need them to be in a quieter space. you can go to this room and get noise canceling headphones and the lighting is different so people who have those disorders can find a calmer space. >> that's great. in the meantime, the nfl better hope they have loud, full stadiums for the rest of the season >> exactly >> thank you for watching "power lunch" >> the "closing bell" starts right now. welcome to the "closing bell." i'm morgan brennan in for sara eisen here at the at&t post. that stock is jumping. we've got more on that stock and the rest of the market with just 59 minutes left until the close. >> and i'm wilfred frost good afternoon to you. let's look at what's driving the action financials, one of the leaders on yield moves and comments out of the barclays financials conference we'll have those details, coming up plus, a rally in energy coming as the new saudi energy minister commits to output cuts, and we get more details on that massive aramco ipo and a small cap surge.

the russell up nearly a full percent. the broader markets, though, flat s&p just lower dow, just higher joining us for the full hour, stephanie link very good afternoon to you >> thanks for having me. >> markets flat overall, but what's happening underneath? >> massive rotation today, and it actually started over the last couple of weeks and a lot of that has to do with a little bit better economic data that we're getting around the world. even over the weekend, we got the export/import numbers out of china. and even though they were down year over year, the trend is still definitely up. and this comes on the heels of better pmi so i think a lot of it is a little bit better economic data. and then it's this trade talk seems to be making some sort of progress so the cyclicals are actually the ones that are leading. it's financials, tech, industrials. and within tech, it's se semiconductors versus software software is actually getting slammed. >> is it that the expectations came down too far, too fast,

especially with all the talk about recession fears? >> i think so. i think we were talking about recession every day for the last month. so the economic data is important. and if it's going to improve a little bit, it's more than people had expected. that's why it's the economically sensitive stocks and sectors that are leading today we'll see if it lasts. we're one tweet away from maybe it not but now, it's a good day >> wilfried is covering fresh comments from bank executives as the financials do get a lift today. ylan mui has details on a new state-led anti-trust probe of google and david faber has more on eliot management's multi-billion dollar stake in at&t but wilf, i know you've been listening these calls and conversations from ceos all day. what's been the takeaway >> firstly, banks are trading higher because yields have risen. but also, those updates you mentioned, morgan, from the barclay's financials conference here in new york and those updates are not worse than feared so yields, of course, significantly lower than when we last heard from management over q2 earnings back in early july here's is john shrewsbury, the

cfo of wells fargo >> if rates remain in line with current market expectations, we expect full-year 2019 net interest income to be down approximately 6% versus 2018 this would imply that we expect net interest income in the second half of 2019 to be down approximately $1.8 billion from the $24.4 billion of net interest income we earned in the first half of 2019 >> so that would mean the second half of the year, net interest income is only down 7% compared to the first half. that's better than worst fears, given the huge moves we've seen in rates shrewsbury had no idea to give on the bank's cfo search and citi ceo said that growth should be offset in other areas and operating leverage his stock is up 4% today, leading strong performance of all of the big six and this kind of fits, steph, i

guess with what you were just saying about how much expectations came down we get the update. it's not that we're going to see hu huge growth in the second half >> the de-risking and de-rating of the whole sector, all year long, no matter what, really has been surprising. surprisingly negative. but now, you've got interesting yield stories, right i mean, think about how much capital these companies have been returning, both buybacks and dividends. and i think that's going to continue, obviously. and the valuations are really pretty trattractive so, yeah, i'm overweight financials it's not been a good call all year long, but i'm hoping we're about to see a turn. >> more coverage from the banks at that barclays conference. jamie dimon, the headline speaker tomorrow around lunchtime. one to watch tomorrow. >> meantime, state attorneys general are opening an investigation into google. ylan mui has the latest from washington >> reporter: 50 attorneys general are now banning together in a bipartisan coalition to conduct that anti-trust investigation into google. 48 states, plus the district of columbia and puerto rico are taking part in this effort

only two states, california and alabama, will not be participating? but here at the supreme court, the ag said that the investigation is actually already underway and they've started requesting documents from google. >> all of our -- everything we've requested so far is related to advertising if there are other facts that demonstrate that we need to go in another direction, we will talk about it. and we're certainly open to doing that >> reporter: now, about 13 of the ags spoke here at the supreme court today. and they had a broad array of concerns beyond advertising. they talked about search bias, they talked about privacy, as well as just google's dominance in the marketplace so this is clearly going to be a massive and sweeping investigation into google. and certainly, the largest action we've seen so far by the states guys >> ylan, quickly, any commentary or sort of sense why alabama and california didn't sign on? the fact that there are so many state attorneys general that are involved in this, to have two that aren't, it seems unusual. it seems significant

>> reporter: not clear on alabama, but obviously, google's headquartered in california, and that ag's office says that they do remain committed and concerned about anti-competitive behavior so we'll see if they go their own route or if they're just going to sit this one out entirely >> ylan, thank you well, coming up, we'll be joined first on cnbc by louisiana attorney general, jeff landry he's going to weigh in on the crackdown on big tech, what the change is he wants to see and dig into those details around the timeline of this lots of questions. >> lots of questions that we're looking forward to that interview in the next hour of the show now, at&t spiked this morning after management revealed a $3.2 billion stake in the company though shares are now well off the highs. david faber joins us with the latest hey, david >> reporter: hey, wilfried it is a large stake in a very large company. of course, always worth pointing out that percentage wise, still very small, given at&t's $270 billion, roughly, market value made an interesting point, we're below a 2% gain now. earlier this morning, the stock had been up a lot more

there are plenty of challenges for at&t eliot is not going after the big ones and saying, well, break this thing up, which some investors perhaps wished might have been the case that's no what they're focused on they're focused on better execution of the current plan in terms of at least margin improvement. their plan from there is to say, hey, you know what, we think this is a company that could have 36% ebitda margins, adjusted ebitda margins within the next three years that would be 300 basis points of ebitda improvement. how? cost cutting focusing on areas that perhaps are not getting the return they need how much would that amount to? well, they're saying, listen, we're just thinking $5 billion, but it could be as much as $10 billion. that would be one key part of why they believe that the stock can go higher. another, nonstrategic divestitures we're talking about things like home security, regional sports networks, sky mexico, latin america, their paid tv business in that area as well as the puerto rican operations. will they actually move to sell any of these things?

unclear. they may have been in an attempt previously to sell some of directv's latin american assets. not sure there were buyers at that point a lot of this does come down to management i think there will be a key area for elliott to be focused on will they get what i believe is the upgrade in management that they hope for. what is the communication going to be like the board of directors, with the lead director, matt rose. so far, one conversation elliott's had with randall stevenson, i believe, as well, one conversation with mr. rose that does not mean that they're going to be off to the races here and sort of fulfilling what elliott is hoping for in terms of some of those changes i discussed. but it is a long road perhaps that they will go here december 28th is when the nominating window for directors opens. they are all up the entire board. last year, they held their annual meeting in, i think it was late april we'll see if we get to that point. the hope from elliott's perspective is, perhaps you execute on some of these things we're asking for, some divestitures, margin improvement.

perhaps adding some people in terms of upper management and/or some changes on the board. and that gets you to a ten epps grower, 10%. if you get the margins and the buybacks that may come with less leverage, wilfried we'll see. and you can see the market perhaps during the course of the day expressing some doubt as to whether they will get there and the current plan in place, as well >> david, your take -- i mean, clearly they -- as you said, anyway, they want some changes in terms of leadership in those creative positions, those content creators, where they see is different from a background in telecommunications. are they implying they want changes right at the top >> you know, i think that that's fair to assume that that would not be something that elliott would necessarily object to, but that is going to be sort of -- they've left that out there. they certainly haven't said it, because this is a kinder, gentler approach right now and from our perspective, we want to see, can we get traction in terms of getting the company to agree by the way, in its statement, we should point out, at&t did make

a point of saying -- and wie hae it for you -- that they maintain a regular and open dialogue with their shareholders, including, of course, elliott's perspectives it's that last line, many of the actions outlined what we're already executing today. so you may hear at&t saying, we're trying to do many of the things you're asking us to do. although, wilfried, as you well know, there are plenty of people believe that the long track records of deals not done and done has been a bad one, whether it be t-mobile and money and spectrum that was given to that company when at&t was unable to acquire it or directv, who is having a tough road of things as it watches subscribers leave the service, or even the warner acquisition, which took two years to complete, it's still a question mark as to whether at&t will be able to execute on those assets the way perhaps the previous management was able to. >> david, is there any significance to be had about -- and just to use your words, this kinder, gentler approach certainly, it was quite a long

letter that elliott put out this morning. >> you know, i think that they are happier to have that go their way. if they can approach other countries with sort of the idea that we can be constructive, morgan, as opposed to just coming at them, as has sometimes been the case with elliott, in terms of a more combative tone that could be helpful as well amongst their own investors, amongst their ability to attract more capital, perhaps. but it doesn't mean that it won't turn nasty if they don't get what they want we know the history. elliott doesn't back off but that said, if you get to a fight here involving a vote to try to oust investors, they don't have a large percent at stake, so perhaps it's priming the shareholder base at this point with a nicer approach than one that would be more combative. >> david, thank you very much for that quick take, stephanie, before we talk about the broader markets on where at&t -- has actually had quite a good year-to-date performance, albeit terrible for the few years leading into that. >> it's had a good run as of late so maybe there was some speculation building on this, anyway but they have a $100 billion

expense base annualized. this is at&t i think there's a lot more they can do than just cut out $5 billion to $10 billion in that expense space. so the margin side is very intriguing to me the m&a -- they can't do anymore m&a. they can't informs, they are going to have to divest, but they have to regain the confidence from investors. so i'm not involved. it's a very cheap stock. i actually prefer verizon. they've been better in terms of executing in the 5g play, so that's the one i would go with at this point. >> okay. let's broaden out and discuss all of the markets we are trading essentially flat at the moment. s&p in the red, dow in the green. let's bring in cnbc contributor rich bernstein from richard bernstein advisers good afternoon to you. richard, we were talking at the top of the show about whether or not that global macro data had at least bottomed, even if it's not looking particularly rosy yet. what's your take on that >> well, wii think, will, it depends on where you go around the world. surprising to many investors, if you look at leading indicators

which are very, very important as opposed to coincidence or lagging indicators, some of the strongest leading indicators in the world are actually in china. they're not here in the united states, they're in china and they have some of the strongest of the major economies so if you look at europe, you'll see leading indicators look kind of blah. look at japan, they look terrible look in the united states, they look blah to weakening but look in china, they're actually bottom iing which is a oddity relative to most people's expectations >> let's dig into that a little bit more private data shows a sharper slowdown what's an investor to believe here, especially if you are looking at it as a close leading indicator? >> so i think it's important to look at leading indicators that are not necessarily government issued, or at least are scrubbed by other entities like the oecd or something like that i think if you're to a certain extent, i'm not going to go out on a limb in saying this, some chinese government data is propaganda and one has to be a little bit careful with that

but that being said, even within the propaganda, that if you look at the trends, forget the absolute numbers this gdp, 6%, 5%, 7%, who cares. that's not the important question the important question is, are things getting better? and i think with the amount of stimulus they've done, to make a bet in the next 6 to 12 months, their numbers are not going to get better, that's a huge bet to say that economics 101 just doesn't work anymore >> stephanie, do you agree >> absolutely. and i was encouraged bip the paxon number out of china, we're at a three-month high. the commodities have actually stabilized there are indications that are telling you things are getting no worse maybe they're not great, but you only need those incremental data points for people to get excited. and when everyone is crowded in the defensives and practically no one owns the cyclicals, it doesn't take much. >> stephanie, to what extent is

the tech sector underperforming today because of the political threat, versus the rotation that've you've mentioned already? >> yeah, i actually think that the f.a.a.n.g. stocks are hanging in better than i would have thought this is kind of old news we've been expecting this, and the fines that these companies have seen so far have been really minuscule relative to what their cash flow generation is so i think the f.a.a.n.g.s are probably in a trading range, because you are going to have this overhang. i think software, way crowded at 25, 30 times revenue those are really outstanding multiples. those are got to come back down. and semis, i think, are where your value trade is. i actually like broadcom into the report on thursday >> richard, i'm looking at your notes quickly here and you say your positioning remains defensive. it sounds like maybe you're taking the other side of this tray >> well, morgan, it depends where we are in the united states, we still believe defensive positioning is the right thing to do. profits in the united states are decelerating the risk of a full-blown profits recession in the united states is getting higher and higher, almost every day there's no doubt about that. but as you look at outside the

united states, you can almost see light at the end of the tunnel so from our positioning at our firm, it's sort of like, look. look at the last ten years the last ten years, the u.s. has outperformed everything. did people believe that was going to happen ten years ago? no way no way everybody says, you have to invest outside the united states emerging markets are the place to be and the u.s. outperformed for ten years. now we're sitting here and everybody is saying, where are you going to invest other than the united states? our bet is that we look forward a year, two years, five years, ten years, we're going to find that non-u.s. markets perform better than u.s. markets and that's the positioning that we're starting to take i don't want to say whether we're 100%, but that's what we're starting to do >> rich, thanks for joining us >> sure, will. coming up on "closing bell," the backlash against ecigarettes growing today as the fda slams juul for illegal marketing practices. we'll discuss the latest fallout on what it means for big tobacco. plus, we'll speak in a first

on cnbc interview with jeff landrybo aut why he's joining the new antitrust probe of google it's all coming up stay with us "closing bell" will be right back of 5g with ultra wideband, so more screaming, streaming, posting fans... can experience 5g all at once. this is happening in 13 stadiums all across the country. now if verizon 5g can do this for the nfl... imagine what it can do for you.

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welcome back over 40 minutes left of trade. mixed session, as you can see,

on the russell that leads the charge let's send oit over to mike for our market dashboard >> let's start off saying is the market cheap with an e/p an indistinct profit outlook, the initials ipo, and s&p takes the "w." the market cap weighted standard & poor's 500 has been incredibly hard to pebeat and you need a " to spell debt. in this case, "t" is a ticker symbol so let's figure that out as well the forward p\e of the s&p 500, it's pretty much exactly where it was a year ago. right at this 17 level you can draw it right there. obviously, we've fluctuated above it, just slightly, but also below it at this december buying opportunity right there so what does that say here hey, guess what, we kind of fell off into that fourth quarter collapse when we were at this valuation last time. obviously, earnings forecasts have come down from here we did not meet the earnings we thought we were going to get

the market is more expensive than 17 in reality but take a look at this adjusted for bond yields. the equity risk premium measures, the earnings to price ratios of the s&p, the inverse of the p\e ratio. and puts it up against the ten-year bond yield. the buffer, the spread between those two things is kind of your valuation cushion. so that's pretty high by this cycle of standards in fact, it takes you back to 2016 the last time bond yields were super low and you got a pretty good buying opportunity for stocks however, morgan stanley, which created this chart notes that when this ratio goes up, when the market starts to look very cheap relative to bonds, because bond yields have collapsed, it isn't always a great short-term timing signal, so it's not necessarily a slam dunk, but it shows you that the backdrop on a relative basis has improved for stocks as we go into september, guys >> mark, i wonder what that relative u.s. equities to international rest of the world developed equities is? just glancing at facts that we're looking at sort of 14 1/2 times for european equities, 15 1/2 times for japanese, so -- >> those markets would look

vastly cheaper, as a matter of fact, a lot of the critics of this approach will point to japan and say, you know, for 30 years, you could have said that the japanese stock market looked cheap relative to japanese bond yields and it just hasn't worked. it's really a matter of where you are within a given market, relative to its own history. and relative to its current regime, because, by the way, this market never got this cheap at all in the late '90s as it was going north, because we were just in kind of a different valuation dynamic back then. >> stephanie, is this a relationship right here that makes sense to you i mean, do stocks look cheap to you or do you think about it in different ways >> well, there are pockets of the market that are cheap. it goes back to what we were talking about in the beginning of the segment, meaning the cyclicals are cheap. and they're cheap for pa reason. but the defensives, i mean, you're talking about like the consumer staple stocks trading at 25 times for organic growth of like 5% that's like -- that's crazy to me and it's the same thing with reits. same wing with utilities but everyone was looking for that yield play and that

defensive play that's why you don't want to be piling into those at this point. and you want to nibble at some of these cyclical names. they are chap. look at the banks. 0.7, 0.8 times book. >> and your last chance trade today, stephanie, you've gone for a 7% dividend yield. >> which is well covered >> we'll talk about that one later. >> i'm excited to talk about that one all right, after the break, the nfl coming to a theater near you. amc has a new plan to show football games on the big screen and one wall street firm thinks the idea is a winner we'll discuss in "word on the street." plus, td ameritrade out with its monthly sentiment survey and investors did something in august that they haven't done for months we'll tell you what that is, next and as we head to break, here's a snapshot of commodities today. all getting a boost, higher by more than 2% natural gas also getting a lift and gold and silver both near the flat line. "closing bell" back in a couple of minutes who's dog is this?

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welcome back to the "closing bell." it is time now to get to "word on the street. b. reilly fbr out with a note after amc announced it's launching a pilot program to show non-local sunday nfl games in its theaters. the firm saying this has potential to boost monetization, reiterating its buy rating on the stock. you can see there, shares are up more than 1% >> deutsche bank upgrading las vegas sands to buy

the stock targeting bearish sentiment which has created an opportunistic entry point for the stock. it's up some 3.5%, you can see there, lvs and jpmorgan out with its internet handbook. the firm naming facebook, amazon, netflix, and aic as its top picks. this is a broad-based bullish note because of timing on tech and on internet in particular. 36% average upside to their calls. 20% -- 27% if you market weight it but it's essentially overweight, all of the big names that we talk about regularly here. >> all the time, right i didn't really find that there was too much new incremental data, but i agree with the call, because i do think, especially facebook, that valuation to me makes a lot of sense 20 times earnings, growing 30%, 35%, expanding margins but we have this overhang of what we talked about before on regulation so i think they're in a trading range, unfortunately i own facebook, i'm going to hold on to it, but i don't know if it's going to explode to the upside with the regulatory

environment heating up >> i know when it comes to internet, i know there's more than just the f.a.a.n.g. names however, when you look at the f.a.a.n.g. names year-to-date, the one that has underperformed the most has been netflix, which has not been exposed to all of these regulatory headwinds >> competition disney that's not going away anytime soon in fact, it's going to intensify. that's why i think you're seeing it sell off. >> all right we're going to stick with that theme, i believe, here we have a new report from td ameritrade saying in august, clients were net buyers of equities for the first time in three months, but moving away from some of the big tech names. j.j. joins us now to discuss, chief market strategist at td ameritrade and here on set at post 9 j.j., talk to us about this latest report? why the change in sentiment? >> i think it's really interesting in august, i think there were two main -- you know, talking about tech, amazon, selling off 8% it was a stock that our clients absolutely piled into. as the number two buy. and disney was the number one buy of the month so those two, disney, the first two weeks of the month, amazon, the rest of the month,

microsoft, those three names really drove things. i think it's interesting you just bought up netflix, because our millennial clients, netflix was one of their top five sales. so it's just kind of interesting, you know, disney being our number one, amazon in the video space certainly not their primary business, but then netflix being a sale so i think all playing into the last story you just had. >> stepping back from the names, investors fearful? >> top line, investors continue to invest in short-term interest rate products. consider, i guess, the safer products six months and less. so that when things -- >> as in the fixed income market >> yeah. or even cds or things like that. so they can, when there is a sell-off, quickly move their money into buying equities and i think that's been the most interesting trend of the at last three months to be honest with you. usually when we see fixed income products, it tends to be longer duration they've cut the duration significantly as volatility has come the last few months

>> technology, is it still overweight for retail? >> overall, apple was the number one sell for the third month in a row. apple still remains our number one held stock so i want to be careful, people are like, oh, my god, they're just piling out of apple no, it's interesting to me, when i watch the behavior of our clients, you get above 205 in apple, and retail clients are suddenly taking profits, because many of them held it for so long and i think that that's -- i'm sorry, mark. that's a stock that reflects the fear about tariffs the most clearly, for most people, in my opinion. >> is there a difference among retailer investors between younger investors and older investors right now? are millennials doing something different than others? >> marijuana stocks. buy what you know. >> that's right! well, then i think that goes across generations. >> but quite honestly, when you look at marijuana stocks and even, you know, uber, i think people hear uber and are like, oh, my god, millennials are just

buying marijuana and uber. they tend to hold broad-based etfs as their holdings, but as uber sold off last month, they did buy it as the marijuana stocks sold off, they did buy it why? because we have a great time frame. and if in 15, 20 years, depending what your time frame is, but i find it hard to believe that you can't be of the opinion that some of these rules will go away and it could be a nationalized product if this is a longer term investment as part of your portfolio, it may make sense for people who are looking longer term >> j.j., thanks for joining us >> always a pleasure we've got 29 minutes left to go here are the three things that are driving the action today financials, one of the leaders on yield moves and comments out of the barclays conference pa rally in energy as new saudi energy minister commits to output cuts and a small cap surge. the russell 2000 is up more than 1% time for a cnbc news update. sue herrera has got it for you >> hello, wilf hi, everyone here's what's happening at this

hour illinois senator dick durbin is calling on the epa to use the power congress gave it and regulate vaping and e cigarette products targeted to youth this comes after word of five deaths relating to vaping and hundreds of illnesses. >> i sent a letter to the head of the fda demanding immediate action fda must immediately ban all e cigarette devices that have not been approved by the agency. the chief executive officer of nissan resigning. he says that a new generation should run that car company. the illicit income allegations are tied to nissan's stock price. and what a difference a year makes. the boston red sox have fired president dave dombrowski. he was the mastermind behind the red sox's 2018 world series title. but the team is currently 17 1/2

games behind the yankees and 8 games behind for a playoff spot. that is the news update. i'll send it back downtown to you guys tough sport. >> sue, thank you very much for that, sue herrera. still to come, we've got your "last chance trade" and stephanie is focusing in on an oil name she says is the best in its class. we'll recall the deal ahead. >> and speaking of oil, up next, we'll discuss what a shake up in saudi arabia's oil ministry could mean for the price of crude going forward. ♪ keeping the night interesting, is all about setting the right tone. ♪ lower carbs.

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welcome back to the "closing bell." we have 24 minutes left to go until the close. and right now markets are largely flat let's send it over to mike santoli for a second dashboard mike >> morgan, ipo, normally on wall street stands for initial public offering, but also these days, indistinct profit outlook. indistinct as in unclear look at this breakdown of what percentage of newly public

companies have profitable businesses when they become public this got attention when uber and lyft were becoming public earlier this ear it's not really changed. first half of this year, only 17% of all companies actually had profits. last year, very similar percentage and then you go back to these kind of internet bubble years for comparison, where 24 and 20%. obviously, that did not really end well for many of those companies. and of course, the three-decade average is 60% well, there are some differences, obviously, with the way we treat start-up companies. they're not run for profit it's not as if they necessarily can't turn a profit, but it's just one of those potential warning signals of froth out there. look at the chart of the ipo index against the russell 1000 it's a pretty broad stock index. the ipo index has outperformed for much of the past year, except just lately the index has nosed above the ipo index. i think the market is being more discerning than those stats say. uber and lyft have not performed well since their ipos and wework

may not get out there. even though they're trying to become profitable, the market is not accepting all of them blindly. >> two questions, how much, going back to that bar chart, how much of that is distorted by companies like uber, lyft, or even potentially, if we do see an ipo, wework in the fact that just a handful of companies have some very big losses and secondly, the comparison to '99 and 2000, how much is that warranted? >> first of all, morgan, it's the percentage of companies that are profitable, not the market cap. so basically, it's just the number of companies that are becoming public with profits is not that high. so, yeah, you could look at, you know, you could look at a dropbox or these other companies that have come public in the last couple of years that have not been profitable, aside from those real big ones. in terms of '99 and 2000, the big difference back then is that there were hundreds of ipos. there was a tremendous rich to

go public at very, very early stage companies and the market just took it off we're not seeing the same kind of pressure on the supply of stock from rampant ipos. that's a huge difference back then but essentially any company with dot come in the name and a catchy business plan was able to become public. not been the case in the last couple of years. >> mike, thanks, as always we'll see you again in a little bit of time. now, oil higher today after saudi arabia's new energy minister confirmed the country would stick to its commitment of cutting all production by 1.2 million barrels per day. for more, let's bring in the president and founder of hosseini energy who joins us by phone. good afternoon to you. thanks for joining us. >> my pleasure >> first of all, do you think they'll stick to this promise and where do you see hooil prics headed from here for the rest of the year >> definitely, there's no doubt that the currently minister is a very, very experienced oil man he's been in opec and in the oil industry in saudi arabia for

several decades now. and he's very much committed to protecting oil prices, but i think he will work with the other members of both opec and aramco management in a consensus-building strategy. yes, oil prices are important, but he's also looking at the long-term and the ipo figures very big in this so he's got quite a few challenges to deal with. >> yeah, to that point, sadad. a number of analysts coming out and saying that his appointment is certainly bullish for oil prices how bullish is it, though, for this aramco ipo actually moving forward? >> oh, it's very supportive of the ipo. the ipo is good for aramco, it's good for the kingdom it's got a lot of merits to it it's brought a lot of management transparency so he's very committed to it and a higher performance from aramco will definitely have returns for the kingdom's

economy. so i think it's going to be a very positive change in leadership within the oil industry >> sadad, some reports coming that jpmorgan might be set to win top billing on the ipo of saudi aramco my first question on that, though, is the ipo definitely coming in the near future? >> i have no doubt that it will be coming, and we're looking still to hear more details from the leadership in the ministry, but no doubt about it. >> do you think they are weighing up jpmorgan any insights on that democrat do they have particular preferences when it comes to the u.s. investment banks >> there will always be several banks involved, because it's too big a project for any single bank to manage it. but jpmorgan has been working with aramco over many decades, so they really know the company

inside out and if they had to leave a group of other banks, they would be very qualified for that. >> in the meantime, if you look at the price of oil, part of this has been developments in saudi arabia, the other part has been these headlines out of israel that the prime minister, netanyahu, says a nuclear site is nearly discovered in iran and is calling for action against that country how does this continue to play out? is there ongoing increased risk of escalation? and if so, what does that mean for oil markets? >> yeah, look, just know that iran is a problem and has been and will probably continue to be way through the u.s. elections i don't see anything happening very soon. but the oil prices are recovering because of seasonal demand what we have every year is in the fourth quarter of the previous year and the first couple of quarters of the year

thereafter, demand tends to slacken off and therefore prices suffer however, when you get into the third and fourth quarter, there's always a strong recovery and i suspect that's what people are aware of and that's what's probably propping up prices. it's the seasonality in demand >> all right saadad al hosseini, thank you for joining us by phone today. shares of arcadia pharma are surging in today's trade we'll break down what's driving it higher, next. >> plus, louisiana attorney general jeff landry will join us next on cnbc to talk about the crackdown on big tech. we're back in a couple of minutes. [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated.

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whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you. welcome back 14 minutes left of today's trade. new drug data has pharma stocks moving let's get to meg terrell who's got a breakdown of it for us hey, meg >> let's start with the biggest one. acadia pharmaceuticals is up massively after the company's new drug met the goal of a late stage clinical trial in patients with dementia-related psychosis. fda approval of the drug for this indication could expand the number of patients it's approved

to treat by ten times. next, we'll move over to a pair of movers on new cancer researcresearc research they are both working on a medication it's implicated in a large number of different cancers. new data from amgen is generally perceived today to be positive, but not quite being the high bar set by the street. mirati's stock is higher because amgen's data widens the window for mirati to beat it. all about expectations >> stephanie, any of these names you like >> yes, i have and i own amgen, and i was surprised that it was down that much pre-market, actually down almost $9. so i think the data was fine it wasn't -- it didn't meet the expectations the stock is up 21% from its lows so i get it. but i'm a buyer here, for sure >> come off the lows today, as well >> yeah. >> there's been some buying there. >> yeah. still down 2.5%. we should point out the broader markets have improved a little

in the last 20 minutes s&p is exactly flat. the dow is higher by 0.1%. up next, we've got your last chance trade 13 minutes left to trade >> and shares of at&t hit levels not seen since february 2018 today after elliott management disclosed a $3.2 billion stake in that company. coming up, media executive tom rogers will join us to weigh in on the future of that company. "closing bell" is back after this

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welcome back to "closing bell." we've got eight minutes left of trade. there's the s&p 500 intraday for you. started high lower by around lunchtime. just recovering into the close to be flat of course, we are higher last week and for the month of september so far, the s&p is up 1.8% time for your "last chance trade. stephanie, what have you got for today? >> today i have schlumberger this is like the best company in terms of oil services, very well run, great execution they have a new ceo who's dedicated to profitable growth and margin expansion margins are very depressed given what's going on around the world. and i think that there's a lot of upside and a lot of operating leverage potential for double-digit earnings growth going forward. it trades at 15 times forward estimates. it yields 7%, which is very well

covered. and down 42% from its highs. so i just think this is a down and out, best in breed, these are the kind of things that i do as an investigator i like the number one and number two player in this field and that's what it is. >> it's not typical that you get that kind of yield at the oil services end of the spectrum, but you are happy it's covered, you're not worried that this is going to be something that -- >> in fact, the ceo just talked about being very committed to actually the dividends and increasing the dividends going forward. so you do need a healthy oil environment, right so you can't go to $30 oil but i think if you stay around here, it's actually well covered and that's a nice clip to get while waiting for the recovery >> the stock is up 5.5%, almost 6% after the ceo spoke earlier today. the digital piece of this story takes me back to the interview i did with honeywell ceo a couple of weeks ago, the fact that oil and gas is right for this digitalization and connectivity. how does that play a role in the stock? >> absolutely. that's going to help on the margin side, too it's not just cost cutting it's more productivity, more

efficiencies and that kind of thing. that's why i think that margins have a shot at moving a lot higher from the very depressed levels where they are today. >> all right we'll see how it goes. >> okay. we have got six minutes left to go nodin today's session and is time now for the closing countdown. let's trade the futures with bill baruch. what are you watching into this close right now? >> i'm looking back at friday's nonforeign payroll number. it was highly anticipated, but the market reaction was fairly muted. wage growth came in better than expected we're seeing less worse data out of europe this morning and we are eyeing cpi on thursday, which has been a fairly strong number of late what we're seeing here today is the 30-year bond the prices are coming in pretty strongly today or pretty weakly today. the yields are firming up. we're at the highest level in about two and a half weeks lowest level in 3 1/2 weeks on the prices and i think there could be a little bit more room here to go. if you see this chart, there is a trend line that we broke out

above. we can pull back down and detest it that's at 160. on top of that, you're seeing the two-year, the ten-year yield curve. it hasn't been negative for about a week now that's a good thing. and you know what else likes that are the banks the banks are on fire. and we're seeing the xlf up. there is some good room here for it to run a little bit further just above 28 1/2. but some of these other banks also have some really good room to the upside, like jpmorgan if it gets a little bit of a tailwind, it could be at all-time highs potentially here. again, it's about this yield story. and i think there's room for yields that continue to stabilize and that two in ten to stay away from an inversion. >> is there a small chance that the fed doesn't cut? would that hit the market ifs they didn't cut? the market itself would not like the fact that the fed did not cut. i think the banks would overall outperform some of the other sectors. and i like that about the banks right here right now, there's only a 10%

probability or just under a 10% probability that the fed won't cut next week. and i see the reason why they won't. and they don't have a whole lot of powder. but if they use it here, they have even less powder. i think that cpi number on thursday will be crucial and the ecb is expected to cut rates by ten basis points, deeper into negative on thursday as well but that's already priced in so their rhetoric and their negative as well as that cpi number will be very closely watched on thursday. >> bill, just to go back to the xlf for a moment the fact that financials are the best-perform sector, one of the best-performing sectors so far in today's trade right now how much of this hinges for you, this trade, on what comes out of ceos and cfos this week at the conference >> that's crucial. we've started to see a little bit of upbeat from wells fargo, the second half of the year, as well as citigroup is on fire here today i think it's jamie dimon tomorrow and he'll set a good tone i think jpmorgan has some room to the upside. and we could see jpmorgan

potentially be a high flyer again tomorrow >> bill, we'll leave it there. thanks so much for joining us. let's get over to mike for the third installment of the dashboard. >> the s&p takes the "w. the s&p dominated by the very largest companies and especially big growth stocks has opened up quite a lead on the average stock. take a look at the last year the s&p 500 against the etf that tracks the equal-weighted version of the s&p that's a pretty good split in performance there. more than 2 percentage points by the traditional s&p 500. however, today, i would note that it's a little bit of a reversal and part of these rotations we're seeing today from laggards going to leaders this rsp is up about half a percent today with the s&p 500 itself very flat big question here, if this represents a typical late-cycle phase, where the biggest companies dominate and smaller ones kind of buckle because profit margins are more fragile. or if this is just a little bit of a lull and the average stock can come back. that's one of the things we'll be watching for the next several weeks. let's get out to rick santelli to track some of that selling

today in treasuries. hey, rick. >> absolutely. and there definitely was selling. if you look at an intraday of twos, we're on the high yields of the sessions. look at a one-week of tens, up seven basis points finally, a bound chart going back to august 1st these are the best levels for bunds in a month and that's very interesting considering there's an ecb meeting this week, and many think draghi is going to be more stimulative. one thing that wasn't stimulative is the nasdaq after launch today, bertha coombs. >> yeah, not really, those yields certainly not helping tech large tech cap, kind of a mixed picture. you've got apple up ahead of its event tomorrow hardware overall strong today, software kind of weak. chips are mets today, but it's really the smaller caps that are moving haigher. and a lot of those lagging sectors like retail today. new high for zumiez. michael's going to be moved into

the s&p 400. retail is up about 6%. what tariffs are we talking about, right meantime, you've got the banks, as well. as those yields have come up, the banks are up 4% this month and among the leaders today. over to seema. >> the shift from defensive to more cyclical, economically sensitive sectors continues to play out in the second week of september. today, it was industrials, transports, financials, even energy seeing gains of 1%. the small caps, as you mentioned, quietly moving to the upside with a gain of more than 1% this as the dollar continues to weaken u.s. dollar now down about 7/10 of 1% in the month of september. within industrials, those construction-related names that make everything from engines to tractors, cart pillar up 3%. almost 4% on no news in fact, bank of america cut its price target on shares of caterpillar to 145 from 150. that stock seeing a gain of 3.7% two subsectors within consumer discretionary, big standout in

retail gap, macy's, l brands, not only higher today, but announcing on double-digit gains for the month of september and those casino stocks continue to move to the upside there's the closing bell dow industrials at 26,835, up 40 points s&p 500 hovering the flat line at 2978. if you're just joining us, good afternoon welcome to the "closing bell." i'm wilfred frost. >> and i'm morgan brennan in for sara eisen, along with mike santoli, cnbc senior markets commentator. let's take a look at how we finished this first trading day of the week here on wall street as stocks settle right now the dow finishing up 40 points, that's after being up as many as 103 points earlier in the session and negative as many as 35 points as well today. taking a look at the s&p, we closed right at the flat line,

2978 is your level there keep in mind for the dow and s&p, we're just under 2% from all-time record closes that we hit during the summer. the nasdaq finishing lower, down 0.2% small caps and the transports were the outperformers >> constructive final hour or two of the session, took us back to flat on the s&p, we're up 1.8% on the s&p in september so far sector performance, banks were strong, only beaten by energy banks performance, citi in particular up 4.3% i've got a chart over the last ten days of the bapnks showing that this change in momentum in the bank stocks had already begun, but took off today as we heard comments from management, not just the yield curve move, but comments from management that the earnings are looking fine for the rest of the year. >> and certainly, the tone, some of the rhetoric, some of the more upbeat headlines we've

gotten around u.s./china trade has also been leading some of the action we've seen here today. that was certainly the case for a name like polaris, which actually rang the closing bell here there's one of their indian motorcycles sit heerg behiting d us i spoke to scott wine earlier on "squawk alley" and one of the takeaways there is really how strong the consumer still continues to be especially amid these low interest rates one of its competitors, harley, is also higher today, as well. but joining us to talk about the market day, stephanie link, head of global equities research at nuveen mo mona moyhajan joins us here as well mike santoli, i think the market you used is ambiguous? >> it is ambiguous in terms of knowing whether what we've been dealing with since august, the fierce about growth, compression in bond yields is really a stutter step in the expansion or if it's, in fact, the leading edge of something worse.

and i think the market has been contending with that today, in the last week, it's kind of interesting. i think the collective thought was, look, maybe markets overshot in august in the short-term on this recession trade, on this idea that you have to only buy defensive stocks and all the rest of it. so today, you had a market overall trading water in the indexes. massive moves underneath the surface. my favorite is, software stocks down 1.6%. energy stocks, up 1.9. money coming out of very, very crowded popular momentum names, going into things that had been left behind. that can go on for a while as long as bond yields continue lifting. >> i get your point, mike, as well, about the individual sector performance banks were strong. but when you look at the move in the yield curve today, which was risk on, both in terms of moving higher and steeper, would you have expected the s&p 500 to track higher as well interms o the broad moves we've seen of late in those correlations >> it would have been not

surprising, i guess, to see the s&p as a whole go up higher. but i do think the fact that you have -- this has been a multi-day move out of the big growth winners and i think that's a little bit too much for the rest of the index to look. by the way, that's an issue. for anybody saying there should be a rotation into value in cyclical makes all the sense in the world. doesn't mean the overall index will move very much because of how everything is weighted in there. >> mona, what's your take on this do you agree >> it's interesting to see some of the sick ibcyclicals that ha lagging like we talked about, financials and energy were really not popular trades coming into the quarter and into the year tech on one hand and defensives on the others, like reits, staples, parts of industrials. but what we're seeing today and perhaps over the past week or so is the laggards are really taking hold here whether or not, like i referenced, this is a longer term rotation or something just temporary as positioning is going into the fourth quarter of

the year remains to be seen. i think it will be driven by the fundamentals do we get more progress on trade. do we get a base on gdp growth and global growth generally? and do we see some of the consumer resilience continuing >> so you position for more rotation or not? >> i think right now, we continue to maintain our barbell approa approach one hand of that barbell continues to be defensive sectors. it's been a nice comfort as we were going through this last quarter. but the other hand of that barbell, we still like some of those tech sectors perhaps it's not just the cloud, cyber security, software, a broader tech portfolio that can do well longer term, i think, makes sense. >> and stfephanie, we were talking about in the last hour how you feel about the cyclicals and rotation into those. looking at the market more broadly here, do you think earnings need to keep coming down the expectations are still too high or do you think they've bottomed out here? and bads sed on at least some o the data we've seen so far, that maybe the second half of the year is going to be a little bit stronger than had been

anticipated? >> and it goes back to what has worked and where the earnings have remained strong, like the defensives, right? they have actually been pretty good a little better than expected. can that keep up i don't know but i do know the cyclicals, the industrials, the financials. look at the relief rally we saw today. numbers have been coming down for the last several weeks for these two sectors and energy especially so i really think we'll continue to see this rotation, mean reversion, watch the dollar that will be very, very important in my book, too. but i think based on where we are and where earnings are at, the cyclicals continue to run. >> jpmorgan created a new index to analyze how the president's tweets are impacting volatility in the index >> the volfefe >> i like how you say that i was say fefe >> the word was never spoken it was only written. you can pronounce it however you want >> he can probably clarify for

us i'm going to go with volfefe it was found this jpmorgan analysis was found to explain immeasurable faction of the moves in implied rate volatility for two-year and five-year treasuries jpmorgan also found that out of 4,000 original tweets by president trump occurring during market trading hours from 2018 to present, only 146 moved the market, which is an interesting statistic and in itself. mike, how do we actually trade this and the the overall impact of the president's tweets when it moves the market diminishing in that quite quickly, it can move the other way a day or two or a week or two later? >> i don't know if it's diminishing in a linear way, but i do think that the mark has tried to, you know, not overreact to each one, because, obviously, it can be whipsawed i think this also represents to me kind of the content creators on wall street not really sure how to add value in this environment when you factor

macro models, really stand no chance against a particular type of tweet that says something about the trade negotiations or something else like that it's actually an fascinating exercise, but i don't know how you incorporate it into a process. >> 4,000 original tweets, only 146 that move -- only 146! >> that's 146 too much >> yeah, exactly so i think it gets to the point point, how much -- to really play this market, how much do analysts, strategists, and investors need to be psychoanalyzing the president? and is it really possible? >> first, i think if you're a long-term investor, you cannot trade off of tweets. that's what we -- we do not trade off of tweets. it is important, though, because there are some things happening in washington like this whole medical -- you know, the health care industry and medicare for all. that's a big issue and when president trump is going to tweet about pricing and this sort of thing, that will impact the sector. now, you have to have a long-term perspective, you have to focus on fundamentals who's going to weather that kind

of storm, let's just say, within the health care sector and pick your spots, really. you know, pick your high-quality names. and it goes back to my strategy of buying number one or number two on sale. you're going to get your opportunity from these tweets and i think that's the kind of attitude you have to take. >> we've got a news alert. frank has it for us. >> shares of ford down about three quarters of a percent after moody's downgraded the automaker's credit rating to a junk level, down from ba1 from ba33 moody's citing weak earnings as part of the company's restructuring of levels. this is the first time they've been rated at junk levels since right after the recession under ceo alan mulally >> thank you very much ford, junk, mike this is a big headline, whether or not, you know, it was on ratings watch already. it was close to that line. >> it was. i'm not -- it's not clear to me that the debt itself, and if there's an abundance of it, has

traded in a matter, okay, the market has already figured this out. i think this still would represent a split rating perhaps in terms of the different agencies on ford but it's obviously a pretty good reminder that we're at a point in the cycle, the auto cycle and the economic cycle where you're going to start to become concerned about, you know, debt service, in a very big-picture way. i don't think anyone is sending up a very prominent alarm about ford, but it does show you that eroding long-term fundamentals for the industry do have a little bit implication for bond holders. >> quickly, mona, last word whether it's on ford or volfefe. >> first of all, that writer gets brownie points for that title itself, but i do think all tweets are not created equal when you have that tweet that actually references a 5% increase in tariffs, that should get more attention than a tweet that says, well, perhaps we're coming forward something to think about as we move forward and volfefe continues.

>> all right, thank youboth fo joining us up next, tech under fire several states launching an anti-trust probe into big tech companies. we'll hear from the attorney general of louisiana when cos.90ng bell" returns in send

♪ are we supposed to dance? ♪ boy bands without dancing are just ok. get a better than just ok unlimited plan with spotify premium included on america's best network. only from at&t more for your thing. that's our thing. welcome back a bipartisan group of 50 attorneys general, this includes 48 states, d.c., and puerto

rico, launching an investigation into google over possible antitrust violations california and alabama are the two states that have not participated louisiana attorney general jeff landry is one of the ags taking part in the investigation and he joins us now good afternoon to you. thanks for joining us. >> thank you for having me >> so why google and why now >> i think that the alarm bells started ringing with many state attorneys about 18 months ago. we met in portland, oregon, at a national association of attorneys general conference where we started to discuss problems that we saw with many tech platforms, google being one of them. from there, we had an ftc hearing in nebraska, under which we again walked through the ad tech pipeline and the problems that google was creating inside the digital advertising space. so we've been focusing in on that we've had a number of meetings

with the u.s. department of justice and explained to them the problems as well and i think what you're seeing is, you're finally seeing the momentum to have built to such a point in time where attorneys general are ready to look into these practices >> mr. attorney general, there are so many different regulators and lawmakers that are focused on google and the big american tech companies right now in general. what the can attorneys general -- the attorneys general bring -- this group bring that maybe federal regulators can't and will you coordinate where federal regulators as you investigate? >> look, we are going to cooperate with the u.s. department of justice, but make no mistake about it. this is an didn't investigation by those attorneys general, by those states and territories that are participating we're going to do it our particular way we're going to cooperate with u.s. doj, but it is our investigatio investigation. >> timeline? your expectations for how this investigation plays out? >> right now, we're focusing on

the digital advertising space, right? because there's basically a virtual commodity exchange that google is controlling from start to finish. and that is problematic. this is one of the areas that we're focusing on. and of course, as we get information, we're going to go where the facts lead us. >> only focused on antitrust, though or could you start to look into topics like privacy, also? >> everything is on the table, but attorneys general in all different states are tasked with protecting the consumers that's unfair trade practices and antitrust actions. >> what's the sort of range of possible punishments that you expect could be in play here, depending on what you find >> again, i think we should wait and see where the facts take us. as lawyers, we're going to go where the evidence takes us. we're going to look at it. and at that point in time, once we've gathered those facts, once we overlay them on the law,

we'll discuss a remedy >> is the harm you expect you might find here in the digital advertising area to other advertising venues, principally? or is it to the advertisers who may be have less of a choice because, obviously, the demand among small, medium, big businesses to advertise digitally, google and facebook, has remained strong and growing. >> i think the harm flows all the way down to the consumer look, many times on this show, i've explained that consumers have come to have an expectation in search results, right, when they're looking for a particular product. again, i explained a time where i was looking to repair a particular product and searching for the replacement part, i was unable to find it, but knowing what i've known over the last 18 months, i started looking in the following pages, not in the first page and on the third page result was able to find it. the consumer's harmed, because what is happening is, they're pushing the consumer to buy the

entire product rather than the replacement part that's needed and so, again, you're pushing the consumer to buy something that he's really not looking for. and he has an expectation that he can't find it, when if those consumers know that they have to go to the second, third, fourth, fifth page, they can find what they want. that's not the expectation that the consumer has had as the internet has evolved they believe when they're looking for that, they should find it on the first page. >> louisiana attorney general, jeff landry, thank you for joining us today on the heels of this news of this possible investigation. >> thank you still ahead, apple is under fire for allegedly violating chinese labor laws we've got those details straight ahead. plus, former tivo ceo tom rogers will join us to discuss e ref at any ti&t after elliott management announced a big stake in the wireless media giant. - stand up if you are first generation college student.

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welcome back to the "closing bell." apple is facing accusations from a watchdog group that it violated chinese labor laws at an iphone factory. jon fortt has the details. jon? >> hey, morgan china labor watch is a new york-based nonprofit that highlights worker conditions in china and they put out a

detailed 51-page report. you can find on its website. the report accuses foxconn, apple's manufacturing partner, of multiple worker rights violations, including unpaid bonuses, forced overtime, and overuse of students and temporary workers from outsourcing firms. here's apple's statement "we looked into the claims by china labor watch and most of the allegations are false. we have confirmed all workers are being compensated appropriately, including any overtime wages and bonuses all overtime work was voluntary and there was no evidence of forced labor we did find during our investigation that the percentage of dispatch workers -- that's the temporary workers -- exceeded our standards and we are working closely with foxconn to resolve this issue." guys >> jon, how much is this a foxconn situation, that foxconn would be responsible for, and how much of it would actually be apple? i just think back to a handful of years ago when you saw report of labor conditions at a foxconn

report on behalf of apple as well >> foxconn works for apple and apple has made no secret of its desire to set labor standards that really conform with its image and its principles, as they might put it. so really, this was a hit not just at foxconn, but at apple itself i'll note, apple didn't dispute that the use of temporary workers was far above allowed levels it's also interesting here, temporary workers on a per-hour basis make more than permanent workers, which is probably part of the reason why regulations prevent -- are supposed to prevent you from having more than 10% of the workforce as temporary. but as we know, with the iphone, when it's a crunch season and they're trying to build up that initial inventory, there's the real temptation to get as many workers working at a time as you can. >> jon, thanks very much for that, jon fortt back at hq for us up next, former tivo ceo tom rogers will discuss activist investor paul singer's plan to boost at&t's stock price we're back in a couple of

minutes. it was sophie's big day.

by the way, she's the next mozart.

as usual we were behind schedule. but sophie's enthusiasm cannot be dampened. not even by a run-away donut. we powered through it in our toyota prius. because a star's got to shine, no matter what. it's unbelievable what you can do in the prius. toyota let's go places. ♪ welcome back it is time now for a cnbc news update with sue herrera. sue? >> hello, morgan hello, veryone here's what's happening at this hour "the new york times" is reporting that commerce secretary wilbur ross threatened to fire top employees at the national oceanic and atmospheric

administration after the agency contradicted president trump's claim that hurricane dorian might hit alabama. that led tonne noaa's release oa statement disavowing its own position that alabama was not at risk the coast guard says it has rescued three of the four trapped crew members from an overturned cargo ship off the coast of georgia it's working on rescuing the fourth the four south koreans were trapped in the propeller shaft room, which is near the stern of that ship. former national security adviser michael flynn has been sent an order to testify before congress a letter was sent friday demanding he testify before the house intelligence committee on september 25th the committee says that flynn failed to comply with an yearly subpoena and house of common speaker john bercow says he will step down by the end of next month. this after a decade on the job he will also quit as a member of

parliament i'll miss him. i've been getting -- >> at the very least, it means exactly less re-tweetable clips, which people really love here. >> they do and amazing taste in ties, as well but just such -- >> "amazing" is an interesting word for the ties, but either way, it's been another crazy day in parliament. it's going to go on until past midnight tonight >> we'll miss him. >> then they'll be closed for six weeks. but there we go. sue, thank you very much >> mm-hmm. let's send it over to mike for the final installment of the dashboard. hey, mike. >> wilf, you need a "t" to spell debt we've been talking about at&t. the activists taking a position, elliott management take a look at the chart of at&t against verizon. pretty much its only close competitor and peer. this is over two years i think the two-year look is pretty interesting, because at any time has done very well year-to-date, but on a relative basis, still way behind verizon, which has pursued a very, very different strategy now, at&t also looks pretty cheap, right ten times earnings, about 5.5%

dividend yield so maybe it's perceived to have a cushion from elliott, even if things don't go great steenlg y strategically, the stock is pretty safe. this is a more all-inclusive valuation measure that encompasses the debt load. at&t about $160 billion in debt, one of the biggest corporate debt loads in the world. and this is actually not looking like -- it's basically around the same as verizon's. but you've had this march uprds ov over the last ten years, and even with the stock underperform welcome the enterprise value, the debt plus equity did not really back away perhaps this is why we think elliott thinks there's room for approval you can use capital with a little more discipline and maybe just do things a little bit more streamlined. >> though ebitda or free cash flow >> this to ebitda. this is a very broad measure of cash flow before, of course, interesting and all of those other things, they really do have to cover. because depreciation,

amortization for at&t is not a trivial number it's a real expense. >> let's talk more about this and the elliott management taking a stake in at&t with tom rogers, former tivo ceo, former nbc cable president, and now executive president at win view. thanks for joining us today. >> thanks for having me. >> so mike santoli just showed us a chart highlighting debt to ebitda are you surprised to see that l elliott would be taking a stake here >> i'm kind of surprised that anyone thinks that at&t is potentially a $60 stock. that's a pretty bullish, optimistic view of the potential of at&t, given the issues that it has to work through i read the letter. it's a thoughtful letter, but randall stevenson is a very thoughtful ceo, who i think has been put in a very difficult position by the government everybody knows that the

government sued, based on motivation about cnn that delayed the closing of this deal and in the meantime, the media industry galloped on in a very significant way that has put them behind the eight ball in terms of the planning and implementation they can do to take advantage of the assets they have. having said that, though, they have a bundle of pretty troubled assets now and it's not clear to me how they really begin to drive growth anywhere near what would drive this stock to $60. >> but, tom, i guess the government-imposed deal on completing the deal was a 12 to 18 month thing, and the changes in the media history have been evolving over the last decade. so i'm not sure that's a kind of full defense of randall stevenson, if it is that you disagree with the strategy let's dive into the letter a couple of the criticisms, one of them was a lack of sort of creative leadership on the content side is that a fair criticism

>> well, they had some really strong people at hbo and time warner that are no longer there. but it's not so much the management changes, which in the near-term, are probably significant, as new people come up to speed. but it's really the issues that they're facing look, directv is a melting ice cube i think last quarter, they were losing subs at an annual rate of 8% worse than wire line telephone voice. and that's pretty dramatic and there isn't any clear recovery there it looked like for a while that an over-the-top skinny bundle of services offered under directv now might make up for that at&t had guided to the combination with that would make directv's subscribers flat it's very clear that's no longer in the realm of possibility. when it comes to the media side that you're referring to, look,

you know, time warner, like warner media, traditional channels like the rest of the media world is having ratings decline of 13% we just had the worst churn of cable channels in or cable connections and satellite connections in history in the last quarter and they're dealing with all of that while they're trying to roll out hbo max, where it's very unclear given how it looks like they're going to price themselves well above the disney bundle. well above where netflix is, with not that much incremental value, it would appear, relative to what hbo alone had. and how that pricing is going to allow that to turn into a major vehicle. i think the biggest issue is that it's not so much that those media trends weren't developing over many years, as you say, but the implementation to get out into the market and get something going to drive those assets was delayed by 18 months.

and that was very significant. now they're entering where appletv is entering, where comcast is entering, where disney is entering, a lot of folks, a lot of competition. and while the wireless business, their core business, it's 40% of revenues is enjoying actually a less-competitive period than the wireless world has -- cellular world has had for a while. that world looks like it's going to get much more kprecompetitivf the t-mobile/sprint merger is agreed to. so a lot of issues on all their assets >> absolutely. it's a story we're going to continue to watch as it develops tom rogers, thank you for joining us the stock finished the day up 1.5%, well off the highs of the session. we have a news alert on wendy's now. frank collins has those details. >> shares of wendy's falling about 8% right now after it lowered guidance as part of its plan to introduce a new breakfast menu and also hire 20,000 new workers

as part of this plan, wendy's says it will take a $20 million charge this fiscal year that will reduce eps to 3.5 to 6.5% wendy's says it will also restate its 2020 guidance on its investors day on october the 11th this new breakfast menu will include morning takes on its baconator and frosty >> baconator >> a breakfast frosty. coffee flavored. >> wilfred frosty in the morning. >> there you go. >> i remember a while back, several years ago, there was analyst work on wendy's in terms of why they were impeded in going big on breakfast for a while. and one of the arguments was because mcdonald's always tended to be first and get the better locations. they had the better side of the roads. so for wendy's in rush hour, you needed a left turn to get into wendy's more often than you

needed it for mcdonald's and it was a little bit of -- because you don't stop for breakfast unless it's very convenient, typically. >> i love that analysis. we need the same analysts to go through whether that's -- >> i need to go fish it up, but it's stuck in my head. >> i think about that when i go through drive-throughs, for sure stock is down something like 6% in the after-hours trade on this news. still ahead, e cigarette vaping is now being blamed for five deaths. coming up, find out if that could force the government to step up and strictly regulate this industry. and as we go to break, take a look at fords, under pressures wnadr hours when moody's dogred its credit rating to junk status. now down 1.7% in extended trade. we're back in a couple of minutes. [upbeat action music] ♪

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welcome back to the "closing bell." the fda slamming ecigarette company juul today, saying it had illegally marketed its nicotine pods as a safer alternative to cigarettes, despite never undergoing an official review. this comes after five deaths and 450 possible cases of severe lung illness have been linked to vaping by the cdc and the

american medical association has urged the public to avoid ecigarette use, leaving many calling for greater regulatory oversight of the industry. >> here to discuss, robert taryn, professor of cell biology and physiology and member of the lung substitute at the university of north carolina school of medicine and chris meekins, raymond james research agency with the department of health and human services a very good afternoon to you both professor, if i start with you, what is the latest in terms of hard data on how bad e-cigarettes are are we now suggesting that they are as bad as cigarettes themselves >> so there's data from my lab showing that proteases, that cause emphysema with related to the same level in vaping as in smoking, so potentially, yes >> but presumably, there's no tar, so there's an aspect of improvement, at least? >> everything i've looked at in the lungs just as similar levels of change.

even without the tar >> and is this something that you feel that manufacturers would have always been aware of, and thus had they advertised to the country, it would have been a knowing misrepresentation of the facts? >> i honestly don't know whether they did or not. i think when e-cigarettes first came on the market about ten years ago, people thought they could use products which were safe to eat, and then put them in the lungs, and they should be fine but i mean, i think it's fair to say that many companies put them on the market without doing the same extensive testing you would see in the pharmaceutical industry, for example. >> chris, we're seeing these warnings, these public health warnings around vaping right now and certainly, these deaths and some of the other alarms that are being raised is there a warning to be had for investors here, too? i ask that because juul, obviously, saw a lot of investment, it saw companies, it saw venture capitalists making investment because of strong growth, but in terms of all of the headlines, all of the regulations, the lack of a lot

of research right now, what happens next >> i think that's a great question, morgan and what i tell investors is, look, if you want a company who's going to have its executives hauled before congress every few months and you want a company whose very well-being from a financial growth perspective could be regulated by the fda out of existence and you want a company who potentially in the judicial branch, you know, the judiciary could face class action lawsuits in the future for targeting kids and the potential danger to kids, then e-cigarettes are the company for you! i think that what we see with investors, generally speaking, is that if you have a policy risk from all three branches of government, the judiciary, executive, and legislative, usually that leads to rough roads for those companies going forward. >> dr. tarran, are you of the view or are you suggesting that e-cigarettes need to carry the same level of health warnings on the packaging as cigarettes do

>> from a lungs perspective, yes. i can't talk about the heart or other organs, but everything i've seen in the lungs suggests they're just as bad as cigarettes and now we're starting to see people get hospitalized and die from it, it so seems a reasonable thing to say. >> and is that because the nicotine levels are higher than certain cigarettes or is it because of other ingredients or the way in particular that an e-cigarette delivers those ingredients to the smoker, the user >> so we found that nicotine levels are about the same in cigarettes as in e-cigarettes, but the effects of some of the other chemicals, the propylene glycol and the flavors, we don't fully understand yet >> the fact that you have altria that's invested in juul and now you have this proposed merger with phillip morris, the tobacco companies in general, is this going to open them up to more potential oversight, more potential litigation depending on how some of these vaping-related injuries play out? >> yeah, i think it is going to.

the tobacco companies have a long history for decades now of understanding the potential litigation risk, as well as the regulatory risk. so it's something that's just become a part of their business model. and at the end of the day, what it really boils down to are the profits going to outweigh the potential benefits for targeting kids and for potentially putting a product on the market that could negatively impact the americans' public health and in the case of big tobacco, historically, the profits have outweighed the potential penalties. will that be the same case for e-cigarettes we'll wait and see >> dr. robert tarran, chris meekins, thanks for joining us >> thank you up next, boeing under pressure this as the company suspended testing its new wide-body aircraft after the doors blew off one of its planes during a test infoaris could impact boeing gog rwd. we've got that story, ahead. so servicenow put your workflows in the cloud, huh?

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♪ welcome back shares of boeing slipping, this after suspending load testing of its new wide-body 777 aircraft phil lebeau has the details for us hi, phil >> hey, wilf the maximum load test is one of the crucial tests that needs to be done on every commercial airplane before it is certified by the faa and other regulatory agencies around the world. well, during the most recent one

for the 777x, which is boeing's next plane, the cargo door blew out. now, this is a test with extreme conditions in fact, conditions that airplanes rarely encounter during regular commercial services a and we should point out, this happened when the plane was on the ground it was not in flight in a statement, boeing says the testing conditions were well below any load expected in commercial service the event is under review and the team is working to understand the root cause. boeing also says that it is not changing its schedule for the 777x it still plans on first flight early next year. and first delivery by the end of next year. but certainly, this is one of those headlines, guys, when people see it, they say, more problems for boeing. but remember, this is what happens when you have a plane under development and going through the certification process. they put these tests in there, sometimes they have to go back and do them again. >> and phil, just to dig into that a little bit more the fact that you do see that play out when you're talking about testing a new aircraft right now.

how -- i don't want to use the "normal," that's not the right word, but how usual is it to see something like this take place versus the fact that you're talking about boeing that's already having so many issues around its 737 max >> reporter: well, not just with boeing, but with other commercial airplanes, they do have some of these maximum load tests, where there are failures. now, this one is getting attention because the cargo door is blown out and people say, oh, you hear the word blown out, there must be something wrong this this plane. these tests, morgan, if you see how far they bend the wings, way beyond anything that a commercial airplane would ever go through, but that's part of what the faa does. so this does happen during the development of new airplanes not just with boeing, but also with airbus and other commercial airplane makers. >> phil, while we go, just want to ask you about ford. it's trading lower by about 2 or 3% in after-hours, seeing it's downgraded to junk was that to be expected or is this a surprise to you and everyone else? >> reporter: not a surprise. in fact, i think many people were thinking this might have happened maybe three or six

months ago the concern that moody's has that the profit margins as well as the cash flow, they're going to be under pressure for some time you've got a slowing auto market we've talked about all of the stresses that were on not just ford but a number of other automakers we should point out that moody's does say in this downgrade that the balance sheet and liquidity, they're normal they're fine for ford. it's just that the outlook because it's going to be slow here for a few years, it's not that great and that's why they've been downgraded. by the way, guys, last time that ford had junk credit, back in 2012 >> phil lebeau, thank. still ahead, new data is showing a big shift in the real estate market this season. we're going to explain when "closing bell" comes back. fun fact: 1 in 4 of us millennials have debt we might die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right -

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labor day in the rear view mirror the fall housing market is getting under way but the heat is off. >> reporter: rock bottom mortgage rates are just not heating up the competition much because consumers are more worried about the economy. consumer sentiment in housing

did improve in august, but mainly because a lot more people think mortgage rates will keep falling. but the survey also found fewer people think now is a good time to buy or sell a home and more are worried about losing their job in the next year now we visited a sunday open house in dallas yesterday where darryl and carrie smith were taking their sweet time toby a larger home or enlarge their current one. >> any recession could affect our incomes, we don't know for sure, but it's something we have to consider. >> reporter: last year 40% of homes were seeing bidding wards. that has dropped to just 10% >> up next on close bell, your was look wall street look ahead and gnome apple's special event. what to watch for when we return

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larry you're coming in through the sewer. you have your snorkel? got it. janet, i hope you're not afraid of heights. what's going on in here? my it staff is planning to overthrow me. they're tired of working weekends to maintain our aging infrastructure. at cdw we get the pain of outdated technology. that's why we'd assess your needs then design a secure infrastructure to make you more agile and efficient. hey guys. oh hey, boss. no more weekends. no more weekends? let's do this! mutiny's off ted. what? for infrastructure solutions you need it orchestration by cdw. as we focus on the impact of tariffs on american companies let's have a listen of dollar

tree who sat down with jim cramer >> the last thing i want to do is take any value out of the package at all so our merchants go to asia and not just china >> right >> we're moving product out of china to the right places. and i think over time what our folks have done is we make it took easy, but it is a lot of discipline with what we've done over the years with this working knowledge. >> full interview "mad money" tonight 6:00 p.m. eastern time an action-packed show as always. apple's special product event is set to be a big highlight of tomorrow. josh lipton has a preview. >> reporter: so, morgan, star of the show is expected to be the iphone looking for they new models. upgrades could have a faster processor, improved camera, waterproofing. big question is what price does tim cook charge for those. maybe a new watch. wearables is a bright spot did we get any more details about pricing and availability

for apple tv and that new streaming service. more details coming next on "fast money" guys, back to you. josh, i realize it tends to be a device event but we could get more details around the tv or some of these other service, how much is hinging on that tomorrow given the fact this is a company that continues to invest in and pushes that narrative of services. >> reporter: it's a good question because it's been six months since they first unveiled some new services. front and center you're right tomorrow isn't just hardware but do we get any details that streaming service, do we get price? apple was carcinogenic 10 bucks a month availability, maybe more on content, is that must see tv. apple arcade, a new gaming service as well. i was talking to michael of web bush he points out that's a big potential opportunity. 1.5 billion people play cell phone games.

that also may be front and center for traders and investors too. >> apple avoided some tech center settling we saw today which was more focused on tech software >> it's broken above this one level like 210, held it for a while. seems like it's making progress. i don't know if it's all about anticipating of what's coming now. the market itself is tending to act better apple is often a destination, tends to be underowned i do think it's worth watching in term of the reaction to news. it doesn't seem as if there's a lot of anticipated excitement. >> a lot of potential market moving events whether ice ecp or opec, apple tomorrow what's the big thing you're watching >> until we get to ecb, tomorrow

small market confidence index. labor turnover report. see what it says about labor market it's been a very strong part of the economy. probably going to continue but it's worth watching. >> markets finished essentially flat out, s&p being on the flat line >> "fast money" begins right now. life in the nasdaq market site overlooking "new york times" square. the countdown is on. apple's big event tomorrow will it be enough to convince investors to trade up. and activist taking a shot on at&t traders take a second look boeing pausing stress test on its new 777 after an issue is discovered we begin with big bang breakout.