that's funny, chewy ceo. firms to shield themselves from trade. of course, it had traded down the debts and pension about 2.2% in the actual but i'm simple did you see the story about obligations of companies they session. it comes off the company says it this passenger who tried to open take over. coincident with that, she has will take a $4.9 billion charge a door mid flight. >> and the airline is going also called for a reinstitution to -- of the glass stiegle separation for the 737 max problems in this >> bill her. quarter. it is due to report earnings in >> -- bill her for that? between commercial and six days time. >> $100,000. investment banks boeing ceo dennis muilenburg she is also tying it together through go for the average person by making the argument that the postal don't do that midflight. service ought to be able to "closing bell" starts right now. offer low-cost checking and just tweeted rpgs we remain savings accounts in cooperation welcome to the closing bell. i'm courtney reagan in for sara with credit unions and community focused on safely returning the banks. now i just got a statement from eisen at the delta post as ceos the financial services form, 737 max. which said that warren's clearly that impact is being prepare to meet with the taken well by the market, president in this hour proposals would raise costs perhaps expecting a slightly without providing any commence that and everything else investors need to know before bigger impact. they also in the press release the market closes. rate benefits to the consumer. also got a statement from the relating to this reiterated >> and i'm wilfred frost they're aiming to get the 737 investment counsel which represents private equity, max back up in the air by early pressuring fang and media stocks saying they're responsible for outperforming and odds of a q4 perhaps that aspect of it supporting a $685 billion in welcomed by the market. >> yes, and that would be half-point rate cut rising the fed needs to, quote, investment in 2018, trying to 7 points on boeing is 50 points make the case that elizabeth on the dow so just to keep in mind if you vaccinate the economy from too warren would disturb the see the dow futures responding after hours, but, yes, any economy, impede economic growth low inflation. with these proposals signal that the company feels as let's check in on what the markets are doing. obviously they have no chance of if it has its arms around they are now higher. being enacted any time soon. quantifying the impact probably

if she becomes president and will be welcome. >> definitely is stock to watch all the major indices. democrats win the senate you tomorrow as well as we said, netflix is lower microsoft's conference call set have to be paying attention to to kick off next hour. what she's proposing in the back to john fortt with a look communication services bottom, campaign right now. >> clearly, there is a bank at what to expect. john, what do you make of what oil continues to slide down 3% aspect of that, as you said, we heard from the quarter so with the reinstation of glass far? >> yes, the call in just over 30 minutes, and this is going to today, 8% for the week as a be somewhat of a victory lap for whole. financials top the sector stiegle. what's your take on that performers microsoft. revenue, you recall, came in news this hour, as airline do you think that's a calculated nearly a billion dollars above point from her, to think well, executives get ready to meet expectation, strong eps and with the president at the white wall street was the focus ten margins, but it is also the end of the fiscal year house. let's get to eamon javers for years ago, so whoa have to go after a subsector of finance so we should get a glimpse of the latest. >> reporter: we're expecting now, which could be more microsoft's level of confidence about next quarter and the next fiscal year. ceos at the white house for a palatable across both sides of a lot of the guide is broad the aisle, potentially. meeting with the president of >> she has tapped into a the united states. color about volatility in longstanding critique of the certain lines of business, deal we'll see familiar faces from american economy, which is that united, american, big-named it devotes too much resources to sizes, maybe even geographies. airlines who will be here. financial engineering and that typically microsoft gives a atlas, a cargo carrier, qatar finance and wall street suck too number for operating expense much money out of the economy. growth also last year they projected she calls it legalized looting 7%, so expect analysts to be by financial executives. listening closely to that as airlines, fred smith from fedex. the question really is, would well, guys. these proposals, in a this is over a dispute about >> john, thank you 1.4%, up microsoft after open skies agreement that allows substantive way, address that problem? is it the right problem to hours. mike, final thoughts address? a couple of good earnings would it have unintended consequences carriers to fly. we won't find out unless any of reports here. >> yes. >> they're going to help the there's a concern about the these things get enacted market overnight, and microsoft

middle eastern airlines, qatar probably the key one. >> i took a quick peek in particular. for now this helps identify her u.s. carriers are arguing ever more firmly as the amazon slightly bid higher in the after hours. candidate who has very specific so it seems people might want to they're unfairly subsidized and proposals to restructure the bet tech can essentially get a american economy bid after giving up ground with these artificial subsidies she's competing with bernie today, but not much. >> and netflix, we had the big are playing into the american sanders for those votes on the market loss but it doesn't necessarily it appears that will be aired in left of economic populists who speak to the rest of the faang say the 1% is taking too much full inside the oval office in a stocks. >> it is its own thing, it was on the way up but somewhat on minute we'll try to speak to these wealth out of the economy. the way down but she has more detail and more it is exactly right. airline ceos and bring you their it is purely about the pacing of comments and let you know where, intellectual heft behind her netflix subs for now, 16 billion if anywhere, the president comes in market cap lost, not great proposals than bernie sanders down on this debate. has shown so far. but contained in the overall >> good point. we expect that later this hour. john harwood, thank you. market for now. >> we finished close to the highs in the session >> eamon, thank you. mike, what do you make of all we'll continue to monitor that. these proposals from elizabeth s&p up about 0.4% for the week joining us for the full hour warren i imagine this will stir fear. is mark eversole as a mo that does it for "closing bell." >> "fast money" begins right now. >> "fast money" starts right now, live from the nasdaq >> it certainly does marketplace overlooking new york speculators and financial city sometime square engineers as opposed to down to these relatively dovish. i'm million. operators. not just that they flip companies after cutting costs we have pete najarian and guy and taking away retirement adami and karen finerman benefits and things like that following the earnings rereport, but thousands of companies are we will find out what is next owned indefinitely by private for microsoft.

>> investor sentiment. equity nobody is expecting the market they're a much bigger force in the economy than they ever were to go up a ton or expecting it plus cloud strike. before and this is a reflex of . striking it bill byck g in the t to go down erpgs report since the ipo trump probably getting >> interesting stuff when it comes to the battle oil getting crushed in the re-elected if you asked what between washington and big tech, session. we begin with big breaking news facebook and google are not the on boeing. they think about the market. the company out with new numbers same thing only companies in focus. on the impact of the grounded stability is the ultimate watch senator marcia blackburn word with rates going down in the 737 max planes other direction, that can't chairing the first-ever senate hurt. >> we'll hear a lot more from judiciary tech task force today hosting a round table with you on this hour julia boorstin is covering the chiefs of snapchat, mozilla and match group. netflix fallout. senator blackburn joins us with morgan stanley earnings. bob pisani is tracking the our own ylan mui. >> thank you for joining us today. >> absolutely. >> reporter: let's start with the privacy round table. why did you call these companies in particular to come to capitol hill and what did you want to movers julia, let's start with you. find out >> netflix not only lost >> senator lindsey graham who subscribers in the u.s. for the chairs the judiciary committee first time in eight years but was looking holistically at what added 2 million fewer is happening in the virtual subscribers than it had space. he said, you know, we need to do projected. one reason the stock is trading a deeper dive on this. down over 10% is concerns about so he turned to me, i'm one of coming competition. first women ever to be a >> we're adding a lot of new republican on the senate judiciary committee, and he said, "why don't you take this

competitors enter over the next year i think our position is chairmanship of this task excellent. we're building amazing capacity force. i was honored to do so we called them in and said, for content. our products have never been in look, we want to look at how better shape our rate of investment is privacy works in the virtual extremely high so, if investors believe in space because one of the number one complaints from tennesseeans internet television, which i think is an easy one to get there, then our position in the i hear is they feel as if they market is very strong. have no privacy online, their >> netflix did suffer from not exposed, their information is having any really big breakout exposed. we had snapchat, match, hits this past quarter salesforce and mow zilmozilla a hastings said he projects strong subscriber growth over the next year as some of their most the good thing is it let us see how privacy is working with the popular shows return back to you. companies for those that are >> julia, is this suggesting preteens, teenagers, young that the model is very much adults and adults who are in the based on one or two massive hit shows as opposed to the more job market and mozilla, which is a privacy mediocre catalog they've been building underneath it by design company, that, works >> it's interesting. people spent a lot of time with all of these. watching netflix, wilf >> what was the tenor of the what brings them in, and what conversation there's been a lot of heated keeps them around? rhetoric from both sides of the it seems, especially based on aisles against tech companies this past quarter, that big this week on capitol hill. water cooler type shows, things what was the discussion like like "stranger things" or "the >> our discussion was really so

crown," the type of content instructive and informational, people will be talking about and doing it as a task force or because it's new, exclusive to a working group you are sitting netflix, that's what's most likely to bring people on to the together and members are asking platform, to add those new questions. it is not like a hearing where subscribers. you look at what people stick around and watch maybe overtime, everybody gets an opening people are likely to watch the statement and everybody gets five minutes this was an opportunity to have likes of "friends" and the dialogue and to have very "office. constructive dialogue. now they're less worried about netflix losing its licensed shows like "the office" and like senator kuns and i did a mini "friends" and are more worried gaggle if you will with some of the reporters and talked about about the challenge of coming up how we are looking at the issue with new hits all the time of privacy and getting some a bunch of popular series like protections in place for the "orange is the new black" but it american people. >> senator, thank you so much will have to keep introducing for joining us i'm wondering whether you're concerned about just making sure new ones. companies adequately protect the >> leslie picker has more at data they have collected from headquarters hi, leslie. >> beat on the top and bottom line helped to drive morgan stanley shares higher today. consumers, i.from potential hacs the results were driven by the or where consumers start to own wealth management division, now representing about half the net the data collected from them >> we talked about each of

revenue at the firm. those. i think as you enter the beating analyst estimates, discussion of what privacy is going to look like online, you have to talk about harms to the showing gains year over year consumer you also have to talk about how long you capture and hold data cfocruzen said that helped but and what the protections are could reverse if markets decline. also facing headwinds with that going to be for that unit in declines year over year indeed, as you say, let's put a and missing analyst estimates. privacy framework on the books guys >> leslie, thank you so much what we did get some agreement on today is this marc, what's your take on banks everyone thought the ftc should earnings as a whole this week? >> you look at morgan stanley, be the regulator, and they really agree with that one our analyst glenn shore has it clear on this. regulator, one set of rules for watch word would be stable but the entire internet ecosystem. lethargic, right that's the message that's not necessarily a bad they all like the idea of having thing. declines in key markets, m & a, underwriting other areas opt-in if you are talking about the core franchise is absolutely more sensitive data, opt-out for fine they've been controlling costs, less sensitive data, so that you doing -- loans are looking up. are giving the consumer the again there's some good signals ability to control what i call in there quite frankly, i think there are their virtual you, which is their data and their presence franchises that even in -- jp online i think you're exactly right we're going to move to a day

morgan, wls look better. where the consumer owns their morgan stanley fits into the reasonable and, frankly, data they figured out they're the positive category, all things product when they're using some being equal. of these online apps and that >> only thing i would add is banks overall down for the week their data is very valuable, and as a whole positive moves today slightly they want to own that data missing the sentiment of the week as a whole. it doesn't matter if it is health care or financial citigroup the only one that's up services or if it is their week to date social media interactions. after a late session boost, bob >> senator, thank you very much for joining us >> good to be with you pisani is tracking the moves bob? >> take a look at honeywell. thank you. ylan, thank you for bringing big dow component. they came in, beat light senator blackburn to "closing bell". up neck, microsoft's earnings revenues guidance for the second half of call about to get under way. the year, raised the full end. we will preview the key inthgs to listen out to that stock is trading to the up 1.4% on microsoft hours upside elsewhere, if auto business is in trouble globally here, genuine auto parts way below expectations, auto retailers, advanced auto. o'reilly they're all trading to the downside tough situation for them do you know how complicated the situation is look at ppg.

coatings, airlines, all sorts of things, boats all over the world. solid growth in aerospace and marine but sluggish in automotive higher ra material costs, selling costs are higher this is a very tricky earning season back to you. >> thank you, bob. shares of philip-morris surging before the bell. hi, frank. >> hey, guys philip morris on pace for its best day since 2008 after it beat on eps and revenues, raising full-year guidance for its heated tobacco product expected to compete with e-cigarettes fda approved eikos, nicotine cigarettes with fewer toxins core business globally, those fell by 3.6% very vocal about pivoting away

from that business philip morris on pace for its best day since 2008. >> frank, thank you very much for that angle we want to ask you about another earnings winner today, union pacific. what's been moving that stock? >> i think it has to be the beat on eps, 8 cents above estimates. shares up 5% right now record operating ratio, measure of efficiency that the street likes a lot. volume was down 4%, the company blaming falling rates. flooding in the midwest. lower demand for coal and sand csx had a similar problem. earlier today, saying he wasn't concerned about a slowdown in the freight business but did say passing usmca was key. west coast ports where chinese goods are brought in and u.s. goods are shipped out. again union pacific up 8%.

>> jack, what do you make of this we didn't hear great things from csx, talking about a puzzling environment, ceo today, union pacific, pretty good. >> one of the beauties of the rails, you get updates on a weekly basis so the volume shortfalls we're talking about are not necessarily a surprise per se we talk about the weather in the midwest, the flooding, that agriculture has been late starting not news because we're hearing it so long how well are you controlling your costs not just the rails but the market overall costs in terms of what they can work their way through i think the rails wind up being interesting leverage to the idea of a trade deal when we talk so much about kicking the can, in terms of working to negotiate further, one of the provisos has always been more agricultural purchases. the rails end up being a nice

xhod toit that trade that can come at some point. >> marc, more exposed to global trade or u.s. growth >> i think it's a little bit of both is the reality. frankly, the sentiment will drive these. in my opinion, there's a belief right now that trump will resolve the chinese trade issues long before the election he won't let this hang out if he does, i think, frankly, that's still okay news for the rails in that the economy is strong if that happens, we get a boost. that's probably more upside than anything else. the way they're acting today, that certainly bodes well. >> certainly you can look through and if you go back to the original and look for the difference of how the transports is behaving and the market broadly and even within the transports, more traditionally exposed names have been much weaker than the rails. >> one thing to interject, though, is make no mistake, the volatility with the chinese trade issue is going to remain

out there for another good six months we have a house view that in essence there is still going to be a lot of challenge to that. there's major issues to resolve. huawei hangs out there while we have upside today, the reality is this could be under pressure going forward if there's concerns. >> jack, we've seen the big tech stocks pull back today off the back of netflix. buying opportunity for netflix or the broader fang names that have suffered a little bit in view of netflix's numbers? >> the issue when you think about fang, they're described as secular growth if you want to be secular growth you have to grow regardless of the environment. some subscriber models have proven they've been more secular and less cyclical. i do like tech broadly but i would like to have a little more cyclical exposure, value biased. >> jack, we'll leave it there.

thanks for joining us. >> thank you. >> we're counting down to another big afternoon of earnings microsoft gearing up for their numbers. chewy since going public, we'll preview the key things to watch. >> plus the debt ceiling debate taking center stage. we have a look at how stocks continue to perform. check on the data tracker, well above estimates with a reading of 21.48 rising to 216,000, a match with ctions we'll be right back. the hamstern their cage. content on their endless quest, to nowhere. but perhaps this year, a more exhilarating endeavor awaits. defy the laws of human nature,at the summer of audi sales event. get exceptional offers now.

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44 minutes left of trade, the dow is higher by about 12 points we're not too far from the session highs at this moment the low was 151 points, so well off those lows mike santelli has today's dashboard. mike >> thanks very much. the cobbler's kids, you know what they say about them once bitten, twice shy a bit of caution by one reading that might be evaporating. we'll see.

tortoise and the hare, pretty self explanatory which two groups that's about and goldilocks or the bear the cobbl er's kids, how they've underperformed s&p 500. historically, they've been the best stocks to own their productive, effectively, is the stock market. what you've seen here is the big guys of last year underperforming, black rock, t. rowe price pretty profound under performance. today some of them are bouncing. it's a little bit like when the energy stocks underperform the commodity. it's because the market either thinks it's not sustainable or these companies are not positioned to profit the way they were used to be able to profit healthily from this trend. flows are not that great fees are being compressed. they look fairly cheap if this rally has legs, these guys could be prime for some kind of a catch-up move.

morg morgan stanley shows you the bright spot. guys >> mark, i guess it's all about scale and goldman sachs shows managing numbers could perform well and this industry has seen a lot of consolidation it's all about cost cutting and scale at the moment. >> it is a steadier business even when it's not growing rapidly. perhaps investing banking. you see the appeal of it the market is treating this group as though it's somewhat subject to continued disruption as to flows in passive instruments and things like that. >> mike, thank you mark, do you want asset management exposure, private equity or banks? >> i think the business certainly has its challenges right now. they're standouts. t. rowe price, a firm with culture, with a great history, with a fantastic management that understands how to outperform if they're managing active money. that's been the core of what

they do. i think there are names within that list. you saw the differentiation. although i had to look up the cobbler's children thing. >> we didn't get that either. >> i had to look that up google these are still very, very good businesses first five ones are being helped more and standouts have a real active management culture, t. rowe stand out our analysts feel that way as well. >> make sense. after the break, bank of america hitting the fast lane with a new note on ferrari the word on the street on that call next. chewy facing its first big test since going public. rngs, 'lompany gives out eainwel speak to the ceo exclusively after numbers hit.

welcome back to "the closing bell," the firm citing greater conviction in the iphone saying will drive a struggle cycle. >> barclays on qualcomm, when it comes to a failed appeal on the anti-trust case, down 2% bank of america raising its price target on ferrari from $150 a share to $200

defensive business structure that allows the car maker to hold up despite broader economic market this is a big upgrade on the ferrari one. it's 50% upside. it's up already 75% year to date been a strong performer. price target and they've done a big upgrade. kudos to that. apple, marc, to come to you on that, is very sensitive around g5 models and the mix of what they sell will be toward the high end of their product range as opposed to this year it's been more low to mid-end products. >> i agree i think it's great they're upgrading late in the game but this is still a great story, right? it's all about monetizing. frankly, not the iphone in my mind that's certainly an important part of the story. but the mac. that's even more important to the story going forward,

considering what's going on in the app store. >> it's a small portion of the earnings. >> it is but when you think about the movers to the model going forward, 10 plus percent being that, that is an opportunity and a big refresh cycle. couple percent for apple is a meaningful number. >> 5g and a large reason for the raymond james upgrade, do you think consumers will understand the benefits to 5g i'm not sure that 5g is enough for me to buy a new phone unless the other features are markedly different, i'm fine with mine. >> my guess is last time around the three of us sitting here didn't know why we needed an lte phone, nor 3g nor 2g or 1g or why we needed to get rid of our blackberries at the time. >> right. >> when people see the features, the ability to do sort of dynamic things, use it much more interactively within the environment, the internet of things kind of features that will become much more pervasive with 5g, the lights will turn on

a lot more it's a live, in-person kind of product. you need to see it live. >> apple up a little bit today, price target from raymond james is 250, some 20% or so upside of where we are today breaking news out of washington. eamon has it for us today. eamon? >> unrelated event here at the white house. the united states u.s.s. boxer has shot down an iranian drone over the strait of hormuz, new incident being reviewed by the president. he says u.s.s. boxer acted defensively against an iranian drone, calling for everyone to act defenseively in that region. another provocation from the iranian side, the president says, and represents another flashpoint in that ongoing series of tension we've seen in the persian gulf the past month or so between the united states and iran vital oil shipping route through that region. that's an area that gets a whole lot of attention any time

anything is shot down. the president within the past couple of minutes saying the u.s.s. boxer shot down an iranian drone earlier today. wilfred back to you. >> wti oil prices about a percent in the last hour or so they are down 3% on the day, now down 2% on the day i guess this offsets a more positive tone out of mike pompeo a few days ago. >> sure. that's right if you remember, the president backed off of a planned military strike that was going to retaliate for the iranian shootdown of an american drone now it looks like the president has, nonetheless, conducted some military action in the region. this, a defensive strike, he said, by a u.s. ship against an iranian drone which approached it in what the u.s. is apparently saying are international waters we'll have to get more detail on what exactly happened from the pentagon over the coming hours to figure out exactly where this incident took place in that region. >> eamon, thank you. still to come, last chance trade. marc is looking at one name

getting crushed on earnings. it's not netflix we'll reveal what it is ahead. >> does today's pullback represent a great buying opportunity or is it a sign of things to come big bull/bear debate on the stock, coming up is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology,

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big subscriber miss for netflix, putting pressure on that stock and other famed names. president trump said the u.s. destroyed an iranian drone in the strait of hormuz. and half-point rate cut higher. hello, wilf.

happening at this hour, representative omar calling the president a fascist after he told her and three other congresswomen foreigners and telling them to come back where they came from. >> as much as he's spewing his fascist views on stage, telling u.s. citizens to go back because we don't agree with his detrimental policyies, we tell people here in the united states dissent is patriotic sworn in as acting secretary last month, taking over for patrick shanahan, who abruptly resigned amidst ethic questions. taiwan preparing for the first typhoon of the season there, expected to hit the island tonight

airlines canceled domestic flights and authorities have issued warnings about flooding that's the cnbc news update at this hour. see you next hour, hopefully god willing, producinger willin >> yes, you will. i apologize, cobbler's kids go barefoot. should have explained that and made a tortured relationship but let's move on. once bitten, twice shy people are cautious after they had been burned on something the relationship of the volatility index, implied volatility and realized volatility, which means the actual movement of the markets what you see here in orange is that the market has gotten a lot more calm, right you've seen the step-down in day-to-day movement. you haven't had a 1% move in quite some time. yet the volatility index, based on trader's pricing of defensive

options, that's not gone down as much we're bleeding down to 13 today. what that shows is there's a bid for protection residual in this market obviously, you've had pretty traumatic events recently. trepidation about the fed coming up there's some room for the vix to go back down and indicate that the markets are still more stable we have to watch this relationship it doesn't always go one for one. you've seen these other periods, for instance, back in the spring, where you did see a period of volatility it didn't last long. summer calm has taken hold day-to-day traders are not yet believing it's going to be the rule. >> could bbler's kids gdon't wer shoes? >> they go barryfoot. >> looking forward to the tortoise and the hare. we know that one. >> keep us in spenuspense on who

win. >> i always learn something from mike santoli on these dashboards copying scrambles to raise the debt ceiling to avoid a government shutdown. steven mnuchin addressed those concerns this morning on "squawk box." >> i don't think the market should be concerned. i think everybody is in agreement that we won't do anything that puts the u.s. government at risk in terms of our issue of defaulting. and i think that nobody wants a shutdown in any scenario so, i don't think the markets should be concerned. and we're working hard we'll get there, one way or another. >> cnbc's dom chu is at headquarters to explain a little more hi there, dom. >> courtney, secretary mnuchin has it right, the markets will eventually resolve themselves to it all these issues get resolved. what we have in an historical precedent, every time there's been a budget issue, debt

ceiling issue, shutdown issue, markets have reacted negatively going into that. they don't like the uncertainty. right there in 2011, you can see a little bit more of that move lower and it comes out after it. look at 2013, by the way, there's also a situation where the markets are dealing with a government shutdown and those markets kind of sold off a little bit and rose coming out of it. by the end just this past quarter we saw what happened in 2018 into 2019 and again sharp move lower some fed fears there and nice move higher on top of that as we watch these issues develop, one thing we do know for certain, guys is that, yes, there is volatility at play. it does end up resolving itself once these issues get resolved overall, guys. >> thank you, dom. what do you make of that mnuchin says we shouldn't worry. history shows eventually we get over it. how do you position yourself >> how do you spell yawn i think it's y-a -- there's no

there there. and today even less. it's no longer an issue. we can infinitily spend, raise debt, raise debt ceilings, run deficits none of it matters why worry, man >> i think it's a different issue to a long term issue of how big the national debt is the market now assumes up against a short-term deadline. >> truth be told, they will sort it out, right? it is not in either one of the party's advantage to do this history would tell them they get punished, not rewarded for it. i think it is a general nonissue did we just agree on something, all of us? is that possible >> we're not taking positions. >> of course of course. >> anyway we've got 24 minutes left of trade. the dow has gone negative. we are much closer to the highs on this session than the lows. dovish commentary from a fed official helped us move higher up 0.3%.

shares of netflix, of course, moving sharply in the next direction. we'll debate at today's fine opportunity of a lifetime, coming up. >> plus microsoft and chewy set to report earnings at the top of the hour first results with the company's ceo, an exclusive teieinrvw. "closing bell" is back after this

. we're back netflix falling today, following its q2 earnings last night,mying on subscriber growth and lost u.s. subscribers for the first time since 2011. despite today's drop, research shows it could be a temporary blip according to ken sho. the stock ends up rebounding three months later by about 1% could this cause earnings miss, make it a buying opportunity for the year ahead let's bring in michael graham and victor anthony from cgs capital. you're bearish you think it's time to take profits? >> i do. i think a set of red flags was raised in the second quarter results that i think will keep this stock range bound over the next several quarters. this is the third consecutive

quarter that netflix has guided below consensus on a domestic sub-numbers. that means there's dynamics -- change in dynamics that the management team doesn't really have a handle on that's one number two, the aggressive price increases, that led to churn in the quarter. even with the latest price increases, there's price empower in the model cfo recently stated he saw a $25 price in nirvana i think that will be harder to achieve longer term. we have reason to believe that netflix not a hit-driven business guess what, it is a hit-driven business and like every other hit-driven entertainment business, i think investors should start evaluating netflix based upon that and so that has changed, i think, in the quarter. and fourth, lastly, you know, the company stated that competition wasn't a factor, but, you know, what happens when competition does become a

factor, when all the different competing services that could be a meaningful challenge for netflix in their ability to grow subs and, yes, you know, candies be complimentary? maybe. can they pay for multiple streaming services they can but we haven't really tested that in the market yet. that's an unknown, an uncertainty in the model part two is that they're losing really good content, popular content. "the office" and "friends. netflix is basically saying that secondary content doesn't lead to ads but churn could possibly be an issue. that hasn't been tested yet. >> michael, you take the other side of this debate? >> well, i do. there's no doubt that as we get into next year and we start to see some competitive streaming launches, there's no doubt that

the market will become more competitive. i think it will quickly coalesce into the competition around content and around, you know, widespread distribution on set-top boxes and through different services i think netflix will do very well in that content battle. you know, there's no single show on netflix that accounts for more than 2% or 3% of the streaming hours. it's really hard for me to see a scenario where, you know, consumers are sort of anticipating the loss of "friends" and anticipating the loss of "the office" and say i'm going to cancel my netflix subscription to us, this miss on this quarter was a combination of a couple of things number one, it's hard to forecast the company typically we'll forecast exactly what we think they're going to do, unlike a lot of other companies, that tend to forecast conservatively and then beat it. they added 7 million net ads

internationally. that is something that's tough to repeat. there is some pull forward there. in general we take the step back and look at there are some competitive forces, but the bigger thing that we see, the bigger transition is that viewing habits in the u.s. and around the world are moving from traditional models to streaming models netflix is still only about 10% of all viewing time in the u.s and it's way less than that internationally. so there's a ton of viewing that needs to migrate over from these models and that, to us, is the overriding factor. certainly we'll see more competition in the near term we think netflix will do very well and there's a big tailwind to the market behind them. >> you made case for a bull, case for a bear. we can all pick our sides from here michael graham and victor anthony, thank you for joining us. >> thank you. up next, your last chance trade. >> tomorrow, don't miss our exclusive interview with boston

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a little more than 12 minutes left to go here before that "closing bell" sound. >> i have an abundance of wealth, right? fantastic analysts across the board. it's hard to choose. for this one, just timely for the day, because it happened while it was topical that's what you were asking for. in this case, i chose s.a.p. quarter gets reported. it's down on licensed revenue being weaker the reality here is that you've got a product cycle coming you've got a fantastic qaul tricks acquisition that's still being integrated in and has transformed the company in many ways this is a fly under the radar u.s. name. it really is they don't own this as widely institutionally in retail. and you've got a catalyst ahead a bit further out. in november, analyst day when that happens, frankly, we think it's an opportunity. kirk mcturn does a terrific job

on the name. >> definitely under performed. the question is whether it can really catch up or not we shall see, marc thank you so much for joining us. >> thank you very much. >> ten minutes left to go. here is our earnings score card so far 80% have beat. 20% have missed. let's preview what to expect after the close. seema mody previewing chewy, john fortt, u.p.s. >> $2.7 billion roughly. big area for microsoft is the cloud. intelligent cloud unit expected to top $11 billion in revenue. as your revenue grew, 75% constant currency last quarter under microsoft's current structure lease there's a lot of cloud-driven business to watch outside that specific unit office 365 and linked in, both

of those will need to post solid numbers if microsoft is going to hit it out of the park this quarter. guidance is big, the end of the fiscal year. we should get a fresh number for operating expense growth for fiscal 2020. guys >> thank you very much, john let's get over to seema mody with a preview of chewy. hi, seema. >> hi, courtney. peek of q1 estimates the focus will be on whether chewy is growing its active customers amid strong competition from a number of players like jm smucker and general mills, both of which acquired pet food companies and amazon prime day, amazon has been offering sales on pet food and supplies and chewy has responded with its own discounts the question is, how do all these discounts and promotions impact its path to profitability? shares have gained about 40% since its ipo. courtney, back to you. >> it's been an active name. thank you, seema coming up, we'll break down

chewy's first report with the company's ceo. he will join us for an exclusive interview later in the show. on pace to close the week lower as things stand. we'll have the closing countdown, every angle covered coming up. "closing bell" bacin cplk aoue. ♪ as your life grows, so do your needs. ♪ and with bank of america and merrill, the benefits you get can grow, too. as a preferred rewards member, you can enjoy priority service and exclusive discounts... so your growing life can be more rewarding, too. ♪ what would you like the power to do? ♪ prpharmacist recommendedne memory support brand. you can find it in the vitamin aisle in stores everywhere.

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>> down 30 points or so on the dow. mike, what are the key levels you're looking at? is there more upside or downside from this point? >> the market is adjusting the gains. we pushed it up to about 17 times. that's where it peaked if you look at the last year and a half for the very near term, i think the market is consolidating those gains but as it consolidates either the market will pull back a little bit or you'll have the sectors rotate and maybe some pullbacks in that we would be buying those pullbacks if it happens. backdrop is still constructive

we still think over the next 12 months the market is positive. 3106 for the s&p over the next 12 months is a 4% gain it's real important if we get weakness during this earning season that you buy it that gives you the opportunity to enhance the return in an environment that may not be that large in terms of percentage return over the next 12 months. >> mike, you're saying if we do get some weakness, because you believe the downside may be somewhat limited here. why? >> well, i think it's limited for numerous reasons number one, the fed has significant nald they're going to cut rates this month. the fed has significant nald they're there for us if we need to couple of fed members made some comments we had a market that was down and all of a sudden it turned and rallied on that. you have that as a backdrop. g-20, we passed that without blowing the markets up we have a long way to go in trade. we get that. both sides will continue to handle it with kid gloves and sort of keep prolonging the process. so with that as a backdrop, i think we have limited downside

to the market, probably, you know, during earning season, 3% pullback if we get that much. until something changes with the narrative, the narrative being maybe the fed shifts or china/u.s. trade really gets in trouble, then i think we're okay you're looking at the economic data yeah, on the manufacturing side, you're hearing companies on that side come out with cautionary comments that's expected. the manufacturing side of the economy has been moving lower for the baffle this year the consumer is fine all the other economic data looks fine i think we're in a situation where you buy the pullbacks. the pullbacks will be limited for the near term until something changes the narrative. >> thank you very much mike gibbs, guiding us into the close. mike santoli has his third dashboard. i hope we understand this one, mike. >> courtney, checking in on the race between the tortoise and the hare two segments of the market

operate that way the financial stocks have actually retained their gains, despite the fact that bond yields pull back here is the bank index, kbw bank intext etf along with the qqq nasdaq 100 dominated by big tech over the last three weeks or so. in white, the banks. they've caught up here another day or so back, they basically crossed. this is happening when, obviously, we're talking about fed cuts, treasury yields staying low and the banks have managed to do okay obviously the earnings have come through fine one-year chart of this same relationship, you see how much distance there is between these two. there's a lot of ground for the tortoise to make up right here, holding well above the recent lows you have that big of a spread right there. obviously, you can't fully say there's been an inflection here but definitely a relationship worth keeping an eye on.

let's get to rick santelli for what that all means. >> yeah, mike. philly fed, you look at leading economic indicators, worst month over month chain since 2016. it started out as an odd day then john williams dropped a huge dovish egg, new york fed president. interday notes are down two basis points 2016 for tens, fourth quarter 2016 and today we've had three sessions close under 2%, july 2nd, 3rd and half day on july 4th. we're only a couple of basis points away now. finally the dollar index also getting hurt and when it comes to stocks, dr. john williams, the fed president of new york, wrote a big prescription of easing frank collins seems like the nasdaq just loved it. >> that's going to finish slightly higher today after closing slightly lower

nasdaq 100 was apple, getting a boost from a raymond james upgrade, 5g iphone releases, apply materials, leading the semi conductors. qualcomm an outlier. and anti-trust fine in europe. amazon, along with microsoft, is trading lower today, following reports that president trump is, quote, unquote, looking into a $10 billion for web services that both are vying for. netflix having the worst impact on nasdaq 100. now over to bob pisani at the new york stock exchange. >> we had a spike in gold late in the day president trump said u.s. navy had shot down an iranian drone in the straits of hormuz, giving a nice boost to gold mining stocks, gdx. that's been very active recently going the other way with the oil stocks, xop down here throughout the day. oil has been down last few days here

u.s. gulf oil platforms have returned to service at storm in the gulf of mexico that's been depressing oil prices throughout the day. and finally stock, honeywell, big relief in the industrials, raising the low end of its guidance. >> and there's the closing bell. dow jones industrial average, another day with virtually flat performance. s&p 500 eking out a fraction of a gain welcome to "the closing bell." i'm courtney reagan in for sara eisen today. >> and i'm wilfred frost the dow did close just higher by one basis point. s&p led the charts up a third of one percent. also we got a decent intra-day recovery from dovish comments on the fed.

strong intra-day recovery. all the banks were low to begin the session but finished higher. week-to-date, most of them still in the red worst performing sector was communications services, of course, way down by netflix. >> i thought the market action was remarkable we saw around 2:15 those comments change things around on all the charts, major indices, dow. is it 50 basis points? i don't know those odds are a little higher. >> how much the market does trade off the back of expectations for the fed. >> very much so. earnings away from big earnings reports. seema mody is watching chewy's first report since going public. e trade, capitol one, sketchers. we're monitoring those results as well. let's discuss the markets. joining us to talk about the

market day mike, i'll start with you. decent intra-day turn around u.s. a little bit of catch up relative to the rest of the world. still lags the rest of the world this week. >> it does this week it's been coming off the boil all week before you had this pop in the index after the fed comments by john williams, the market was holding together okay. it's doing that by essentially going to the laggerd groups, rallying when big tech is selling off. it's basically been, i think, keeping itself supported as it has to burn off this condition what's interesting about the fed thing, it's a microexperiment in what's built into the market already, right odds of a half point go up after john williams' comments. you didn't get a runaway rally but oh, wait, let's see how this works and data have given creden credence i think we'll remain in suspense

until the end of next week. >> up 1.3% yesterday very different story. >> laggard group, famous glamour stuff sells off and transports pick up. you can't strapolate past the day except to say the market right now is not interested in selling off heavily across the board. >> where do you stand on expectations for the fed and how crucial that is for the market to continue on >> clearly, the market is expecting a rate cut and so, you know, whether it's 25 or 50 basis points, i think we're probably more in the 25 basis point camp than 50 we don't see the fed become that aggressive they're going to be very calculating and appropriate in their measures i think it's necessary for the market to continue to drift higher at the end of the day, it's going to come down to the earnings season. more importantly, two forward-looking statements by chief financial officers earnings will be down year over year this quarter. at least that's the expectation.

we're expecting a pretty good earnings boost in the third and fourth quarter if those expectations get revised down, you'll see some trouble in august and september. >> we're just waiting for the microsoft numbers to hit it looks like it's ahead of expectations. >> it's interesting. the other fang stocks did go down in sympathy with netflix, mostly amazon. the same kind of investors that are heavily owning netflix owns the others microsoft is down 3%. >> john, what are the numbers? >> good, wilf. earnings per share, $1.37 versus $1.21. $33.7 billion versus 32.77 expected the unit that outperformed the most seems, at least on on a dollar basis, azure, 11.4 billion versus 11.03 expected. gross margin came in at 69%

versus 67.1 expected and microsoft says the percentage increase was because of out performance in more personal computing, windows, x-box. but also productivity and business, office, linked in, other units like that. and the gross margin included a six percentage point improvement in commercial cloud. that's primarily azure, guys. >> john, thanks very much for that and bring us nor headlines when you've got them. john, what's your tame on this object the revenue line, azure looks pretty strong, which the market focuses on. >> i haven't gone through all the numbers, obviously, yet.

gross margin number in particular, that's really healthy. that means all the cloud businesses and businesses that microsoft provisions from a data center, not only azure and office 365, but x-box live, linked in, all of those are starting to enjoy the operating leverage that's inherent you have that fixed cost at a data center and there was always a question as to whether that was actually going to be realized but this is strong evidence that that is the case that's a real positive along with the revenue and eps beat. >> john, do you think sash ya nadella gets credit. >> yeah. not just the vision but execution on that vision at

microsoft has been particularly impressive i followed the company for a couple of decades now and they're really firing on all cylinders like i haven't seen them since the early '90s. >> what were you expecting for jason? >> 69 seems about right. i'm not going to sit here and tell you we pegged that in our model. what we did expect is for them to come in a little bit better than the street, what your other guest is going to talk about cloud as this scales up. not terribly surprising we celebrate that in terms of investors. >> are they still behind in terms of profitability with the cloud, though? >> they seem to be that's part and parcel in terms

of the number two established player in terms of market share. as they continue to scale this up and get more wins as we expect them to do, we'll see that profit margin continue to grow it's still impressive, nonetheless. amazon and microsoft look good in cloud right now. >> 39% year over year. today president trump said he would take a look at what's going on with this pentagon contract for this cloud computing. i know amazon is a front-runner. any chance that microsoft gets it >> there is a chance microsoft is executing on all cylinders. their move it open source has been brilliant and well executed they're doing exactly what investors should be focusing on, taking market share away from competitors, focusing on areas they excel at and improving margins. we saw all of those things in

today's report so, you know, i think that trend continues. they are being -- the other thing president trump said he would look at google there's pressure on the competitors. that benefits microsoft. we're long-term investors. we're not trading this stock. >> 33%. >> without a doubt it's a trillion dollar market cap company. let's remember and i think it's a pretty unasailable report up a little less than 1% on a really good beat on a really large company shows you that everyone gets it and i think that the company is getting a lot of credit. it deserves a lot of credit. and only thing you have to look at for is people getting too overconfident it's a flawed story, nothing will ever go wrong with it. it trades right in line with a lot of elite secular tech stocks like adobe, sales force, the other ones that have proven

they're big beneficiaries. >> john, if you're looking for a negative, gaming revenue is down 10%. does that worry you? >> no, it doesn't. it's hit-driven kind of business this in and of itself doesn't bother me. x-box has a reboot coming soon the fact that they beat with x-box being down 10%, that's impressive. >> jason, are you surprised here as mike pointed out, good quarter but shares are up about a percent here after hours surprising >> no. we've seen this before the print in this case was solid. second quarter they beat analyst expectations people pause and hold their

breath for the conference call that will start in a little over an hour. we're going to get the next quarters' guidance expecting 10% year over year, earnings growth for the next quarter which seems achievable we'll wait for that guidance, see how the stock trades between now and then long-term investors in microsoft, too we've been there for years sasha nadella is doing a great job. while the pe has expanded, it's basically doubled under nadella. secular growth, players in software and cloud you can make an argument it's under valued relative to that 40 pe? probably not going forward that seems fair and that's an attractive investment. >> where do you want exposure in tech >> companies are taking market share away and growing margins so we like microsoft we like intell, some of the semi conductors that have been beaten up a little bit. i haven't spoken about those

names with compliance. i have to be a little bit careful. they like to slap me on the wrist every once in a while. the tech sector, certainly is the area of growth one thing that thematically we believe in, when growth in general becomes scarce, you want to find those companies that are able to grow in that environment. that's critical. those are going to be the outperformers. >> mike, we saw facebook and google trade down -- actually, google finished flat, but trade down a little bit in lou of netflix. can this help offset that? >> it certainly can, in terms of mathematically. >> can it track those stocks >> i don't think there's anything today that says all of fang is for sale, all of big cap tech is on the defensive i would watch the rest of software because that has been, even within tech, a leadership sector. >> jason and john, thank you all for joining us. >> thank you thank you for having me. >> thank you.

much more in today's after-hours movers, including an interesting interview with the ceo of chewy after those numbers hit. plus a battle raging on capitol hill. >> it seems like the problems are in big tech as it has become a mature industry that they're just mushrooming. >> ahead we'll speak with senator blackburn about her biescoanvaeysilicon ll's ggt mpies. tell him we're flexible. don't worry. my dutch is ok. just ok? (in dutch) tell him we need this merger. (in dutch) it's happening..! just ok is not ok. especially when it comes to your network. at&t is america's best wireless network

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welcome back the nasdaq closing higher for the first time in three days frank holland with a look at movers hey, frank. >> apple having the biggest positive impact 100 after the raymond james upgrade, 5g iphone releases, liberty global, largest cable provider outside the u.s. seeing its shares spike after eu approved its sale to vodaphone. good day for them. good day for chips applied materials having a good day finishing up over 4% and

support company, its shares up netflix, disappointing subscriber numbers, increasing competition in the streaming space hurting the stock. back over to you. >> that is for certain frank, thank you couple of more earnings reports. >> crowdstrike, numbers were largely in line with what the company reported in swrun on their s1, 96.1 million first quarterly report since going public last month. one analyst i spoke to said he was surprised they raised the guidance crowd strike up 8.4% in after hours. turning to sketchers, 15%

beat on earnings sket skechers, up, reporting strong growth in india and china. back to you. >> thank you >> pointing toward a goldilocks scenar scenario. >> another check on microsoft and chewy after hours we'll speak with chewy's ceo about their results after they hit microsoft has reported and is up

the dow, s&p and nasdaq putting up some gabeer gain, the dow by just a hair there. s&p below the 3,000 mark and nasdaq about .3% russell 2000 higher .3% as well. 2:15 today we got those comments from john williams, moving up the percentages of the possibility of a 50-base rate cut. >> even though there was debate over whether there was intention for him to convey that idea, that he was thinking more about 50, inflation expectations are very low, interest rates are already on the low side, you want to be aggressive and proactive if you're the fed. people immediately said okay

fine we'll bet heavily on a half point move july 31st but also i think there was an internal traction in the market already building from the morning lows so, you know, obviously not a major move in terms of the net change for the indexes it shows you how traders are tuned in. >> not a major move but noticeable in all the charts chewy earnings are out let's get to seema mody with the numbers. >> hi, courtney. $1.1 billion in revenue. we're seeing a lot of $9.6 million, pretty much in line with the q1 estimates we got for chewy. shares are dropping fractionally in after-hours trade we'll look for more color on q2 and 2020 guidance. for now, guys, back to you. >> seema, thank you very much. let's bring in the ceo for chewy, sumit singh thank you for joining us. >> thank you happy to be here.

>> revenue and eps in line how are you feeling more broadly for how the second quarter has kicked off and second half of this year? >> feeling good coming into this quarter and year over year growth thanks for acknowledging that. we're capitalizing and creating opportunities in the marketplace and we feel good about what's out there for us. >> talking about opportunities in the marketplace, you came from amazon, who just wrapped up a really big prime day event you tried to participate in that as well. how did it go? did you acquire new customers? what happened with those promotions you offered >> it's beautiful, these e-commerce industry events now, of course, drive consideration and demand sure we saw our demand on chewy as well. our teams were ready we were planned and we believe we offered customers a tremendous customer experience

as well as a great assortment they were looking for. >> i notice on your sight -- this is something you've been working on as the auto ship function as a pet owner myself, it may make my life easier, but it might also limit my impulse buying is that a concern? >> you know, courtney, our customers, the way we engage -- the way they engage with us, we actually really like it. not only -- i know you have a cat. not only can you put your cat's food on ougauto ship, you know,t the treats and toys that customers are generally more experimental with, we see them adding those to the auto ship because it's so convene. you have a shipment coming to you. we remind you before the shipment comes to you that that's a great opportunity for you to take advantage of that, to be able to add something. it's really attractive to them and to us as well. >> you know, investors have liked the pet care, pet food

category for a long time, for good reason, obviously it's been growing fast in the economy for some time. as you've been going through your ipo, talking to investors since then, how do you convey to them why you think that there should be an e-commerce vertical in this area in other words, dedicated to this as opposed to being integrated with a larger e-commerce player? >> you know, first of all, it's a large industry $70 billion. when you think about our mission statement of really bringing together all the core offerings in the industry, you know, the core food and supplies, health care, the services, and doing it in offering an exceptional high charge customer service, that value proposition where you're offering personalized care that you only find in the best local neighborhood pet stores and e-commerce it's a win/win for customers. you're getting that personalized interaction. they greet you by name they know you. we're pet parents. we know your pets' names and

everything that you feed them. we're able to offer you unadulter ated advice. nobody likes lugging jugs of heavy product back from the stores from that standpoint there's a lot to offer in being able to create that destination as well as the convenience our customers love it and that's why we're doing it. >> sumit, how much more do u.s. consumers spend on their pets per year relative to other geographies? any other countries you're excited move in because it's comparable, or is the well ahead? >> two things there. first of all, if you look at in 2017 the pet market was $17 billion. if you divide that by about 85 million households you're looking at an average household span from 900 to $1,000. if you look at e-commerce penetration in the united states, it's still pretty low. we're early in our growth. we know we've got a lot more in front of us. for now we're focused on the united states and making sure we

capitalize on it we fundamentally believe that what we bring is spendable anywhere pet parents live. for now we're focused on the u.s. when we start thinking about international, i'll come back and talk to you about that. >> sumit i was thinking what you said, nobody likes to lug heavy cat food or cat litter i don't. that's got to be an expensive proposition to ship. free shipping if you spend $49 or more. how does that value proposition work out for you how many customers are hitting that threshold and frankly, how many are not how are you balancing that that has to be very expensive shipping costs. >> yeah. you know, think about it this way. we offer the customers a broad assortment we recognize what a customer needs when they need it. we're able to help them build baskets with that. and what that does is it creates a large basket size for our

customers and they enjoy the convenience of that product arriving at their doorstep at the same time. proposition of an auto ship program for the customers is great. you don't have to remember it. we deliver it reliably and predictably to your doorstep for us it's also great because it provides us the ability to plan we know where the shipment is going to go into future. it allows us the ability to plan and put that in our network. think about the pets as a category it's not necessarily peaking the fact that you're able to take all these inputs and flow it to our supply chain and it helps keep our costs low and maximize the value proposition for our customers. that's how we do it. >> sumit, prime day on amazon was mentioned at the top more praudly they put on a big summer sale in this area, clearly trying to take you on in certain subcategories. how long are you prepared to fight back on pricing and take the margin hit with that in mind

>> yeah. e-commerce -- in the e-commerce world, the pricing world is dynamic and promotional events are part and parcel. some months they're higher, they're lower. we have the ability to monitor we offer that proposition. we feel good about our ability to execute and we'll continue to monitor and respond. >> this is the first time you'll speak to investors after the ipo. what he the message you want to get across for chewy >> couple of things. we're playing in a large industry two, we offer something of the best of both worlds, personalized care at the scale of e-commerce. three, we've been disciplined about getting big fast but fit fast from evidence of the fact that not only are we delivering revenue, our gross margins are improving year over year and we're creating a one-stop shop for pets and pet parents

>> sumit, thank you for joining us. >> thank you appreciate it. >> sumit singh, ceo of chewy that stock is up 0.6%. revenues came in line 1.1 billion to eps sorry, net loss of 29.6 million also in line with estimates which, of course, we did have ahead of time because of the recent ipo up 0.6% after hours. breaking news. phil lebeau has it for us. >> boeing has just announced it is taking a 4.9 billion after tax charge for the second quarter, $8.74 a share tied into the 737 max not just now but in the future for several years revenue and pretax earnings because of all this will be reduced by $5.6 billion in the second quarter in terms of q2 production costs, they are going up 1$1.7 billion

in announcing these charges, boeing is making the assumption that the max will return to service early in the fourth quarter. that's not a guarantee that's not them saying it's for sure that's their assumption at this point. production, by the way, people have been asking will they have to cut production further as this gets extended out for now they're keeping at 42 per month and still plan to get up to 57 per month, which is where they expected to be this year they expect to hit that rate some time in 2020. this is the part that wall street will be most focused on the company expects to issue new guidance for 2019 at some point in the future. they're not saying exactly when. remember, they suspendedfiedance. after-tax charge of 4.9 billion, working out to $8.74 roadway share for the second quarter, all tied in to the 737 max guys, back to you.

>> phil, the stock was down 2.3% today in the normal session. sshlly flat in the after-hours trade. was this roughly in line the plane back in service in early q4. >> right i've talked with a number of analysts almost all of them say the same, which is we've got some models we put them together we have a rough idea of what to expect but those estimates, by the way, were all over the place. it's hard to say if it's in line of what we were expecting. not expecting a big sell-off with this, large institutional firms were expecting this type of charge in the second quarter. $4.9 billion after tax. >> mike, the stock clearly suffered generally late. down quite a lot in the normal session, down 2.3%

odd move i don't know if people had an expectation. >> had a sense it could be. from the company's perspective, it's an effort to quantify and front load a lot of the impact of the program slowing down, the expenses associated with it. in that sense, i think, investor base will more or less say, okay, fine at least we can get our arms around this number we know what assumptions going into it are. you're not really treating it as an operating loss of 8.74 a share. makes sense given that the stock has been on the defense for a while. >> production cost of the plane has increased. is that something that's going to weigh on margins long-term for the 737 maxine when it's up and running again? >> remember, wilf, the way that it works in terms of the accounting, that accounting is basically stretched out over the life of the program. 737 maxes in the backlog, they'll be able to stretch that

out a number of years. i'm not surprised we're not seeing a big reaction based on that number, that the q2 production costs were up remember, you never like to say, look, that's an accounting issue. don't have to worry about it. >> sure. >> it is going to be stretched out a number of years. >> phil, july 24 is when they're due to release numbers anyway. why this prerelease? >> i think it's exactly what mike was talking about they want to, as much as possible, get in front of this story and try to get people as much certainty as possible regarding the 737 max, especially in terms of costs and charges. look, most people are expecting there will be charges in the third quarter and likely in the fourth quarter as well it all depends on whether or not we see deliveries resume in the fourth quarter does the grounding get lifted? does it enter back into service? we should also point out, wilf, a number of airlines within the last week have said we were scheduled to get 15, 16, 20 of

these plane this is year we're not going to get them this year maybe not all next year. united cfo said that yesterday it's going to be stretched out over some time. >> phil, stick with us jeffreys analyst sheila kahyaoglu has joined us on the phone. >> we have factored in about a billion dollars in terms of expectations for q2. i think phil said it best. it's in the best interest of the company to front end load the charges, the max is still grounded we're assuming resumption toward the end of the year. and i think the last faa requirement probably extends the grounding more than people expect as airlines are delaying and pushing out the aircraft and cutting capacity, take the charges now and mpb analysis of how we think about the impact longer term. >> how are you thinking about

that impact longer term when we have yet to hear the new guidance from the company for 2019 >> sure. we think about potential risk factors. one of that is price concessions as aircraft might be grounded. it might impact, three points of price, second bucket we think about is encapsulations. every 50 or so cancellations and then the third bucket is the 777x that's a very large aircraft and the scrutiny the faa is under at the moment, we think there will be some delays and we're factoring that into our estimates as well. >> still guiding to early q4 for when the 737 max is able to be back up in the air if that was pushed back again,

say by another quarter, how big of a swing factor is that for the share price and when does this start to have long-term damage in terms of the branding value in consumers' eyes and investors' eyes? >> the guidance has been minimal. we're currently forecasting q4, looking what airlines are saying, going after that suppliers are looking for guidance as well they don't have any out there. i think the longer this goes on, airlines are leasing aircraft so they have to be compensated in some form. whether you see that as a price cut or, you know, an after-market deal that happens, we're not sure potential price impacts. >> sheila, thank you for jumping on the phone and joining us so quickly. phil lee beau, thank you for bringing us that news. >> time for cnbc news update with bill griffith

hi, bill. >> hi, courtney. u.s.s. boxer, seen momentarily from the arabian sea tuesday destroyed an iranian drone he called it the latest hostility by iran and insists that it was a defensive move earlier the president said he was not okay with his supporters saying send her back at greenville, north carolina, last night. >> i was not happy with it, but what i would suggest, you go there. go to north carolina and you ask the people why did they say that but that's what they said. >> will you stop them if they try to do it again >> i didn't like that they did it. >> finally, the month of june was the hottest on record, according to the national oceanic and atmospheric administration temperatures averaged 1.7 degrees warmer than the 20th century average. swrun was the warmest since the

agency began keeping records back in 1880 apparently nobody cared what the temperature was before then. that's the news update. >> i'm going to care about this weekend. it's going to be really, really hot. >> a scorcher, yes. >> the worst. >> bill, thank you. >> you're very welcome. coming up, senator elizabeth warren lashing out at a private equity -- at private equity, excuse me.

over to mike santoli this one i get it. >> goldilocks or a bear? the great macroeconomic argument greatest index on a quarterly basis since 2016 30-year chart of this index. the shaded areas are a recession. what you see is that it typically rolls over it peaks well before a recession. that gives you a little bit of comfort, right you still are working around the peak levels right here it has flattened out here is the hope of everybody

who wants a soft landing is that we have a mid 90s scenario, 1995, when you flattened out the economy wobbled a little bit. fed cut rates, no recession, and it picked up from there. only a precedent of one in the last 30 years. although in the late 80s you saw a flattening out before you did go into a recession. again, one to watch. >> even if we do have a recession, s&p 500 can continue right up until we get to that point. >> often that's the case, at least a six-month lead before you peak in here and get intra-day recession. >> thank you, mike. elizabeth warren sounding off on wall street details on her new economic plan and why she's waging a war on private equity. >> sara eisen brings us an exclusive interview with eric rosengren, voting member of the fed. we will talk to him about the meeting. latform. 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. ♪

welcome back senator warren is taking aim at equity and other john harwood has more from washington john >> elizabeth's campaign has built her campaign so far around economic populism. she has a wealth tax, corporate profit tax today she's going after private equity, in particular, with a series of financial proposals. first of all, she wants to try to drain some of the fees,y