that could hurt them over time an i'm not saying it's not a great business but it's expensive and competition is coming ford is in a tough business. looks like their pe stock and don't generate any cash so -- and they have a lot of cap x coming their way so we're just not too bullish on ford and the way we value things is on cash flows an not earnings and from that standpoint quite actually expensive. >> i want to ask you about value investing, as a business throughout history, more recently we have seen systematic quantitative approach to quality

investing. more people moving toward that and traditional concentrated book and stock picking style of investing is few and farther between. how do you see the future of value investing going and do you think it will become easier over time and the cycle will turn in favor of value as we move forward in the cycle >> sure. well, really depends on how you value value. traditionally russell or morning star is low price book and sales and that's not we define it. we value a discount and that's a definition of value. ben graham would say figure out what something's worth, pay less, leave a large margin of safety that's the definition. not low price book they have rhymed with value meaning if you're trading at a low sales, the company is closer to the historic cost of the

assets and more likely out of favor and a bucket of those, you tend to find more than a fair share of cheap companies but that's acorrelation. causation are cash flows valuation of the business, that's what stocks are not pieces of paper that you put sharp ratios on or other fancy ratios they're ownerships you value and try to buy at a discount whether the market rewards us we ignore because that's what stocks are i taught at colombia for 2 years and make a promise to the students first day, i promise them doing good work the market will agree with them i never tell them when. >> a matter of when. >> a couple of weeks or two or three years but that is the secret to have a steady, disciplined, process to value, companies, and to be confident enough to stick with it. you know when it's not working in the short term market's very emotional in the short term we try to ignore the noise.

>> joel, thank you so much for joining us. >> thank you. >> i'll send it back downtown to you, wilf and morgan. >> leslie, thank you our thanks to joel greenblatt. >> with about 19 minutes before the bell, the dow is up, about 27 points higher right now the s&p is also up slightly. as is the nasdaq composite cater pill hear hit with a rare double downgrade today why wall street is seeing signs of trouble. but first, jon fortt at the mobile world congress looking at the future of wireless communication. jon? >> reporter: 5g is allowing this robot's joints to stay in sync find out more of what 5g can do coming up.

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and it's only from fidelity. when yowhat do you see?itical issues facing our world, we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today.

at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. welcome back tech's newest gadgets are showcased in barcelona and cnbc's jon fortt is there. what did you find? >> reporter: well, wilf, fifth generation wireless is coming this year and finally starting to get good examples of what it's going to be able to do. take a look. there's hype, 5g, 5g what can 5g really do and really

change here at mobile world congress, the show floor is the perfect place to find out. let's go ♪ now, normally thinking about 5g we think about phones like this samsung galaxy s 10 5g this is streamed directly and there's a lot more 5g can do check it out with 5g's low latency, i can react live with an animated version of the actual game now, in a factory, 5g should allow for more flexible, efficient production because the controls don't have to be physically connected to the equipment. they can be wireless there is an actual truck more than 1,000 miles away and i'm going to drive it over a 5g connection

multiplayer. nice on 5g that's what i just learned oh the most impressive thing to me about all this is combination of stadium thing where there's a live event simulated live event and i could manipulate it and that ping-pong match because in vr it makes sense, move around you could have a virtual boxing match with a game or the person. it is that fast and the latency is that low. >> ping-pong looked fun. is 5g going to really now threaten hard line cable in a way of 3g arrived, questioned it. 4g and seemed by what you showed us is the capability of 5g as good as anything that we have seen before. >> reporter: well, it could happen, wilf it is an issue of high band spectrum

that's what you need in order to do that kind of work that's simulated cable and at the same time cable companies are trying to compensate for that verizon is already out with a fixed wireless kind of 5g-ish service that's trying to capitalize on exactly that i think it's too soon to say. >> jon, first of all, i'm convinced you haven't slept for days because the coverage is around the clock and awesome and we talk about the race of 5g for an economic standpoint with the u.s. versus china and the huawei stuff playing out right now but when you demonstrate some of the technology that you just did, i can't help but think there's a security piece to this, as well, because essentially what it seems like 5g is doing is pin pointing location of every person with a smartphone, every device, every machine, et cetera, hooked up with 5g. am i right >> reporter: yeah. you are right. actually, i was talking to the chairman of the fcc of those

issues today i have been on air since worldwide exchange an it's about 10:00 p.m. here. those are some of the very concerns that people are trying to dig into. you know carriers say they're covering that cisco who was with me on worldwide e worldwide exchange was talking about that you have to monitor the activity across the network, all these sensors, the devices and if something is acting in a way and data flowing in a way it shouldn't that's a security incident and it's once you know bad people are in being able to monitor their activity before they do something really bad >> jon, thank you. again, jon fortt for us in barcelona. jpmorgan outlining its strategy for the year. that's coming up. blackrock's rick rieder will

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welcome back let's check in on individual market movers today. jpmorgan traded lower. down .75% after their investor day largely saw no positive surprise upgrades to guidance which sort of fits the late cycle narrative for banks. their return on equity target seemed on track and seemed to suggest they would prioritize reinvesting in the business rather than returning to shareholders we can expect slightly lower buy backs, too the guidance on q1 trading softer than expected anddown high teens on a year on year basis. the change from a year earlier driven by equities being softer,

especially in equity market and banks reported q4 earnings last month they suggested trading picked up in january and it was down, morgan, 1.5% or so earlier in trade. it is down .75% and a sense of no extra surprises than changes really to the downside on their guidance. >> yeah. we are starting to get the reports. bob pisani has been talking about it, the one idea missing from the market rally is nofs or thes and so much of what's driving the gains is share buy backs and seeing a drop in trading revenue and a company like jpmorgan coming out saying that, you know, a lot of their clients aren't necessarily jumping back into the market right now affirms that. >> volatility below 14 this month not played into decent trading revenues. i'm keeping an eye on caterpillar trading down on a double downgrade worst performer in the dow

today. firm cited slower global construction demand and lowered the price target of 154 to 1.25 a share. caterpillar currently down about 2% right now but worth noting, wilf, stock's up 8% quarter to date year to date it's down 15% over the past 12 months and what this downgrade has to do is expected peak in construction spending and what that means for caterpillar in terms of growth in the unit this year and come off next year and thus maybe the company's overpriced at these levels. >> you mentioned the rebound seen recently in the stock and seen it tied to china -- u.s./china trade talks and shanghai rebounded much more stronger than this stock has but other factors at play, not just china trade, of course. >> yeah. we have a news alert on ebay

and alex sherman with the details for us hey, alex. >> yeah. breaking news from ebay telling me that ebay is in talks to settle with activist firms elliott and starboard, both of them taking stakes in the company and pushing for a breakup of the company sources telling me now that ebay may settle with both of these active firms in separate settlements to come as early as friday, later this week and in them ebay will agree to do a full strategic review of the company including potentially selling stubhub, the classified business, and maybe even the marketplace business and a full operational review and strategic review those are the terms of the settlement which are still ongoing. of course, the settlement could fall through as the talks continue but sources telling me now that ebay would have separate settlements with both

firms pushing for a similar thing, both firms have about 4% stakes in the company and announced that in late january. >> alex, thank you for that. you can read more of alex sherman's story on cnbc.com. four minutes left of trade a up omiten k with the close i colef nus. this is loma linda, a place with one of the highest life expectancies in the country. you see so many people walking around here in their hundreds. so how do you stay financially well for all those extra years? well, you have to start planning as early as possible. we all need to plan, for 18 years or more, of retirement. i don't have a whole lot saved up, but i'm working on it now. i will do whatever i need to do. plan your financial life with prudential. bring your challenges.

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welcome back to the "closing bell." just over a minute left to trade. s&p essentially flat just below the flat line it's been up and down all day. no clear point when the fed chair was speaking the dollar, though, did sell off when he start talking. again, not purely because of what he was saying and more because of other currencies, as well sectors here back to the equity markets bringing in bob pisani no clear outline performance materials down half a percent. bob? >> if you look, when's the laggards banks, semis, industrials. when's the market leaders? banks, semiconductors and

industrials. i think we have seen modest profit taking. trade talk benefits. and even the fed being patient. >> bob, thank you very much. there goes the bell. at the close, we are back into negative territory for the s&p the russell down 0.7%. dow down about 33 points and lost steam into the close. but only down slightly at the close. back to you, morgan. ♪ welcome to the "closing bell." i'm morgan brennan in for sara eisen. wilfred frost will rejoin me in a moment along with mike santoli, cnbc senior markets comme commentator. stocks settle. well off the highs but also off the lows of the day in a tight trading range today. we had the dow finishing down about a tenth of a percent 33 points lower.

2657 the s&p 500 also finishing just around the flat line 2793 the nasdaq composite also finishing just about flat. 7549 the russell 2000 and also the dow transports were the worst performing indexes today the small caps finishing down. tech, consumer discretionary, the best performing sectors. of course, all eyes were on the fed chair today. day one of testimony on capitol hill here are the stories on the radar for investors. we got home depot weighing on the dow after reporting disappointing earnings buybacks helping to fuel the big rally to start the year and we are awaiting earnings from papa johns ian weight watchers to name a few joining us is our guest and then

mike santoli how would you characterize the market >> taking a rest everyone can see the charts and say on a short term basis the market looks a bit stretched but really, it's not looking like it's much selling but fatigue in there also, the reaction to powell's testimony today was really a nonreaction which i guess tells you the market fully absorbed the fed patience message. >> barry, can the fed get more supportive without the fundamentals getting a lot worse? >> no. i don't think so i think that fed global synchronized pause trade is pretty cleat in terms of its impact on the equity market. from this point it will be more about what happens with the

fundamentals i suspect the next big trade to the fed will be the bond market starting to sello of and looking that the year you have really pressed the 10-year noninflationary or real rate component down decidedly some 27 basis points or so this is what the non crisis period of qe 2010 to '13 did the rate from 1% to minus 1% yeah okay the fed is on hold and they may stop the balance sheet purchases but not about to restart asset purchases so you have a pretty good chance as the data starts to stabilize we get a decent selloff back above 3% on 10s at least. >> steppening curve with it? >> probably, yes. >> just to dig into that, if you have signs of weakening growth globally, i know the fed chair talked about that in front of congress today, and that has really been anchoring interest

rates abroad, how much can the u.s. bond market sell off? >> what happens to global trade over the next couple of months right? because that was clearly the catalyst for the stock markets in europe and in asia selling off back in the summer the data finally rolled by november, december and january it probably doesn't get much worse than it did. i mean, chinese imports from the u.s. fell 40% year on year in the month of january you would have to think you get some degree of stabilization and front loading of orders, maybe boycotts of u.s. products and you would think growth would look better from that perspective. so i don't think that things are on the verge of collapsing globally i think that story's largely behind us. >> what do you make of the fact that the russell is an underperformer today >> i think the stuff that's led off the bottom it looks like it's coming in for a little bit

of a refrentrenchman. semiconductors down today more than the overall market. i think it's one of those kind of first up is the first to kind of reset lower i don't know that it was necessarily a global macro impetus to that trade today. >> the 2800 level proving to be more of a resistance to the upside opposed to a breakout above it. >> at least for now. yes. we are stalling out right here again, it is one of those things where you have to ask yourself, is the market just exactly that cute for a fourth time since october to stop right here and then pull back sharply maybe. it is widely watched and a 19% run off a 19% decline and it's a symmetry that got us back here. >> let's talk about stocks specific home depot one of the worst outperformers today after missing on earnings estimates this morning citing slowing momentum and

announced a $15 billion buyback. it's down about 1% by the close today. coming with some poor housing data, as well, mike. what is this telling us about the consumer there's been different yigs. >> there has been. retail was okay today. sort of a home depot story obviously. decent undershoot to the guidance to eps this year versus the street and one of the more expensive big retailers, a status of quality names, stead de 18 times forward earnings is more expensive that's why i feel alike it's in a different spot versus ones that really need a strong consumer to kind of flush in there. what's interesting, too, is when new car sales decline, and the numbers are really bad, the auto parts stocks do really well. people say you have to pay more on your existing car it is less so with home depot because they rely on home depot

for turnover. >> what is the read through on housing with soft data and the consumer because we did get that strong rebound in consumer confidence today, as well. >> actually, i would argue that some of the leading indicators of housing have turned up. right? so that home builders surveys better home builder stocks rallying we have had a good sized drop in mortgage rates so i think -- it's funny, you know, when you think about why the fed went on hold, the idea that consumer price inflation is not responding to slack and hasn't done for two decades the one area where it is responding to slack is in the housing related components of cpi. as things went up through the course of last year you had a slowdown in housing and looks like a reacceleration under way and maybe home depot is a little bit part of that if you get a pickup in construction because rates have come in and the fed is now on

hold you could get a pickup in that sector. >> permits were strong, too. within the new home status usually a leading indicator. >> talking about earnings season more generally, people framed it as suggesting that quarter is okay but the guidance is looking worse for the year ahead >> i really don't buy into that. we were talking about this earlier. i followed earnings revisions for a long time going back to my days as barclays equity strategist equity analysts follow prices. earnings cut when prices go down -- >> stock prices. >> stock prices. excuse me. and thank you for helping me with that. i think when you think about the last earnings recession we had that was not associated with an actual recession, in '15 and '16, we had a 75% decline in oil prices 25% increase in the trade

weighted dollar. china's heavy industry going into a hard landing to cause commodity prices to crash. none are true. the revenue numbers are better now than they were then. i think the talk about negative earnings growth even for a quarter is highly unlikely and i do hear this argument periodically that, well, we have reached peak margins if i had a nickel for every time i heard that through this entire business cycle i don't believe that that's true and so i think we'll escape with a reasonable number in the first quarter and reaccelerate to low double digits by mid year and into the second half in my view. >> mike, is it enough to say that guidance from a large chunk of s&p 500 companies for the year ahead has been lowered relative to where it had been? >> it has, absolutely. that's been the direction of company forward guidance, analysts kind of tracking that but it's mostly concentrated in the first and second quarter and keep in mind, you know, look at apple, the big names that are going to weigh on earnings in

the first quarter perhaps. so, you know, i think it's -- i think that earnings recession argue systematic a little bit of a false one in the sense of talking about maybe we get to zero growth or plus or minus a percent or two based on the current estimates. not as if there's a deep trough in this kind of decline in overall profitability, at least not right now unless the second half of the year starts to look dimmer. >> can't help but to think to talk about trade margins. >> revenue numbers in particular in the industrial sector up nearly 9% in the consumer discretionary sector similar amounts. those are not the type of core revenue growth numbers you associate with anything like what happened in 2015. >> well, we have an article in "the new york times" today saying that this stock market rally has everything except investors. we were talking about this last hour attributing the recent gains to corporate stock buybacks mike, i'll put it to you first.

>> yeah. i mean, first of all, kind of a familiar argument, this entire bull market people point to things like cumulative net outflows of equity funds and stocks going up and a puzzling aspect of it because that's only a few flows that you can identify that are measured on a weekly basis or a quarterly basis to say that's where the buying's coming from it doesn't account for nearly all the buying an the selling so a trillion dollars in buybacks at the most recent pace, annually, one week's worth of trading volume when's buying? let's just say it's obviously household equity ownership as a percentage of all assets closer to a historical high than low. people don't have to buy as much to keep the allocations high and i don't know that it's necessarily something that's that much of a mystery look buybacks have played a big role in refreshing the whole kind of financial system and getting

money out ofcorporations and basically back into investment portfolios. >> barry, the marginal buyer decides the price on any individual day and buybacks have therefore flattened stock prices at least somewhat. >> they certainly contribute on the margin i've made the point in the past and continue to that buybacks were really desired by investors in the qe period it is a form of total yield. right? pay a cash dividend. you saw buyback relative performance. the companies that buy back a lot of stock massively outperform from 2010 to 2013 since then flattish. if you're looking for a more interesting number and way to think about that, what's driving stock prices, look at correlation. if correlation's exceptionally high, investors hugging the benchmark. correlation goes down, they take risk that risk that investors take is far more determinant of share price and share price direction

than buyback flows or retail inflows or outflows. >> talking about share buybacks, home depot is buying back incredible amount of stock. >> yes as long as they're not borrowing money to do it they did kind of mark the top back in 2007 when they were going to borrow some $10 billion to buy back stock. >> home depot is a great example for a lot of reasons they have done it all. they have brought leverage up and bought back 30% of the share float since 2010 so if you look at the actual operating cash flows, gone up 140% net income is up 230%. earnings per share up 360% over that period. they have really shrunk the flow and it's a growing business because comp sales are up every day and did the world need more home depot boxes no they have 2,300 now and did 9 years ago and not had an

opportunity or a need to reinvest in the business in a big way. so they have been able to grow, give money back and raise the dividend. >> on this debate about who's doing most of the buying, where cash levels are, and how much money's assigned to fixed income and most research from that is that people are still quite defensive. even though we saw a bounce back in markets and a bullish factor i guess. >> right there is a reserve of cash holdings in there. if you look at the fund manager surveys, money markets with a bulge last year and trickling back to stocks. >> we have an earnings alert on weight watchers. seema mody has those results. >> 46 cents adjusted, a huge miss on weight watchers bottom line estimate was 60 cents. revenue lower at $360 million versus 347 million and concerning comments in the earnings release

the ceo an president saying we had a soft start to 2019 versus last year. last year's strong performance winter campaign did not recruit as expected. therefore it's focusing on improving member recruitment trends and does mention that oprah winfrey playing a central role in the upcoming campaigns for spring oprah has about an 8% stake. shares are halted and will resume at 4:35 p.m for now back to you. >> thank you for that. mike, seemingly a big miss stock down 60% or so over the last 12 months. >> awful stock there's a sort of trending effect in this space in terms of the diet stocks, sort to speak they have a big surge, campaign hits or a new menu type thing works. and then they pay for it later so if they're not hitting that's weakest. it looks like it's pretty cheap.

not too much growth built into the stock price. >> that stock, as well, halted as seema said and we haven't seen the reaction to the eps numbers. >> yeah. will be interest dog see what a new marketing campaign with oprah does for it, as well. >> she is in the money from when she bought it. >> i believe well in the money. >> thank you, barry. up next here on the "closing bell," rick rieder tells us where he sees interest rates heading. elon musk lashing out against the s.e.c. after the regulator said he is vie latting a settlement deal. coming up, a pair of former s.e.c.awrs dat lyeebe whether musk could be in trouble stay with us i wanna keep doing what i love,

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welcome back to the "closing bell." fed chair jerome powell testified earlier today. powell saying economic growth will be somewhat slower this year and the fed will be patient on further rate hikes. >> the committee has decided that with our policy rate in the range of neutral with muted inflation pressures and with some of the downside risks that we have talked about this is a

good time to be patient and watch and wait and see how the situation evolves. >> leslie picker is at the forbes shook top adviser summit in las vegas and joined by rick rieder leslie, over to you. >> hey, wilf thank you so much. so listening to that testimony today from jay powell, what do you think are the market implications for investors here? do you think there's anything he said not priced into the market? >> not really. not today. but it's continuing down this path that he and all of the fed members have talked about being -- i call it the yoga fed. being patient, flexible around responding to the data chiwhich think the right thing. the reason this is so profound is you have what's a more symmetric fed. the you invest in equities it is commodities, whatever you invest in, the fact you had to worry about rates moving higher that's

gone i think it's a big deal and now thinking about do i hold interest rate exposure in the portfolio against the equities or otherwise you can do it and why you don't have that ugly ominous gosh we'll see the discount rate continue to rise. >> there's bit more certainty and did get into a bit of explanation surrounding the inflation mandate and you wrote you believe the drivers of inflation misunderstood. without an inflation mandate, what should the fed be looking at do you think? >> one of the things i said that i think is really important, inflation volatility at an 85-year low meaning you don't have to do a lot you can be patient that we're actually at a level, core cpi to 230. it is not that scary at all. what tends to drive inflation is demographics and technology and both pressing down i thought what was interesting is last cpi report with growth in inflation people said here it comes. actually if you took out

california on cpi, it was 1.6% top line cpi, california contributed about 50 basis points of wit the fires and you had a dynamic with regard to transportation and utility costs meaning rest of the country 1.1% inflation. not scary and the fed has more tools to deal with inflation than deflation and let it go a little bit. >> how coverly or not overly but somewhat optimistic of the economy and paying attention to overseas risk. a bunch of our guests today spoken with say they don't believe a recession is imminent but a downturn or slower growth environment. how do you view the contours of the economy right now? >> slowing there's no doubt looking at the cargo data, aircraft data, the economy is slowing

we grew at a quick pace last year you had factors driving the economy. the rest of the world was growing pretty significantly i think we slow the potential around 2%. i think there's something really important. historically thinking about a recession you had a manufacturing oriented economy and then you close the output gap and inflation grew you don't see that the hiring in services things like education, health care. it is not an economy that's that sensitive to boom/bust like you saw historically but one we will have unemployment rate that's 3.5%, consumption is 70% of the economy and continue to grind along. slower and pretty good for a while. other than it seems about time we have a recession. i don't know that there's another reason to have one. >> powell mentioned that especially as it relates to the oil economy. i think we have a question at the nyse wilfred? >> thanks, leslie. rick, i'm interested in what you make of what the other major central banks have said in the

last six months and how they have changed their tone because it's interesting despite the dovish tone of the fed over six months that the dollar index is kind of broadly flat around that 95, 96 level what is your take? >> so i'd say a couple of things first of all, the data and what jay pow sell talking about, the data in the rest of the world is tougher than it is, the data in europe and china has been slowing considerably i actually think it stabilizes, particularly china stabilize post this deal a thing i think is surprising is a fed on auto pilot, the dollar appreciated. i think it's hurt the emerging markets and the dollar appreciation has -- we can grind up a little bit but for the most part is gone and big deal for marks, emerging markets, we'll see the move in the dollar that we are going do see. >> rick, morgan brennan here the fed has a dual mandate

right? inflation and full management and managing and controlling both of them and focusing on inflation. considers reassessing the framework to that but the comments from him today also about the fact that perhaps there is more slack in the labor market than previously been, you know, i guess regarded when you look at the labor force participation rate what does that do for fed policy, as well? how should investors be thinking about that piece of the puzzle >> that's a great question it is a big deal there has to be slack. jobs reports of 300,000 jobs with an unemployment rate under 4, been under 4 and you have hired million -- i think 18 million people in the last 10 years. the numbers are staggering but we'll keep seeing it, we continue to see job growth and a hugely important thing of a service operated economy health care, education you're seeing the sectors, leisure, they continue to need people

more jobs available than actual people today and by the way i don't think that changes much. but, you know, quite frankly, we should let that go as long as you're not creating inflation, wages used to create inflation. they don't today let it go. let the economy continue to grow, hire more people let that manifest itself for a while. >> rick, powell addressed this idea of mmt, modern monetary theory meaning if there isn't much in the way of the inflation that the government runs up a higher debt tab and larger budget deficit as a result what do you make of this theory? what do you make of his comments in response to it saying we shouldn't be running up the debt tab without bounds, without limits >> i have a somewhat different take there's papers writing about taking on more debt. that is a difficult paradigm when you talk about the debt has

grown, if inflation were to rise, you would certainly have an issue in terms of debt costs moving up. it's a problem the thing we saw in the last quarter for sure was a crowding out effect the treasury crowds out and saw it in december in profound manner that what happened was interest rates moved up. gosh, i could be in the 2-year treasury at 3% why do i need to invest in equities that's profound and people say, gosh, we can absorb more debt on the country i think that is a very dangerous thing because it tends to drag on the economy in a multitude of ways. to be reserve currency in the world which is hugely powerful for the united states, we have to be thoughtful about the burgeoning debt levels in the country to be careful about it i think some of the papers recently i may push on a bit. >> are you concerned at all by the pause in the fed's policy

with regard to interest rates and what would happen if a significant slowdown did happen with regard to the toolkit that whether it's on the fiscal side our the monetary side and the policymakers have to lift us up? is there enough of a toolkit to help >> i mean, i think the ecb's in a tough spot you are at negative rates and you have a tough time buying more assets. fed has a tremendous amount of tools left at their disposal you can cut rates. you can -- you have had the ability to do more quantitative easing the balance sheet of the u.s. is 4 trillion 20% of gdp 40% europe and 100% in japan fed can do qe, do more in terms of moving interest rates, talk a lot about where they go in terms of policy. point being is i think the fed has a huge amount of tools at the disposal and reason for pausing makes a lot of sense

let it go. close to the neutral rating and seeing housing softens a bit they have plenty of ammunition from here. >> all right rick rieder, thank you so much for joining us. >> thank you, leslie. >> back over to you. >> thank you, leslie picker and thank you to rick rieder of blackrock. we have a market flash on gap meanwhile. seema? >> hey, the board of directors approving a $1 billion stock buyback program and the stock responding nicely up nearly 1.6% the announcement ahead of gap's earnings report due on thursday, february 28. shares trading at $25.25 back to you guys. >> seema mody, thank you mike speaking of buybacks. >> small enough market cap that it's dlesz than $10 million and gap going a slow motion leverage

buyout high free cash flow. we have an earnings alert on papa john's, as well kate >> hi, morgan. this is looking like a tough fourth quarter for papa john's misses eps at 15 cents adjusted, that's a two-cent miss. revenue $374 million the street looking for $390 million. take you through some of the same store sales metrics for the fourth quarter, north american comps down 8.1% for the full year down 7.3% meanwhile, for the quarter international same store sales down 2.6%. announcing their deal with starboard a few weeks ago they did give results for the month of january which, of course, are not included in the quarter. doing 10.5% in january the company also gave some guidance for full year 2019 eps coming a bit below the range also saying seam store sales in north america to decline between

1% and 5% for the full year but as you can see the stock up by around 4% right now. back over to you. >> certainly is, kate. thank you. mike, i mean, a lot of downs there in her reporting. >> exactly sort of shows you that the stock is not trading on month to month, quarter to quarter results with the activists in there and question of ultimately the structure. also, $1.3 billion market gap. prominent and not that huge of a company in the market. >> same store sales particularly surprising including guiding down for a year and the stock up 3% or 4%. up next, the s&p 500 has rallied nearly 12% so far this year we'll discuss whether there's a risk to that rally, whether it is overstretched, straight ahead. latter, find out whether nemaivesorts avoids a sse fi against the former ceo. st a ,

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to full-blown production. ♪ ♪ let's go from being on-call... ♪ ♪ to being on-line. american express can help move your business forward with loans, vendor payments and buying power. chat with one of our 4000 specialists and let's make it happen. the powerful backing of american express. don't do business without it. welcome back the strong rally in the market stretched the s&p 500 far above its short-term trend could this indicate a pullback in the market ahead? mike has more. hey, mike. >> the setup is here for a pullback this measure it is s&p 500's level relative to the 50-day average. above it and below it. way below it here in december.

that's an unusually steep decline relative to the 50-day trend. only really matched in the bull market in 2011 sprang higher. above 6% yesterday's close you can see that's about a level right here where we have had pullbacks in the market before so essentially this is telling you the conditions are ripe for a mean reversion trend i will say this is an interesting example in 2011, though, because this is the european debt crisis and the debt ceiling issue in the u.s. this is a mini bear market just like in late 2018. when you sprang back off of that, pull back and not near the old lows and a measure of a strong market with a good trend behind it and maybe just getting overheated in the short term. >> looking at the s&p 500 chart here, as well. just above the 200-day moving average. >> puts you in a basically

neutral trend on the longer term basis and the 200-day average is flattish right now and no real, you know, red flashing lights here for the rally but it does show you it should not be a surprise to anybody if we back off of it here. >> thank you very much always a pleasure. check out shares of weight watchers reopening after reporting a miss on the top an bottom lines issuing weak full-year guidance. they have reopened down 32% as we said when we brought the numbers. big eps miss 46 cents per share expected to be 60 cents per share. 330 million. expected 347 of course, they were already down almost 60% over the prior 12 months before this. time for a news update with sue herera. >> everyone, we begin with members of the senate finance committee grilling executives of seven major pharmaceutical companies on the issue of

soaring drug prices. merck's ceo saying the system is to blame. >> we believe that prices can better align with the drug's value when manufacturers and payers are able to negotiate innovative contracts that base payment on a drug's benefits we need to move to this type of system but there remain obstacles. the republican candidate in a north carolina congressional race marred by voter fraud allegations will not run in a special election mark harris bowing out after fighting to be certified as the winner of the disputed november race his campaign was tainted with accusations of voter fraud. and take a look at this cutie pie. 1-year-old yang of north carolina has been chosen as this year's gerber baby she beat out more than half a million other baseballs for that honor. she was introduced on the "today" show this morning. the gerber ceo said she was

picked because of the curiousness and wonderment they saw in her eyes. the first gerber baby of mong descent from southeast asia and china. >> those pig tails help, too. >> i know. you can never go wrong with pig tails when you're 1. anything after 1 it's not such a good idea. >> sue herera, thank you very much. >> got it. >> uplifting final story which we always welcome. two former s.e.c. lawyers will debate with us. we're back in a couple of minutes. you're searching for something more... ...red-blooded. right this way. you thirst for adrenaline, you hunger for raw power. well, you've come to the right place.

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welcome back shares of tesla finishing slightly lower after the s.e.c. asked a judge to hold elon musk in contempt for violating an agreement reached last year. >> musing called out the s.e.c. for lack of oversight. the s.e.c. complaint did move

the market musing writing this has happened several times, something is broken with s.e.c. oversight. a judge has given musk to march 11th to explain why he shouldn't be held in contempt. joining us to discuss this is two guests gentlemen, good afternoon to you both michael, i'll start with you does the s.e.c. have a case here >> i think this is a message case elon musk has been clearly dismissive of the s.e.c. since the settlement was entered into and trying to send a message that the settlements to be taken seriously. we see here is a one strike an you're out policy. >> michael, overall do you think the s.e.c. has a strong case with this particular interchange of tweets? >> on the merits it is clear

from the s.e.c.'s order they agree he did not follow the procedures laid out in the settlement agreement but there's an optics issue for them the tweet after market was closed and it was corrected within four hours and he laid out in the public record his defense so i think he had some defenses there. >> russell, do you agree he has clear reasons for defense? >> i'm not sure that he has clear reasons for defense. as i agree with michael, the s.e.c. doesn't have a sense of humor with respect to the negotiated orders. here i think his problem is not only substantive but procedures. there's procedures placed by the judge on him by which he had to comply in order to send out these tweets and he clearly did not that was admitted by his lawyers with the s.e.c. so i think he's in a position to be eating humble pie and

basically begging for forgiveness. >> so, key question here, michael, of course, you did see the stock come back off the lows of the day i think closed around the flat line there seems to be a belief at least among investors that maybe you could get musk to, you know, remedy this situation and adhere to said settlement and not going to mean him being ousted as a ceo. >> that sounds about right civil contempt is designed to coerce compliance with future orders and not to be punitive. so if you think about tweeting, it's hard to think of a remedy to force him in the future to prom ply maybe there's a fine maybe there's additional procedures and not renegotiate the order and say remove him as the ceo or something like that. >> you say it's on the procedurals grounds and doesn't the argument he violated the procedure hinge on what you consider material, material bit

of information that you're putting out there. so are they going to play semantics with that, perhaps, saying we said 500,000 cars this year within the range of what we previously stated and all the rest of it, is that where we have the argument of what's material from a ceo? >> what's material is very relevant to what the s.e.c. does and here they have put in place certain procedures including basically a 24-hour period in which he's got to get approval that approval expires after 48 hours and clear that either mr. musk or the attorneys, though my mess guess is mr. musk decided not to comply. the s.e.c. doesn't look at specifically this violation as to whether or not it's a material violation it's concerned more about the absence of mr. musk compliance with the terms of the court order and courts have a great deal of power to enforce the powers i don't think it's the case to do this but they can blow up the whole deal

there is a requirement that individuals when they sign the negotiated settlements comply in full and the s.e.c. reserves the right to come back to court and ask that the agreement vacated if the individual is not in compliance with the terms of the court's order. >> okay. we'll leave it there thank you both very much. >> thank you. north korean leader kim jong-un going old school for the meeting in vietnam with president trump. why he skipped traveling by plane. he's on our radar, next. we are back in a couple of minutes. . and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

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welcome back here's some stories on the "closing bell" radar today kicking off my story, north korean kim jong-un arriving in vietnam overnight for his second summit with president trump using a slightly dated form of travel despite north korea a being four-hour flight from vietnam by plane, kim took the journey by train which took 60 hours. it was in part to evoke memories of kim jong-un's grandfather, former ruler who travelled to the soviet union and eastern europe by rail i can't believe the lengths you go for the sort of image 60 hours versus 4 hours. >> the theater of it. >> yeah. went to singapore on an air china boeing 747 and the fact it had a china flag and american made didn't go down well have a better photo-op. >> like the antithesis of high

speed rail i can't imagine the security for the optics. i'm keeping an eye on fake meat wars that are heating up. bio tech start-up startup, a nee called motif closing a $90 million funding round. they aim to find the next thing in laboratory-grown food it's inspired by the success of the impossible burger, which is a genetically engineered plant-based burger designed to taste like meat and look through meat right through energy ventures which includes jeff bezos, michael bloomberg, richard branson and jack ma. it's like the billionaire burger of the future here i don't know about you guys, i like plant-based food but i don't need it to be mocking meat >> that's exactly my thought. >> but i guess if you're trying to combat hunger and climate

control and those kinds of things, this is a way to do it. >> these arement to be environmentally friendly and be healthier to eat. >> mostly the environment, yeah. >> genetically modified food, somehow this is okay. >> an end to all those annoying robo calls might be in sight there was a warning to phone providers to crack down on scammers or face new rules >> recently i told the industry, look, woe need to adopt call authentication this year otherwise there's going to be regulatory intervention. >> and these robo calls are even more frequent according to a caller i.d. company. the average american received ten spam calls per month in 2018, up 46% from the year before ten a month sounds low to me. >> it's like ten a day between my two phones.

and some of them are in chinese. >> it is a lot it's more than that. >> this is a perfect, if you ask most people, use of a regulator's power to say let's set some technical standards and solve this problem everybody thinks is a problem. >> always on student loans as well. >> i must have aged out of the student loan robo calls. >> it's infuriating. the nevada gaming commission just handing down a ruling on when rorests dealt with sexual harassment claims at the company. we will be live in vegas with that story coming up next. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman?

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welcome back nevada's gaming commission handing down a history fine to

wynn resorts for its handling of sexual harassment claims in the business contessa brewer is here for us. >> reporter: this was a $25 million fine, nearly four times bigger than any previous fine, punishing the casino to turning a blind eye to employees' complaints of sexual harassment, misconduct, assault and even rape this time the company says that steve wynn was allowed his bad behavior wynn resorts admitted to almost every allegation laid out in the complaint but it pleaded that it had transformed the company. new leaders, new board members, new policies in place. in fact the ceo matt maddox testified before the commission today. >> and i knew along this journey that this company was not about one man. it hadn't been about one man for a long time. so we went on a journey to define our values. >> reporter: that fine is equal

to 1% of its ebidta. stiffer penalty than many insiders had expected. massachusetts regulators and that crucial decision on wynn's gaming license there, guys. >> contessa brewer, thanks for the details on that fine from las vegas. shares omyn nkg f lasiin after hours on earnings. we'll bring you those numbers, next obvious. sometimes, they just drop in. cme group can help you navigate risks

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welcome back we've got another earnings look on mylan seema mody has it. >> mylan reporting earnings that missed expectations, $1.30 versus the $1.36 estimate. total revenues down driven by weakness in north america where net sales dropped 16% and that was primarily due to lower volumes on existing products shares are responding, down about 6.7% back to you. >> seema, thank you very much for that down 6.7%. mike, rounding things back off, the markets down very slightly but not an encouraging sector performance. >> just a little bit sluggish, a little defensive it seems like the market is trying to see really if we're going to set up a true pullback or just go sideways for a little while and restoere a little bit

of the buying energy. >> we've got the fed chair in front of the house tomorrow. we've got the north korea summit between trump and leader there we've got michael cohen testifying, more earnings. it's a busy week ahead of us. >> there's headlines but it seems like the market has baked in the fed. >> ge just dropped its 10k >> we're out of time here on "closing bell. "fast money" begins right now. "live from the nasdaq market site i'm melissa lee tonight on "fast," the powell pause continues. and now stocks are pausing along with him we will tell you the one thing the fed chair said that had all of wall street talking. plus two dow downers home depot and caterpillar getting crushed today but for very different reasons. first we start off with tesla's twitter trauma stop me if you've heard this before elon musk in hot water