change you've spoken several times that you think severe weather events are happening more often and that the fed is monitoring that that could physically do to a bank or financial institution. but that's sort of one institution. do you think there's a system-wide risk that could develop from climate change? >> so that's an interesting question the question is, is there a system-wide stability risk i would say over the longer term it's certainly possible. and i would say that sort of feeds into the way we're thinking about climate change as an institution so as i've mentioned, climate change is an important issue, very important issue, but it's essentially a sign to many other agencies in the federal government and state governments for leadership on that and importantly, society's overall response to climate

change needs to be decided by elected officials and not by the fed. all of that said, if you look at our mandate, we've got a monetary policy mandate and more immediately, perhaps, supervisory mandate where we're supervising financial markets, utilities and financial institutions, banks, and we share overall responsibility for financial stability with a number of agencies and that latter part, i think the public has every right to expect and will expect that we will assure that the financial system is resilient and robust against the risks from climate change now, i think that's got to be right. we are in the very early stages, as are other central banks in understanding what that means. and there's quite a lot of work going on around the world at other central banks and at the fed to think that through. but i do think in that sense it has to be part of our role, but not the overall response of society to climate change. that's not us. >> and if i could follow up,

could you clarify why the fed hasn't signed onto the net work for greening the financial system, like 40 other central banks have >> so we've attended all of their meetings and taken part in them, and we've been looking at joining in one form or another and talking to them about that we probably will do that at some point. so that's an ongoing question. but we're very much attending those meetings and taking part in them. >> thank you, mr. chairman edward lawrence from fox business network there was a signing of a ratified usmca today fid february the phase one china deal goes into effect. have you seen business investment pick up at all, if not what will it take to get the business investment going as this uncertainty is being cleared up >> yeah, so i guess i would start by saying the fact that we've reached a phase one deal

with china and the fact that we've moved ahead closer to getting usma agreed, those are potentially positive things for the economy without question and financial markets, the reaction of financial markets is very consistent with that perception a sustained reduction in uncertainty over time should improve business sentiment investment, which would provide some additional support for the economy. it's important, though, to bear in mind a couple of things first, trade policy uncertainty remains elevated businesses continue to identify it as an ongoing risk. we still have two, or even three, active trade discussions that are going on in the public square right now so it hasn't gone away and we've just come through a round of talking to our vast network of comments -- sorry, contacts in the business world, and i think

clearly these are seen as positive developments going forward. but there's a bit of a wait and see attitude is this going to be sustained. the agreements have to be implemented and that will take quite some time. so i would say we need to be a little bit patient about the effect on the economy. there's also the global economy. you could well see manufacturing, as i mentioned, manufacturing pmis have started to tick up consistently among both advanced economies and emerging market economies. we do not see a decisive recovery, but it's possible that this mix of positive developments and financial conditions could spur further growth >> mike darby with dow jones do you have any greater sense of what was going wrong with the repo market starting in september? there seemed to be, whether it was a one-off event tied around tax payments and debt

settlement, or whether there's a more enduring issue going on with the market, more structural forces that are gumming up the repo sector? >> as for those forces, so as we indicated, we would undertake a serious review of that question and look at both regulations and supervisory practices and we would be prepared to adjust those in ways that might encourage liquidity to throw more easily in the system, as long as it didn't undermine safety and soundness so we've undertaken that and done a ton of work i feel good about what we've learned there. i think you mentioned other factors. we will be announcing our findings -- i'm not going to give you a time but we're well along in that assessment at this time i think we also found out, though, that the level of reserves that we need in the system to conduct our operations without frequent resort to open market operations was higher

than we had thought and was higher than others had thought, too. we learned that they can't let reserves -- we shouldn't let them go below $1.5 trillion at any point. and that means that reserves will move in a range over the course of the year that will be substantially higher than 1.5, but we don't go below. so 1.5 is not a target, it is thebottom of the range in whic reserves will be expected to move >> hi, mr. chairman. i just wanted to ask about how your balance sheet operations and repo, temporary repos, how they affect the system and who they're helping. clearly they're mostly designed, as you said, to keep the fed funds rate in the range you're looking for. but certainly the repo market used heavily by hedge funds and other wall street institutions, and so how would you explain to

sort of main street why you're doing all of this for that market and how would you address criticism that it is helping mostly wall street along with everything else? >> let me just stress that we have a very specific and important reason for caring about money market operations generally and that just is that our monetary policy decisions are transmitted through the financial markets, through the money markets, into other financial markets and into broader financial conditions so we care that money markets are operating smoothly and they stopped operating smoothly briefly back in september, and so we acted. this is a one-time thing that we're doing to adjust the level of reserves so that money markets will be able to operate smoothly on an ongoing basis repo markets are important because that's where treasury securities, the purchase of treasury securities, which is the way -- part of the way the federal government is funding its operations, the way those are financed so those are largely treasury securities that have been

purchased by dealers for distribution and buyers to a substantial extent that's what's going on in the treasury repo market so it's just financing for that. again, that activity is a market activity we're not looking to eliminate volatility or protect anybody from volatility. what we care about is that volatility in the repo market can affect the transmission of our policy decisions to federal funds rate and that really is important for the public >> nancy marshall again with marketplace. is the fed going to vote tomorrow on changes to the volker rule restrictions in venture capital funds? what can you tell us about what the fed is considering and why make those changes >> sure, so we will be looking tomorrow and voting on a new

part of the existing volker rule and that is the covered fund provisions of the rule and we're making a bunch of proposed revisions that we believe are faithful to the letter and spirit of the law. we're going to put those proposals out for public discussion and we're going to listen carefully as we always do to public comments on those proposals. again, we believe that they will be -- and you'll see them tomorrow, will be public we have a board meeting tomorrow to do that. >> are you changing the rules for hedge funds and private equity funds >> it's covered funds, so it's not the proprietary trading part, it's the covered funds part. >> is there a chance that banks could take this and run and maybe even get involved in mortgage backed securities again? >> you know, we think that what we're doing is very consistent with safety and soundness and absolutely consistent with the letter and spirit of the volker

rule we'll be getting comments from people and looking into that question, among many others. >> thank you, chairman powell. i would like to turn your attention back to china and the health of its financial sector in particular. and i guess i'm basing my question on reading the transcripts from 2014 that came out earlier this month in march of that year, there was concern about the chinese economy and one of your colleagues at that time asked the staff about how the chinese economy would hurt the u.s. economy. and the staffer said that what they were worried about was not only was the chinese economy slowing down, but there was the financial sector and the quote was there's a tremendous amount of dodgy loans in china. now, i was wondering if you could give us an update on these problems in the chinese

financial sector and how you think it might impact the economy, particularly now that they've been hit by this unexpected shock >> well, china has had a problem for some years, including from that period, 2014, up until i guess '17 or '18, which was essentially just a lot of debt for an emerging market for an economy at the state of evolution of the chinese economy, they had very high levels of debt not sovereign debt the way we think of it, but more business debt state-owned enterprises and private businesses and a couple of years ago the authorities decided to try to get that under control, to stop the growth and control it. and as i mentioned, that's one of the reasons why chinese growth flowed and it's one of the reasons why global growth slowed, because we've felt that. and they've actually stuck to that even during this difficult

period when they were experiencing strains from trade negotiations and that kind of thing. the authorities have stuck to that, and again, continued to try to do that to try to control the growth of debt and that's important that they do that we don't think that there's any imminent risk there, although as you point out, the coronavirus thing is a significant thing which will have some affects on the chinese economy, at least in the short term the chinese economy is very important in the global economy now and, you know, when china's economy slows down, we do feel that not as much as countries, though, that are near china or that trade more actively with china. we still have 85% of our economy that is domestic we have a much smaller external trade sector than other economies just because of our physical location.

>> brian chung here. yahoo finance. so the combination of repo purchases and operations have been described as liquidity. i'm just wondering if you semantically agree with that decision and assets, i don't know if that's something that the board or reserves banks are looking into or just looking at what the effect of it has been how are you kind of thinking about that going forward >> so two questions. in terms of liquidity, i think what we're doing is what i said. we're trying to raise the level of reserves back up to a level so that banks can meet their reserve requirements and that there's enough reserves in the system that we don't see reserve scaresity and we don't have to use repo to provide reserves i believe we can get to that state at the current pace sometime in the second quarter in terms of affects on risk assets as i said earlier, it's very hard to say what is

affecting financial markets with any precision or confidence at a given time it's not our intention to change the stance of monetary policy. these were designed to provide more reserves and really dod that, in order to enable better transmission of our rate decisions into the economy under our chosen framework that's really the purpose of what we're doing >> i wanted to ask about the framework review again would a shift of focus to inflation over an average period, would that call for a different policy stance if you made that shift? and whether or not we know the answer to that question, would the fed consider changing the stance of monetary policy for that reason, even if there was no change to the economic outlook? >> well, as you know, we're comfortable with our current policy stance.

we think it's appropriate and it will remain appropriate as long as data coming in are broadly in keeping with our outlook over time, though, let me take a step back. overtime an average inflation targeting framework would be different than a current framework in the sense that it wouldn't be -- there would be some aspect of trying to make inflation average 2% over time which means if it runs below 2% for a time it has to run above to bring the average up. so that is a different framework. our current framework is one where we say we would be equally concerned with deviations from inflation from target on either side but that doesn't suggest an intention specifically to have those deviations be symmetric. in other words, consistent with that would be having all of the deviations be on one side, which is what we've had actually so i think it is a change in framework and over time it would

lead to a different approach to policy again, i don't want to comment on the current stance of policy, which we do think is appropriate. >> "l.a. times." i wanted to ask you about the stock market by historical comparisons, as you know, valuations are high and i just wonder how much discussion and concern you and your colleagues have about that and what risk you see for the economy. >> we look at a broad range of financial conditions there isn't any one financial condition that we look at. and when we look at financial conditions, what matters for the real economy is substantial changes or material changes in financial conditions that are sustained over a period of time. if i can -- maybe i'll answer that in the context of our overall substantial stability framework. that's one way to look at it when we look at financial stability, we've got four pillars to that.

the first of which is leverage in the financial system that is at a comfortable level our banks, particularly large banks have high levels of capital. the second is leverage in the nonsecter and that divides into households and businesses. households debt to gdp has been coming down since the financial crisis it's not moving up it's at low levels compared to what it was before the crisis. so not every household in the aggregate household debt is in a good place, a very good place. business debt is moving up we've been calling that out for more than a year substantially more than a year and it's something we're focused on and we've taken appropriate measures and are monitoring carefully. we think it's not something that would threaten financial stability but be an amplifier. the other is asset prices, getting to your question we do see asset valuations as being somewhat elevated. i do if you look at risk spread, it's narrow if you look at pes, they're high i think the way to -- one way to

think about equity prices, though, is what is the premium you're getting paid to own equities rather than risk-free debt and that's also fairly low levels, but not extremely low levels so valuations are high but not at extremes. the final factor is funding risk, our big financial institutions and other players in the financial system funded with stable funding or is there a lot of run risk and the answer is very stable funding for the most part. so if you look at overall, what you see in my view is vulnerabilities to the financial stability are moderate overall >> katie o'donnell, politico i wanted to know do you support governor brain ard's revision for the act reform and is this something we could see the fed formally proposal at some point? >> so let me say i think this is

a good time to do -- to update cra really in a way that is a win-win, both for the intended beneficiaries, the lower income communities and also for banks that would like to have more certainty about what does and doesn't qualify and that sort of thing. the law can be more effective and more efficient and we think this is also a good time to take on board the way the delivery of banking services has changed through technology and demographic change as well we work very hard to try to get on the same page with the other two agencies, we think that an inter-agency final rule together would be the best outcome. worry seer we haven't been able to get there and we still hold out some hope that we will be able to. we've spent a lot of time on research and analysis and looking at meaningful reform you saw the speech presenting some of the thinking and the analysis and we haven't made any decisions about what we're going

to do. our focus has been entirely on trying to get to agreement with the occ really so haven't made any decisions about what we're going to do going forward. in terms of governor brainard led our oversight committee over these for many years and i asked her to take the lead, which is a high priority for us i was comfortable with her speech and i'm comfortable with the work we've done and with the fed's position on this as i said, we haven't chosen to bring a proposal forward we haven't decided what to do going forward. we're not going to comment on the other proposal it's just not appropriate. it's not about us. it's not about our views it's about the views of the interested parties >> hanna lang with american banker thank you for being here today i wanted to ask about the recent

speech on bank supervision in which he laid out some suggestions for making changes to the regime. i wanted to ask, do you agree with his approach and are there any plans to codify some of these suggestions later in the year >> so i do agree that the principles that he articulated of firm and fair supervision and effective transparency and communications i do think it's a good thing that we would have brighter lines to define our supervisory portfolio, which we haven't really had to date remember that when a firm moves from one portfolio to another, that doesn't mean that its level of scrutiny or supervision will change and i also thought that he's raising some very interesting questions about -- in the first part of the speech where he's talking about regulation and supervision and how to balance the desire for transparency and

due process in everything the government does with the needs of confidential supervision. it's a challenging question and it's one that could use further thought. and as far as the specific, you know, proposals, they're interesting and need further development and will need lots of comment and that sort of thing. >> last question >> thank you mr. chairman, thank you. i wanted to ask you a question about one of the unintended consequences of the year's long low interest rate environment, and that is that savers haven't gotten as much return as would have otherwise been the case what would you say to those individuals who have seen the fed again cutting rates eroding their ability to get a higher return on their savings and how much would you take their plight

into consideration and how much can you sympathize with them >> so we are assigned a job by congress and that is to use our tools to pursue maximum employment now, monetary is a blunt instrument but a powerful one. so look at the time since the financial crisis that was a powerful recovery in the labor market and part of that is the effect of lower interest rates so many, many people benefit from low interest rates. in fact, when you talk to low and moderate and you hear please do whatever you can to keep the expansion going. i absolutely sympathize with people if you're living on just the interest in the bank or fixed income generally, that's a challenging thing. on the other hand if you own a home, home values and the

housing market has recovered and other financial assets have recovered. but yes, for some people who are limited to those sources, plus whatever other help they get, it can be challenging we have to do what's best for the overall society and the economy. those are our orders from congress >> thank you >> thanks very much. >> fed chairman jay powell wrapping up his news conference, speaking to reporters after leaving interest rates unchanged as expected. painting a pretty upbeat picture of the u.s. economy. the global risks, including the coronavirus in china, business investments and exports remaining weak welcome to "closing bell." i'm sarah eisen with carl. carl, as you can see, stocks still just barely holding onto gains. the dollar gave up some gains

and sold pretty sharply throughout the session generally interpreted as a pretty dovish commentary, talking about the downside risk, missing the inflation target, which is 2%. and then about the balance sheet, you know, powell says the expansion is going to go through april, but don't think of it as too weak. >> we're going to talk about all of what he said. first, goldman is hosting its first f investor day and wilfred is sitting down with the chairman and ceo david solomon >> thanks so much. good afternoon to both of you. thanks so much for having us here at the investor day. >> absolutely. the first ever the first in 150 years. >> i'm glad for the first of 150 to come. did you enjoy it >> we'll see how things progress forward.

for the moment i'm focused on finishing this one today. >> thank you for having us the share price, it didturn around a little bit in the middle of the day. which by the way is going to happen when you pass the mic over to john, so you should probably pick that up with him later. all in all, the feedback i've had talk to go lots of investors and particularly the share price, when we consider it since you started making announcements and changing the structure, year to date you're well ahead of the pack is that kind of a relief to you that all of these changes you've announced have gone down well? >> well, i really appreciate the feedback that i've heard from investors today as i've moved around during the course of the day. the feedback has been that they appreciate the transparency. we're focused on building shareholder value over a long period of time and i'm not really focused on the share price in a short period. obviously i like it better when the stock goes up. but we're focused on a plan and executing on the plan over the

next three years and i was really encouraged to hear the feedback today from investors that they really appreciated the work that we put into doing this today. >> the main targets you set, the medium-term target was a three-year period of time. clearly at the bank there is a large part of your business that's tied to macro and a lot can happen in three years. so how confident are you that you can hit and beat the targets? >> we're confident in the plan that we've put forward and we're going to work toward that plan we did state, as all financial institutions do, that that assumes a normalized operating environment. so if for some reason he went into a significant period of economic retraction, it could affect the timing of our executing. but assuming a normal operating environment we're confident and we're working hard to execute. >> on some of the lines you're still forecasting behind some of our peers or ahead of your peers. a couple of investors i spoke to

thought perhaps you haven't been aggressive enough that shows improvement from where you've been the last couple of years, but perhaps you could outdo that quite significantly? >> we've worked to put together a three-year plan and then a longer-term plan as we're making investments that we think can enhance the franchise over a period of time we're looking to broaden the business that we have, strengthen the existing businesses, there are opportunities we talked about today in our existing businesses and then we have a handful of investment we're making where we think we can diversify the revenue and create durable revenue and the result of that will drive returns higher over a period of time so i feel good about the plan we've laid out i think if we work toward it and deliver, i think shareholders are going to do well. >> i think one of the standouts wasn't just the revenue opportunity, but also the impact that changing your funding structure is having on the bottom line. so when we think of the consumer business, should we be thinking of that is something that will be challenging retail banking in

america and taking 5% market share one day or sit purely beneficial because it's lowering your cost of funds >> sure, we really believe that we can build a very interesting world-class digital bank one of the ways we got into this strategically is we felt we needed to do diversify and become a deposit taker we weren't historically a deposit taker. as we laid out today, we think there's a real opportunity to build a very strong digital bank and i said this during the q&a, the big leading u.s. banks, the top four, have approximately 50% share of the u.s. consumer business but then there are 4,000 banks that share in the other 50%. and i think goldman sachs is very well positioned given our scale, balance sheet, risk management capabilities, our ability to make significant technology investments, to compete for a share of that business as disruption goes on in consumer banking. so we think we can build a nice

business and it doesn't have to be 5% share and we would have an excellent business. >> you talked a lot about the benefits of one goldman sachs and in fact how the apple card was an example of where your great investment relationship with apple led to the partnership for the card and consumer business. are there any other big tangible examples of one goldman sachs like that that you can point to, perhaps? >> well, we gave a handful of examples of client experience where clients are dealing with us across the firm and this was something else i tried to emphasize in the q&a today. i think the world has changed. if you look at our industry, it was siloized and people sold products to clients. today we deal with complex organizations that need to connect with goldman sachs across a range of activities and geographies and an ability to put yourself as an organization in the shoes of the client and say how is this experience for the client, is the experience working, are they getting what they need.

that's something i think is really advantaging all of our client businesses around the firm. so it's been a real focus of ours to really install this one goldman sachs culture throughout the organization. >> and the target you laid out today, they're based on no further acquisitions or could the targets improve if you found the right target >> the targets are based on our plan today obviously inorganic growth is not part of that plan. we are always looking for opportunities to accelerate some of the things we're trying to do, especially some of the new business fields. if we found an interesting opportunity like last year, we found united capital if we found another opportunity like that that could accelerate our wealth management business we're always looking, but as i've always said, making an acquisition at any point in time is high, but i think it's important for our organization. >> and were there any potential settlements? >> there were no questions that were asked i did right up front, at the

beginning address the fact that we're focused on integrity in the organization and learnings from the experience of having gotten our selves entangled. as i said to you the last time we talked, we're doing everything we can to get this behind us as quickly as possible, but other than that i can't comment on where the settlement talks stand just that we're engaged in trying to put it behind us. >> you pointed to integrity and i listened to the importance you put on that. you're confident there won't be a repeat >> we're incredibly focused on integrity and on our control processes and our ability to always upgrade and improve those. it's very, very hard for me to say to you that never again in the history of goldman sachs will someone do something very wrong. we're going to try to do everything we can to protect and diminish that from ever happening again. but as i talk to other ceos, when you run big organizations, occasionally people do bad things and we're going to try to make sure we protect as good as we can against that. >> i want to touch on an

announcement you made in davos about not taking on any future ipos unless there's a female representation or minority representation on the boards have you made assessments as to whether that could lead to you losing business, and if it does do that, would you still proceed with the policy? >> well, we've thought a lot about this over a long period of time and to be perfectly honest, i'm amazed in 2020 that goldman sachs has to say that they don't want to take a company in the united states or europe public without at least one diverse board member going sometime in 2021 to two diverse board members. there's no question that diversity on boards benefits companies. and i'm hopeful by our taking this action some of the companies that are preparing to go public in the future that haven't really thought about the structure of the board and how important it is in the context of the ipo will start thinking about that earlier i think we're well positioned

with qualified diverse candidates to help companies have opportunities to talk to and network with people that could join their board i said on cnbc when i was in davos that we might lose business, but we think it's the right thing to do. i stand by that. this is good governance and common sense and i think based on the response we've received overwhelmingly, people agree this is the right thing. >> as you said, people do agree it's the right thing and i wonder whether you would consider in taking it a step further and applying it to listed companies who you bank with and do business for as well is that something that could come next? >> look, i think we sit in a position in markets and the capital formation process where we want to use your platform to help the communities we operate in move in the right direction we want to use the position that we sit in with respect to governor nens to see that it's

improving. we'll always think of ways we can do that and advance what is a healthy dialogue we don't have any plans to do anything differently but this was one that just was -- it was so obvious that it needed to be advanced and it could be advanced and i do think that most companies as they get into the public market are already doing this t. it's the transition period. especially for a lot of the private companies in the transitions where i think it's more focused. >> i want to ask you about the coronavirus. where do things stand? goldman sachs has got a big footprint over there >> first and foremost we're folk id on it because we have a couple of thousand people right there in the region and we're obviously very concerned about those people, about their families, et cetera. i think it's too early to say where this will go we obviously have a lot of people working from home and are restricting travel like many companies. but we're watching very closely and are obviously concerned for our people and doing everything we can.

>> just one final question on the fed. as you look at the u.s. economy and the strength of it, if you had to guess now, which is likely to be the direction of their next move in interest rates? >> boy, by the way, if you said of course the fed didn't move today, i knew the fed wasn't going to move today. and until we sat down, because i've been a little bit busy, you told me that the fed didn't move today. when you lookout, we're still pretty constructive on economic growth our economists, putting the virus aside, which obviously could affect global and u.s. growth r still a little bit above the consensus on u.s. growth a little bit above 2%. at the moment, as i sit and look at where we are, i don't think we're going to see the fed move until at the earliest, late in the year or sometime early next year so i'm not going to speculate because there are a lot of variables that can change that but i think for the moment we're going to have a stable

environment for the next few years. >> congratulations on your start for the year and thank you for having us. >> absolutely. thanks for having me on. and also thanks for spending the day here and listening to the presentation and our story we're hopeful that this helps people have a better understanding of what we're trying to do with the firm. >> i think there's still time for me to join the deep dive on risk management and compliance >> thank you very much. >> i'll send it back to you in the studio >> that was stimulating. >> keep us posted on that, wilf. joining us for the hour, karen finerman is here co-founder of met ro pole tan advisers what do you think? >> i'm pretty positive overall i feel like the economy is in decent shape i feel like the fed is obviously pretty dovish, right i feel like there is a chance that we see some green somewhere else in the world. that would be good

and i think that coronavirus will be fairly fleeting. so all of that together makes me feel somewhat positive i'm always long, but a week like this, i would be buying in china and buying some ba ba and selling hedges, which makes me nervous. but i feel like the volatility strike was too high and the vix is in no man's land. but i'm feeling good overall. >> as karen said, the fed did keep rates unchanged let's bring in steve liesman who was in the room. hey, steve. >> good afternoon, carl. yeah, i've got to agree with what karen said, that the fed is definitely in a dovish mode. i think one way to think about it is if it were sitting in a many radio, it would be a lot closer and it would have to get up and walk across the hall and go to another office where the hike button is it's much further from that. and it was interesting what

powell said, that he saw some of the trade uncertainty easing, but he said they still exist and he's kind of reserving decision as to whether there's going to be a business investment rebound because of the trade deals that have been announced and signed but he said there's a new one, which is the coronavirus i don't know if we have the sound there, but he did talk about that quite a bit where he said it's something we have to watch. didn't want to get ahead of other authorities, but ultimately he said that's another thing we're going to be watching and the statement itself said global developments were something the federal reserve had concerns about there was this downgrade to household spending, not a big deal the consumer has been strong now they see it growing at a moderate pace and that's something worth watching so again, the risks when you listen to chair powell and when you read the statement look to be much more to a downside than the upside >> steve, on the balance sheet

question, i mean, repo i think was the worst. someone should go back and count how many repo questions there were, which is crazy if you think about it what did they learn about balance sheet expansion and what the fed's plans are? >> they're going to continue at least through may. there was some discussion, i guess agreement, to reduce the balance sheet expansion over time we didn't exactly get a number we got some indication of where the federal reserve is heading and he didn't really bite on my question about whether or not he thinks it's juicing the stock market he said a lot of things affect the stock market qe is not our intention, even though it's a large balance sheet purchase, he said. and so he's going to leave it at that and i asked him, as carl said, about the possibility of a temper tantrum and i know some members of the federal reserved are concerned about that but that does not seem to be a concerned right now of the federal reserve chairman. >> steve liesman, thank you. >> pleasure. >> for more, we are joined by former pimco chief economist and

former federal reserve governor and former deputy treasury secretary. go to see you both >> watching this together, this is like watching now normal people watch sports games. >> exactly. >> we're cheering and you were loud why did you think powell did such a good job? >> i think he had two essential messages that he wanted to communicate. one was that he really does want to get inflation to 2% not near 2%, but 2% or higher, which is flash back to where he was in december when he said basically no tightening unless 2% gets realized and he pounded the table about that so essentially the committee is pounding the table in sympathy with him back in december. so i think that was important. he just changed a simple world in the statement from near 2% to 2%, and then the other thing he wanted to do was really for wonks like me, which is to walk through the details of exactly

what they're doing with their balance sheet. and the key take-away from that is that he really wants rates to be the point of the sphere in implementing monetary policy and he really wants to get out of day-to-day open market operations but they can't get there to getting out until they get reserves back up so essentially it was 2%, dam it, i'm going to get there and the other was that he wants to get out of high velocity day-to-day operations by the new york fed and he really wants administered rates to carry the load. >> sara, when he talks about repo operations receding, trying to remove unnecessary volatility, how much is he willing to tolerate and what is an equity investor supposed to think about that is it a classic sell in april signal >> so i think while there were

tons of questions on the plans that the fed has in terms of removing the massive accommodations that it has made since september -- i mean, accommodation in the realm of $60 billion of treasury bill purchases per month, which is really quite extraordinary there is of course a concern that this can't or shouldn't go on forever, and so his signals that there will be some kind of tapering back of this accommodation, i think is a signal that he wanted to send. he tried to keep his options open in terms of dmiefinite timing and yet at the siame time i thik he wants to signal to participants in the repo market that this is going to happen that he feels that this can't go on forever and there's going to need to be some paring back. >> what he says and how the

market interprets it are different things he can say this is not qe, it's not meant to stimulate, this is technical. but forget it. investors sort of have their own ideas about that so what's the reckoning there? >> and i think you're exactly right. he is using that term technical over and over and over again, hoping that people will kind of tune out and think that this is something that is pretty benign. and yet i think that there's some questions on that, because again it has been a massive accommodation. it has done it through some tools different from the qe tools. again, it's just treasury bills. it's not going into longer-term treasury securities, so that is a difference and yet from a market standpoint, you have to look and say but wait, is the effect in essence the same and that i think is what a lot

of equity participants are asking and with that question, i think they continue to wonder whether or not this is some kind of, you know, qe in the shadows. >> paul, you talked about this being a one-time thing in december, it was about corporate tax season, that it was about year end now it's about regular tax season if march comes and there's no exit ramp in view, the market is going to have some questions, right? >> i think the market does now and will in the future, because the market really hasn't taken on board the core thesis that he's articulating, is that in shrinking the balance sheet, they overshot ample reserves they simply overshot so they want to get back to ample and then once they get to ample -- and they're doing it at $60 billion a month, then they want to go to just generic growth for currency and circulation, other sorts of things so i think he was incredibly

clear on the plumbing issues that he's dealing with but the marketplace wants to look at it as a shadow qe. >> do you care, karen? do you care what the balance sheet is doing >> i care that people care, right? >> exactly. >> so if i think people are going to react negatively -- like you said, it doesn't matter what he calls it, the reaction is going to be negative. can they do that in a vacuum how much does that dictate the policy >> i don't think the ecb really has anything to do with what they're doing. this really is a plumbing issue. he wants to have enough reserves in the system so there's no more repo scares and the core issue is that they set rates through the administrating process now with interest on reserves. that is the bedrock and open market operations really are fine tuning at extremes. he doesn't want to do open market operations on a daily basis like they did when i was a

young man. >> thank you very much, guys, for your time today. when we come back, we'll bring you uninterrupted coverage of the final moments of trade. don't go away. ving youubs lost r damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

shipsticks.com saves you time and money. help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. you should be mad they gave this guy a promotion.

you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. ten minutes left in the trading day. we're entering the market zone, commercial-free coverage of all of the actions. >> commentator mike santoli here to break down the crucial moments of the trading today and today we've got karen finerman from met ro pole tan

capital vieze capital advisers as well >> let's take a look at the stock right here, nearing the $13 mark now up over 10% as the company continues to scale down its debt and grow its industrial free cash flow. that's building investor confidence and the ceo was brought in in late october of 2018 to really turn around the struggling industrial giant. it still has a way to go, but encouraging results to say the least. and despite the grounding of the boeing 737 max, which they manufacture the engine for, the ceo is telling me this morning that ge continues to grow with aviation business and it's seeing increased demand from airbus and the u.s. military the stock up 10%, best day since october of 2019. back to you. >> thank you karen, thoughts on ge, are you a buyer? >> i'm not a buyer that is what everyone is looking for, cash flow and when you have this balance sheet and you need to be

plugging away at improving it, that's really important. so kud ohs to him. very impressive. >> so to minimize the possibility of adverse surprises coming from non-core parts of the business and then a convalescence in financial discipline it's probably got a little work to do. around $13, that's where it really fell off a shelf. we'll see if chart-wise it can get further progress. >> of course heading into a headwind of sorts on aviation. boeing did post its first annual loss since 1997. phil lebeau has been following that from the beginning. >> the numbers from boeing were as expected, the fourth quarter a mess as you mentioned, the company did most its first annual net loss since 1997. $2.33 a share is how much the company lost in the fourth quarter. the numbers within the numbers, it's all about the 737 max the cost now, basically they almost doubled it's now up to $18.6

the ceo david calhoun reaffirmed his guidance of a mid-year ungrounding of the max and he downplayed any suggestion that they are sandbagging their estimates in terms of bringing this plane back. >> you can't sandbag in a situation like this. i have to answer to our employees and listen to our employees. i simply have to give them the time they need to do the natural discourse that occurs in a big, complex certification process. and that's what we've provided for, nothing more, nothing less. so i believe we can do it. and the only other comment i have to make and will always make, i do not and will not control this timeline. >> one other note from our interview with david calhoun this morning, as you take a look at shares of boeing, he says they are not going to change the name on the 737 max. he's heard people say you won't be able to get people to board this plane once it's recertified. he's saying it's not about marketing, it's about showing people that the plane is safe. that will take some time they acknowledge that. >> phil, while we have you, what

can we expect from tesla after the bell >> they are expected to turn a profit and it's really about the guidance for 2020. so when you look at the fourth quarter numbers from tesla, unless there's a huge change in terms of where they come in, in other words, way above or way pl below, i'm not sure the stock is going to respond too much. we're going to be focused on the conference call with elon musk, what does he say about china and the model y, do we still expect it and of course there's the guidance for how many deliveries they expect to make in 2020. last year was 360,000, a little over the street, the analysts are expecting them to deliver 476,000 vehicles in year we'll see if the estimate matches that the numbers come out shortly after the closing bell, guys >> phil. china is going to be a key topic as google is confirming they're going to shut down all of their

china offices. the stock is at an all-time high, $15 shortly. >> you mean tesla? >> absolutely. >> i'm not sure what this ramp has been about it's not what's happening this quarter or next t. guidance is interesting. 500,000 cars was supposed to be the goal five years ago for 2018 so now they're going to deliver this year in 2020, perhaps, and it's $105 billion company. so it's obviously kind of become a little untethered to the day-to-day operations. >> up 120% since the last earnings in october. >> of course china was a big topic last night with apple. about just about five minutes left, apple hitting all-time tas on the heels of the earnings josh has been covering that. >> so carl, apple easily beating estimates and the star of the show, the iphone revenue jumping 8% to $56 billion. surprising analysts services surprising to $12.7 billion. that did miss estimates.

home and accessories surging to $10 billion. that stock touching a new all-time high in today's trade more big tech news after the bell microsoft will q2 eps of $1.32 on revenue of $35.7 billion. a jump of 10% on the top line. back to you. >> josh, thank you mike, it was a tough setup for apple with the run-up. they delivered so many analysts raised their price targets. >> they have to chase it at this point. 2% for a relatively blowout quarter, you would have to say it's modest. but it's better than the news response it's another stock that has the sort of power because of the squeal for huge mega cap >> were you impressed with the iphone revenue >> that was a big surprise i'm long apple i think that the only tiny thing was the rate of growth of services i thought the wearables, we

talked about being constrained so i think obviously people are very bullish on that but i think their valuation is getting a little stretched but i'm hanging on. >> mike has more on the market internal what do you see? >> definitely mixed. obviously the market indexes were up earlier, but if you look at the new york stock exchange, it has been up for 1,000 decliners, so basically it's break even right now as we flatten out in terms of the indexes. and then if you want to look internally at what has been marking on the nasdaq side of things, if you look at the 100 versus the equal weighted version, the average stock is down and then also a little divergence this month. this is a month that really has been more of a software story. >> karen, as far as what's moving the overall market, for so long it was the coronavirus for a number of days

it feels like earnings are really taking center stage and starting to differentiate. we've got industrials, energy, real estate and staples. so it's a little bit of risk on, risk off and a little bit of earnings. >> starting with the bank earnings, those were really good the stocks had run up nicely going into that. so they came back a little bit but i like what we're seeing in earnings i like some of the revenue bates are so impressive. particularly the iphone. >> about two minutes left in trade. s&p has gone red and the ten-year yield still subdued let's get to rick santelli rick. >> carl, yields continue to drop, the entire curve continues to close at the lowest level since october of last year because the day had such a big downside range look at in april of 2017 chart for two-year note yields their note today 140.8 we're only several basis points

away from the rate at april in 2017 inter-day at 10, off the lowest yield of the session and an inter-day dollar index closed down slightly, but still holding. good gains for 2020. bertha, it is the second up day in a row. >> holding up here with apple, microsoft at a record high and facebook as well ahead of its earnings, getting an upgrade at raymond james. they said expect it to report after the bell $2.53 per share on $20.1 billion meantime, chips are sinking. both providing disappointing guidance, both of these are run up quite a bit and finally a big bet on online sports betting penn gaming buying $140 million stake in bar stool sports, getting a big surge on that. >> the dow is just barely in positive territory following the press conference with fed chair

jerome powell where they did discuss balancing normalization. yet a number of the industrial sector, the best performing sector, norfolk southern at a record high. sales came in slightly lower than expected citing a tax hike in japan and the s&p 500 negative on the day and the dow jones industrial up slightly, 10 points >> and welcome to "closing bell." i'm carl quintanilla. >> and i'm sarah eisen along with mike santoli. cnbc senior market commentator stocks finished up the day little changed we saw some of the gains slipping as fed chairman jay powell spoke this afternoon. the fed leaving rates unchanged as expected. no major drama or fireworks out of that decision though the s&p is kind of

closing here around the flat line yields slip, the dollar slipped as well. mostly interpreted as a dovish news conference. the russell 2000 was an underperformer all day and finished in the red than most of the major averages. >> post-market session is going to be busy facebook, tesla, pay pal, microsoft, all on the way. we'll break down the numbers as soon as they cross first let's talk about the market joining us, chairman of strategic research partners, and the chief market strategist and still with us, karen finerman, metropolitan capital president. >> let's go to you first, david. take-away from the federal reserve and the news conference? >> i think it was pretty dovish and kind of a somber message and i think that's why the equity market got a little soft as it read into jay's remarks. they weren't that upbeat it was a downgrade of the consumer and i think the change on the inflation language was

also sort of a negative really in the sense for the market in that they're still not able to really see themselves getting to the 2% number and they feel like they need more accommodation to get there. so this was not a fed message that i thought was really, really exciting. >> wait a second isn't that exciting when the fed is downbeat on the economy and inflation? >> the fixed income markets did really well. but what we saw is continued flattening and we're back to some of the flattest levels we've had in a while in fact, the curve has flattened almost 20 basis points between qs and 10s that's not a signal that's going to go great for the stock market it will say maybe there's a red flag so i actually do think it was a more somber message. yes, there will be more accommodation coming but doesn't it sort of take kind of a little

messy necessary to get us there, first. so that may be the reason is stock market is a little sogier than you otherwise could have expected with a very accommodateive fed message. >> the initial reaction was a little bit of upside move and then we sort of lost it. i agree, the yields were coming in the way they did and just -- i agree with david in the sense that it was a dovish message, but it was also one of resignation. it was we don't really know what we're doing. we're going to wait until it gets to 2% so it was kind of a low and slow type take-away didn't want to build in too much meeting into an hour and a half's worth of market action. we might just be still in chop and pullback range. >> do you agree with the system ber assessment he said coronavirus was serious. >> i think the somberness really

comes from the fact that the ten-year treasury yield is lower and the curve is flattening. part of that could be for things that are transitory, whether it's coronavirus but i think the fed was probably looking forward that it didn't have to do much after it eased three times last year. now you're in a situation where the curve is flattening again. the fed makes a distinction between a flattish curve and an inverted curve by the same token, they want it to be steeper and ten-year treasure yields to be stronger and now that you have trade behind you, i think everyone was looking forward to a stronger global growth profile for this year i know i am. but it may take longer to get there and that may be what david is picking up, which is you want it to be the real thing. >> we're going to continue that discussion in a moment let's check in on how las vegas is doing. >> hi, carl. you know we're missing here on revenue. it came in at $3.1 billion

versus the estimated $3.6 billion but a beat on earnings per share at 88 cents what was expected as 78 cents a share. we know that there was some increased corporate expenses coming into play here. we're dialing down on the mccow revenues, the estimate for revenues was $2.25 billion and we know the adjusted property ebidta, and a lot of focus on the call coming up is going to be on coronavirus and the impact that it's had and on marina bay sands because sing a poor has casings of the virus as well you can see the shares up 2% we'll drill down into the details. >> contessa, thank you microsoft now, josh lipton with the results. josh. >> microsoft reporting q2 eps of $1.51. that's versus ex skpek tagzs of $1.32 and revenue up versus

expectations so beats there on the bottom and the top. just turning to the segments, revenue and productivity in business processes, 11.8 billion that is an increase of 17% within that, office 365 commercial revenue growth 27%. reven revenue intelligent growth and finally revenue in personal computing $13.2 billion, an increase of 2% windows oem revenue increasing 13%. >> and you're seeing a pop in the stock. up more than 2% after hours. we're going to talk about all the earnings movers on the side of your screen throughout the market zone. president trump signed the usmca into law today and joining us in a first on cnbc interview is peter navarro, white house director of the office of trade

and manufacturing policies welcome, peter, nice to see you. >> what's going on >> so tell us a little bit about how you're thinking about the economic growth. the president said more than 1% as a result of the usmca how do we get there? >> this is -- what we put in place today was a long-term economic driver and i think the most important thing to know about usmca is it's designed to reestablished north america as an auto manufacturing hub for the world, with detroit as the center of that universe. and the beauty of usmca is it's got tough regional content rules coupled with strict environmental and labor protections, which will make sure the u.s. and detroit gets its fair share of auto manufacturing. and then in addition to that, we've got really nice things for agriculture, dairy farmers in wisconsin are going to be able to scale the great walls, we're

going to see a lot of things in terms of north-south trade down on the southern border and tomorrow is president is going to get on a plane and go to two places, michigan and iowa, that i think bracket this idea that this agreement is great for all 50 states and farmers and auto workers and manufacturers are going to benefit. so the numbers on this in terms of growth, 75,000 auto jobs, a couple hundred thousand jobs overall. some growth in terms of real gdp. so great day for the white house. i remember back in 2016 in june when canadidate trump promised o renegotiate nafta. promises made and promises kept for donald j trump. >> very important signing. you're absolutely right. not to jump too quickly to the impact of the coronavirus, but

obviously there's the fear that it's going to unwind some of the potential benefits of phase one. sonny perdue said he didn't know whether it would affect ag commitments. >> we have a strong leadership with the secretary and the cdc we're working very carefully and diligently on this so let's see how this unfolds. this is not my lane, per se. so i'm going to let others come on cnbc. >> with the passage today and signing by the president and phase one china, it removes the uncertainty for business and so investors and economists are expecting a growth pickup just from that alone why leave the tariffs in place if you're hoping to create growth as a result of these trade deals? >> sure, the tariffs -- the china tariffs have been tremendous successful in two things

one is defending american technological crowned jewels against aggression and two, they make sure china comes to the bargaining table to sign phase one, but also it comes back to the bargaining table to sign phase two. and remember, what we didn't do in phase one is deal with china's unfair subsidies and state-owned enterprises which to this day hammer american industry and american workers. and the tariffs themselves basically act as countervailing duty against the economic aggression so what president trump has done is put into a place a system and a process where we think over time we can get to a great place. >> peter, if it's evident that the chinese are working in good faith, even with the challenges of the virus, is it possible you could see tariff rollbacks on the part of the white house as a stimulus mechanism to help them

out? >> that's a spin that's coming right out of wall street and really i think it does a disservice to this whole crisis, to bring that into the discussion >> so that's a no? >> well, again, let's remember why the tariffs are in place the tariffs are in place because china engages in a massive unfair subsidy, they use their state-owned enterprises to put american companies and workers out of business and the tariffs also ensure that we come back for phase two. i think what's really important here is like we've got a great phase one deal, everything is moving forward, and i think what we need to do is to talk about progress in usmca and all the good stuff ip instead of dwelling on that kind of question at this point during a crisis. >> one place that people are looking next is europe as a trade target and we know that the president has said that he would impose auto tariffs if the

europeans don't make a deal. what is your expectation at this point about whether we're going to see those tariffs >> let's just step back and understand president trump and how he works with trade policy for example, mexico, we had a tariff issue with mexico and next thing we knew, they did more in two days to help us with border security than they had done in 20 years as the president has talked about, 2020 has to be the year where we come to some kind of understanding with europe that they can't keep treating us so unfairly our trade deficit with europe is approaching $200 billion a year. it's absolutely insane for germany to be able to charge a tariff on american autos, who is four times higher than what we're charging on them and those kinds of unfair and nonreciprocal relationships with europe are endemic and systemic

in the system. so what the president is trying to do with ambassador lighthizer is to work with the europeans and say all we want here is fairness and now we're going to basically try to get that with the tools we have at play. >> peter navarro, thank you for joining us. >> my pleasure. >> the presidential adviser on trade. facebook earnings are out. let's get to julia bore steen with those results. >> earnings and revenue both beating expectations the company reporting earnings of $2.56 per share that's 3 cents better than estimates. revenues coming in at $21.08 billion versus $20.89 billi $20.89 billion as estimated. we see the monthly active user and daily active user numbers coming in a hair stronger than expected pretty much in line.

2.5 billion, 1.66 billion daily active users and an average revenue per user also stronger than expected at $8.52 per user. that's up from $7.37 last year per user so the average revenue per user metric is growing. also, news just crossing the wires that the company has also announced a share buyback program, an increase of a $10 billion authorized share repurchase program we're going to dig through the slides here and look at some of the numbers for the different regions, which are always important and we'll be back to you with more. >> julia, thanks for that. mike santoli, is this what happens when you don't absolutely crush the estimates >> that's definitely part of it. it was within the range of the estimate within the numbers, revenue growth looks great it's still another reminder that expenses are ramping at a rapid pace and margins, therefore, are down 400 basis points i don't know that that's

unexpected but it does sort of show that they have less earnings leverage. maybe they're past the bulge in expenses but i thank that's part of the reason. >> karen. >> this is where you really want to listen to the call. let's hear what happened with the expenses that really caused the sort of miss here. the other thing, it was an additional $10 billion on top of what already would be a pretty significant buyback. and so i don't know if they'll talk more about that, but i think it was $24 billion before. so that's significant if they use it i really want to hear what happened on the expense plien. >> the giant global snackmaker with a beat on the bottom and top lines reporting 61 cents adjusted the estimate was 60 cents. also on revenue, $6.91 billion, and $6.8 was the expectation it's a nice organic growth of 5% so they continue to show that we

are outgrowing rivals like a kellogg or general mills and part of that is global exposure they get 80% of their revenues outside the u.s. and also the snacking business continues to be strong they own oreos which continue to drive the brand. we're going to talk to the ceo tomorrow on the show tomorrow about the results. but clearly the market continues to reward this stock. >> without a doubt it's a standout in the group people's eating habits, some would say not good, but good for them. >> they did make the oreos cleaner. >> we're in the thick of earnings now do they look okay to you >> you look at microsoft beating and mondelez beating you have a technology software company. i think one of the things that

mike mentioned before, i would argue was a little disappointing and it goes back to the yield curve, the pure cyclicles are not doing as well. so you're back to almost a sector play where things with high growth do very well and things with yield do very well as karen said before, the earnings season is coming in better i think than people expected and it's hard to get too negative given where interest rates are and earnings are. >> julia has been digging through joifacebook and she's gt more. >> we're always interested in knowing how much the company has really hit a limit to its growth in the u.s. and canada in the u.s. and canada the company added 1 million users between the third and fourth quarter. so ending the fourth quarter with 248 million up from 247 million. in the prior two quarters the company had added many more. and this was an issue back a year ago and user growth was

flat between q3 and q4 and then they started growing again in the u.s. but it's notable that growth slowed in the u.s. and canada to just 1 million additional monthly active users and those million active users are usually stronger than daily active users. i also want to note that the company is stressing their daily active people for facebook family of apps they're really trying to shift the focus not just to facebook where the growth is slowing, but to also include instagram, messenger, what's app, and focusing really here on what they're calling family monthly active people. they're saying there were 2.89 billion monthly active people using facebook family of apps so trying to shift focus there and we see facebook's shares down almost 6.5% but it is worth noting that facebook shares were up over 50% in the prior year leading toup th up to this. >> roughly a third of the global population >> that's it

and it's closer to half of whoever owns a smartphone. >> we'll wait for the call as karen said thank you, jason, karen, and david. up next, we're going to dive more into facebook's earnings, plus we will talk to the "closing bell" closer, draft king jason robbins he's here ahead of the big super bowl weekend we are back in just 90 seconds especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. so it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. ♪ ♪

earnings are flying tonight. we've got tesla a little earlier than expected. phil. >> carl, we have tesla beating on both the top and the bottom line and beating by a wide margin on the bottom line, earning $2.14 a share in the fourth quarter the estimate on the street $1.72. so well above expectation. revenue also coming in better than expected at $7.38 billion the guidance is what everybody is focused on. they delivered 360,000 vehicles last year. wall street was expecting them to say 475,000 tesla is saying it will comfortably exceed deliveries of 500,000 vehicles in 2020 the model 3 ramp is taking place right now in shanghai. they expect model y production in shanghai to begin in 2021 and limited production of the semitruck later this year. finally, solar and storage

deployment, that's a part of the company that doesn't get a lot of attention they expect growth of at least 50%. i think the big reason it's moving higher, that guidance for deliveries in 2021 tesla said it will comfortably exceed a half million vehicles guys, back to you. >> mike santoli, they do say 2019 was a turning point operating cash flow in the quarter, less cap x. >> it's like a free cash flow type number they're using. and that is the biggest change they're building cash as opposed to burning it, at least for now. and the 500,000 guidance for deliveries is the big number as i said, it was a big round number you went back five years we know about all of the stumbles and this year seems to be good enough to keep the story rolling. >> the story rolling, but the valuation, this was a $200

something stock in october >> it's closing in on $600 and we're still talking about a 5% operating margin it's still a moving business, even though they're doing it in a more efficient way once they get to full scale. >> they would point to automotive margin, which is up from 18.9 in q2. >> kate rooney has pay pal numbers. >> so pay pal shares taking a hit after coming up light. start with nongap eps, it was a beat by 3 cents, revenue also above expectations total payment volume was the key metric that was slightly short, $199 billion. the street was looking for $202 billion. we did get a rare update on vin mow. the company did raise guidance partially thanks to the

acquisition of honey that closed in january calls coming up in about 40 minutes. we'll be looking for any details on profitability guys. >> thank you very much talk about pay pal. >> we know they've had challenges of sorts. >> they have the stock has made a decent comeback, but revenue basically being on target, so really no more momentum on the street. that's my high-level interpretation of why the stock would trade down it was very high expectations and so many people think it's a no-brainer to crowd into everything electronic. >> facebook down sharply after hours. joining us to break down some numbers, john freeman, the vice president of equity research and kevin landis, guys, it's good to see you both. good afternoon >> thank you for having us >> kevin, i'm seeing some numbers on the ad revenue growth may be a little shy. are you seeing something else? >> well, we haven't gone through

all the numbers, but what i would say is that it's basically an up and to the right story and the whole micro targeting and the power of that is still early on so even though their users aren't ramping up that fast, they should still be able to ramp their revenue pretty aggressively. >> john, what do you see that explains a 7% down move this afternoon? >> i just think maybe expectations got a little bit ahead of what was plausible. certainly it had a run, facebook has had a run recently i thought the beat looked pretty solid actually i was actually surprised i was looking for more like 7% to 8% in monthly and daily active users and it was a little higher soy thought twafs impressive and growth obviously is something that is going to be more and more important because, you know, the u.s., facebook makes $34 a user and in the rest

of the world i think it's like $3, so there's a lot of room for that to kind of at least catch up or make some progress versus the u.s. and i think that's looking pretty solid and i'm fairly optimistic about that going forward. >> now down 7.3% after hours, kevin. so is this a buy, the dip opportunity for facebook after, what, a 60% run-up for the stock last year? >> maybe remember, it's a mega cap name already so you're not going to yet outlandish moves we're still early in the story playing out. so they're on their way to becoming even bigger and more scary than they are today. i certainly think that the fundamentals are going to keep going up and to the right for the next two, three, four years. so if you're looking for an entry point, today is not a bad one. >> kevin, in general what's your

view on faang related names given the run they've had, where we are on global yields and so forth? >> we took a bit of a beating last year by being early to deemphasize the faang names, the mega cap and microsoft as well so the point that i make there is that once you get close to a trillion dollar market cap, it's a little tough to say you're going to double your money in these stocks so we have kind of emphasized the faster-growing sort of mid cap growth names but that was bad advice last year you would have been better off to ignore me a year ago. >> we'll watch this one. obviously it took some time to break above $200 john and kevin, thank you, guys. >> thank you. tesla shares taking off after a big earnings beat. we'll talk to someone who sees

tesla hitting $6,000 a share coming up. >> and as a reminder, you can always watch or listen to us live on the go on the cnbc app mengel rur ia n mont tastes great! high protein low sugar so good! high protein low sugar mmmm, birthday cake! and try pure protein delicious protein shakes doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

tesla shares popping after an earning beat on the top and bottom sitting at $618 now in the after hours trading. joining us is jmp securities and other guests josh, to you, tesla. i assume you're encouraged by this report. >> i think the auto gross margin was higher than expected i thought it was in the early 20s range. i think that goes to sort of prove our thesis that we think with the way that they've modelled battery cost decline that tesla's costs should continue to come down while traditional gas powered vehicles are becoming more expensive to produce. so we think electric vehicles will be at parity with gas

powered cars. >> elon musk tweeted earlier this afternoon, he said the use the money to build an even more affordable car joe, is this all going to plan and are we really on track to 1.5 million? >> well, i will say that we had -- for this year we had them at above 500,000 units i think they're making tremendous progress in terms of the manufacture ramp and the market share they're gaining my question is really more to do with what you want to pay for it even on our numbers. you're paying mid 20s eastboubi multiple, but with all credit to the company, they've done amazingly well. >> we've got a news alert here on delta phil lebeau with the details. >> as american and united have both said that they are going to be reducing their flights or canceling flights from the u.s. into china because there's been

a drop off in the number of people who are going to china, delta is now doing the same. starting february 6th it will cut the number of flights between its hubs in the u.s. going to china from 42 a week down to 21 a week. so basically cutting it in half. that is from february 6th all the way through april 30th and again, this is much like american and united. there's just a big drop-off to the number of people who are flying, especially corporate customers. therefore delta is going to cut back its schedule to china. >> phil, thank you keep us posted on all the changes to travel. let's stick with our panel and get back to what we were talking about, which was strong results from tesla, strong guidance and margins and how you balance that with a share price that has already exploded and questions about the valuation. >> yeah, i mean, i think we've got all of the questions on profitability as well as demand answered i think the risk factor on a go forward, and hopefully tesla will be able to address this, is what is the virus going to do

with respect to chinese demand is the shanghai facility clearly a big component of the growth story going forward. so i think right now we're just going to need to see more information in terms of constantly evaluating. i would say that one of the challenges, and i think the problems with taking a traditional metric approach to a company that's far out in the lead of a new space, often we get into these situations where valuation metrics are maybe not applicable in the same way they are to a gm or ford. so i do think we need to look at the stock differently. >> although the bear case would be that eventually it does get valued like a traditional oem. >> i mean, listen, that's -- sorry, i thought you were addressing me. >> you know, i think he has a good point that i would say the traditional valuation metrics are broken

this is an electric vehicle company and not traditional. i think the market is going to consolidate as electric vehicles come into play and tesla is really the leader. and especially if you consider the autonomous opportunity which we think is measured in the trillions, tesla, there's a big market and it's going to get higher margins and it's going to help with the multiple so it should be valued more than gm or ford. >> may i offer some perspective on that? i don't disagree i guess the question would be do we value it like gm or do we value it like facebook we're not talking about a 10 ebidta multiple, we're talking about 25 so i do agree that comparing the company to general motors doesn't make sense the question is what is the right multiple >> you're also comparing it -- >> go ahead, last words. >> i was going to say, we're also comparing it during the growth phase we've had these same arguments

with respect to amazon and google 10, 20 years ago. i don't want to point out how old i am, but we've been through a few of these cycles and this is the value of being able to capture one of these early leaders. >> jed, joe and tasha, thank you all. >> still ahead, our closer today is draft kings ceo jason robbins. find out how much money americans are voting on the super bowl on monday later on "closing bell.

here is a look at the closing bell big board stocks finished barely in positive territory flat for the nasdaq after no real surprise from the federal reserve leaving interest rates unchanged. some of the after-hours movers, as you can see, facebook down almost 6% after sort of meeting expectations, big expenses there. mandelez up, and tesla soaring after posting strong 2020 guidance of 500,000 deliveries. >> let's get a cnbc news update. >> hello, everyone here's what's happening at this hour pentagon officials have now updated the number of u.s. service members that suffered injuries from this month's iranian missile attack they say a total of 50 suffered traumatic brain injuries and that is up from the previously

reported 34. of those 50, 31 were treated in iraq and have returned to duty a woman who described herself as an aspiring actress and a big fan of harvey weinstein's films telling jurors that they jumped as his invitation to screen test. at a follow-up meeting, she testified that weinstein led her to a bedroom and then assaulted here former rudy giuliani associate lev parnas was o capitol hill as he tried to attend the impeachment trial but he wasn't allowed in because he wears an ankle monitor as a condition for bail he told reporters the senate should allow witnesses like had himself to testify >> the next thing is i would love to do it under oath and i welcome rudy to come in and testify under oath and the president to come testify under oath, i welcome pompeo to testify under oath >> you are up to date. that's the news update this hour, guys i'll send it back downtown to

you. >> sue, thank you. up next, draft kings ceo jason robbins is today's closer. we'll talk about sports betting and how you can wager on the oscars we'll be right back. >> announcer: cnbc news update is cons spored by comcast business joorks (soft music)

- when i see obstacles, i create opportunities. - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

align technology is out and sinking. bertha combs with the numbers. >> they beat on the bottom line for the fourth quarter, but the company is warning for the current quarter. align is the maker of invisalig invisalign the company is lowering its guidance and saying given the uncertainty and disruption to its employees, they expect to see 25,000 fewer shipments to china and a $30 to $35 million hit for revenues in china and they're absorbing a $3 million to $4 million in idle china plant capacity costs although their some 600 miles

from hubei and wuhan, as you can imagine they've had a lot of people staying home so tremendous disruption. >> one of the biggest we've seen as a result of the virus, impacts on business. bertha, thank you. up next, the closer, super bowl sunday just a few days away and we've got the draft kings ps 'lth us. >>luwel be bringing you highlights from the las vegas earnings call and bring you names of others reporting tonight. while our competition continues to talk. ♪ talk, talk while our competition continues to talk. but how do i know if i'm i'm getting a good deal? i tell truecar my zip and which car i want and truecar shows the range of prices people in my area actually paid for the same car so i know if i'm getting a great price. this is how car buying was always meant to be. this is truecar. their medicare options...ere people go to learn about before they're on medicare. come on in.

you're turning 65 soon? yep. and you're retiring at 67? that's the plan! well, you've come to the right place. it's also a great time to learn about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. here's why... medicare part b doesn't pay for everything. only about 80% of your medical costs. this part is up to you... yeah, everyone's a little surprised to learn that one. a medicare supplement plan helps pay for some of what medicare doesn't. that could help cut down on those out-of-your-pocket medical costs. call unitedhealthcare insurance company today... to request this free, and very helpful, decision guide. and learn about the only medicare supplement plans endorsed by aarp. selected for meeting their high standards of quality and service. this type of plan lets you say "yes" to any doctor or hospital that accepts medicare patients. there are no networks or referrals to worry about.

do you accept medicare patients? i sure do! see? you're able to stick with him. like to travel? this kind of plan goes with you anywhere you travel in the country. so go ahead, spend winter somewhere warm. if you're turning 65 soon or over 65 and planning to retire, find out more about the plans that live up to their name. thumbs up to that! remember, the time to prepare is before you go on medicare! don't wait. get started today. call unitedhealthcare and ask for your free decision guide. learn more about aarp medicare supplement plan options and rates to fit your needs oh, and happy birthday... or retirement... in advance.

still watching facebook's thinking after hours on the earnings julia. >> i was just digging through the slides, facebook pointing out that its operating margins have been under pressure, up 42% in the fourth quarter. this aligned with the analyst expectations and it is down from 46% operating margins in the fourth quarter in 2018 and also down from 57% operating margins in the fourth quarter of 2017. that of course reflecting the ongoing expenses that are growing, ongoing expense growth. you see shares down over 6% in after-hours trading. it will be interesting to see in the call which is starting at the top of the hour what the ceo says skppecifically for his outlook about the expenses and how much they're going to grow in 2020. back over to you. >> the countdown is on for super

bowl liv the american gaming association estimates 26 million americans will wager $6.8 billion. a preview of what's to come is draft kings ceo jason robins good to have you. >> i'm happy to be here. >> you guys have done a fair amount of work about what americans are thinking about betting and sports and the game itself what did you find? >> well, we're pretty excited. this is the first year since, you know, we were in one state, new jersey, now we're in several. so it will be interesting to see geographically how the bets come in slight lean on the 9ers. the money line is dead even and people are heavily betting the over i guess people think there will be a lot of points scored in the game so it should be interesting. >> my husband will be happy to hear that. where are you seeing more growth, in traditional sports betting or in daily fantasy? >> traditional sports betting is exploding right now.

daily fantasy is still growing, but traditional sports betting is essentially a new product, at least having a legal version outside of nevada is a new product, and i think a lot of new customer adoption is happening right now and implicar viewership trends as gambling and betting becomes more common? how much of a tailwind could it be or is it already >> well we know from research -- this has been studied for years, that people are more likely to tune in if they have money on the game, more likely to stay and watch through the whole thing also that's because even if the game is not within question there will still be maybe many bets that people have that are in question i think the biggest change in terms of even driving more of that will be when in game betting arrives. right now there is not as much in game betting on the sports like nfl as there are on european sports. those are things keeping people engaged to the last play of the game and we are excited about the offerings on that front. >> jason, we've been talking

about the deal, penn national gaming buying a stake in bar stool sports a media content company, indicators to betting oriented fans what do you make of that as a strategic move is thering a elks for you to do linking up directly with casinos or on the media side >> well, both are great company case, we have known both and partnered with both in various ways for years we still the partner with penn on many states that we're in it's a great deal for them we try to keep our ear to the ground if there is something out there -- obviously we announced a big deal of our own recently we are certainly active in discussions and we'll be opportunistic. but i like where we're at right now. if there is something interesting that comes along we're open to hearing about it but we are excited about the future we have in front of us right now. >> finally, with we know sports

viewership has been robust oscar viewership is that reflected in interest in betting on the oscars. >> it's hard to tell because so much of in is new. everything is growing right now. and if betting can do for the oscars what it has in fantasy for sports, hopefully that gives it a boost but we have to see right now it seems that people are favoring 1917 and jauquin phoenix. jauquin phoenix for best actor and best picture we'll see how much america is paying attention and how accurate a the predictions. >> what is next? are we betting on the election. >> i would love to see that. it's a case by case thing with talking to regulators, understanding what they are comfortable with but i think people have a lot of fun betting on the election. really at the end, anything that's content that people want to make predictions on that they enjoy discussing those predictions with the friends

that can make for interesting betting opportunities. hopefully over the cores we see expansion of what's possible. >> that means fed meetings for us, jason, thank you good to see. >> you thanks for having me. >> up next, the earnings have been coming fast and furiously all hour long. conference calls gtietng under way. we'll break down everything you should be listening for when "closing bell" comes right back. . i see award-winning service, and a trade desk full of experts, available to answer your toughest questions. and i see it with zero commissions on online trades. i like what you're seeing. it's beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪ we're committed to making college more affordable., that's why we're keeping our tuition the same through the year 2021. - [woman] i knew snhu was the place for me when i saw how affordable it was.

- [narrator] find your degree at snhu.edu. woi felt completely helpless.hed online. my entire career and business were in jeopardy. i called reputation defender. vo: take control of your online reputation. get your free reputation report card at reputationdefender.com. find out your online reputation today and let the experts help you repair it. woman: they were able to restore my good name. vo: visit reputationdefender.com or call 1-877-866-8555.

busy day lets send it to mike final dashboard of the session. >> of course a lot of talk about a dovish fed and low inflangs expectations this is the five-year tips yield. the yield on this embeds expectations for inflation over the next five years. two patterns the last ten years. very negative inflation expectations and declining in 2013 that actually saw a nice ramp in stocks the exception was 2017 when you saw reflation trade people thought nominal growth and real yields higher. that fell apart. what we have seen is the recovery since 2018 has been about real yields going negative that's where we are. in the zone for a while. it what it means growth stocks defensive stocks yield play

plays are leading sfoot to 2017 when you have. >> yield rates longer. >> yes. >> the key tnghi every every investor needs to watch heading to the new trading day when "closing bell" comes right back. at leaf blowers. you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.

doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

looking ahead to tomorrow, we discuss earnings in an exclusive interview with mondalez ceo at 3:00 p.m plus the ceo of hershey. we will be all over the consumer tomorrow. >> that does it for "closing bell." >> have a good evening, everyone "fast money" begins right now. live from the nasdaq market site over looking times square this is "fast money. i'm scott wapner for melissa lee. tonight on fast, it's all about earnings two tech names on our radar this hour facebook and microsoft both on the move after reporting results. in fact we have full team coverage tonight standing by to break down the names. josh lipton in san francisco watching microsoft we kick it off with julia boorstin and a big move lower for facebook julia. >> well, scott, facebook retreating from the record high shares down over 6%.