'sit called aviation gin there she is, and i believe she chugs an entire martini. something not even i have ever tried to do. >> really? >> chug a martini? >> maybe i'll show you some time >> okay! >> depends on the liquor >> we've got to go >> all right >> nice being with you that's "power lunch. "closing bell" starts right now. that sounds fun, guys. sign me up good afternoon welcome to the "closing bell," everyone i'm wilfred frost. the toll brothers stock is up 1.5% they report earnings after the bell the broader markets, down about 0.2% it's been a bumpy session. we're 59 minutes left. we're down 67 points on the dow. >> hello, everybody, i'm contessa brewer in for sara eisen. let's take a look at what's driving the action today chinese export data falls, which is rep kindling the worries on global growth. democrats, republicans, and mexico nearing a deal on the usmca trade pact and big

catalysts for investors on the horizon. with fed meetings this week and new tariffs set to go into effect this weekend. joining us, ian winemore we've been paying close attention to these big trade headlines. how much is this influencing what we're seeing on wall street these days >> i think it's overstated as to how much it's actually influencing wall street. i think there's two things at this point the first is that there's so much liquidity being pumped into the marketplace by central banks. they just announced another round of qe, even though they're not calling it that. and you've got positioning, which is a very big deal a lot of hedge funds and active managers are lagging again some for the last ten years, and because of that, they can't afford to miss a rally you see this synthetic short base, where people are long cash, and that's why sell-offs like today, you're not seeing a whole lot of follow-through, because need to hold until the end of the year. >> ian is with us for the next

hour we have got 58 minutes left of the session. let's focus in on the big stories we're watching kayla tausche has the latest on trade. mike santoli has a look at the longer-term market trends. and td ameritrade's j.j. kinahan tells us where investors are putting their money to work. >> we're waiting an announcement on a deal between house republicans and democrats to move the usm krrkusmca forward. some say that a deal is very close. sources say to the white house suggest it's already been reached in principle, with the white house telling allies of potential vote timing. they say if the final usmca text is depleted by december 15th, the house could vote on december 18th, with the house voting the day before on impeachment, according to two sources informed by the white house. of course, house speaker nancy pelosi will have the final say on scheduling. president trump just moments ago making some comments about how talks on usmca are going well,

saying that specifically he has heard that labor unions are happy and that, of course, is one of the key constituencies here in the united states, that the white house and democrats needed to get onboard. wilf, contessa >> so kayla, are we suggesting that early next week, we could have some positive news on this trade deal and potentially also, of course, following sunday's december 15th deadline with china? >> well, of course, there are two separate issues, wilf. you need to have this handshake deal then you potentially would need to have some committees in congress do a mark mock-up of this deal. you would have to have the white house send the final text over that's what the december 15th date as it pertains to u.s. mca relates to it. and then you would have to have a vote here. and all of that assumes that mexico and canada are onboard with the changes certainly, a lot needs to happen just on the usmca front.

and it is ambassador robert lighthizer leading both that and the china talks. >> let's get over to mike with a look at trends in the market and we'll start with minding the gap. that would be a relationship between stock price movements and earnings that's a bit of a divergence getting mauled that's a close-up look at a big department store owner and then, oh flow you don't. retail, outflows from equity funds, what does it mean, and debt there be light. thousandshold the household burden not particularly burdensome along with the trend in earnings per share, as forecast by fact set for the s&p 500. and what you see obviously is this big surge since last december in stocks we're up more than 20% as earnings have flattened out so they've been just slightly positive but call it flattened out. we have valuations being expanded implicitly here obviously, we've had an accommodative fed. also, a big comeback from that

decline last december. it's not that unusual, though. i want to point to this instance right here, where you see essentially on a point-to-point basis, earnings were flat for this entire period, 2015 into 2016 that is your upside scenario and essentially what a lot of the bulls are hoping, is that this move in the s&p has been handcapping a pickup in activity and earnings growth next year. obviously, got to sfee thee if t can happen >> mike, thanks very much for that i have to say, let there be love sorry, let there be light. got confused i was so focused on the brilliance of the pun. i'm looking forward to it, mike. might be one of your best financial puns yet moving on, retail investors, the next area to focus on, fleeing stock funds at the fastest base in decades according to new data, pulling out more than $135 billion from u.s. mutual funds and etfs so

far this year. this comes despite opposing data from td ameritrade's investor movement index that investors were net buyers of equities for the month of november, with the index rising to its highest points since november '18. let's bring in j.j. kinahan. good to see you. how you doing? >> i'm great, how are you? >> very well, thank you. headline, november, what was the theme? risk on, risk off for your clients? >> you know, i think you hit on the biggest theme, they've taken the greatest exposure to the markets since any year it's still not actually to historical average levels, so still below in that sense. it's still a market that everybody's cautious about a couple of things that really drew my attention, though. number one, if i look at the buy side, disney just continues to be something that our clients are so interested, they continue to buy that stock and continue to buy microsoft one that they also bought on the sell-off we saw last month was mcdonald's and the part that actually drew my attention the most, actually,

wilf, is what they sold. and you know, you see on the screen now now some of the things they bought and what they sold also was interesting is because it was stocks that are either at 52-week highs or multi-month highs. citigroup, bank of america, netflix, tesla being -- tesla was actually sold three of the five weeks of november as, you know, the stock started to rally to a level we haven't seen since last january and our clients sold it. they've been big buyers of it for the last year or so. i thought that was also very, very interesting to see tesla get sold while you see ford coming out with the electric f-150 being purchased at the same time. >> i also see that you broke out what millennials bought. in particular, virginia galactic holdings and canopy growth corps. ian, tell me what you think of those pics >> maybe they think we're going to space some time soon, but that should be a little concerning, right?

that millennials on their phones are buying marijuana stocks, and moon shots.concerning at all >> not at all. here's why let's look at time frame they have an longer time frame first of all, if you look at virgin galactic, it's the only way to purely play any sort of space move overall as far as canopy growth, again, i think sometimes we get a little caught up in the nearer term if you're somebody who's a millennial, i would think that the view is that in their lifetime, that federally, this will be something that is passed so it may make sense you also have to remember, it's inexpensive in terms of price stock. so if people are putting part of what they have to invest, because the rest of their investment portfolio looks very much like a boomer's portfolio so it will have some of your portfolio on things that you think that 10 or 20 years of growth opportunities i actually think that this might not be the worst idea in the world for somebody of that age,

which would certainly be different perhaps than a -- so i want to be clear that most of their investments are very much the same of the older generations. but it's okay to put things that you think are going to be worth a lot of money sort of in the future >> j.j., did cutting commissions to zero make a big difference in volumes or to account openings >> it certainly led to both. you know, the volume has been up, wilf but i think the other thing that's happened is that the educational interaction has also been up pretty significantly so when i see both of those together, that makes me feel very good. yes, our account openings have been unalso. so i think there was this fear when commissions went to zero that right away the whole world would go crazy so we haven't seen that. we have seen some people pick up their trading activity, which is fine i would always compare it to, if every company went free with coffee, you might have an extra cup of coffee, but you're

probably not going to go drink 22 cups of coffee that day and so we're seeing the same sort of thing with trading and more importantly, as i said, we have seen our educational offering, that has certainly increased participation from our clients and that i think makes us feel the best >> j.j., thanks for joining us great to see you, as always. >> always a pleasure >> still ahead, sculpt capital ceo jimmy elevlevin is looking r opportunities in the market with stocks at near highs and the surprising winners and losers from today's golden globe nominations. that's next. each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs.

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47 minutes left to go until the market close let's check in on some individual market movers today facebook reportedly is selling oculus medium, a 3-d sculpting tool, to adobe the sale comes after facebook acquired vr company beat gains in late november terms of the deal have not yet been released. those stocks, right now, as you can see, adobe up half a percentage point four industries lower after reporting weak earnings results.

the maker of recreational vehicles sites slowing sales in europe that stock right now is off by 3.5% wilf >> viacom cbs ceo, bob backish, was on cnbc earlier this afternoon in his first interview since that merger closed and was asked by our david faber about the multitude of streaming products the combined company will offer >> what we have today is a result of two independent companies with two different strategies and one skewed overwhelmingly free that's viacom with pluto tv, one skewed overwhelmingly subscription that's cbs, cbs all action, although they have some, et cetera what we're in the middle of now, just like everybody else viacom, cbs, is putting together one integrated company with one integrated strategy. we will do that in the streaming space, as well >> clearly some internal changes are coming in terms of structure and cost cutting, but also some

consumer-facing changes as well. there was a really interesting other section of this discussion with david and bob backish about free cash flow generation. and on a simple p\e basis, you look at this as one of the legacy old media companies, and it looks cheaper than the rest, but on a free cash flow generation level it, doesn't look quite as cheap. what's your take as to whether it's cheap enough for you to get in on? >> i just don't see if streaming is the way you want to go, i think viacom/cbs is sort of an also ran and cbs has a decent subscriber level. but if free cash flow is the issue and money is totally free and netflix can send billionso dollars and so can apple and so can disney, i'm not really sure where viacom/cbs fits into that landscape. as far as i'm concerned, they're kind of not in the game. >> let's stick with media now. and the golden globe nominations are out. the biggest winner so far is netflix dominating both the film and the tv categories. julia boorstin is in los angeles to break that down for us.

julia? >> contessa, netflix's $15 billion content spent this year has been paying off, especially when it comes to those gold en globe s nominations. netflix's 17 tv nominations beats hbo's by two and sony's, three of the top five most nominated films this year. the other streamers are also on the rise amazon drew eight nominations, three for film, five for tv. hulu also drew five tv nominations. and appletv plus drew its first three nominations for "the morning show." those streamers starting to edge out those traditional media companies really speaks to the spending power of those streaming tech giants. both when it comes to both pure content spend as well as those exclusive content deals they've been striking. guys, back over to you >> spending power perhaps the operative thing to focus on,

julie. because clearly they're paying up immensely just to get these first kind of nominations and potential awards it might even be the case that these are also in their history, the most unprofitable projects that they've backed, just because they're focused so clearly on getting these awards. profitability will be calculated in a totally different way look at a film like "the irishman," which is a movie that cost probably $200 million, but it's not about the box office. it's about how many people are streaming and how much it really helps build netflix's identity as a destination for premium content. now, one thing i really think is worth noting here is the fact that now netflix and amazon are two of the main players when it comes to sort of premium oscar-type films there was an era when the major studios used to invest a lot in these movies, but now they're focusing their efforts on the big franchise films like "the avengers" and "lion king," all

of the films that have helped drive disney to $10 billion in box office this year so now we're seeing those more prestige stories like "the irishman" or "two popes," another netflix film, those are the ones that are really getting the awards attention and maybe helping to boost the profile of these streamers as the kind of thing that you would want to watch at home, you don't have to buy tickets to a movie anymore >> all right julia, thank you very much for that i think it's interesting, because now it's going to change who the power brokers are, who are the star makers in hollywood? it's not going to be the big studio men anymore >> if they stay committed to doing that year in, year out, as opposed to just wanting to get their names on the board to begin with >> right >> it's a war of attrition, you've got to go with the companies that have big subs and big wallets, and that's where people -- >> that's whereyou're seeing the award nominations, for sure. all right. we have 22 minutes left before the bell and the dow is off by oh, about a quarter of a percentage point. nasdaq off by about the same s&p following suit after the break, goldman sachs

just adding one restaurant stock to its conviction buy list it says it could climb more than 70% in thenext year. we'll reveal the name, next. plus, sol big earnings coming after the close, including chewie, stitchfix, and toll brothers. we'll bring you those numbers when they hit. and break down chewy's results colef c, ckn ny'seoba i a up ominutes. (vo) the flock blindly falls into formation. flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling. defy the laws of human nature. at the season of audi sales event.

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. welcome back to "closing bell." time now to get the word on the street citigroup downgrading 3m to neutral, while maintaining its $180 price target. the firm says growing litigation risk over chemicals could be a lingering overhang for the company. the potential environmental hazards have garnered main street's attention in the latest film "dark waters," starring mark ruffalo >> citi also out with a note on chevron, downgrading the stock to neutral and lowering the price target to $120 a share from $135. the firm says while chevron has been a standout over the past several months, the safe haven stock is overplayed. citi notes this is a fragile period for investors in the energy sector. goldman sachs adding wingstop to their conviction list. goldman highlighting the restaurant's strong underlying trends, manageable commodity prices, and improving delivery

dynamics it's up 5% on that news. >> and mentioned they can cook wings 50% faster i'm so fascinated. all right, but we want to talk about 3m here and this call about the environmental hazards. and ian, you don't agree with that >> i think it's a silly call i mean, he talks in the note about how year over year revenue growth has bottomed. he expects a modest industrial correction things are getting better on the profit side and you're downgrading it now because you're worried about some litigation that will probably go on for ten years at the end of the day, once this starts replacing pleameasle thel owe ma, i don't think that's the case >> okay, we've got 36 minutes left of trade at the moment. the dow is down 60 points. finding a little bit of impetus in the last half an hour it's off the lows, up a hundred points plus, shares of macy's have

plunged nearly 50% this year wall street is piling on with another sell rating. mike santoli checks in on where the analysts stand, next and as we head to break, here's a check on bonds. treasury yields ticking lower ahead of the fed meeting this week the ten-year currently yields about 1.83%. there you go and we will be right back on "closing bell. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

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. welcome back we've got 33 minutes left of the session. here are the key things driving the action renewed worried about the trade war's impact on global growth. democrats, republicans, and mexico are nearing a deal on their trade pact with president trump, saying, quote, we're doing very well on usmca and investors are looking ahead to the fed meeting this week and new tariffs set to go into effect on the weekend, as things stand. we are down 60 points on the dow with just over half an hour left it's time for a cnbc news update with sue herrera hi, sue. >> hello, wilf hello, everybody

here's what's happening at this hour the u.s. government across three white house administrations has failed to be honest with the public about failures in the afghanistan war. often suggesting success where it didn't exist. this is according to interviews with officials obtained by "the washington post. first lady melania trump participating in the annual marine toys for tots program she joined dozens of children at joint base an kcosta bowling in washington to separate and collect toys for children in need this holiday season >> the marine toys for tots is one of my favorite events during the christmas season thank you to all of the children who are here today to help >> and peter afrafrates has die. the challenge raised more than $200 million worldwide he died peacefully, surrounded

by his family, who released a statement saying, quote, today heaven received our angel, end quote. peter frates was 34. you are up to date that's the news update this hour contessa, back to you. >> sue, thank you very much more that appreciate it. let's get over to mike santoli now for the second installment of the market dashboard. mike >> contessa, you mentioned earlier, piling on to macy's, getting mauled goldman downgrading the stock to a sell after the stock was already down about 50% and that really joins a very negative sell-side consensus on this stock if you look at the breakdown of ratings right now, you see sales right here, there's 7 out of the 17 ratings now sells that's very unusual for any large stock to have that much in the way of sell ratings. only two buy ratings right now clearly, everyone is very much onboard with the idea that the trend is lower, the fundamentals don't support things, and there's the price target,

average price target, sitting right around 15, where the stock is itself. the stock is up today, giving people hope perhaps it's bottoming. look at the downward trend this is a ten-year chart it was always cheap. now it's down a little over 5. about five and a half. the caveat here, there's a lot of debt. this is about a $4.8 million market value there's almost that debt on the balance sheet. if you look at it in terms of enterprise value, it's less cheap, but definitely shows you the market is not expecting much of this company. look at the dividend yield this really jumps out at you in a market right now with a sub-2% dividend yield dividend for macy's is up around 10%. clearly, the market saying, that can't last the company will decide to cut it or something like that. so this is one of those things where it's such a high yield that it almost scares investors off as opposed to attracting them, guys >> what was the low in terms of p\e that some of the other retailers got to before the

market started to believe their turnaround stories i guess target is probably the best example that's suffered for a wile and now is performing pretty well? >> target, those kind of big box non-mall retailers never got quite this cheap i would say it got down into the 13 to 14 times range for target reexpand that multiple if you look at things like gap, kohl's, they're in the high single digit p\es right now above macy's, but not really very much above there. it's the mall-based apparel centric stocks that have had the hardest time >> now energy on pace to finish, as the worst-performing sector this year. it's underperforming the broader market by more than 20% year-to-date, with the sector higher by just 3%. but despite the slump, some investors seeing energy opportunities. joining us now, jimmy levin, cio

of sculptor capital management we'll come to energy in a moment, but broadly speaking, in terms of investing actively in the credit space is your main area of expertise, right >> it is we do a bit of everything as a firm, but credit is certainly a large part of what we do and personally, that's the background i came from >> do you feel like there's more opportunities in that space for active management today than perhaps relatively speaking, compared to equities where we have seen a lot of indexing and move into past investment? >> definitely, but it depends by what you mean by credit. one of the interesting things going on right now, if you look at markets broadly, stock markets around the world are up 25% year-to-date if you look at investment-grade bonds, high-yield bonds, you have double-digit returns underneath that. if you look at essentially low-quality or stressed or distressed assets, a lot of which overlap with energy and credit, it's been quite the opposite story significant negative returns or lack of return as opposed to what's been generally rip ro roaring everywhere else. >> and that correlation pretty strong in terms of a sector basis across the s&p 500, for

example, energy flat this year in the s&p pretty much and you're seeing flat returns or down returns in the -- >> similar depending on which credit market we're talking about, i would say if something's going very well, it's flat, but if it's not going well, it could be down 10, 20% year-to-date >> i have a note here that you own pg&e debt. they reached a $13.5 billion stoplight with wildfire victims, but not in the clear yet, as i understand it. why this particular debt what calls to you about a potential upside >> i was going to avoid talking about specific names, but with pacific gas and electric, that investment, whether it's for us or others is less about it being an energy name and reallyit being about what happened to the wildfires. all i can say is we're hoping for a great outcome for all constituents do you see it -- with the wide availability of credit, we've had some guests come on and ring a warning bell that the money is too easy, the access is too widely accessible to companies

that don't have a lot of creditworthiness and that we could be heading for a big credit bubble. do you see that? >> we're starting to see the beginnings of it if you talk about the feed stock to that. the market having issued probably a net $1.5 trillion over the last five years nearly almost every metric of credit performance or credit risk has gotten riskier over the last decade. the percentage of deals where the ebitda calculation involves a bunch of adjustments all of that has happened and you're just now starting, literally in the last few months, to i think see those cracks >> is that because we're seeing the yields so low, from safe havens, that even pension funds and insurance companies are chase i chasing riskier investments. >> more or less, rates have been close to zero and asset classes have mostly gone up. and one of the asset classes that participated in that boom

and then experienced that leniency is certainly the credit markets and certainly the non-investment grade credit markets. >> outside of special situations, which you've touched on a couple, outside of those, would you want to be avoiding this space in general, particularly where it's investment grade credit of that -- has that been bid up as much as treasuries have? >> investment grade credit is not typically an area for us it looks a lot like treasuries so yields are low, generally returns have been very strong. what we're starting to find interesting, and we have found for a while, but certainly more so the case today, are the beginnings of these breakdowns so that really falls in two buckets. there's the energy-related breakdown, which is really significant. it's one of the most meaningful voids of capital in all of capital markets right now. and the other area, which is probably less talked about, because it's more idiosyncratic, is the number of names within the credit space that are starting to trade at distress levels and you're starting to see, there are some articles about it

today. 200 issuers now trading at distressed yields. >> how tight is the energy to oil, as far as the credit webts? is there a pretty high correlation? >> there should be, but this is a pretty wild phenomenon this year i think the price of a barrel of oil is up 30% year-to-date find an energy asset, whether that's debt equity, public or private, that's up 30% year-to-date, you're not going to find a lot. so that relationship has broken down now, in certain cases, maybe it's deserved or maybe these assets were at the wrong price before, but certainly, we're finding plenty of opportunities where it seems pricing has got away from fundamentals and there's an opportunity to step into the void. >> to the point about some of those -- an increase in the amount of distressed equity debt that's trading out there, to what extent is that caused by liquidity for whatever technical reason, failing to get into the market place, whether that's shown by the repo rate or other issues around the fed? >> probably the most meaningful technical that's driving it, and it's definitely a technical driving it, in the loan market,

the biggest buyer of loans in the loan market are clos and they have a lot of very specific rules about what they can and they can't buy, based on rating and based on price. so what you're seeing, and i think this has been reasonably well reported on or at least is starting to, is as a given bank loan trades at par, then 95, then 90, then 85, then 80, all of a sudden it hits this acceleration to the downside based on technicals. and it turns into a very negative feedback loop, where price goes down, because there are sellers, not buyers. people look at the asset and say, there must be something wrong with it, because price is down, and you get this vicious cycle, that we're in the middle of >> what do you think we need to see for those 200 companies that are really distressed to take the next leg down as far as actually surviving >> those companies themselves, those are idiosyncratic based on earnings and everything else it's not because of a weak economy. the economy is fine. i think the issue is, there was no margin for error. when you're creating trillions of dollars of paper and you're doing it at ever-increasing

multiples, ever-increasing leverage, increasingly creative adjustments to what the numbers are, the slightest thing goes wrong, you have a problem. so if there was actually a problem when the economy, i think it would be a whole different game, but even absent that, you're starting to see those cracks >> jimmy, thank you so much for sharing your perspective with us >> up next, we have your last chance trade >> and tomorrow a cnbc exclusive interview with goldman sachs president and coo, john waldron. that will be right here. "closing bell," 4:30 p.m. eastern time we're back after this short break. you should be mad that this is your daily commute. you should be mad at people who forget they're in public.

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welcome back to "closing bell." we've got just under 20 minutes, about 18 1/2 minutes left of the session. we're down 80 points a little bit more selling in the last ten minutes equates to about 0.3% on the dow. s&p, nasdaq, just a little less than that. consumer stocks doing well

today. staples and discretionary in the green, while health care, utilities, and tech lag. but overall, not too much of a decline. all right. 18 minutes left to go here ian, let's talk about your last chance here it is, what do you want to trade? >> i want to buy netflix and i think a lot of people don't appreciate the fact that 70 to 75% of netflix subscribers only have netflix. and so there's this perception that somehow everybody is going to jump ship and move to other streaming services >> really? >> yes >> based on what analysis? >> based on data that i saw before i came in here. >> 70 to 75? that's high. >> so as a result, i don't think this max exodus is going to happen and on top of that, you've got what we talked about earlier this scale, massive scale. 160 million subscribers. it's no that easy to penetrate that moat from nowhere like apple and disney so i just think the fears are totally overblown. i think the money situation with the fed will continue to provide

support for companies that have leveraged balance sheets like netflix. and who doesn't love "the crown" you must love "the crown," right? >> i do love "the crown," although the early season is better than the most recent one. but coming back to the stock even if you're right and people don't start canceling, has it already pivoted to now starting to be valued a little bit more on its earnings and sales as opposed to just that arbitrary subscription number? because people got a little spooked whether the subs could keep growing and now they look at other multiples that gives it a big gap below potentially to slip the anything disappoints in the year ahead. >> i think people got upset last quarter when the subs didn't grow as much as people had hoped. but i still think people are looking out two, three, four years and who's going to be around in this and ultimately, who's going to be able to raise price because of that. and the uber case on netflix is, not only do they surprise, but eventually they can raise price and then the margins start to really expand. >> netflix down 1.3% today a buying opportunity, according

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close. >> and mike santoli joins us here to break down the crucial moments of the trading day and today we have ian weiner, from bellatore asset management with us as well. good to see you both let's kick things off with biotech. bertha coombs, looking at big deals in that space. hi, bertha >> a pair of blockbuster deals in cancer drug therapies shows just how important and how fierce the competition is for these new immune therapies being developed. being acquired for $2.7 million, 20 bucks a share that's a premium of more than 100% over its closing price last week they're developing gene therapies to treat blood cancers. meantime, synthorx flushing a better deal from sanofi. that makes it one of the steepest premiums this year. coming after last month's deal

for audentes the deal for spark remains under review at the federal trade commission the two extending the offering for another week that's the other issue for these companies. whether they will get approved but nevertheless, the race is clearly on in biotech for this immune therapy drugs >> bertha, thank you for that. so mike, what do you think is this the trend in biotech that mergers and acquisitions are going to drive the profit margin >> it's a big element of it. i think you have these very big slow-growing pharmaceutical companies that don't have that much of a fruitful pipeline. any company that seems like there's a head start in a promising treatment, they're going to buy merck shares are flat on the day. obviously, a small deal relative to the size of merck they'll encourage that kind of thinking among the drug companies. >> where do you stand in this biotech space? >> i think it will continue to go on like this. it's about the free money, the capital that we've been talking about. that makes it easier and easier for these big pharma companies to gobble up anything small that

looks like it has a promise. >> mike, more broadly, we have seen a flurry of deals in this space, not just biotech specific, but broader. do you think the health care companies is just feeling a little less concerned about the political outlook or what's going on >> yeah, or this particular type of activity does not seem to bear upon the drug pricing controversy very much at all they're basically looking for these kind of treatments that would kind of leapfrog what's going on right now it's not just about existing drugs. >> just under ten minutes left we're down 80 points on the dow. amazon placing blame on president trump after losing a multi-billion dollar cloud contract >> amazon said that repeated public and private attacks from the president is why they lost that jedi contract to microsoft. and over the weekend, jeff bezos making the case for why amazon and other big tech needs to work with and not against the

pentagon >> my view is if big tech is going to turn their backs on the department of defense, this country is in trouble. that just can't happen and so we have to -- so if the senior leadership team could say to people, look, i understand these are emotional issues that's okay. we don't have to agree on everything, but this is how we're going to do it we are going to support the department of defense. this country is important. >> big tech has faced backlash for pursuing defense contracts a group of shareholders expressed reservations over amazon licensing its facial recognition system to law enforcement. there was google's project maven. it was protested by thousands of employees. and a group of microsoft workers before winning jedi demanded they cancel their contract with u.s. military. >> thank you is this issue of -- to me, jeff bezos is just doubling down, being the patriot in this case is that truly to win back business >> i do think he wants to kind

of head off of this idea that a big company need to sway with the preference of their employees about where to do business, where not to do business it's a tremendous source of growth especially if you're going to be something like aws what i find fascinating about it is this dispute is also going to hinge upon amazon making a public case for why microsoft is inherently inferior in this business as a company-on-company action, it's fascinating >> to that point, it's also interesting that microsoft stock hasn't really flinched >> it's not a big mover for microsoft stock. over time, it will be interesting to see whether or not microsoft has cohad to come out and defend >> we were all led to believe that aws was the winner in this space. microsoft had a very strong kind of last six months, though >> i think there's two separate issues, right? there's this one contract and the overall business i don't think there's any

question on this one contract that the president had something to do with it. i think the question now is going forward, to me, from what i hear, aws still continues to be the best low end sort of situation for anybody looking to outsource data >> okay. ian, thank you we have seven minutes left of the session. shares of canopy growth going high today let's get to rahel solomon who has the details. >> investors seem to be high on the news today that constellation brands' cfo david klein will take over as ceo as can pi growth, the world's biggest marijuana producer klein was also appointed chairman in october. and the move now means that they're from constellation with mike lee, a former vice president at constellation the maker of corona owns about 38% of canopy stock and the news has some analysts now wondering if constellation could be moving towards take a majority stake. shares of constellation are down about a percent today. >> rahel, thank for that ian, what do you think would that be a good move to go

in and take over more of canopy? and especially at this time where in the united states, at least, you've got some real pressure from the fda over where we're moving with marijuana. >> i mean, i live in l.a., so i understand this industry, but i would say, it's unclear how anybody is going to really make money. that's yet to be proven, anywhere along the food chain. so if they want to double down on this investment, have at it but it's unclear to me how this is going to play out i don't see why you've got to be the first one in the party >> mike. >> i think, first of all, it's obviously a market reading this as a good move it gives greater legitimacy to the country. but it's had such an awful run, canopy shares, and it seems like an excuse for it to bounce in the short-term yeah, sure, if you want to hinge it on a potential majority stake down the road. maybe that's a reason to buy it. but i'm kind of with ian in the sense that if i look way down the road, what do we have here it's kind of a boring ag business as it stands right now, as opposed to some great growth

opportunity for proprietary branded goods down the road. >> all right coca-cola ceo james quincey appeared on cnbc earlier today, where he discussed the company's efforts to become more sustainable, as well as the rise of esg investing, which weighs a company's focus on environmental, social, and governments. >> the amount of attention by the investor base has shot up exponentially in the last few years. and i think we have a very clear strategy around the various areas you talk about, whether it's plastics, water, sugar, women, and the community in general. it's inherent to our approach. >> it's interesting, when we're talking about esg, the casinos that i cover have all have these big plans in place about water conservation in las vegas. they do it because it affects their bottom line. >> but they're gambling stocks >> that's exactly right. but they say that this really matters to the bottom line of what they're doing and when we had warby parker's ceo, i had this whole, buy a set

of glasses, give a set of glasses, and he said, our employees demand it. how much of a focus does a company need to spend on esg both to attract and retain skilled talent and also because it's good for their bottom line. >> so mark my words, this esg is one of the biggest shams going because any company can say, well, now we do this, so now we're open up to this whole new pool of investment money it has yet to be defined and i think it's lip service so they can say, hey, we're esg, too how coca-cola is, it's unclear to me. >> there are groups seeking to define it, and to qualify companies to be eligible for the indexes in esg and whether it's substantiative or not, i think employees, vs. very much part of the corporate culture among companies that need to hire a lot of younger people >> i think the theme that is definitely happening and is not going to be stopped is the big

existing asset managers themselves are doing more of this in their process. so even if the esg category doesn't take off, the black rocks and fidelities of this world are engaging much more with companies to check on their governance in general. slightly to ian's point, it's a little duplicitous if your main business is sin and you're claiming, great, our waters are recycled and our plastics are recycled -- >> you see gambling as a sin, and i do not >> i like to do it once a year or more, sadly but membership point, it's a little bit of a dodgy spin to go down that route more broadly we have three minutes left of the session. and we are down 93 points. mike, you've been looking at the market internals >> index is settling back. the new york stock exchange has been pretty much an even split there's not really a separate story being told there in terms of brett that's basically as you would

expect in fact, slightly positive right now. i do want to look at two sectors that are often kind of gauges of fast-money risk appetite that's biotech against semis that's for the last month. you see boiotech has taken over. did also want to make sure we point out the volatility index today. it is popping above 15, as that trade deadline approaches, i think you see some -- might as well get some hedges in there and you have it going back up towards the highs of a few days ago. >> we are right near the session lows, we should mention, by the way, with just a couple of minutes left >> let's get over to rick santelli now for a check on bonds. rick, what do you have >> well, you know, contessa, we are towards the lows in price, the highs in yield today, while stocks are visiting their lows look at a two-day of tens. what you really want to pay attention to is, we had good volatility on that two-year, like all maturities on friday, but then it leveled out. two years, mostly sideways, unchange if you look at the ten-year, further down the curve, you can see it's a little bit heavier.

and finally, pound versus dollar with that election looming and boris johnson and the exit looking good it's at six-month highs. and bertha, first two hours were all green in nasdaq, but that's certainly changed. >> analysts over at wedbush say this week for tech is going to be all about the countdown to those december 15th tariffs. and we'll see whether we get a reprieve apple, they say, stands the most to lose. if, indeed, those go into effect, it will be an impact of about 4% on the bottom line. we'll likely see those headwinds throughout the weeks but skyworks bucking the trend bank of america upgrading the stock, saying it's going to be a good opportunity for sky works over the bob >> some concerns about that december 15 trade deadline here. defensive names like procter & gamble and pfizer, johnson and johnson, all a little bit stronger on the day here e&p companies did very well today. range resources, oasis, chesapeake, the smaller names. goldman lifted its crude oil

price forecast for 2020, saying production cuts will help the market avoid supply. biotech did well, but some of the health care down, managed care like wellcare, week on the day. they are closing right at the session lows the dow jones industrial average down 104 points. also session lows at the s&p 500, down 11 but overall, fairly narrow trading range. >> welcome to the "closing bell," everyone. i'm wilfred frost. >> and i'm contessa brewer in for sara eisen, along with mike santoli, cnbc markets commentator. >> let's check in on where the markets finished as bob pisani just told you, we were at the sessions lows, although not too severe declines 0.3% for the s&p, 0.4% for the nasdaq the dow, somewhere in between. and of course, last week, we did just eke out gains as a week for the whole for the s&p, following what was a very strong november. >> we are just moments away from some big earnings reports.

kate rogers is following toll brothers leslie picker on chewy, and rahel solomon on stitchfix today. joining us to talk about the market day, ian weiner from bellatore asset management, still with us, along with sam stovall, chief investment strategy at cfra mike, let's start with you today. it was rather a lackluster day across the indices >> giving back some of friday's pop. that gain on friday after the good jobs' number got us right up to below the record highs in the s&p. i think it's getting close enough to this december 15th deadline there's all kinds of excuses for folks to just kind of sit back and figure out if that little 2 to 3% pullback we got last week was enough to refresh this rally or not so not to really extrapolate from today's action, except a wait and see posture >> sam, how have things stacked up for the rest of this year do you feel like valuations are already pretty full. >> we're trading at 18 1/2 times full-year earnings we typically see what i call a

mid-december low we have to wait and see what kind of news comes out between now and the end of this week to see if we do get a sell-off to take profits in what we've been experiencing but history would then say, don't bail out, because we typically tend to advance about 3.5% off of that mid-december low. >> there's a lot on the agenda this week. what stands out for you? >> well, really, it's the fed. we also have retail sales on friday next week is probably a stronger week in terms of economic data but i would say those two are the main ones for this week. not expecting a lot of commentary from the fed, a lot of movement, except people are looking to hear what jerome powell may have to say about the repo market and about liquidity. what do you think he needs to say to reassure the markets? >> well, i think he needs to say that they're watching it and they stand ready to add liquidity, should need be. i think they're going to -- those investors are going to wait to hear that information

and wait to ask questions about what's going to happen to the dot plot if we get continuation of very strong employment data, as we saw last friday, then that certainly not only takes off a rate cut in december, but possibly all of next year, and the next move could be higher. >> what are you thinking about investor positioning do you think it caught up in november, to be fairly risk on or is there still room for more cash deployment? >> i think anecdotally, talking to people, the majority of investors think that these tariffs are not going to happen. so i think that the people are set up for the market to go higher and i also think that, you know, most investors, if you look at the call ratio, that's at lows if you look at some of the sentiment indexes, those are creeping up. on balance, i think investors are more bullish than not. >> in terms of today's move, one thing that stands out relative to the size of the overall indexes is the jump in the vix >> i think it is about, virtual, after a weekend, you kind of

rebuild a little bit of that premium in the vix but it is, i think, because you have one of these definable known potential catalysts coming in several days with this december 15th deadline and that's the sort of thing that's going to get people to say, look, i don't necessarily want to completely back out of my exposure to stocks, but doesn't it make some sense to buy a little bit of downside protection and that's why i do think we're seeing it. it also has a kind of a tail wagging the dog effect because when it's conspicuously higher earlier in the day, that seems to be when the overall market softened up a little bit, too. >> sam, you've been looking at the spread in terms of different sector performance so far this year what are your key takeaways and what does it mean for the year ahead? >> if you go back to 1990, which is as far back as s&p has sector-level data. wherever we have seen the spread between the best-performing sector and the worst-performing sector below average, it's like compressing a spring that tends to pop the next year average price change is 13.5%.

frequence of advance is 80%. we are right now still below average, which would imply more of a positive move next year than a negative one. >> on the topic of next year, jpmorgan came out with predictions for 2020, saying u.s. and global business cycles are showing early signs of recovery and the s&p will deliver high single-digit returns next year. the note recommends investors head into next year overrate communications, health care, industrials, energy, and materials and underweight staples, utilities, and real estate jpmorgan also lists their analyst's favorite individual stocks heading into next year. some notable names, bank of america, conocophillips, disney, and facebook mike, lots to dig into there in terms of the sector performance, what stands out for you? >> that they're basically looking for the markets to continue to play offense, as they indicated in the last couple of months some cyclical sectors. it feels somewhat like the way the consensus is starting to garth up about 2020.

i don't think it's wrong i think the upside that most firms are looking for is relatively modest, topping out around 9 or 10%. that's generally low if you look at history but it's all in the context of cyclicals doing better hard to make a great case for yields or stocks to go that much higher from here >> it's interesting, because morgan stanley's prediction really points out the negative, the evidence of cycle peaks here, some waning labor dynamics, as well. do you have a big 2020 overall expectation >> price wise, expectations are 34/35, i guess in line with an old zedgar and evans song. and a better year than probably most people are expecting. right now earnings are evaluated, but i think we're probably going to see an improvement in earnings expectations as we start to see stronger economic data and i

believe that phase 1 will be passed and that will give investors the ability to breathe a sigh of relief so earnings are going to come on up to catch valuations, in my opinion. >> there's a phrase i trade deal for you, ian, indicate that you're going to have more businesses willing to invest where they were holding back on perhaps capex spending, waiting to see how this would resolve? or is it just going to be sort of icing on the cake of what's already expected >> i don't know what's in it my guess is it's going to be a whole lot of nothing i don't think it's going to affect companies i think there's still going to be a lot of concern about how to invest their capex the interesting thing is, you know who is investing a lot? it's all of these unprofitable companies. the percentage of capex by companies that aren't make any money continues to go up to about 5% of capex right now. >> stitch fix numbers are up we're combing through the numbers and we'll have a deep dive for you in a moment sam, coming back to the other big agenda item of this week, the fed. we're not expecting much action, if any, from the meeting this

month. but hold up important to the stock market levels is that level of liquidity that they've supplied this year >> well, i think it's important. i mean, just looking historically, in the first six months of the fed rate cutting cycle, the market is up about 10.5%. the batting average is only about two out of every three times did we go up but 12 months out, then the batting average gets a lot better, closer to 90% with a 14% upside, and even 18 months out, mee meaning through the end of 2020, the average increase is about 18.5%. so the implication if the fed does not start a rate tightening program or at least hint at one, that we could still have the wins behind us >> and mike, that's certainly the expectation for the market this week, is that we'll just get encouraging rhetoric that there's not going to be any tightening anytime soon. >> the market really wants the fed to remain on hold and for a couple of reasons. first of all, they like the fact that the threshold is very high

for thinking about rate hikes. if you can set that aside, one of the circumstances under which it would get more easy and cut, in the immediate term, it would mean that the data were going to weaken up. i don't think we're rooting for that right now also, three quarter point cuts has been the magic number that bulls want to hold on to that is what you got back in the '90s >> stitchfix numbers are out rahel solomon has been going through them >> it looks like shares are up quite handedly after-hours a stronger than expected quarter for stitchfix, the online styling service. eps was break even compared to the loss of 6 cents. revenue came in at $445 million. that was a slight beat the expectation has been $441 million. they also announced a new president. this is going to be as of late january. her name is elizabeth spalding she's coming from bain and company's digital practice of course, stitchfix parades their use of algorithms to sort of capitalize on what customers want it looks like a nice nod to

that you can see shares of stitchfix are up about almost 8% in after-hours. guys, i'll send it back to you >> thank you very much for that, rahel. mike, when you're looking at stitchfix here, it looks like they've really gone out of their way to innovate on the platform, as well, now receiving, it looks like some of that revenue back >> and i do think that the stock has fought its way back. it has this very steep hype-cycle trade then it cracked when a couple of quarters did not come up to snub it's been fighting its way higher i think the story is solidifying in the eyes of investors it's still, you know, one of these relatively narrowly focused ecommerce names that i don't think it's going to completely win the benefit of the doubt in terms of that they've really figured it out and they have a sustaining -- >> ian, one of the things that investors want to know is how do you then monetize that customer data that's coming in? is this a stock you like >> i'm not really interested in it, but i would like to see in the earnings release what the actual average revenue was and the subs, because to me, that's

the big issue as opposed to what they're putting out on the top line and bottom line right now >> ian weiner, thank you very much sam stovall, thank you very much for that >> my pleasure >> appreciate it still to come, chewy just reporting earnings we'll break down the numbers in a first on cnbc interview with the company's ceo. "closing bell" is back in 90 seconds. what'd we decide on the flyers again?

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blackman's persian square. leslie picker's got the details. >> pershing square has revealed it has a new stake in agilent technologies they're disclosing a holding of 2.9 sharesworth, at the end of september. however, i'm told the firm sought confidential treatment for this position within the last -- when the original 13fs were filed about a month and a half ago in terms of the exact amount that they're holding now, i'm told by a person familiar with the matter that it is significantly more than the $223 million at the end of september. in a november call, bill ackman actually said that this new position, which turns out to be agilent represented about 8 to 9% of firm capital the firm capital stands at about $7.3 billion right now that implies a stake or an

exposure to agilent of $650 million. this is actually the second position that the firm added this year, after berkshire hathaway, which was, indeed, a passive stake. so we'll have to wait to see exactly what they plan to do with this, whether they do plan to do something that's more activism in nature you can see there that the agilent stock price is up 4.6% on this news and pershing square itself is up about 51% in the year through november guys, back over to you >> leslie, thank you for that. let's send it over to mike santoli now for his third dashboard of the day mike, what do you have >> calling this one, oh, flow, you don't. fund floes out of equity funds getting a lot of attention "wall street journal" had a look at that today, as if retail investors are somehow boycotting the big record stock rally this is ned davis' research's rendering of the data. into or out of equity funds, it's been basically negative for most of the last two years the exception was this real rush

in in that really exuberant peak we saw in january of 2018. obviously, this is last december when there was genuine flight out of equity funds. i don't really view these smaller net outflows to be that much of a story about retail investors hating stocks. a couple of things you have to keep in mind right up here, this is about 1% of assets on the way out of equity funds equity funds are up more than 20% in value this year so it's a rebalancing effect, because of demographics and because of basically people keeping a portfolio spread among different assets, stocks, bonds, and cash that you're seeing a steady flow out, especially of active mutual funds. so i don't think this is a contrarian indicator in an outright way by the way, when you get above positive, that tends to be in the certainly when it's time for a rally to take a break. we're barely up there. >> and 1% of funds, does that have a big impact -- >> one percent of assets >> no. it's a very light undertow

we're talking amounts as you can see here on a four-week basis of around zero. in the tens of billions in a market that trades a lot more than that in a given day >> all right, thanks so much for that up next, we'll break down chewy's latest quarterly results in a first on cnbc interview with the company's ceo >> plus, unicorns may be mythical creatures, but are delivering some very real pain for some of the nation's largest mutual fund companies. we'll have the details later on "closing bell. (soft music) - when i see obstacles, i create opportunities. - when i see adversity, i find a way. - when i hear never, i say now.

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let's check in on how we finished here today on wall street, as you can see, red throughout the day on the dow. no point where we were positive. the high of the day was down five points. the low is where we closed, down 105 points 0.4%, not a huge decline the decline for the s&p and nasdaq slightly better than that for the s&p, down 0.3. the nasdaq itself was also down 0.4% chewy's results have just hit. leslie picker has them for us. >> hey, wilf, a slight beat on the top line, $1.23 billion in

revenue for chewy in the third quarter, that compared with $1.204 billion, that analysts on the street were expecting there and also in line where management kind of guided that quarter to be, growth of about 36 to 38% year over year growth on the top line. on the bottom line, they reported adjusted ebitda slightly less, lower losses than the street was expecting, losses of about $30.2 million compared with $33.5 million that the street was expecting there now, sentiment surrounding this has been pretty low lately, about 32% of its stock is on borrowed to be sold short. and it's only up about 9.4% from its ipo, which surged quite dramatically one of the main reasons to keep in mind this week is the lockup expiration, which take place on the 11th that represents about 89% of chewy shares

and the parent company put a lot of debt on this one. chewy stock up about 2.2% on these results. >> leslie, thank you very much more that. chewy sea sumit singh joins us now on set for a first on cnbc interview. very good afternoon. thanks for joining us. >> thank you >> 40% year over year on the quarter, growth. talk us through the quarter and your outlook for the year ahead. >> look, we love delivering the growth 4% consistently. and we love the fact that we're beating on top line, beating on bottom line. we continue to deliver gradual, incremental profitability increase at the same time, we're focused on the large opportunity that's in front of us and that's exactly what you should expect us to play the rest of the quarter out with >> you've started to face more competition, whether that's from online rivals or exist iing sellers. is it hard of you to capture the new pet owner or to hold on to existing customers

>> you know, we are -- if you look at the number of customers that we have, which is 12.7 million active customers, 30% growth year over year, we're ve very pleased with the number of customers we're acquiring, but very pleased with the way we retain these customers we've got 90 million households in the united states, roughly 13 million of them. there's a lot more headroom in front of us. but the fact that when we bring customers on and we give them the service that we do, they stick with us for long periods of time. and what does that do? they spend more with us the longer they spend. so this quarter, our net sales is up 11% year over year >> your record high was 31.34. you're definitely off of that. and your lockup period kprir ex on wednesday so what's the story for investors? what do you need to let wall street know about your plan?

>> a couple of things. one, 40% year over year growth is nothing to sneeze on. so this comes back to the point of us getting big fast, but fit fast a record quarter from gross margin point of view so one, the more -- like i said, the more customers stay with us, the more they spend. but if you look at our newer verticals, private brands, pharmacy, health care, customers are spending more in those verticals, as well the complimentary nature of us not only selling food and supplies but being a health care provider for you, that's a phenomenal proposition >> what about international? i saw on singles day in china, pet products for a point in time were the number one imported product on sales -- from singles day. how big is the international market for what you plan to do with chewy >> i think i should say a couple of things. one, we believe that the model and the capability that we're building is extendible internationally.

we believe pet parents are more the same than different, as you pointed out. that being said, i'll go back to the fact that we have so much growth to be had in the united states, that for now, we're totally focused on the u.s >> how do you ward off amazon? >> i've talked about this in the past as well not only are we delivering scale and convenience of ecommerce, you know, we're also doing it in a high-class, high-touch customer service-oriented manner and when you put this together of differentiated customer service, but also the fact that we are dimensionizing the business away from just offering food and splice bupplies but ino health care, that's a phenomenal value proposition. >> so your customer advisers go in and they say, okay, off miniature ddachshund, they might be prone to this or that, here's the nutrition that they need, the update with the vet that they need, what's to stop that customer from taking that advice from their adviser, but adding dog food on when they go to buy their pantry from amazon >> this is a grcategory that's

emotive in nature. customers refer to themselves as pet parents. they like to find a person on the other side we get numerous calls every day, customers saying, i just brought home a puppy, what should i feed it i have a chocolate lab that's 6 years old, graduating to year 7, what kind of supplements should we use >> i feel like we should have pictures of our dogs while we do this segment >> don't forget, the local artist that we connect with across the country because that pet portrait that shows up to your doorstep, we're engaged with you through the highs and lows of pet parenting. >> but because of the regularities of the purchases that most people make for their pet, does that mean miss out on black friday, on cyber monday, on holiday-related discount days >> not at all. what we observe that customers that are active with us are not only stable with their rate, but spend more on treats and toys.

at the same time they're building baskets, it's very easy for them to eat that treat or that toy that might go to that same house in the same box so you get the accretive benefit of u.s. reminding you exactly when your shipment's about to ship out >> there's been this conventional sense out there that pet products are in this secular increase in term of share of wallets people owning more pets and ending more on their pets. have you stress tested the business in other words, have you been in the business at a time when the overall economy was struggling >> what we do know is last time the recession occurred, pet spending over those two years was up over 6.8% while we have not tested it for the upcoming recession or some time in the future, we have the business is recession resilient. >> because if you lose your job, the thing that makes you feel better is going home to your dog. i'm just saying. >> pets bring you happiness. >> i call her my dogter.

>> thank you >> really appreciate it. >> trouble for tesla a model 3 on auto pilot crashing into a parked police car coming up, we discuss whether that could lead to more regulation plus, tlaihe latest readingn the health of home building when toll brothers reports earnings the reaction to those results when we're back in a caouple of minutes.

i'm sue herrera. here's your cnbc news update at this hour. on capitol hill, lawyers from both sides of the aisle testifying before the house judiciary committee. each making their case for and against the impeachment of president trump. >> president trump's persistent and continuing effort to coerce a foreign country to help him cheat to win an election is a clear and present danger to our free and fair elections and to our national security. >> the inquiry has returned no direct evidence that president trump withheld a meeting or security assistance in order to pressure president zelensky to investigate former vp biden.

>> former federal reserve chairman paul volcker has died he headed the central bank from 1979 to 1987 when he took over, the economy was suffering from runaway inflation. he pushed interest rates to historic highs to tame it, but that triggered a recession he is widely regarded as one of the most successful central bankers in history paul volcker was 92 years old. you are up to date that's the news update for this hour contes contessa, back downtown to you >> sue, thank you very much for that tesla under fire after another auto pilot-related crash and phil lebeau has the details and the potential fallout. >> can contessa, this happened on friday in connecticut it involved a tesla model 3, where the owner was apparently dealing with a dog in the backseat or controlling the dog in some fashion. the vehicle then slammed into a connecticut state trooper's vehicle, as well as another vehicle who the state trooper was stopping to assist

we have reached out to tesla for some response about this accident, in terms of, are they investigating? what's going on? we have heard nothing, nothing at all from tesla regarding this you might be saying, this sounds familiar, has this happened before yes, it has. in 2018 in mountain view, california, there was an auto pilot related crash. in that case, the driver was not engaged before the vehicle slammed into a barrier the ntsb said the driver was not engaged. no final report has been issued in that case tesla, as you take a look at shares over the last year has been on a heck of a role over the last six months. it has said or ceo elon musk has said, look, we're going to have 1 million auto pilot-capable vehicles on the road by the end of 2020. those are auto pilot capable that doesn't mean they're fully self-driving vehicle but the perception by some people, and i hear it all the time is, hey, when is tesla going to have these self-driving cars out on the road aren't they already out there? no, these are vehicles that have

driver assist auto pilot, but the driver still needs to stay naun engaged. >> when you say the driver needs to be engaged, like that crash we saw in california, that means the driver is paying attention, the driver can step on the brakes if they see something, that they're not supposed to be turned around and taking care of stuff with their kids in the backseat or the dog or getting in the glovebox. >> correct correct. and by the way, tesla's vehicles have a system in there where they alert you, hey, you need to be paying attention. whether or not that happened in this case in connecticut, it's unclear at this point. but -- and tesla makes it very clear, you need to pay attention when you are behind the wheel. >> so my next question is, because i drive a car that has assisted driving it warns you if you get too close to the car in front of you, warns you if you're going to back into something, yada yada how much of this attention on tesla when these cars get into a crash is warranted or how much of it is because what they plan to do with self-driving cars >> the question here with tesla

is whether or not the perception has been put out there by elon musk, by tesla fans, by others in social media that these vehicles can completely drive themselves they do not. they do not. you have to stay engaged and that's why these crashes get more attention, contessa, than if you have a vehicle that's on cruise control and it rear ends another vehicle. that's not to say that people aren't paying attention and that sometimes happens with those driver assist technologies i'm sure it does happen. the issue becomes whether or not the public is being misled maybe not intentionally, but there is a perception people have of these vehicles are self-driving, completely self-drive welcome and they are not. >> well, thank you for setting the record straight, phil lebeau toll brothers' earnings are out and kate rogers has those numbers for s. >> looking like a very strong number here for toll brothers. eps beat coming in at $1.41 compared to estimates of $1.30 revenue also beat, $3.28 billion

for the quarter. the analysts were looking for $2.91 billion. home unit deliveries also beat, more than 2600 on that metric. douglas yearly, the ceo, saying consumer confidence is healthy household formations are also strong interest rates and unemployment also remain low, which is of course good for that company the stock is up by more than 3% right now. back over to you >> kate, thank you for that. mike, home builders going in, they're having the advantage of low mortgage rates right now and tell me what you think >> and you know, pretty good demographic trends i think the comments there that toll was making are pretty much the backdrop for why the group has done so well toll has lagged the rest of the home building group, in part because it's somewhat on the higher end the real tight market where there's a real rush of demand is more on the entry level, but toll obviously riding along some of those trends as well. >> toll is up 4% we'll talk to an analyst coming up later in the show meantime, we have a news alert on sanofi.

>> french drug maker sanofi laying out its strategy under new ceo of paul hudson ahead of an investor day tomorrow the company announcing it will focus on its vaccines as well as a pipeline of drugs for cancer and rare diseases. so sanofi will stop research on diabetes and cardiovascular disease as part of a role to spa save 2 billion euros cnbc did ask sanofi if that means it plans to sell or spin off that business, as we've seen other pharma companies do recently and ceo paul hudson told us this we have a truly fantastic team and we are vested in their success. our goal is to get out of their way and prepare them to focus on two of the largest prescription to over the counter switches that will happen s cialis and tamiflu paul hudson will join cnbc

tomorrow morning for his first interview as ceo >> rahel, thanks so much for that update. coming up next, toll brothers shares higher after better than expected earnings. adg atto, rahtou should be trinth sckstig ahead.

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toll brothers shares popping after reporting earnings moments ago, a beat on the top and bottom line there. you can see shares up 2.25%. joining us is jack masenko what stands out with you in this report the beat was driven by top line, so they sold more homes at a little bit of a higher price the other thing that stands out, unfortunately, is the profit margins were lighter than expectations gross margin in particular, and they also didn't leverage their cost basis on the g&a side as much as we were hoping for >> you surprised to see the shares jump to the upside then >> i am, a little bit. we downgraded the shares in mid-october, partly on evaluation, and partly because of our concern on what margins would be into 2020 >> we're talking about guidance here first quarter deliveries between 1650 and 1850 units with an average price of between 800,000

and 820,000. i thought all the room in this market was at the entry level. >> a lot of the demand is at the entry lovell a lot of the pricing power is at the entry level. toll is going to build, let's call it 8,000 or 9,000 homes next year. that's about 1% of the new home market there's always a niche the question is, can they follow that demand downstream can they move off the coast where they're the strongest, like in california and the northeast? and that's higher margin deliveries for them and continue that success into the middle parts of the country >> the margin pressures that you see in this report, is it a macro story? in terms of just overall industry costs going up, or is it something else? i think for toll, it's more specific to them i think it's segmentation. california, their margins are -- a total reported margin of about 19% this afternoon their california margins are in the mid-20s. margins in other parts of the country, they might be in the mid-teens. so as you shrink the california had a rough go a year ago, the

northeast is slowing, that's no surprise as you retrench into where demand is better, both in geography and in price point, you lose some of that margin benefit. and i think that's part of it. material costs have stabilized some, labor has stabilized some. it's not the conversation point with these companies that it had been i think this is more of a mix on their footprint on their own >> how closely are these home builders paying attention to what happens with the china trade deal >> you know, i think it's more of a confidence issue and noise than it is, you know -- >> why because they've already adjusted to what the tariffs are on materials? >> i think and i think you're more worried about tariffs out of canada for lumber, than you do a lot of stuff from overseas and from china. and then labor is obviously a bigger input than materials when you're building a home and obviously, you know, that's with the domestic workforce. >> are you constructive for the macro outlook as a sector for the whole going into 2020?

>> we are. >> has the share price performance already been -- >> yeah. >> i think that's the theme throughout the sector. we only have two positive ratings on all of our home builders today, both of our -- well, kb homes is one very much focused on the entry level, and second, taylor morrison, which is a smaller builder, but they've been acquiring and getting laernlget getting larger and as they get larger, you get scale benefit there. a lot of the momentum and the demographics and all the things we're hearing about are largely priced in the group at this point. >> jack, good to see you >> coming up next, feeling the heat as mutual fund managers step up their bets on unicorns, they're getting burned by some of the biggest flops we'll discuss when "closing llcos ckbe" meba

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as big mutual funds step up their bets on unicorns, they're getting burned by some of the biggest flops. deirdre bosa has that story for us >> that's right, as unicorns stay private for longer, participating in a late stage round is one way for institutional investors to catch some of that upside. the problem is, some of the buzziest unicorns saw big write-downs this year. mutual funds like vanguard invested in wework and juul, two of this year's biggest flops, leading them to write down thos investments by as much as 75%. we know uber and lyft received a lot of money that cut juul's valuation further to $19

billion. another interesting trend here, guys, is that we have seen mutual funds get into start-ups in earlier rounds. allbirds series "c" round was led by fidelity. and the unicorn calibration isn't over for some. a source familiar tells me that dog walking app wag cut its workforce by 80% today from the start of the year and buying back softbank's stake to basically start over again for the company. back to you. >> another potentially bad write-down for softbank in that one. d., i guess perhaps we could have seen the sign coming once they're analyzing publicly listed mature companies could well have been a sign of the top end itself >> it's hard to say, because it does make up such a small percentage of their holdings and i should note that fidelity gave us a comment and they said they've actually had more successes than they have poppy disappointments. they've been in companies like

crowd strike and data dog. i think the thing is, these companies are staying private for a lot longer so when are you supposed to get in, for pension funds, for the people that you're responsible to these companies in some cases represent among the best growth. i think it's a trend that you'll continue to see, although we had brad gersner on earlier today and he said that he does think that given this year, you might see some of these funds pull back a little bit. >> thank you, deirdre. up next, mike santoli heads to the telestrator with a check on consumer debt. >> and later, we're looking ahead. boeing's november orders are due out tomorrow can the embattled company avoid losing further orders this year? a full preview of that report when we come back. she wanted to move someplace warm.

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yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. it's you >> let's send it over to mike santoli. i'm new at this. to mike santoli -- >> i thought you were going to say something, otherwise i would have picked it up. >> only like a wo-second beat. it was fine. debt there be light is the final dashboard of the day

there being household balance sheets actually the debt burden not that onerous at the moment considering we're almost ten years through an economic expansion. that jobs number last week showed that maybe we're getting a little bit of a second wind. so this is obviously a long-term look at household debt costs as a percentage of disposable income this is how much it costs to service household debt as a proportion of what people earn this obviously is the right preceding the housing burst. housing debt was way beyond what we had seen historically and rates were much higher so we've seen a forced deleveraging a lot of credit scores are impaired people are not able and not willing to take on a lot more debt and incomes continue to grow what we see right now is savings rate is up and it basically costs less than 10% of household disposable income in aggregate to service debt. that is something that suggests that perhaps there's a buffer

against any real slowdown or recession because typically before recession, as you can see this level is much higher. >> this is service costs. >> service costs not total amount of debt. >> so i would say that's still pretty high relative to only 3 percentage points below what caused the most massive housing crash of all time. >> well, three percentage points except if you go back, we're talking about 1970s level of burden so three percentage points is the difference between having any money left over to spend or having to go into further debt i mean so, you know, depending on how you treat it. >> right i wouldn't frame it as bullish i guess is my point versus, perhaps, being -- >> how about more bullish than any time in the last 40 years. basically it just doesn't get -- in the united states, people take up as much debt as they can afford. >> this is service costs which is heavily linked to rates which are unbelievably low and it's not addressing total pile of debt if you see rates go up a percent or two --

>> all it really means is that households have not ramped up their leverage as much as low rates would have allowed them to whether they were not allowed to or they didn't choose to. >> but they have a couple percentage points to go spend on christmas presents. >> mike, thanks. up next, the key things every investor needs to watch ene adwh whe into a new trading day when "closing bell" returns.

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welcome back we've got a news alert on alphabet deirdre bosa has the story for us >> hey, wilf, alphabet adding frances arnold as their 12th board member she's a nobel prize winner in a filing of her offer letter, chairman john hennessey writes that her compensation is $1 million in the form of alphabet restricted stock units pachai tweeted his welcome saying he's thrilled to welcome her. she brings incredible academic and industry experience with a career spanning chemistry, engineering, renewable energy and more >> a million dollars what for

tenure >> after each annual shareholder meeting, she's eligible for more compensation not that much, 350,000 gsu, that's alphabet's form of restricted stock units and a $75,000 cash retainer for the prior year of service. >> thank you. looking ahead at tomorrow, boeing's november order numbers are due out at 11:00 a.m. and phil lebeau joins us with a preview. >> as it has been for several months now, the focus when boeing reports these orders and deliveries tomorrow, the status of orders for the 737 max. now, for most of this year since the grounding of the max, we have not seen any orders, any substantial orders, and we've seen some conversions, net cancellations. let's see what we see tomorrow remember, there were some tentative orders that were placed at the dubai air show in november that should help the bottom line there in terms of those orders overall boeing's backlog has been shrinking in 2019 airbus has racked up 721 orders

through october, 940 through november remember, they report on friday. boeing, negative 95. we get those numbers around 11:00 a.m. guys, back to you. >> phil, thanks so much for that phil lebeau. also just having a look at some key interviews coming the next couple of days from the goldman sachs financials conference which i will be attending. kicking things off tomorrow with howard marks of oak tree always a fascinating investor to get a check in on, especially ahead of the new year. john waldrun and then looking ahead to wednesday, a rare interview with the co-ceo and then bank of america stock has been very well jpmorgan, wells fargo amongst others will be making presentations, their cfos will be, and we'll be the only people

at the conference to bring coverage of that. >> some voices in private equity which is a pretty hot area people looking at that as dry powder but also as a source of risk down the road. >> absolutely. we're out of time here today that does it for "closing bell." >> "fast money" begins right now. live from the nasdaq market site overlooking new york's times square, this is fast money and i am brian sullivan in for melissa lee. your traders october desk are pete najarian, steve grass orks karen fineman and guy adami. tonight on "fast" shares of stitch fix and toll brothers are on the move after hours. both companies reporting their results. look at that stitch move up 12%. plus canopy growth soaring after the cannabis company names a new ceo. what it means heading into the new year. and coca-cola celebrating 100 years. >> stop. >> 100 years as a