one, do you think that's enough to get people to sign up for this apple card. remember, this is the new product that they're offering alongside goldman sachs. >> at the margins, it will do well and i think it has done well since the card has come out earlier this year. i have one, it's very convenient you can pay it right on the phone. it's pretty cool >> yeah w, i mean, i think if i gives you a break, why not >> thanks for watching "power lunch. >> and "closing bell" starts right now. >> welcome to the "closing be " bell." i'm morgan brennan in for sara eisen at the auto zone post. take a look at that stock. it's up 7% right now it's leading the s&p on a strong earnings and sales the broader market, meantime, treading water with 59 minutes left to go in this trading session. >> and i'm brian sullivan. wi wilfred frost will be along shortly. first off, you've got the u.s., mexico, and canada agreeing to a new trade deal the usmca making changes

stocks bouncing around all session along on conflicting headlines about that december 15th deadline for china tariffs. will it sfwebe extended. and house democrats officially announcing articles of impeachment, two of them, against president trump. plus, coming up only today on the closing bell, wilfred frost is live from the goldman sachs financial services conference and he's got exclusive interview with howard marcus ks in just aw minutes. joining us now for the hour is steve grasso from stuart frankel. we've got to stop meeting like this >> i know, i know. >> we talked about this last night on fast money 5. what's going to happen if there's no trade deal? >> what's going to happen if the deal is extended and what's going to happen if a deal gets done there are three scenarios. quickly walk us through each one. >> if the deal gets done, the market shoots higher but it's only phase i of a deal. so i think it has a lot more ammo in its ability to move the market progressively higher from

there. nobody expects a deal to get done anytime soon. you're talking about tariffs going on or not going on -- or not coming back on for me, if they don't get put on, the market rips, if they do get put on, sells off and it's a buying opportunity that's it. in a nutshell. you have to realize that every time this market sells off, the buyers have come in. who's going to short the market knowing that you not only have one phase, but two phases or three phases of a blowoff top in the overall marketplace? i wouldn't be shorting it. >> well, it's also, how long are we going to deal with this how long have we been talking about this now going on two years now you're talking about phase ii and phase iii at some point, the trade war, even the tariffs, if they stick, they simply become the new operating normal >> you could almost say that the last -- when you just said, how long have we been talking about this you could say, this year was less productive than last year on the trade front, but look at the returns in the overall stock market so, if you think about it, a

long/short hedge fund is always more long than they are short. so if the market goes down, their longs underperform more than their shorts outperform longs only want the market to go higher net/net, there's more people who want to push the market higher than see it sell off, and that's why it keep going higher >> we'll talk about this and a whole lot more over the next hour with steve. in the meantime, let's focus in on the key stories we're watching today kayla tausche has today's big trade headlines. wilfred frost is getting the pulse of the banking industry. the goldman sachs financial services conference, and mike santoli is here with his market dashboard. kayla, first to you on trade >> morgan, one of the two major variables on trade getting solved earlier today with house democrats announcing a deal with the white house on usmca and negotiators from the u.s., mexico, and canada in mexico citi to sign and fete the revised deal the senate will not vote until after an impeachment trial with some republicans raising

concerns, even as speaker pelosi confirms a vote in the house for next week. >> we're declaring victory for the american worker in what is in this agreement. but we would never, not any one of us is important for us to hold up a trade agreement that is important for american workers, because of any collateral benefit that might accrue to any one of us. >> reporter: the white house is aiming to have the usmca text to the hill by december 15th, the same day new china tariffs could go into effect top economic adviser larry kudlow declined to confirm "the wall street journal's" reporting that tariffs would be delayed, but others have gone further the agricultural secretary, sonny perdue said at a conference yesterday, we have a deadline coming up on december 15th for another tranche of tariffs. i do not believe those will be implemented and i do see that we could see some backing away. officials' reluctance often is because the president changes his mind, which he may yet do in this case. there are bullish signs from officials, but you have to take

those with a grain of salt brian and morgan >> kayla, thank you. the fact that usmca is finally moving forward here, kayla, how important is that to the u.s./china trade talks i ask, because if you do start to see some of these deals with american allies and really finally begin to take effect, they can't help but think it only strengthens the u.s.' hands. >> there are different scenarios. in the usmca, you had essentially an early draft in nafta nafta which they were trying to revise and modernize the china deal is starting from crash and it's revisiting decades of transgressions that the u.s. says cannot be an equal deal because china has gotten so much of a head start on the u.s. and has so many transgressions that need to be righted here that being said, the president has suggested as recently as a couple of months ago that he's willing to bite this off in different portions with a phase i, a phase ii, and maybe a phase iii. the question remains, what is in

each one of these phases and whether china does, in fact, sign on. because even with that announcement in october, china never said there was a deal. >> but it is a big one and we appreciate you're on top of those headlines. i think i'm the only one when kayla says, where's usmca, i say, where's mike d., because it sounds like the beastie boys some of wall street's biggest names are gathering today for the goldman sachs financial services conference right here in new york city who other than wilfred frost is there with some of the early highlights and a lot more to come wilfred? >> yeah, brian, indeed here at the goldman sachs financials conference in new york, as you said, earlier today we heard from the jpmorgan ceo, jen peepsack, her first presentation since becoming cfo earlier this year. and she spoke about her optimism about the u.s. economy, particularly the u.s. consumer >> sentiment had come off the peak, but we've now seen a

rebound in consumer sentiment. and then on spending, spending very strong. holiday spend seems very consistent holiday to date with the trends we've been seeing all year, which is up about 10% year on year. importantly, though, if you look at black friday through cyber monday, year over year, we're up nearly 20% for black friday through cyber monday very consistent with what we're seeing broadly across the u.s. consumer, which is very strong and then on the business side, i would say there are some cautionary signs but things at the margin are improving or at least have improved since the summer. and that includes ceo sentiment, i would say. >> the main area of caution, she said there, was commercial real estate i should mention that wells fargo and pnc were just as positive on the u.s. consumer. citi is presenting at the moment back to jpmorgan and the earnings specifics they reiterated guidance on net interest income for next year, 58 to $60 billion, despite moves in the yield curve

they also said that investment banking revenue for q4 should be flat previously, people had thought it would be slightly lower and that trading revenue should be meaningfully higher year over year all three of those things, slight incremental positives to where expectations were. the stock, therefore, holding on to the gains, huge gains they've seen so far this quarter flat today, but up 14% since the start of q4. guys >> wilf, it's like an early christmas present for you. i mean, being at a banking conference, getting to really dig into the sector and these names even more aggressively today. what have some of the big trends so far >> it certainly is and this conference comes every year this time it is always an early christmas present. and it's very well attended, as you've said. and tomorrow we've got a couple more interviews from the likes of brian moynihan, kusung lee

and howard marcus aks and john d ron. i've never seen such a different tone and that's not because corporate sentiment has worsened since, c'est, the summer. if anything, it's fractionally improved or stayed flat, but the u.s. consumer sentiment has improved significantly wells fargo, pnc, jpmorgan all striking that tone and it's definitely an optimistic one that despite some other challenges, maybe the yield curve or some other things, they're able to reiterate ghirns ftheir guidancr this quarter and next year and the banks have performed very well over the next couple of months and they're holding that ground today. >> we have some big interviews coming over the next two hours, as well. so wilf, we'll see you soon. thank you. >> see you then. >> let's send it over to mike santoli for today's market dashboard. mike >> morgan, going to follow wilf's lead right there with our first installment here it is a bank run, but the good kind of run in bank stocks we'll put some numbers on that and is everybody in the pool

that's a question here as we see this sort of risk on tone to the overall capital markets. fix it yourself. that's one company in particular showing exactly how it could essentially help its own shareholder returns by acting on its own. and then, alternate futures. a look at the growth outlook for 2020 by a couple of different means. a bank run take a look at this ratio of the u.s. bank index against the s&p 500. this is the bkx divided by the s&p 500 over two years what a lot of folks are pointing out here is you had a pretty solid downtrend line that has broken you have this continuation higher, it's not really been the leadership group in the last few weeks, but people are basically placing a lot of weight on the fact that this does seem to be a trend reversal if we went all the way back farther, we've had another peak, a decline. it's been long in coming that we've had perhaps a return to the fore for the bank stocks look at the valuation right here these are the universal banks or the very, very big new

york-based banks are mostly measured here. if you look at the price earnings ratios, you've had some escape velocity in terms of forward p\e for this group a lot of people said they were cheap for years. guess what, it's true and finally they got some traction compared to the s&p 500, it is below this longer term average here for 2019. that's mostly because the overall market has become appreciably more expensive so the question is, how much higher can that relative multiple go. back in the mid-2000s, these banks were very profitable maybe that's a stretch goal. as long as the economy holds together, you have to imagine that the bank stocks can probably continue to participate and plug along >> mike, look forward to more of your dashboard coming up in just a bit. interesting stuff there on the banks. switching gears, does this remind you of anything shares of peloton backpedaling today and -- >> you need more anger in your face

>> and it has nothing to do with the company's controversial holiday ad we will explain. and there's a lot more ahead on "closing bell." zplrns aft >> announcer: after the break, billionaire howard marcus has a message for investors. >> i think there are reasons to have less risk going forward than you have had in recent years. >> catch wilfred frost's full interview. plus, an exclusive sit-down with goldman sachs president john waldron, ahead on "closing bell."

45 minutes left to go and the major averages are hugging the flat line. here's a check on the markets, the dow is up 11 points. the s&p is just about flat and the nasdaq is up fractionally as well stitch fix is trading higher after posting a break-even quarter with revenue coming in higher than estimates. ceo katrina lakes spoke on "squawk alley" exclusively this morning. here's what she said about where the company is investing >> we are doing a lot of big invests. we opened up the uk and kids last year. we are annualizing those

investments. those are still investment markets, so we have that we're investing a lot in technology and data science. we have a lot of stop base compensation, which is how you can see the investment that we're making in the team and that's really against the product. against, how do we take shop your looks and make that fully integrated into our experience, roll it out to everybody there's a lot of investments we're making at the same time, we are showing leverage we're showing great gross margin leverage, showing leverage in our core business. and so, you know, our business has always been one of profitable growth. >> so that stock has been trading higher today it's up about 6% right now >> we talked about it, 47 or 48% of that stock was sold short, steve. >> yeah. >> any sniff of good news, and you're going to light a fire on it >> it's even erring on upwards of 50% right now so if you get a hint of anything good lululemon, when they started offering and catering towards menswear, they started doubling their audience now if you have stitchfix working out the kids' angle,

maybe it helps them there. international, maybe it helps them there i thought she was great earlier on the cnbc show so i'm looking for it to move higher, but you can't prolong that move if it's just based on -- >> shorted steve, back to you in a minute here's the big questions of the day, where is wilfred frost and why am i sitting here right now? it's because wilfred frost is at a massive goldman sachs financial services and banking conference right here in new york and given that it is a banking conference, there's a lot of bankers there. wilfred frost sat down with a few of them today. wilfred? >> i have indeed one of the person i just sat down is oak tree's howard marcus i began by asking him if he was fearful of a market sell-off if we did see a presidentia impeachmen impeachment. >> well, number one, impeachment shouldn't come as a surprise

number two, given that, if we assume that the market is intelligent, it shouldn't have an impact. if it's a foregone conclusion today, then when it's voted in a in line with expectations, it should not have a profound impact on the level of the market >> but conviction is something that you would be concerned about? >> i'm not concerned about that, because i don't think it will happen you know, they need 20 republican votes to convict in the senate and they don't have one and i can't imagine what's going to change in particular, i think that all of the evidence is on the table. so how are you going to change 20 minds >> that said on the political front, the 2020 election, of course, is only a year or so away, but front of our minds, for sure >> yes >> what's your take on the impact that might have on markets? >> well, you know, marketwise, it all depends on whether we have a president who's

considered pro or anti-business. the market took off after trump's election, because he was judged to be promarket and he has pro-business so if he's re-elected, people will continue to see him as pro-business they'll breathe a sigh of relief that he was re-elected and that will probably be healthy for the market in this case, it's not pre-ordained like the impeachment. i think that there is uncertainty as to the outcome. if he's not elected, then the question is, who is? bloomberg would be judged as pro-business and the market would like that biden, moderate, probably not as strong strongly, warren, who certainly comes out as being anti-business, anti-wall street. i think hold your hat.

>> lee cooperman said 25% sell-off in that sense does that equate to hold your hat in your mind >> well,look, a week before donald trump's election, there were two things we were sure of. hillary would win and if trump won, the market would collapse so donald won and the market went up. and that tells me we don't know what's going to happen so i try not to make forecasts and i tend not to believe forecasts, including my own, but i do think that there would be an adverse reaction to a progressive president. >> when we look at your broader e indices, there's been a lot of price pressure, also more recently in the brokered price wars that we've witnessed. do you think that kind of price pressure is coming to the credit space, to the private equity space? >> a lot depends on how it performs, you know, basically, people switch from active to

passage management in equity funds, because active wasn't working, and it wasn't earning its high fees. that's why the fees have come down i think we're still in a rational market where things that make money for people will be compensated, things that don't make money for people will not. >> when we consider wework as an example of a private market company, a private market valuations, do you consider that as broadly actually representing a bubble in private market valuations, or is it more of a special situation. >> i think it was a special situation, because i think that that valuation of $47 billion earlier this year was made by one buyer. and if that buyer miscalculated, i don't think that's typical of a broad trend. i think it's very interesting to see that, you know, the market -- one of the roles of the market is to serve as a vigilante and to reject or down

price when it should the fact that the public market valuation on wework i think was a very healthy development and it shows that the market is value sensitive. that's a plus. >> i know this is very hard to predict when the current cycle will end, but do you ever think about how big the fallout will be this time around when it does end. do you think that the sell-off, when it comes will be bigger than '08 or '09 or -- >> well, look, if you've been around 20 years, you may have been around 20 years >> i have -- not always investing. >> you've seen two bubbles, tech, and subprime, and two crashes. and you may tend to think, as may your viewers, that that's it bubbles and crashes, but the truth is, we have ups and downs, we have bulls and bears. they're not all as profound as bubbles and crashes. i don't see we're in a bubble this time. certainly nothing comparable to '07. i don't think we're going to have a market decline

comparable things are evaluated, but not crazily so >> but where we stand today, worth taking a little bit of risk off the table >> well, it depends on from what the economic expansion and the bull market are old, valuations are above average, prospective returns are low, there's a lot of uncertainty in the world, and it strikes me that one should not have as much risk as one did three years ago or six years ago. you've made a lot of money, take some off the table that is not to say it's going down you know, if i thought it was going down, which i don't know how i would reach that conclusion, i would say, sell it all. but i never say that, and you -- it's impossible to say that. but i think there are reasons to have less risk going forward than you have had in recent year years. >> so taking a little bit less

risk today than in recent years. though all things considered, relative to the last three or four investor letters he sent out, i thought he was a little more constructive than perhaps he could have been his comments on wework perhaps an indication of that, which i thought also was pretty interesting. still to come, from that interview, his comments on the fed and interest rates and what that does on market multiples. then coming up at 4:30 p.m. eastern time, john waldron, the gulf coast k goldman sachs president and ceo, plenty to discuss on the goldman front from their upcoming all-important january strategy update that they're due to give. maybe an update on one mdb there's been some movement on that front and the apple card, the announcement from apple about free financing from an iphone. but as well as those questions over potential gender bias, be great to get his points on that, on the record. guys, i'll send it back to you >> wilf, great stuff we're looking forward to more of

it, too, throughout the hour thank you. steve, the comments about if president trump wins the next election, i mean, there's been so much focus on this idea of what happens if somebody like an elizabeth warren wins the election i mean, i think back to 2016, when the talk was, if trump wins, the market's going to tank, and it did, for a couple hours overnight, and then everything changed again >> but if you think about why the market moved substantially higher, it was on tax cuts and deregulation so obviously, the antithesis of trump is warren. and the rest of the field is still going to be worst when it comes to taxes and regulation. >> i know we've -- i've got to jump in there. i've talked to a lot of people that are worried about this trading taxidea from warren, because if you start to tax every trade, you're going to push the high-speed guys out of the market you may not care or feel sorry for the billionaire high-speed traders, nobody does but them. but they are a massive part of the underlying framework of the market

skper and everybody i've talked to is worried, if that is removed or reduced, they don't know what the baseline is going to be. >> you have no idea where the bids, where the offers, what the substantiative market players will be on a day-to-day basis. but i keep it simple it's about taxes, it's about deregulation and no matter how you slice it, if both of those get pulled off the table even incrementally, and warren, it's not going to be incremental, then you're giving up a large portion of these gains and then some. >> up next, netflix scoring a 34 golden globe nominations, but one firm says the company is facing a fake hurdle on the horizon and that is sending shares lower we'll get the word on the street on that call, next >> and later on, something very cool an inside look at the s.e.c.'s highly secured forensics lab and you'll also hear from s.e.c. chairman jay clayton about the high tech tools they are using 'rba a t ces wee ckfterhis.

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welcome back to "closing bell." it is time now to get to the word on the street oppenheimer raising its price target on peloton from $38 a share to $29 the firm points to peloton's search trends, website traffic, and improving customer satisfaction metrics meanwhile, though, scitron research out with a note on peloton saying that investors

are peddling themselves into frenzy, giving the stock a $5 price target for 2020. peloton stock is currently trading down quite a bit today another 6.5% >> yeah. >> around $32 and change per share. >> by the way, the average price target of the 20 analysts that cover peloton is $33 so you've got an extreme call, a very extreme call on the downside, and in the meantime, we're sitting right in the middle all right, maybe the big call of the day is this one. needham downgrading netflix to underperform fancy word for "sell." analyst laura martin says netflix is going to be hurting, losing as many as 4 million subscribers in 2020. needham suggests that netflix may need to add a second lower-priced service to compete with the likes of disney plus, apple plus, hulu and others. by the way, laura will join us later at 4:00 p.m. great analyst made a call, originally downgraded the stock earlier this year, fantastic call another downgrade, so look forward to that. >> yeah, absolutely. >> go ahead. >> i was just going to say,

steve, your reaction to either one of these names >> i think on the needham call, i like that lower tier monthly subscription i think that makes a ton of sense to get people back in, to get them moving up and full netflix subscribers. on the peloton side, they're at risk of being just a hardware company. it reminds me of gopro you can't ride a gopro >> which was part of citron's argument as well >> yeah, but i like that traffic has been increasing at exponential pace on the website and on the digital membership. i think they have a shot here. you talk about the price targets. still above its ipo price of $29. that's crucial for me, that it holds that level >> oh, by the way, there are imitators. a company called echelon, the logo, the website kind of looks the same andthey're advertisin a lower price point. so peloton may not have had enough protection on the ip side >> i can't understand how that's even possible, but i guess people can push stuff through court systems and everything else but the bike, yes, is too

expensive, the treadmills are too expensive, but we'll see what happens in the long run >> we've got less than 30 minutes to go here here are thethree things that are driving the action first, the u.s., mexico, and china agreed -- china, excuse me canada agreed to -- >> we need that deal weapon need the china deal you just broke news, morgan brennan. china and mexico have entered into a long-term merger. >> the u.s., mexico, and canada agreed to a revised usmca trade deal stocks have bounced around all session on conflicting headlines about the december 15th deadline for chinese tariffs and house democrats officially announced articles of impeachment against president trump. it is time now for a cnbc news update, though, with sue herrera. hey, sue >> hello, morgan hello, everyone, here's what's happening at this hour a very fluid and still developing situation one officer is dead, two others have been shot and this is all taking place amid an active shooter situation in a store in

jersey city, new jersey. all the public schools in the city have been locked down, as multiple s.w.a.t. teams respond. dozens and dozens of gunshots were fired two gunman are down. we don't know their condition. police are sending in a robot to assess that situation. the florida keys sanctuary is getting a $100 million facelift the national oceanic and atmospheric administration announcing a new restoration plan designed to restore seven iconic coral reef sites off the florida keys that is the size of 52 football fields >> we have identified some iconic reefs here in the keys that we want to help restore these reefs have been suffering from a number of threats for years, as have reefs all around the world. >> and redbox is getting out of the video game business. the company saying it will focus exclusively on movies. redbox says game rentals are no longer available from its kiosks, but customers can still

buy games intuntil early next y. we'll continue to follow that developing story in jersey city, new jersey in the meantime, you're up to date brian, back you. >> that is terrifying stuff here, just across the river. thank you very much, sue herrera. keep us updated. meantime, house democrats announcing articles of impeachment, two of them, against prmesident trump. let's get now to ylan movie in washington >> the next step is for the house judiciary committee to debate these two articles of impeachment, abuse of power and obstruction of congress. we are expecting that a committee vote could happen on thursday, which would set up a vote before the full house early next week. >> we do not take this action lightly. but we have taken an oath to defend the constitution. and unlike president trump, we understand that our duty first and foremost is to protect the constitution and to protect the interests of the american

people that is why we must take this solemn step today. >> senate majority leader mitch mcconnell said today he does not see his chamber getting to a trial until after the christmas break. and it's still unclear what that trial will look like, how long it might last, and whether the senate will call its own witnesses. mcconnell told reporters this afternoon that no decisions have been made yet, but guys, it is worth noting that the senate's official calendar has left january wide open. back over to you >> ylan move ylan mui, thanks fg us the latest. as we head to break, let's get a check on bonds u.s. treasury yields getting a small bump investors are awaiting that fed's decision, even though apparently every single one of them expects the fed to hold steady the benchmark ten-year at 1.83%. we're back after this. woman: my reputation was trashed online.

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about 22 minutes left. consider the fact that we were basically literally at one point unchanged, flatline, last few minutes, started to see some action let's send it over to michael santoli for the second installment of his market dashboard. >> thanks very much. asking if everyone has kind of already gotten in the pool on this rally, maybe that's why it's cooling off a little bit. take a look at the trend in the s&p 500. this just goes back a year, so it kind of shows you that decline last december and then the big recovery here's what a lot of folks are focused on, which is the fact that this really kind of stalled out, basically at this top end of this particular trend if you really look at the market that is setting up these channels, it's bumped up against the top and is now cooling off, sometimes these appearance, it's like looking at the sky and seeing puppies and bunnies, but this seems to really this year

obey this trend line we'll see if that's really a backing off. risk sentiment seems okay. look at the dollar in the last couple of months in particular, it has rolled over, it may come off. that's consistent with kind of a, you know, sort of a reflationary story the global macro picture picking off. and the adverse of this could be copper copper prices have been breaking out in the short-term. not breaking out to an all-time high, around the same time the dollar faded, you started to see that rebound could be sentiment firming up on a trade deal the internals of the market still seem like they're gaining traction in terms of a cyclical beneficial move. looking at this chart, is this all in anticipation of trade, a trade deal with china, or is it more a signal that perhaps we have seen some sort of bottom in

terms of global economic -- >> or moving the dollar. >> or a dollar >> so i think the moving the dollar, i think you have to go back to the fed and when the fed starts playing around with the balance sheet, we saw the dollar move higher and they had stopped cutting rates. now we're starting to see qe the extension of qe. and if they're going to expand that balance sheet, then we could start to see a lot of these moves get coupled with the trade headlines and i think that results with what mike is pointing out with those charts >> up next, we've got your last chance trade and grasso is picking a name that's there are up 150% this year. >> what? >> find out why he says it's still bu at cinupa y. ♪ ♪ ♪

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you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer. 16 minutes left to go. major averages are slightly lower. steve, what is your last chance trade? >> snap. >> no way! >> we've talked about this a lot. it's up 153% year-to-date. it's natural to get some sell side with the stock that's up that much going into year end. people want to lock in some profits. maybe they have some losses to write off against it or what not. there's filters, there's international growth there's also the $17 ipo price

that this thing is going to be a magnet to get back to in 2020. it's a 20% move. >> i think you chose it back in october as well. stock is down about 3% since then >> so this is profit taking. why don't we look backwards and say, when we pickedit, it traded higher from there i never said to hold it until the next time i was going to be on "closing bell" talking about snapchat how much did it go up from there? 15% from the time i picked it, 20%? whatever the number is so you should have been aware of that >> oh, snap! >> that was a snappy call. >> steve, thanks for joining us. see you next time -- i'll probably see you tomorrow night on fast money 5, 5:00 p.m. eastern. up next, uninterrupted coverage of the final minutes of trading. we'll take you inside the market zone when "closing bell" returns. - [spokesman] if you've tried college but never finished,

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less than 12 minutes left in the trading day, both the dow and the s&p are lower right now. we are now in the "closing bell" market zone. commercial-free coverage of all the action going into the close. >> and cnbc senior markets commentator, michael santoli here now to break down some of the crucial moments of this trading day, and today we've also got barbara duran from bd8 capital partners is here barbara, welcome so you look at this market, and you think, all right, we might end flat nothing happened but inside the grease, the wheels, the gear, they're always turning. what stuck out to you? >> honestly, the market is just kind of holding its own, right below the highs, you know, apple, up a little bit today,

hovering less than half a percent from its highs soy honestly think that the market is looking to wait until this known catalyst to trade is out of the way and we're waiting and seeing it's sort of also figuring out if last week's little 2 to 3% pullback was enough. that remains to be seen. >> all right so we've got a lot to cover. let's kick things off with what should have been a headline to move markets maybe positively. and that is trade. because house democrats and republicans reaching a deal to move forward with the u.s./mexico/canada trade agreement. the usmca. that is a replacement of the 1994 nafta deal, the revised agreement includes tools to settle labor and environmental disputes the move comes on the heels of a "wall street journal" report saying the u.s. and china were planning for a possible delay in the implementation of those next round of tariffs set to go on december 15th. however, white house economic adviser larry kudlow dismissed that report at a "wall street journal" conference, saying tariffs were still on the table,

so the paper says, we may delay. kudlow at the papers conference says, there will be no delay barbara duran, all you're trying to do is make money for your clients. how do you manage this every day? >> i know, well, every day, you don't. not changing any asset allocations, not change my stock picks. and you're trying to say, well, is the market really overstretched here or not? and the fact is, i think that trade is clearly driving it a little bit in the short-term, but i'm beginning to think that it's really about the fed cuts this year. those three interest rate cuts that are really being discounted in the markets in terms of future earnings. and also multiple valuation support. so i think that's a big part of what's actually going on and yes, trade's an issue. if we suddenly slap on more tariffs, than everybody is going to -- you know, the market will go down until it sorts out how meaningful is this so i think it's really about the fed cuts >> all right it's a key point meantime, boeing out with new delivery numbers let's get over to phil lebeau. hey, phil. >> a little bit of good news for

boeing in the november delivery numbers or orders numbers, i should point out because the 737 max, really, for most of the year, they've had no substantial orders a few here, a few there, but nothing substantial well in november they had 30 planes that were the result of two firm orders. overall for november, commercial airplanes was a net positive 11 planes for boeing, but still for the year, they're at negative 84 check out this chart right now boeing is on pace to have its fewest deliveries since 2008 and that's when there was a machinist strike, which is the reason they didn't deliver a number 737s that year. right now they have 345 airplanes delivered. you do not want to miss our exclusive interview tomorrow morning, steve dixon, head of the faa. right before he goes over and testifies on capitol hill about how the faa has been handling the max. again, guys, a lot of the questions here will center around whether or not boeing's

expectation of having this plane recertified and the grounding lifted by the end of the year, whether or not that will happen. we'll be talking with the faa administrator about that >> what's your best expectation of what he's going to say, phil? >> i think he says, we go on our time frame, we don't go on boeing's time frame. boeing may still be hanging on to that, but he's not going to change where they're at. >> phil lebeau, we'll look forward to that, as well we're closing, a little bit over five minutes left to go. apple making two announcements about its apple card today what are those let's find out josh lipton is here. josh >> so, brian, starting today, people who have the apple card can buy an iphone and pay for it over 24 months with zero interest so the question for investors, does this new feature, this new program now help encourage more iphone upgrades in the quarters ahead? and if so, how much? apple also announced new holiday promotion. apple card customers can get 6% cash back on purchases of apple products from now until the end

of the year, december 31st normally, remember, apple card customers get 3% cash back and that could certainly help drive adoption of the new apple card in this critical holiday shopping season. guys, back to you. >> josh, thank you very much coming up, goldman sachs president and coo john waldron will weigh in on the apple card. they're their partner, after all. he'll speak exclusively to wilfred frost coming up later in the show that interview, what do we say you cannot afford to miss it >> can't afford to miss it meantime, mike santoli, apple, up 70% year-to-date. far and away the best performing dow stock. >> yes >> obviously, it checks off a lot of the boxes of what this market has wanted, not just technology, but just this kind of quality balance sheet, the buybacks, the long-term growth story is all in tact i do think this measure is very interesting, both to promote the adoption of the card, but also, they've wanted to smooth up the upgrade cycle for a long time.

the installment buying plan, it's went some distance -- >> do you ever think we talk about boeing i know pros don't look at the dow, but it shows up on the cover of newspapers and general news if boeing had not had these problems and had just performed with the average of the other stocks, the dow could be a lot higher than it is now. >> yeah! it would be -- i mean, let's say it was 50 bucks higher or 50 bucks higher is another, you know, 350 points on the dow. so you would be handedly over 28,000 right now >> ride-sharing companies uber and lyft both trading below their ipo prices as investors have become increasingly concerned with both companies' paths to profitability former twitter coo adam bayne joined the "halftime report" earlier and weighed in >> i think the issue with uber and lyft ultimately is a bit of this, you're trading on someone else's capital for a bit uber and lyft, essentially, have massive stipends and bonuses that they pay drivers and drive

the incentive wheel in that way. if they take that away, ultimately, both of those companies will be highly profitab profitable it's just a question now of who moves first. >> you know, it's incredible, barbara, because we have heard these companies and some of the others that have been growth at all costs and maybe no signs of profitability, at least in the next couple of years, come out and at least say, oh, adjusted ebitda positive, you know, 2021 or 2022, whichever company we're talking about. but i think it sort of maurksrk shift in the market, particularly among public investors this year, more discerning about the metrics and what they're looking for >> i think that's right. and i think what the shift has been and why you're starting to hear the managements of uber is lyft, particularly uber saying, we've got to focus more on that. they've talked about uber eats, they're willing to rationalize, because it's really about the investors and the stock price. so i think they've got a couple of levers to pull. and i think that i haey've got h

plan and they've got to move it up a little bit sooner it could be cutting down what they raise the drivers or raising prices >> you know, scott walker did a great show from san francisco today. and one of the guests, i don't know who it was, said, companies are no longer going to be given a pass based on if this happens, then we'll be okay because the markets have stopped now with wework and uber saying, well, what if that doesn't happen >> you need a path that's per swai swasive to your second act >> and clear to what's happening now in the moment. >> we're not going to figure it out later once we get scale. that no longer really a welcome answer >> mike has more on the market internals today. mike >> oh, absolutely. it's been pretty much break-even you look at up and down stocks on the new york stock exchange, actually, slightly positive for most of the day, even while the index has been about flight. it's turned slightly negative. i want to highlight oil sneakily, getting up to the top

of its recent range. and if you look at the chart of wti, it's got a nice mini zwr uptrend. 60 is captive with that one little spike >> what's amazing this year, oil is up 30%. the stocks stink because of debt and socially conscience investing and oil keeps going up >> we wonder if there's a threshold price, maybe that changes, but remains to be seen. >> we've got two minutes left to go here. let's send oit over to rick santelli for a check on bonds. >> we had brighter news on the zoo business conference in germany. at least the expectations. but the big story was obviously trade and made everything go up early. two-year note yields, you see there, still up four basis points actually at the high yield of the day. october 30th, last fed meeting you see ten-year note yields there. they've drifted, but they're still higher than they were at that meeting finally, six out of seven down days in the dollar index, as you

see there. and bertha at the nasdaq, not a good last dollar again >> we're just sort of fading down, but biotech continues to be the relative outperformer and among the big gainers today is bluebird bio we continue to hear strong trial data in this case for a gene therapy drug for cancer with bristol-myers. in the meantime, norton lifelock today, trading higher on big volume hitting a new 52-week high on a "wall street journal" report that 1 it may be looking to do a merger with macafee. >> a confluence of discussions on trade dominated the floor the dow was lower by 105 at the open we're currently down about 26. take a look at industrial giant 3m at the bottom of the dow. this is one of those names that

is sensitive to trade headlines. and as we've seen a sustained move in oil prices, check toout the move in transport stocks transports once again weak here we are, the dow s&p lower for the day, 3132 for the s&p 500 and dow jones down 30 points on the day >> the bell has been rung, the button has been pushed and the gavel has come down. welcome to "closing bell". >> i'm morgan brennan like with mike santoli wilfred frost is at the goldman sachs financial services conference in new york he'll join us in just a little bit, with an exclusive interview with goldman president and ceo john waldron >> in the meantime, let's take a look at how we finished the day on wall street you'll look at this market and

go, not a lot happened let's celebrate the small caps -- they're all growns up, as vince vaughn said in "swingers. russell 2000 continuing its path higher small caps have been on the run. the dow s&p and nasdaq down just a touch. we were unchanged most of the day. we got a trade deal. the market didn't respond. we got impeachment articles drafted. the market didn't respond. that alone is interesting, morgan >> it absolutely is. energy, health care, and tech stocks, those are the three sectors that ended the day in the green. joining us to talk about the market day overall is young director of market strategy at bny mellon investment management, and barbara duran, a portfolio manager at bd8 capital partners is still with us. mike santoli, first to you, we were up, we were down, but really very narrow trading range in general >> narrow range for a couple of days market's just kind of idling we're holding a little bit above of where we finished last

thursday get the good jobs report it seems to ratify what this market has been trying to say, which is, we've probably seen the low in growth rates for a while. but i think we got up to a level and the s&p hit that 3150 as a high, we're craving. investors are craving some reassurance that in fact this september 15th tariff deadline happen >> so let's talk about what you just talked about, mike, which is oil if energy stocks can -- i know they're tiny, i get it, but if they can start to participant even a little, would that help >> it wouldn't hurt. i don't think you want to hang a lot on it. it would be part of this general kind of value reflation trade that might fit in with other things going on. but it's a nice to have, it's not -- >> catch up to the markets -- let's be honest. it's not the same without -- >> the fact that trade has been once again dominating headlines and market moves today what is priced into this market? >> i think that was priced into the market, which is indicative of what's happened already

today, is that we were going to have a rollback of the december 15th tariffs i think the conversation moving forward, if we get an actual deal, that would be a positive for the market even though everyone is sort of expecting that v having a deal would be a positive because we haven't had a deal at all. it's only been about tariffs are tariffs going on, coming off, are we raising them, lowering them? the conversation will continue to be about tariffs, but if we actually get a deal signed, sealed, delivered, then the market moves up. >> we're talking about the china trade deal right now there's also the usmca deal that begot some developments on today. >> the usmca >> the usmca >> the new nafta >> oh, the new nafta i'm so used to -- >> would that move stocks if we saw that finally signed into law? >> it wasn't really visible. it hasn't been a big factor in our exports. there hasn't been this continual battle of words. i think it was great there's not much talk about it but i think china remains the

focus. and i agree with liz, i think that if we got even one phase i done, i think it has ramifications beyond that, that maybe we'll get more >> it might be a phase i and done, because we might all be retired by the time this whole thing is done. all right, barclays out with an optimistic 2020 outlook for the small caps the firm giving a 17 and -- that's about 9% above current levels, saying that an accommodative fed or a reasonably healthy u.s. growth environment will all help drive the growth higher. it also recommended an overweight rating in industrials, consumer discretionary software and sector liz, we saw a tiny move, but small caps, the only group that did well today are you a believer and a buyer in the smaller, more domestic companies? >> i am. and i like the bullish tilt. i used to be a small cap analyst, so i have a little bit of a soft spot in my heart for them but i think you have to look at,

why did small caps large lag caps because there was not as much of an appetite for beta and small caps will not see as much demand next year if we're having what i'm calling a psychology recovery. the recession that we've all been waiting for never happened. now market participants are deciding, okay, maybe it's not coming it's time to actually take part in this. they missed a little bit this year, but if we get that back on the table next year, i think you can see that pickup in beta stocks small caps is one of beneficiaries of that. >> the numbers have come more into line on the small caps. i don't think it's an either/or trade. it's really a matter of, can small caps kind of keep pace and participate in a ongoing rally the time where it's kind of small caps are all that works are in your correction bear market phase, when all of a sudden, finally gets washed out and gets value i don't think that's what people are really projecting or necessarily hoping for >> i don't see small caps outperforming large caps

the rationale has been, yes, we're over the recession fears if we have some sort of agreement with china, but it's not going to be just not raising tariffs. i think we have to have a huge rollback to see it impacting small caps small caps have had a nice rally this career, but still underperformed large cap and i think that underperformance will continue but i think they'll go in line >> oak tree capital co-chairman howard marcks sitting down with wi wilfred frost earlier today and here's what he had to sate about the fed's recent moves and their impacts on the market. >> i don't think it's appropriate that every 25 basis point cut in rates should be expected to goose, you know, the market by a thousand points. but, you know, things are still continuing up. the market is still in an uptrend. and people like the low rates. >> barbara, this kind of goes right back at the point you were making a few moments ago >> it's interesting, howard's remarks were, he thought, gee, you don't have a thousand points

on a quarter, but at that point in time, we had the recession fears and global slowing what was that going to mean and after, i think, it's been pretty well agreed that the fed tightened a little too much in '18 and we had the flag effect this year. so the fact that the fed was ready to cut rates and they made all positive noises about possibly more, the market said, this is exciting, this is time, you know, to get involved. >> what i would pay attention to is it all depends on what's priced into the market haahead f the cut. and there was a 100% chance of them cutting according to the market same thing happened in september, close thing happened in october i don't think we should expect a huge bump every time we cut rates, especially if it's already baked in >> according to our fed survey, our morgan brennan told us that there's a 100% chance that the fed is going to do nothing postpartu tomorrow >> it was 0, now it's 0.2%, the last time i checked. there's a good chance they

won't. and the market is in tune with the fed's preference to do nothing for as long as possible. i think that's what the fed prefers. >> would the stock market be okay once you take away the punch bowl, mike, is that all right? >> the punch bowl is still there. because credit markets have completely rushed to a point where they're giving money away. >> how come no one's talking about what's going on in the repo market? >> everybody's talking about it. >> not us. >> we should >> that's another -- to my mind, a placebo that has worked, basically. the year-end question is back in the air, whether we'll have more stress but it will be interesting to see what powell says tomorrow. >> could it be a bigger deal than we're making? >> you've had three central banks that are expanding a bank's balance sheet that doesn't flow through directly, but it tamps down volatility and it's very helpful

in the economic picture. >> we'll leave the conversation there. it's one we'll continue to have. barbara duran and liz young, thank you for joining us >> thank you still to come, the streaming wars are heating up and needham is raising some red flags on netflix. the analyst who sent shares lower by 3% today will make her case, next plus, an exclusive interview with goldman sachs president and ceo john waldron he'll weigh in on the firm's strategy for 2020, coming up "closing bell" is back in 90 seconds.

well, rather quietly and all of a sudden, netflix has become a battleground stock, with analysts and investors really divided as to whether its boom has just begun or a bust could be around the corner laura martin is internet and media analyst at needham and company, she's been kind of bearish, out with a note down downgrades netflix to outperform, and stating, quote, netflix must add a second lower priced product the compete martin scorsese's "the irishman" was apparently viewed by 24.6 million accounts in the first 26 days laura, you've been right on netflix. you downgraded the stock originally months and months and months ago that was a spectacular call.

why sort of pile on? why take the stock now to a sell >> because the catalyst here is disney adding 16 million new accounts we think that about half of those come from netflix, or at least evaluate the churn of netflix. and the problem with netflix is if it loses u.s. subs, it loses its growth stocks credentials. while it will no longer trade at seven times earnings, it will get valued to 15 times ebitda, which is a half on the stock price. >> if you think it's going to or it needs to create a lower-priced second tier service to compete with apple plus or disney plus, would that keep the subscribers around that you expect to leave? or would it sort of bastardize the existing subs who then say, i'll stay on it, but i'm going to cut my monthly payment in half, because that's not the outcome that netflix would want. >> right, no so i think what happens is, our data shows that they do two hours a day of viewing if they added a six-minute ad

load, they could do $6 of ad revenue and convert some of those people that are stealing netflix today, 25% of survey respondents admit to steali ini somebody else's password so there are 30 million people who have never taken netflix in any form because it's too expensive and they don't want to break the law. so getting some of those people to sign into netflix and in a marketplace, you must have a response to apple and disney at $5 a month you can haven't a $13 response >> so one of the key points you're making here and for this downgrade and lowering of the price target is the fact that if you are seeing a loss of domestic subscribers, that even as the company continues to expand into international, it's not as lucrative you've punched those numbers, break it down for us >> so one of the things that people miss is that every incremental international subis coming at a lower price and

therefore a lower probability, profitability. so the profit per sub of u.s. subs was three times higher in the third quarter, and that's before netflix added a $3 per month subin ind in india. a lot of their international sub growth may come from india, but it's a fraction of the $1.90 profit per international sub, which is a third u.s. sub profitability. >> let's talk about viewership numbers. you've got to trust what netflix puts out, right? >> yeah. >> however, i have a question, i don't know if you know the answer to. they came out and they said $26.4 million accounts watched "the irishman" in seven days they view a watch as completing more than 70% of the movie take that for what it is if i sit down to watch three-hour movie, watch an hour, get up, have dinner with my family, the next day, i come back, is that three views, or is that one view?

everyone just takes these numbers for gospel and some of them, they seem very large >> i think, brian, if you have 60 million u.s. subscribers a month and half of them watch a single movie, that's great and 50% conversion is a great number, but i don't think it really speaks to whether those people pay next month. for example, "the man delorean" is a huge hit on disney plus it's quite possible that some subset of 60 million netflix subs stops paying for netflix, watches "the man delorean" for three months until it's over and goes back to netflix if 30% of netflix's people churn for an extra three months, they lose 4 million subs or the equivalent revenue of losing 4 million subs all year. they don't need very much churn to start losing the equivalent subs, because they start with 60 million subs in the u.s. >> all right, laura martin, thank you for joining us on the

heels of this downgrade. stock finished the day down 3% still ahead, we will get the outlook for the market and the m&a landscape when we hear exclusively from goldman sachs' president john waldron >> plus, auto zone, yep, they sell batteries and spark plugs the best-performing stock in the s&p 500 today after reporting strong earnings. we'll break down the charts and show why a profit beat is not the only reason for the stock sur surge today. stick around

all right. we've got a pair of earnings alerts right now on gamestop and ali's bargain outlet rahel solomon joining us now with those numbers >> hi, brian two earnings and two very different stories. let's start with gamestop, plunging after hours after a disappointing quarter. a miss on the top and bottom lines. you can see gamestop down almost 20% right now. so eps came in at a loss of 49 cents. the expectation had been a gain of 11 cents. revenue, not much better $1.44 billion. the street was hoping for $1.62 billion. comps, comps down almost a quarter, 23.2% versus down

13.8%, which the street was expecting. george sherman, gamestop's chief executive officer saying in a press release that our third quarter results continue to reflect the prevailing industry trends most notably, the unprecedented decline in new hardware sales seen across the market, and perhaps even worse, they expect these trends to continue into next quarter looking at guidance, eps for fiscal year '19, t10 cents to 20 cents versus the adjusted $1.20. so guamestop is down almost 20% oll ollie's, revenue was $327 million versus the $323 million the street was expecting comps were down 1.4% the expectation was 1.2% they also named a new president and ceo who was the interim president and ceo. morgan, back to you. >> rahel, thank you. cloud-based gaming, seeing where it's showing up in the numbers

with competition let's send it over to mike santoli for his third dashboard of the day mike >> morgan, auto zone obviously serves a lot of people who fix it themselves, but auto zone as also managed to fix it for their own shareholders here's a ten-year chart of this stock. one of the best performers you're going to find in a retailer or anywhere else. look at this ten-year return 705% that is share price, keep in mind they've done it not just by growing steadily in terms of cash flow and earnings, but by buying back their own shares very aggressively. here's a breakdown of the change over the last ten years in the stock price, the market cap. so the stock is up 700%. the market cap is up only 250% even with that stock price rise. earnings per share up 450% shares outstanding over the last decade are down by more than half this really shows the power of buybacks when the underlying company is also growing. it's not just about buying back stocks, because you have no growth, like gamestop has been doing for years, but when you have growth and this formula,

they keep pursuing it, guys. >> wow that breakdown is quite something. mike santoli, thank you. up next, goldman sachs' president john waldron tells us exclusively what kind of impact the apple card is having on his s tt le.boomin "closing bell" will be right back there's a lot of talk about value out there. but at fidelity, value is more than just talk. we offer commission-free online u.s. stock and etf trades. and, when you open a new fidelity brokerage account, your cash is automatically invested at a great rate -- that's 21 times more than schwab's. plus, fidelity's leading price improvement on trades saved investors hundreds of millions of dollars last year. that's why fidelity continues to lead the industry in value while our competition continues to talk. ♪ talk fidelity.

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let's get a cnbc news update with sue herrera >> here's what's happening at this hour, everyone. an update now on the situation in jersey city, new jersey. one police officer has been killed two other officers and a civilian were wounded at a shoot-out at a store in jersey city, new jersey five people are dead inside the store, including three civilians and the two gunmen heavy gunfire rang out over the course of at least an hour earlier today. secretary of state mike pompeo holding a joint news conference with russian foreign minister sergey lavrov. lavrov was adamant that russia did not meddle in the 2016 presidential election. >> we have highlighted once again that all speculations about our allege d interference in domestic processes in the united states are baseless there are no facts that would support that we did not see these facts no one has given us this proof, because it simply does not

exist. >> and pope francis made a surprise visit to an exhibit of nativity scenes that just opened in vatican city. more than 150 nativity scenes are on display at an exhibit hall next to st. peter's square. that exhibit runs until january 24th i bet he surprised a lot of those people there that is the news update, guys. you're up to date. i'll send it back to you, morgan >> i bet he did. sue herrera, thank you our wilfred frost joins us now from the goldman sachs y annual financial services conference of new york >> i'm delighted to be with the host of the conference, no less, the president and coo of goldman sachs, john waldron. thank you so much for being here >> thank you for being here and covering our conference. >> it's great to be here, as it always is. end of the year, people setting out their expectations for the year what would have been the key themes for you so far from all the key banks we've heard from >> a lot of dulgs aboiscussion h economy and the consumer in particular

the underlying strength in the consumer is showing through. regulation and the election, and the prospects of whether there might be some shift in the regulatory environment, which obviously affects banks meaningfully and i would say an incremental conversation this year may be more pronounced before than around technology. the impact of technology, the amount of technology spend where are we in the disruptive phase of financial services more broadly. that's become more of a prominent theme that we think about at goldman sachs quite a lot and a focus today with our clients. >> we'll definitely dive into what you guys are doing on that front, coming up in terms of the macro sentiment, is the consumer strong enough to be offsetting perhaps less lackluster -- a little bit more lackluster kind of corporate momentum >> we're pretty constructive on the overall economy. certainly in the united states in particular. the economy feels, if anything, like it might be accelerating again from what had been more of a patchy 2019, certainly in the first half i do think that the feds easing by us has made a big impact.

our financial conditions index is operating at a very relatively historic low level. we're seeing that implication of easier policy coming through to the economy. and it's become much more of a stimulant for particularly consumers, but corporations, as well manufacturing weaker, no question but again, 70% of the u.s. economy is really driven by the consumer so as goes the consumer, typically, that's where the economy runs >> and on the corporate side, we did see all of a sudden some m&a announced last month did you guys take part in that and are you kmioptimistic that t can continue next year or a last flurry for 2019? >> consistent with an easing by us in monetary policy, it renewed risk appetite in the market, i think it improved sentiment in boardrooms. we're seeing more m&a activity our market shares are very good in m&a we did participant in the vast majority of those transactions we have more transactions that are on the docket. we feel good about where we are with our backlogs and the

activity levels have definitely ef evaluated from where they would have been 30 to 60 days. >> and what about the ipo market, has that been damaged by the whole wework debacle >> no, i think the ipo market is very healthy generally speaking, there's demand for ipos anda lot of supply coming. a number of good companies, we're doing an ipo today in brazil that's going very well. i think the market is doing quite well >> to focus more on goldman sachs, you guys have a very important strategy update coming in january how are you guys all preparing for that >> we spent the better part of the year getting ourselves organized, not just for the investor day, but for orienting the firm really for growth so when we come out in january, we'll talk a bunch about that. we'll talk about our strategy and the direction of travel in terms of our investing and what we're doing to build new businesses adjacent to our core franchises in some new businesses like consumer, which are more new builds for us from the ground up. and we will have argets, you know, around profitability and

efficiency and so we'll talk more about that in january. but we're excited about it >> so the ft article recently that suggested you're not going to be setting strict financial targets, i think the tone even suggested that you were going to try to duck out in that sense. was that a false sentiment >> i've learned in this job, you can't believe everything you read or hear on tv but i wouldn't believe everything you read in any of the publications what i said is what you should expect to hear >> and do david, steven, yourself, do you see this strategy update, and of course with the investor reaction to it, do you see it as a kind of mark on your guys' first year in tenure is there a sense of nerves at all coming up into this update >> i don't think so. we're excited, because it's an opportunity for us to describe in more detailed terms what we're trying to achieve with the firm over a long period of time. and i think the over a long period of time part will be important. we want to lay out a road map for what where we're trying to go over a number of years. and that's something that will be a little bit different from

things we've done in years past. >> one of the themes people have heard a little bit about is how much you want to shift towards the kind of private equity space. you've reorganized internally to have a specific department to that in five years' time, is that going to be 2% of earnings, 25% of earnings? >> i don't want to make a prediction on how big it will be, but i can say a couple of things we have a 30-year track record as an investor in private equity classes. so we have a real business that's scaled. we haven't necessarily described it as such in more unified terms, which we will do in a more detail in january we think it's a secular growth opportunity in the world you can see how hard it is to create alpha in the public markets. more money is flowing into private markets. we have a long track record, so we're very establish on the opportunity and we have a scaled business we're going to be an active player in that arena and describe it in more detail as we get into in january. >> are you nervous about the timing of that in any way, whether that's because of issues like wework showing that private

market valuations in some areas, at least, might have peaked already. and on top of that, we've seen price wars in active management to public equities in t broerhe brokers as well. >> we're not making a market call on being in the alternative business this is a long-term bet that we're making that this is a secular growth opportunity and we have a reason for being we have unique attributes. a very big sourcing engine in our investment banking business, which lots of our clients want to access, and we have our own private equity and credit opportunities to access that as well in partnership with our clients. we also have a unique ability to talk to our institutional clients and we can offer them products that can help them do that in a more intelligent manner we think we bring a lot of unique things to the table >> you mentioned the spend on tech is a theme that's come out of the conference. we've seen that play out recently in a subsector in the brokers. robin hood enters, leads to price war, and leads to some

consolidation amongst the big players, schwab and td ameritrade announcing a deal do you think of it as a tech challenger or being challengech? >> i think we probably sit in both seats we have a lot of legacy challenges and we have some businesses that would be more disruptive i would say what we're doing in the consumer arena would tend to be more disruptive we're trying to build a digital storefront and bang of tk of the future in the markets businesses, we're trying to be ahead of the curve, almost disrupting ourselves in many respects, to have straight through processing and other platform capability, when you move from more voice, legacy, transmission of risk intermission into more platform and technology in that case, we're trying to make sure we're disrupting ourselves so we're not getting disrupted by others. in transaction banking, it's a beginnings of the two.

we're building a new platform. it will be disruptive. a great product, an improvement on what's in the market place, but we're taking advantage of legacy existing relationships that are quite strong and important in a trusted advisory context, where we can offer something else that's a part of our tool kit that will be valuable tour clients. >> that brokered price war led to some suppressed prices and the schwab/td deal came about partly because of that some people criticize your predecessor, the leadership that came before you and david, for not making more moves when prices were depressed after the crisis, not being inquisitive then have you sensed any opportunities at the moment, that people have tried to link goldman sachs to etrade, for example? >> we did make an acquisition, a company called united capital, which is a national platform in the united states that has a very good kind of high-net-worth wealth platform that we're going to build upon. so when we see opportunities

that allow us to accelerate our existing organic plans, we're going to look hard and want to access those opportunities let's move on to the apple card. david said on the recent earnings call, that it was the most successful credit card launch ever. the numbers may say that i wonder whether you guys retract at least part of that sentiment given the scandal that came up about potential gender bias in terms of the credit issuing decisions. was that a blow? >> the way i think about this is, we're starting a new business it's in partnership with apple it's the first real credit card launch in a long time. and it's going well. we've got a lot of new customers, the usage rates are very high. we're feeling very good about how the processing is working, the tech platform works very, very well, apple is a great partner. there's a lot to be very, very pleased about, and we'll talk

more about that in the coming weeks and months ahead vis-a-vis, the gender question that you asked around the credit approval process were very comfortable. there's no gender bias in our approval process it's quite easy to go look at that you can look at it on the phone in terms of what the factors are that drive the approval process. there's no gender or marital status there's no gender issue at all we do think we may be have an ability to go talk to the world about the fact that it might be harder for women as an example to get credit, so we may be shining a spotlight a little bit on that. which is a good thing to be talking about in the world but we don't believe there are any biases in our processes. >> in terms of the card itself, apple announced today that you can buy an iphone spread over 24-month installments with no interest if you use the goldman sachs apple card so you have to forego the interest or kaem compensates you for that >> i don't want to talk about our economic relationship with apple, but it's another example of where we're trying to be innovative and help the

consumer the whole basis under which we're doing this apple card, with apple as our partner is simplicity, ease of use, transparency, and trying to be sort of democratize, if you will, financial wellness out in the world and people is a great partner for that first of all, they've got a lot of great customers on the phone. and we're trying to mimic a lot of what apple does, which is to be very simple and easy to use and allow people to have tools at their disposal and make their life better. >> on the earnings call, steven scherer said, during the quarter, we elected to suspend our open market repurchases as we've begun discussions with certain u.s. market authorities with respect to the resolution of the 1mdb matter since then, last week and just the week before, both the u.s. and malaysian sides have seen stories suggesting that they're close to a settlement. and they have not come out to outright deny those stories. so i feel like there's a sense in the market that you guys are very close to a settlement is this something that will be

done in q1 >> very hard to predict the timing of any of this. all i can say is that we are working to try to solve this as expeditiously as possible. we don't control the outcome we're one party. we have a number of people to talk to. and that's really all i can say. we're working as hard as we can to try to get it resolved sensibly >> do you feel like it's suppressing the share price if people say it's been trading at or below price-to-book value do you think settlement of this is something that would see it go back above that threshold >> i wouldn't say we're really particularly focused on the impact it has or doesn't have on our share price. we would like to get it settled and resolved and all the other good things we're working on and that's where we would like to be sharing our time and energy >> we all know that david enjoys some downtime deejaying. what's your number one hobby outside of work? >> my number one hobby is i have six children and so they are my number one hobby. i coach my son's hockey team and

spend a lot of time with my daughter and her travel soccer team and that occupies most of my time. i'm not spending much time doing anything else other than working at goldman sachs and spending time with my family. >> that hobby is much more important than the job, but thanks for taking the time to discuss the job. i'll send it back to you at the stock exchange >> wilfred frost and -- >> six kids, wilf! six kids >> you heard it from the source himself. >> the guy's the president of one of the world's biggest and most important banks, chief operating officer, he's got six children there's got to be two of them. there's no way it's like one guy, wilfred >> hi -- your words, not mine. so, goldman sachs, an important company, michael >> pretty good articulation of how they're trying to approach things utilizing the platform of being a vast global bank, having to make all of these technology investments, and as you said, create a digital storefront for

it all the goldman name doesn't go as far in those new markets >> is it going to work >> i think it's going to work. the question is just, how are you going to define success here >> it's not going to be the majority of the business anytime soon >> comment s about the ipo markt still fundamentally healthy interesting. >> up next, this is -- >> yeah, healthy >> better than richard marks bob pisani takes us inside the most highly secure room at the s.e.c. >> a lot of people have been to the s.e.c., but almost nobody has ever fwhn here look, this is the forensics lab for the s.e.c. this is a gigantic copper-lined room where they crack into the cell phones and the computers. we'll have more with s.e.c. aijay clayton when "closing bell" continues. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best...

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chevron a few minutes ago, the company taking a $10 billion charge, but that sounds like a terrible headline. but if you dig in, it's not that bad. here's what they're doing. chevron saying it's going to reorganize a bit, divest some

assets, primarily appalachian gas and an lng project up in british columbia, canada they're looking to divest those, sell those off they'll keep their capital spending budget the same it's been the last three years at $10 billion or $20 billion but they will be taking a $10 billion charge, ostensibly, against some of these assets that they'll either try to spin off or simply write down kind of a sign, guys, tla hat ty do not expect the price of oil or gas to materially increase anytime soon by the way, the ceo of chevron will be on "squawk box" tomorrow morning to talk about it >> all right switching gears, we're going inside the securities and exchange commission. bob pisani joins us live and is taking us inside its most highly secure room. bob? >> reporter: morgan, what a day i've had, hanging out with people who know how to get at information on your phone and your computer. you think you've got a phone that can't be accesses hah! think again.

we're inside the forensics laboratory, a super secure part of the s.e.c. headquarters in washington jay clayton, the chairman of the s.e.c. joining us. i have been on a tour of copper-lined rooms where they essentially go and investigate cell phones and computers. this is amazing technology that you're able to put together down here >> yeah, and thanks for coming today, because, you know, i want people to see that we have great people, but we also have the technology to monitor our markets and keep up with our markets. >> here's some examples of stuff that -- these are amazing. these are cell phones that have been thrown in the river, discarded, and you're now essentially reassembling you're looking at circuitry and trying to recreate the circuitry. what goes on in these kinds of places >> i think what you're seeing here, bob, at least some of these, people were trying to make sure that we couldn't get at that data, because they were doing things that shouldn't have been done. we have people here who can use those tools to get at that data and help us build a case >> it's remarkable, because you

would think that this stuff was irretrievable, yet it is i have seen audio conversations, a lot of this technology didn't even exist five years ago. >> it didn't exist five to ten years ago. look, technology is getting sophisticated on both sides, both for the nefarious actors and for the regulators we need to keep up i think our people here are doing a good job right to keep up with that >> what's the most important thing. you've been kind enough to let us into this secure room what's the most important thing that you want to get across to investors? >> investors, that we care about them but especially to bad actors, that we're looking for them and we're going to catch them. >> think about this, they can access information from phones that are thrown into rivers and retrieve it. it's amazing technology that they have theory remember, the s.e.c., by the way, is a civil organization that's not criminal investigations tha they're going after a lot of people and the fines are going up, $4.3 billion in fines and discouragements last year. guys, back to you. >> very cool, bob pisani

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he will be replacing coo and cofounder steph korry after a report disclosed mismanagement at the company here's what zoe schifer, the verge reporter who broke that story told us was happening at the company. >> i think what employees were saying is they were really beins they were pushed to the breaking point over and over. over and over again stef korey was berating them when they made mistakes and asked them to work harder and longer and using the company mission as almost a weapon. >> i think it's worth noting, guys really quickly on that that iowa did tell the "wall street journal" that a ceo search has been under way since spring. but the change on the heels of the report, note worth. >> slack was a public company by the way is not portrayed well either because everything -- every time you dress somebody down, anybody

that slack channel can see it. you wonder if people thinking about shifting to slack will see that and go do we want it this open. >> she prevented people from having private channels. >> i know 100% you couldn't email a coworkerer what company wants email. >> a trillion dollar preview of saudi aramco ipo trading tomorrow whether the company will be leab to buck the trend of recent ipo flame outs servicenow put our workflows in the cloud. this changes everything. you're right sir... everything. no not everything, i mean you're still blatantly sucking up to me gary. brilliantly observed, sir. always three steps ahead. six steps ahead. sixteen. so many steps.

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all right. let's turn back to mike with the final dash board of the day, mike. >> yeah, brian, alternative -- alternate futures are being handicapped by different forecasting tools for the economy next year. look at this from blackrock 020 year ahead outlook yes blackrock not black presidents these normally run in tune s in a leading gdp indicator using forecasting models and some data. this is financial conditions, what the financial conditions situation says about these implied earnings growth -- gdp growth going forward there you see financial conditions are so loose, generous markets in such firm shape they suggest gdp goes

beforeo above 2% the other traditional tools are saying we're diverging as you can see not always the case clear markets are trying to handicap something going on in the future the data isn't showing it. be interesting to see how it closes blackrock says pretty good chance that growth turns out better but financial markets believe it already. >> quickly the scene from the charts. >> it's obscure but it's a wonderful life it's a plt in four title >> love it up next, the key things every investor needs to watch heading to the new trading day when "closing bell" comes back.

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prevagen. healthier brain. better life. a big day on deck tomorrow, the fed decision due out at 2:00 p.m lulu lemon reporting results after the bell and saudi aramco starts the first day of trading at the local saudi exchange brian has a look at that one for us. >> so after two years numerous false starts and more media scrutiny than any ipo it begins trading tomorrow priced last week at the high end of expectations. gives the oil giant a $19.7 trillion valuation only selling 1.5% to investors limiting the stock available

last week the saudi oil energy minister told us that investor demand was huge >> we had 5 million -- 5.1 million individual subscribers. 4.8 of them will get the full allocation they will be allocated what they requested. we had 4. -- 4.65 of cover to the ipo. as big as that. >> yeah, 465% oversubscribered he also added he was confident it would get to a $2 trillion valuation. the $1.7 trillion valuation is $who 0, 5 billion more than than every publicly trudied oil and gas stock in the united states right now. >> just over a trillion, right.

>> yeah, every single stock is worth 500 billion than saudi aramco. >> all right we'll watch the trading tomorrow too. >> what do you think about that brennan. >> i think it's random but interesting. >> a lot of debt, yeah. >> yeah. >> us not them. >> yes, of course. >> all right that does it for "closing bell. it says. >> "fast money" begins right now. and it does, everybody welcome live from the nasdaq market site overlook new york's time square. i'm tyler mathisen in for melissa le trades are pete narjen guy adami. tonight on fast we have netflix taking a tumble today. has the streaming pioneer reached a peak pete, netflix and what will it mean for the rest of the court cutting world? plus chevron announcing a charge in the fourth quarter. but one of the traders says in stock is primed to pop he will make his case ahead. and later, lulu lemo