banks one of the stories today, kelly. >> often when the russell underperforms you think the financials are the reasonable suspect. we'll hear what citi's ceo has to say in the meantime it's been a pleasure to be with you. >> we get to sit together for a change. >> a little bit back towards normal "closing bell" starts right now. >> thank you very much welcome to "the closing bell," everyone, i'm wilfred frost along with sara eisen. stocks lower and losses are accelerating the dow down 315, the russell 2000 down 3% earnings remain center stage with reports from j&j, travelers and p & g. reopening trades are taking a step back. airlines on the back of united results and cruise stocks are sinking as well.

two blue chips dragging the dow down, boeing on news of a cfo change and after saying it's extended the mandatory retirement age for its ceo nike is pulling back on a downgrade from citi. energy down sharply, banks down sharply, s&p down 1%, sara >> worst day for the dow since early march. we've got a great lineup of guests coming your way in just a few minutes a can't-miss interview with the new citigroup ceo, jane fraser her first interview being the first woman to lead one of wall street's banks the biden administration is looking into nicotine caps for cigarette makers, moving those stocks lower. and netflix, csx, interactive brokers all gearing up for earnings after the close. we've got an interview with

thomas peterffy. first let's talk about the sell-off mike santoli tracking the market action josh lipton with the highlights from apple's spring product event. mike, start us off with the pullback you're seeing small caps 8% off their highs. >> actually setting up for the broad market to be the first two-day decline in april which is a mark how steady and resilient the rally had been when we were getting around 4130, 4140, that was the upper target for a lot of cycle work, a lot of technicals. it seemed as if it was a point that could be a barrier. we overshot it and a lot of time you get those overshoots and they don't last and that's what you're seeing. now, it's not particularly sloppy or disorderly at the s&p 500 level, but you mentioned small caps badly underperforming. take a look at small caps relative to the very largest stocks in the s&p 500.

you see this massive lead that was built up march 15th was the high for small caps, for beta, for the cyclical trade, for the nasdaq so we're over a month past that where we have this little bit of a rethink of exactly how much we've anticipated the strength of a reopening right now we're almost at parity right there. we talked also about how overbought internally the s&p 500 was, which means almost all stocks were above their uptrending moving average line you have something like 88% of s&p stocks but look at the relative weakness in the russell and the damage -- nasdaq there's a lot of damage. one is there's slippage underneath the surface and it shows that the rally was not as big and strong as it was at the surface. we can say the market has been correcting below the surface for a while. maybe that means the overall index doesn't have to come back

but that's the push/pull you get. this is the fourth straight month where we see weakness after a strong rally in the first part of the month. so it's a pattern until it's broken it's something people will key upon, guys. >> you also had valuation stretched, positioning, sentiment, thing you've been reporting on for a while my question is on technology we're getting ready for earnings, netflix after the day today. what's that going to tell you about the growth trade and the overall market. >> i don't think people are oveo overtheir skis in terms of expectations in the first quarter. it seems like maybe you drew people in thinking that was going to be the leadership group. i think the reaction to these earnings will matter just because it's going to tell us if we can keep getting protected from broader pullbacks by that

rotation they represent defensive, quality attributes of those stocks but also the faith in the secular growth story so i don't think people are leaning too hard in one direction or the other based on the print that we get for the netflixes of the world netflix has done nothing but go sideways for something like nine months. let's turn to apple which just wrapped up its spring loaded event josh lipton has the results. >> apple bringing its new custom design m-1 chip to ipad pro. so apple says these are the fastest devices of their kind, also improved displays, camera systems 5g too ipad revenue jumping 41% in the company's q1 they add the m-1 to more macs, specifically the new imac, what apple calls a big step forward gene munster says more people realize how efficient working

from home can be and so munster bets it's a continued tailwind for the ipad and mac segments. check this out, air tag. it's a new small accessory for $29 that helps keep track of your items like keys and wallet which can be useful. finally ios 14.5 will be able next week which will include all the new privacy features that upset some of apple's big-tech peers like facebook. >> apple lower by 2% taking 16 points off the dow, which is down by 339 points. after the break, cigarette stocks plunged on a report saying the biden administration was looking into nicotine caps for tobacco companies. philip morris has turned higher sparked by strong results before the bell you'll hear from that company's ceo next you're watching "closing bell.

the dow down 340 points, 1%.

did you know that petco, is now a health and wellness company? their groomers work wonders for my confidence. i trust their vets, and i'm known to have trust issues. they deliver high quality food the same day. i was outside digging, what'd i miss? just everything regarding our physical, social, and mental health. exciting. i'm gonna take a spin around the room. great idea. ♪ ♪ petco. the health and wellness company.

it's moving day. and while her friends are doing the heavy lifting, jess is busy moving her xfinity internet and tv services. it only takes about a minute. wait, a minute? but what have you been doing for the last two hours? ...delegating? oh, good one. move your xfinity services without breaking a sweat. xfinity makes moving easy. go online to transfer your services in about a minute. get started today.

just about 50 minutes left of trading shares of philip morris international rallying today on the back of an earnings beat and raising guidance i spoke with the ceo earlier and asked him about how the pandemic has impacted his business. >> we were impacted in certain of the developing markets like indonesia and the philippines where daily consumption reduced because people have daily salaries so when they don't have daily jobs because of the restrictions, clearly consumption is depressed and obviously an important part of the business that is duty-free sales, due to the lack of traveling, was impacted so if all this come together over thenext six to 12 months, i think we will see an overall recovery of the business but we

can't precisely say when. >> meantime, a report crossing this week that the biden administration is considering mandating that cigarette makers reduce nicotine levels in their product to nonadistdictive leves here's what the philip morris ceo, who doesn't sell cigarettes in the u.s., had to say about this. >> i think this is something we have to look at over a long-term horizon because if you do it too early, like any abrupt measure, you may have unintended consequences like illicit trade. and i want to remind everybody that the problem of cigarettes is not nicotine. yes, nicotine is addictive so if cigarettes have much lower levels of nicotine, they're still at the very high risk of morbidity and mortality because you still have combustion. so our view has always been that

it must be authorized and made available. i think with the right measures then what we're discussing here supply side we can phase out cigarettes in 10 to 15 years in many, many countries and i don't see why the u.s. should be an exception. >> phasing out cigarettes. and finally today is 4/20 so i had to ask about any plans for the cannabis industry like we've seen his competitors invest in >> clearly there are two routes to cannabis products one is pure pharmaceutical products that have therapeutical claims and go through the fda and other agency process and then products like cbd where we are evaluating their efficacy and also their toxicity because clearly cbd is not zero toxicity product. so we have to know what is the right, say, dose to have

efficacy without creating toxicity we are doing this evaluation so i think it's premature for us to announce for a nonpharmaceutical product whether we will enter the category or not. >> he's not going there into cannabis like we've seen with, for instance, altria, a senior company investing or british american tobacco the story with philip morris international is icos. this is a device that heats tobacco but doesn't burn it. it is portrayed by regulators appendicitis the companies themself as a healthier alternative to cigarettes. it's also why he's trying to paint philip morris as an esg play they're holding an esg webinar and you'd think it would be antithetical but he's trying to make the case that they are

trying to do better here and put in place friendlier initiatives for the environment and also for public health with things like icos. >> better doesn't necessarily equate to good, though, yet. i would say there was one keyword missing. he said the problem with cigarettes isn't nicotine. i think he was missing the word just, just nicotine. so i know we're really tight on time here. we are down 0.8% on the s&p, the dow was briefly close to 400, now close to 300. still to come, our ceo with citigroup's ceo jane fraser. up next education has d consistently been one of the biggest challenges of the pandemic we will discuss the way forward with sal khan who has seen

enormous growth with its online education tools. we're back in a couple of minutes. they guide me with achievable steps that give me confidence. this is my granddaughter...she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. come on, grandpa! later. got grandpa things to do. aw, grandpas are the best! well planned. well invested. well protected. voya. be confident to and through retirement.

stay restless with the icon that does the same. the rx crafted by lexus. get 0.9% apr financing on the 2021 rx 350 experience amazing at your lexus dealer.

we are leading up to the launch of an nbc special event, inspiring america. we're highlighting extraordinary people making a positive impact in their communities this afternoon we are joined by sal khan, founder and ceo of khan academy, a nonprofit educational association helping

undersourced areas it is working with 200 school districts, up from nine before the pandemic downloads of khan academy kids have grown by 150% during the pandemic since last may, more than 50,000 teachers have created accounts on khan academy kids sal, thank you so much for joining us it's good to see you. >> great to be here. >> now that we are over one year in from the pandemic, what's the verdict on online learning >> well, there's sill more data to have. to be clear, it hasn't been optimal. i'm sometimes associated with online learning and distance learning but i'll be the first to say if i had to pick between an amazing teacher or amazing technology, i'd pick an amazing teacher every time we know that 10% to 15% of the population of students has fallen off the radar and those are the ones that everyone is most worried about those are the ones we're most worried about. there's probably another 30% of students who have stayed engaged

to some degree but maybe they didn't have proper supports at home or internet access or distance learning didn't work well for them. they have also fallen behind and on test scores how do we treat this as disaster recovery, go in and make sure students have opportunities to fill in their gaps that's where hopefully khan academy can play a role. we also have free tutoring anyone listening can volunteer to be a tutor or anyone who's a learner can get free tutoring. it's these supports in conjunction with school districts and states that we think can make a positive denting. >> so what would you say are the biggest learnings that can inform how you can do that outreach for those that need it most and engage kids that also need it most that might not be doing the best job when it comes to learning online >> one of the interesting things about this distance learning is a lot of the questions we should

always be asking about education are finally being asked. it turns out there's a higher bar when they're at home than in a classroom and you have them. instead of giving a lecture, make it interactive, leverage breakouts. actually allow the kids to talk to each other, to work on projects or to explain each other. those are the best practices in the virtual realm and the physical realm i hope that some of the learnings that we've gotten from distance learning are going to be operative when we get back. i think people will also appreciate how special it is to be in a room together. so they are not going to just lecture each other they say, hey, if human beings are in a room together, let's actually interact, intersocialize and leverage the human connection. >> when you look at your growth over the last year, it's been phenomenal for obvious reasons, and congrats on that do you see that as continuing or is it more a case of hoping that

things stay where they are in terms of where you've got to over the last year >> it's an interesting trend right when the pandemic was hitting and you had the physical school closures, we saw 300% of normal normal times we see 30 million learning minutes and we saw it get up to 88, 89, 90 million minutes of learning a day. this is actually a school necess phen phenomena. we saw 12 billion learning m minutes in 2020. i suspect when we go back there could be a larger increase because everyone is talking about the need for students to fill in gaps the needs to make sure they don't fall off track one of the ways to do it when you're a teacher with 30 kids, leverage tools like khan

academy, like schoolhouse.world. these are free, not for profit over 50 efficacy studies on them to show that it really moves the dial for kids. >> so where does all this go, sal, as schools get back to in-person learning by the fall we should see that totally across the united states what sticks and what doesn't as far as online learning help like what you're doing? >> it's early to tell. we are in this unique window, this unique moment where everything has been thrown up in the air and we all collectively have a chance to decide how they land back. you do have a generation of teachers thrown into the pool with technology. the inertia to try new things will be lower. things are taking the digital divide at home as a serious issue. in the last stimulus package there's been several tens of billions of dollars to address that i hope that some of the

frictions that have been in before, learning should not be boungd by time or space, students should have personalized learning, i think we have a better shot of getting there, but we will see. >> sal, thanks for joining us. good to see you as always. you will hear from many other incredible individuals on inspiring america, the 2021 inspiration list airing saturday may 1st on nbc and sunday may 2 nd2nd. senate minority leader mitch mcconnell amping up his criticism to withdraw troops from afghanistan he said it's rushed and misguided and will let enemies threaten america. white house press secretary jen psaki pushing back against concerns that president biden might persuade jurors in the derek chauvin murder trial. >> he certainly is not looking to influence, but he has been

touched by the impact on the family hence, he called the family yesterday and had that discussion again, i expect he will weigh in further once there is a verdict. east of new york city, police have just apprehended a suspect who allegedly shot three workers inside a grocery store one of the victims is dead and two were injured and taken to the hospital stay up to date on the latest shooting tonight on the news with shepard smith you're up to date, sara. i'll send it back to you. >> rahel, thank you. coming up, an exclusive interview with jane fraser, her first since taking the helm at citigroup. that can't-miss interview is coming next. later insurance startup lemonade is going head-to-head with some of the biggest players in the car insurance game. a quick check on bonds yields are moving lower and that is helping some of the more defensive groups that pay higher

dividends. the 10-year yield hovering around 1.56. we'll be right back. flexshares are carefully constructed. to go beyond ordinary etfs. and strengthen client confidence in you. 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. stay restless with the icon that does the same. the rx crafted by lexus. get 0.9% apr financing on the 2021 rx 350 experience amazing at your lexus dealer.

that building you're trying to sell, get 0.9% apr financing on the 2021 rx 350 - you should ten-x it. - ten-x it? ten-x is the world's largest online commercial real estate exchange. you can close with more certainty. and twice as fast. if i could, i'd ten-x everything. like a coffee run... or fedora shopping. talk to your broker. ten-x does the same thing, - but with buildings. - so no more waiting. sfx: ding! see how easy...? don't just sell it. ten-x it.

just over one month ago citigroup's jane fraser made history when she became the first female ceo at one of big six banks and is taking steps for a refresh of citi. jane joins us now. jane, very good afternoon to you. thanks for joining us. >> well, thank you very much indeed for having me, wilf i'm delighted to be here. >> well, we want to touch on so much and i wanted to catch off with that strategic refresh that you announced last week on the earnings call. we'll get into the specifics of it in just a second, but just 46 days after taking the helm, i mean, wow, you're not wasting any time >> i know, we're not dillydallying but i also had the benefits and the gift of a reasonable transition period with my wonderful successor. and so we used that time to go and listen to investors, listen to our clients and begin the

work on the strategy refresh, so we had the benefit of, therefore, being able to go fast out of the blocks. >> and on the specifics that you announced last week within the global consumer businesses, are the ones, first of all, that you were exiting, are they just not good enough businesses >> oh, businesses that we have are wonderful franchises, they're excellent. we're basically looking at our strategy based on four principles we want to be very much thoughtful in our responses. we want to make sure that our strategy, that we come out focused, that we're connected, that we're very clear around making the banks simpler and that we take a very candid view on the strategy. so as we look at the businesses over a decade ahead, we want to be a winner. we want to close the return gap with our peers to do that, you take a candid assessment of which of the businesses that you're going to be in a position to succeed and win in and which ones are

perhaps in better hands with another bank. >> i guess what you announced it's not just dweivestment. but it's also significant investment, in particular in wealth and also i guess giving you more space to focus on the institutional business in asia as well. >> yes, we're focused on what we want to be, not what we don't want to be we have a number of fantastic franchises our institutional franchise around the world is somewhat iconic through history and we wanted to make sure in the decade ahead it remains in that position similarly we think we've got a tremendous opportunity to win in wealth, particularly in asia with strong opportunities in the u.s. and so we're doubling down in the areas that we want to focus on, where we see the stronger growth and return opportunities for us. >> and then just a final question on the strategic refresh. you used the phrase of a fundamental transition are we to expect similar size

strategic shift in other areas of your business and how soon might we see those >> well, we're doing work on the strategy refresh, as you said, at the moment. that's ongoing we're looking at what are the strategies for our different businesses and how do we make sure that they're well connected, that they're in leading positions and set up to succeed in the decade ahead. so i think more to come for sure but we'll see where the work takes us, wilf >> jane, i just wanted to talk about the broader environment. you said this is the healthiest you've seen the consumer emerge from a crisis in a very long time if you could just expand on that and globally you guys have such a global reach and a unique perspective it's been so uneven with the recovery, with the vaccination rates, with the lockdowns in covid cases. what do you project for the next year and into the next >> i think it's a very different picture in different parts of

the world. we go for a brief trot around the world. in the u.s. for sure there's a huge stock of unspent savings and our consumers are the healthiest we've seen in a long time in terms of their balances and their savings. when we look at the corporates, the same is true they have got a lot of cash balances to put to work, and so what i think we're looking at in the u.s. is a strong recovery and we want to see that liquidity that is being created put to work in the real economy, driving investments that is sustainable. a fairly similar picture in asia china will be a big driver of growth going forward there but let's not forget the indo-pacific region which has a lot of growth potential and ammunition behind it we think europe will probably be a bit slower partly because of the vaccine, and there's a few more concerns around commercial credit and the small and medium-sized enterprises there i think the biggest challenge

will be the emerging markets would large amounts of government debt and slow vaccines will slow things down there. >> jane, we have so much more to ask you. if you would stay with us. we have to break in with some news in the derek chauvin trial. let's get straight to shepard smith. the jury has just told the judge that they have reached a verdict. we're expecting to hear that verdict read between 4:30 and 5:00 p.m. eastern time this afternoon so somewhere around an hour or hour and a half from now. right now we understand the building that houses the courtroom is being cleared of anyone not related to this case. security of course is extremely tight there. and for that matter in cities across the country when the verdict is read, we'll bring that to you live here on cnbc three different charges for this jury to have considered. murder in the second degree, third degree murder and second degree manslaughter. now, second-degree murder is the

most severe charge for a conviction on that counting the jury must have found derek chauvin committed assault in the third degree that caused bodily harm intent to kill george floyd is not required for a guilty verdict there. the maximum sentence for murder 2 is 40 years in prison. another charge up for consideration was murder in the third degree again, for a conviction here, the jury must have found that derek chauvin killed george floyd, quoting now, by perpetuating an act imminently dangerous to others and without regard to human life the maximum penalty for murder 3 is 25 years in prison. and the last charge and least serious of the three is second-degree manslaughter or man 2. for a conviction here prosecutors must prove -- must have proved that the jury -- that derek chauvin was negligent

and that his actions created an unreasonable risk of death or great bodily harm. the maximum sentence for man 2, ten years in prison. the jury may have also found derrick chauvin of all charges like a guilty verdict, a not guilty verdict requires a unanimous decision by the jury impanelled if he is acquitted, that's it, he's free to go. we're expecting the judge to read that verdict between 4:30 and 5:00 p.m. eastern time we'll have live courverage from inside the courtroom and a complete wrap-up tonight on the news. >> shep, thanks so much. as shep said, we will have the verdict for you live on cnbc as and when it does cross just a quick reminder as we pivot away from that news story the market is down 0.8%. the dow is down close to 300 banks are down a lot

citigroup is down 3% let's put it back to the interview we're on jane, our apologies for briefly stepping away. so great to have you with us i want to dive back into the interview and touch on a topic of culture on wall street if i may. there's been so much discussion about this in recent weeks both aciti having zoom-free fridays and the culture junior bankers are having to deal with. if some of your 200,000 employees are watching this interview, how would you define for them what the culture at citigroup will be under the leadership of jane fraser. >> i think we have many wonderingful aspects to our culture including the diversity and the mindset. that is something i would never wanting to lose in the organization i'd say three things, excellence, accountability and empathy. we certainly strive to be excellent in our client service, our operations and our risk and control and in our people.

accountability to deliver the results that everyone is expecting from a bank, not only the financial results but also our broader responsibilities in the economy and in society and then i think empathy is a very, very important and undervalued quality. it's one about listening, it's one about incorporating other people's points of views and making sure that you have a culture that is in tune with the society that you operate in. so i think that's part of what we already have in the bank but it's going to be an important part as we continue going forward. >> as we think about remote work, is that good or bad? we've seen so much lately about junior bankers getting frustrated and burned out and you've seen it across wall street and different banks taking different measures. what are you feeling inside

citigroup and do you feel people should be working remotely come fall >> when we look in terms of the lifestyle that everyone has, i think mental well-being is something that we've all realized that we have to pay attention to and the relentlessness of the work day during the pandemic, so much time in front of the camera which you can relate to and so much time just being in back-to-back meetings without the ability to get around, it's taken a toll on everybody. so as we are looking about going back to the office in the future, what we're looking at doing is having an environment where we do believe people are better together. this apprenticeship, this collaboration, this productivity that's helped, but we've certainly learned very clearly that flexibility and the ability to work from home has been something we've proven that we can do extremely well. so we'll be looking at a hybrid model when we come back so we can afford people a bit more

flexibility. if you're an analyst working hard during the day, you can have dinner and you'll be trusted that when you go home if you need to do some more work you can, that you can take a break. i think that flexibility will be important both for frankly competitiveness in the talent market but most importantly for having a healthy population and a healthy team of people in the bank it's a high priority for me. >> jane, when we consider the consenti consent order, a lot of people are reminded of wells fargo a few years back where the initial punishment was a matter of months or perhaps a year how are you thinking about the timeline here? are you confident that it won't be as it was for them three, four years until you get it lifted >> well, i would never comment on another bank. what i would say here is we didn't have a situation of major customer harm or fraud we have an operation and we have a risk and control environment and infrastructure that we need

to invest more in. so as we look at it, i look at it as not just addressing the consent order but actually a much more fundamental transformation of our infrastructure we are in an incredibly fast-moving digital world that's evolving so quickly as we've seen over the last year. it's imperative that we have an infrastructure, that we have operational excellence and we have a risk control environment that is able to perform with excellence, with the scale, the speed and the volumes that we expect in a digital world. and so i think like many institutions, we are viewing what we have to do as a major transformation and obviously atropical depression the consent order is a high priority within that but this is a multi-year transformation that most organizations around the world are having to look at. >> yeah, on the digital transformation, what do you do

about the competitive threat from fin tech and big tech in general. even walmart getting into financial services how big of a threat do you see that and what do you do about it >> well, i think we've got to take a step back and recognize what is happening to the world, the global world of finance. we are moving from what's been an architecture of finance from currencies all the way to deposits that served us for many decades around the world to a completely different architecture now which is digitally based and in some instances digitally born we've all got to make that transition that happened in equities back in the '80s but it's happening in many, many more parts of the institution. so frankly it's a case of we all have an imperative to move on to many more digital architectures in many more parts of our business and if we don't, the threat of the fin techs and the large techs will be a very real one. and in many instances, they are

partners and collaborators with us as well as clients, as well as competitors and we will participate with them appropriately on all three dimensions. >> jane, on capital markets, all through last year we kept sort of saying each quarter, well, this can't keep going this strongly, and then the first quarter of this year was better than last year how is it looking this quarter, and do you think in fact this bull pamarket for capital markes can continue longer than most of us expected? >> i think our cfo, mark mason, has talked about this quite often, that this year we expect to see increasing normalization in the capital markets when i take a step back, we've got some tailwinds and some headwinds in the financial markets. we've certainly got the tail winds behind us with large amounts of liquidity we should have a strong economic outlook. we should see continued investment and innovation that

will be driving the economies and the markets forward. on the other hand, there were some losses from the crisis itself we've seen this in loan growth and it'sgoing to take some tim for that momentum in a number of parts of the business to be regained rates have also been pretty low. so you've got quite a diverse picture going on there and this year we'll probably see more normalization across the board some of that will benefits part of the business and some of it will be a normalization in the other direction. >> jane, i wanted to ask a question about the role of the ceo in general in 2021 and getting involved in issues you signed your name along with a number of other corporate leaders pledging equal opportunity for voting rights. obviously this has been a hot button issue in georgia. what do you say to people who think corporations should not get involved, you should not get involved in political issues and favoring certain legislation

>> oh, on this front despite the accent that i have and that i share with wilf, i've been a proud american for 20 years and i certainly view and i think our whole company does view that the -- that for eligible voters and registered voters have the right to vote. we encourage our people in citi to go out and vote in their countries around the world where they're registered to do so and that's something that we stand by it's no more and no less than that >> jane, to round things off, i wanted to reflect a little bit on the fact that you are the first female ceo of one of the big six wall street firms. i just wondered how much you paused to reflect on that yourself and if you ever think, gosh, i hope to inspire a generation of women and think this is the place for me.

>> i certainly wanting to inspire a generation of women and men to think this is the place for them we're seeing some shifts in leadership i think there are plenty of opportunities for people of many different styles to succeed in wall street. but my main focus right now is i want to do a good job in the day job and inspire people by delivering. >> and no dillydallying. jane, great to see you thanks so much for joining us. >> thank you >> big year for financial female first with jane fraser and janet yellen. investors watching netflix closely as the streaming giant comes out with earnings. we're going into the market zone next with the dow down 253, off the lows about three-quarters of a percent down ♪ ♪

it's the biggest thing that ever happened to small. visit your local mercedes-benz dealer for exceptional lease and financing offers.

want to save hundreds on your wireless bill? with xfinity mobile, you can. how about saving hundreds on the new samsung galaxy s21 ultra 5g? you can do that too. all on the most reliable network? sure thing! and with fast, nationwide 5g included - at no extra cost? we've got you covered. so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save at xfinitymobile.com/mysavings.

sales are down from last quarter but we are hoping things will pick up by q3. yeah...uh... doug? sorry about that. umm... what...its...um... you alright? [sigh] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers plus some of the lowest options and futures contract prices around. don't get mad. get e*trade and start trading today.

12 minutes left in the trading day. we are now going straight into the closing bell market zone, commercial-free coverage of all the action going into the close. mike santoli is here to break down the crucial moments of the trading day as always. today we've got director of research peter as well stocks off session lows but still down for the second straight day if you look at the overall market, the s&p down 0.6 of a percent, a little more mike, the 10-year treasury yield at 1.56. a lot of buying of treasuries which seems to be helping real estate and utilities what's driving the action?

mike >> i think mike's mic is dead. >> we don't have mike. so, peter, to you. you can take that. >> yeah, great to be here, guys. thank you for having me. yeah, i do think the move in treasury yields has been beneficial, obviously, to interest rate sensitive sectors, including the reits. i think with the 10-year at 1.56 coming off its high of 1.73 or 1.74, we've also seen a rotation out of some of the riskier sectors that have been doing so well on the reopening trade. i'm not sure you can read too much into it given what the move in yields is, but certainly watching whether or not this rotation turns into a trend i think will be telling. >> now, i was lucky enough to already hear mike's answer to this question because he's just behind me so, mike, the floor is yours. >> obviously just a little bit of a prolonged rethink of the intensity of reopening trade that's been going on for a

little while today what's interesting is what looked like it was going to be comprehensive backing off of stock prices now looks more localized with regional banks and small caps and some of the more direct reopening plays mostly on the downside in sync with those lower yields. you have the nasdaq lifting off the low. so again you zero takes action there's some slippage in that dynamic but it's more or less limited to damage. >> paypal -- earlier today he laid out the bull case for cryptocurrency. >> i don't think this is a bubble at all. this is the beginning of main streaming of it. gold is about a $12 trillion asset category and bitcoin is $1 trillion it's easily transportable and can be sent anywhere in the

world if you have a smartphone, so it is a much better version of historic value than gold. >> i don't think bill miller is the most traditional value type investor and he's been in a lot of those big tech names in a way perhaps some weren't but it's always interesting to hear him so bullish on crypto still at this level where you have to make an argument that it's no longer cheap but hearing him bullish, we have pulled back a bit and that's helped gold as well. >> by the way, bill miller also owned amazon just about from the ipo so it's not just about this as being slightly less than unorthodox or different than an orthodox value manager i get that argument. i think what it does tell you is that a lot of people who are owning bitcoin right now are doing it purely as an investment as digital gold as opposed to simply because it's building out a new financial internet or whatever the other stories are about actual transactions and actual infrastructure out there. that story exists.

but right now this run-up in price is much more about displacing gold, which remains at $10 trillion. if you say bitcoin goes to $10 tri trillion, does that mean gold goes to zero >> it is notable, peter, to hear one of the best known long-time value investors talking about bitcoin, which is often seen as a speculative play where do you come down on that, and whether it is correlated with the market move we're seeing >> and i think bill's -- and i have a lot of respect for him obviously given his track record but i think his view on bit coin is sort of emblematic of how the world is turned on its head with value investors bullish on assets that don't have any cash flows. so i think for you to make an assess meament as to whether something is in a bubble or not in a bubble, there has to be a

way to value an asset. no one can give me any good reason why bitcoin is worth anything other than a scarcity value argument, which i think, by the way, the coinbase ipo tells you the idea is there are going to be lots more cryptocurrencies which makes the scarcity argument less persuasive as well relative to bitcoin being in a bubble or not, i have no idea because i have no idea how to value it >> fair enough apple under pressure today, announcing new products at its spring loaded event this afternoon, including the air tag, new imac, new purple iphone, upgrades to its 4k apple tv box and the new ipad that use apple's own chip the company also redesigning its podcast app and introducing subscriptions plus apple card family for spouses to build credit together. apple outlining plans to be a 100% carbon neutral company by 2030 shares of apple are lower with

the overouall market mike, how are investors taking this is it an apple-specific move or just a broad move and this was all anticipated? >> in terms of the stock, i think it's just the market and just the sense that this is not anything like kind of a ma make-or-break series of announcements. so i think it's going to be received like a lot of these incremental offerings of apple, which is a lot of people saying, oh, that's great a lot of people saying what's the big deal and over time people get used to them and start to see them indispensable and it just reinforces the strength of the overall network that apple has built around its system. >> i've never understood the different colors because you have a protective case over it anyway -- >> well, you can get a clear case. >> what's the point in that? anyway, we disagree on this. you've never had a case because you always drop yours and break yours. >> people have so many --

>> you break it with a case? >> i'm a fan of the purple >> we'll have to get you one of those. netflix set to report earnings after the bell. julia boorstin has a preview. >> the most important thing to watch is its subscriber numbers. the company forecasts an addition of 6 million subscribers. analysts are expecting 6.4 million. that is less than half than the number added in the year ago quarter. analysts expect the company to guide to 4.6 million additions in the second quarter. the question is whether the company cracking down on password sharing could be a catalyst for growth. investors are also watching the impact of netflix' content spending, price hikes as well as of course competition. netflix' earnings have missed estimates over the past four quarters so we'll have to see what happens when the company reports in just a couple of

minutes, guys. >> peter, is netflix growing into its valuation >> hard to say, wilf i think the biggest challenge that netflix has to face is the competition that's coming on right now as all that growth that's been pulled forward by the pandemic is going to start to abate a little bit. you've got paramount plus, disney plus. i think that market entry is going to pose subscriber growth problems for netflix but, you know, netflix is a terrific company but i do think that the paradigm is going to change back a little bit more to what it was rather than what investors have gotten used to over the past 12 months or so. >> netflix hasn't been performing all that well so far this year, mike. is it a specific netflix thing where the concern is just the pull forward in demand we saw in the pandemic or just a broader

growth trade fade as we've seen so far this year >> both of those things plus the fact netflix was up 400% in the prior five years before last summer so i think it's done that. it's gone on these massive sprints and then gone sideways as people get their expectations in line with how the valuation has gotten i think it's a little bit of an incrementally different story. it seems a little more mature and less exciting, but obviously kind of a leader in this whole category >> two minutes to go, mike dow down 262 what do you see in the internals? >> pretty dramatically skewed to the negative side. a little better than it was earlier, but still 3-1 to the declining side also new 52-week lows versus highs on the nasdaq is worth noting they actually have been rather weak and that's actually lows exceeding highs for the day. so more than 100 new lows for another day. it shows you some of the damage is starting to stick

and then the volatility index, it actually did pop above 19 earlier, so we talked a lot about this downtrend up to 18.5 this is not that dramatic a move so it seems like it didn't really unsettle things or show signs of severe stress in the system and just really why should it, right a 2% decline off an all-time high should not get people panicking but traders are on alert to do a little bit more downside protection, wilf. >> all the major averages are lower but off their lows as we approach the close, one minute left we're down 248 on the dow, 0.7% lower. s&p 500 is down 0.7% the nasdaq down just shy of 1% the russell 2000 of small caps is the worst performer but down just less than 2%. it was down more than 2% earlier this hour. utilities and real estate the best performing sectors, both up 1% while energy and financials and consumer discretionary are the worst performers

netflix due to report earnings any moment now is down 0.9%. as mike said, the vix up a little bit, 18.5 meanwhile oil is down and gold is higher. at the close we are lower by 0.7% for the s&p and the dow and basically a percent for the nasdaq >> it looks like we recovered a bit off the lows of the day but still endingi down across the board. welcome back to "closing bell. take a look at how we finished up the day on wall street. dow closing lower 257 points which makes it the worst day since march 23rd biggest drag on the dow, goldman sachs. united health was the biggest winner along with ibm after earnings last night and a return to annual growth s&p 500 down 0.7 of 1% the groups that were working

today were defensive utilities, real estate, health care and staples everybody else was down. energy was the hardest hit down 2.7% the nasdaq also under pressure down about a percent as technology, consumer discretionary lagged apple, amazon, some of the chips like nvidia, some of the weights on tech, tesla actually finished up after a big down day yesterday. small cap down 2% at the close now off 8% from their record highs. they have been among the hardest hit. earnings from netflix, csx, interactive brokers all set to be released. we will break down the results as soon as they are out. we'll break down interactive broker's numbers with the ceo of the company. plus lemonade is hitting the gas on car insurance ceo daniel schreiber peter is still with us, victor

jones joins the conversation first, though, to you, mike, on the sell-off what stood out and whether it's just a consolidation after four weeks of gains or something deeper to read in. >> let's hit the headline numbers. we do have a big beat on the earnings line, 375 per share versus 2.97. revenue basically in line, 7.16 billion but quite a big miss on the paid net ad lines. the forecast was for 6.43 million and they have come in with paid net ads of 3.98 million. so missing the paid net ads by about 2.5 million but a big beat on the bottom line shares reacting poorly to this, down 10% i think julia boorstin is online with further details and angles on this as we continue to dig through these numbers.

>> if you look at what's putting pressure on the stock, it's the fact that those paid net ads are below what the company forecast. so analysts were expecting 6 million paid net ads in the first quarter -- i'm sorry, they were expecting 6.4 the company had forecast 6 million. the company reporting less than 4 million in the first quarter also the forecast, the company forecasting it will add only 1 million new paid net additions in the second quarter. so it looks like a shortfall in subscriber additions versus expectations there had been some question that the company had aed more than 20 million subscribers over the past four quarter. how much of that was pulling forward users they might have added this quarter and next quarter. average revenue per membership rose 6% year over year, 5%,

including foreign exchange so they talk here about the impact of a pull forward and delayed production, but they do point to higher revenue per user which reflects price increases among other things so i'm going to continue to dig in here on the guidance in particular and also look for more commentary on content spending the one thing i'll say about content spending, we'll spend over $17 billion in cash on content and they'll have a couple of different facets to the content strategy, including breadth of content and locally authentic stories. so i will dig in here and come back with more once i get through this release. >> definitely do that, julia, thank you very much. the company and the shareholder letter pointing to two factors for the lower growth they say the extraordinary events of covid led to unpress kented membership growth in 2020 pulling forward growth from 2021

and delayed production from every region they contributed to a lighter content slate and hence slower membership growth. all things that the street probably should have known but this is still coming as a surprise the stock is down 11% plus after hours. >> should have known in the sense these were going on in the background we don't always have a perfect read on what the churn looks like cancellation rates offsetting new subscribers. what's interesting also in the letter is the company says we don't believe competitive intensity materially changed in the quarter or was a material factor in the variance as the over forecast was across all of our regions. so they're basically saying it's not because the streaming world has gotten that much more crowded, they're trying to point to their own pacing of connegligent rollout and pointing out in the second half of the year it should be better. so they're trying to anticipate that question of disney plus, paramount plus, everything else

that's now entering, has that drawn away from netflix's franchise, saying no. >> which is interesting they mentioned that the other thing by the way on the guidance, the guidance is disappointing on a revenue line and paid net adds line so the profitability coming through, the growth slowing down let's bring in the analyst who has a buy rating on this stock i guess with a buy rating you're probably surprised with the paid net adds to the downside >> i'm extremely surprised like everything else. any time you miss your outlook of subscriber growth by 35% to 40%, that's something that's eye catching and also the guidance for q1, which is very underwhelming. with all that being said, we knew that the pandemic pull forward impact will have an impact in q1 it just seems to be a question

of the magnitude that being said, i do believe that we're going to start to see some signs of moderation in the second half, so i think the company pointed out are still valued i think the competitive as intense as it has about, i wouldn't attribute this miss to that the pie has got larger the pandemic has accelerated this shift from paid tv to internet television. but more importantly i think i want to focus my attention on the changing of business profile for netflix. this year we know that they're targeting break even free cash, that's 23not going to change by all indications. the inflection of free cash flow starting next year is something that will help to justify the valuation that the company is

growing into. >> tuna, they always address competition in the shareholder letter they have got three praragraphs on it and how it justifies what netflix is doing, their 10-plus year headstart, how they'll beef up their product offerings they say when comparing services, it's important to pay attention to engagement and revenue as key indicators of success. so how does netflix stack up versus some of the competition which has seen very fast growth in subscribers. >> indeed, sara. i think the importance of the business model cannot be underestimated you know, it's pretty clear that the company still retains a fair amount of pricing power, which you cannot think about the content to provide operating leverage i don't believe that there's anything that's structurally changed in terms of the competitive set that makes us to believe that the company's

runway has changed significantly. as i said, the pandemic has been a major accelerant so if you do some back of the envelope calculation, it's pretty justifiable to us that starting 2022, we could see free cash accelerate off of 1 billion per year and growing and the company has ruled out going back to the debt markets to raise capital and has teased that it could be considering share buybacks which i think will help to further underscore the confidence in the odel. >> victor, is netflix still a hot talk for clients >> this thing has basically traded sideways for a long periods of time. the answer is no it's fallen out of favor with i think younger investors and i would say the investing kmupgt as a whole go back to july of 2020. this has traded from 480 up to

580 and this move today in after hours, while it's a shock for option traders who had the implied move of 6%, this move after hours is about double that that effectively brings us back to the bottom of this range. remember, the last earnings report there was enough positive news in there when you talk about not needing to go to the debt markets, being able to go free cash flow positive. there was enough to get the stock to 586 where we closed and the point is for three months with disappointing sub numbers, nothing in the way of buybacks today or even with the churn you could turn up another $6 billion in revenue, i just think it's not surprising you're seeing massive reaction to the downside. there's not a lot to get excited about in a market that's already priced in a lot of good news >> well, that's kind of -- if i

can jump in for a second, that's a refrain. if you follow the stock for any length of time, that's been a familiar refrain and hasn't changed structurally what the company has been able to establish. so volatility is always going to be in place when you talk about netflix. but you've got to look at four, five years down the road when the company begins to tap into more of the addressable international market remember, we're talking about 1 spoken .5 billion addressable markets so all in all i think we just have to keep our eyes on the prize. stay patient as we cycle through this volatility, i do believe that things will start to normalize >> well, i think they should bring back the duke of hastings after getting rid of him from bridgerton maybe they'd have a little more momentum with the younger crowd, certainly with me. tuna, final word

the stock is down to 495 here after hours. it sounds like you're still bullish so you would tell investors to buy that's a fair price? >> we're still sticking with a 650 12-month target. there's some premium valuation even at these levels but you have to look at some of the other comparables out there and you can pick out a few names that we've seen in this pandemic that makes netflix' resolution look like something much more tolerable. >> pete, i'll come to you afterwards but julia has some more after digging through the release quickly first. >> yes, the company announces it's going to begin a $5 billion buyback. and that $5 billion buyback which was approved by the board will begin starting this quarter. there was some speculation about that but that has officially begun. guys. >> peter, quick final thought

and what it implies for the broader market, not just netflix itself >> yeah, earlier i felt that there might be this issue, and i think it may not be a unicorn for tech i think this is a theme that we're going to see next quarter and later into the year where you had a tremendous pull-through of demand and growth and i think we'll see some disappointments. >> thank you all for joining us, much appreciated. up next, interactive brokers chairman will join us to discuss his company's latest earnings. that stock is moving higher after hours. plus netflix' huge miss on sub growth we're back in 90 seconds okay, imagine this... your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, asap! so basically i can pick the right plan for each employee...

yeah i should've just led with that... with at&t business... you can pick the best plan for each employee and only pay for the features they need. with a bang, energy and change came to every part of our universe. seismic or small, it continues. change is all around us. shaped by technology and human ingenuity, we can make it work for you and your business.

csx earnings are out let's get to seema mody. >> a two-cent miss on cs x's bottom line, 93 cents versus the 95 cent estimate 2.8 billion in sales, a slight beat, but it did decrease from the prior year volumes for chemicals down 8%. automotive down 16%. csx saying strengthening economic momentum is providing added mobility to growth and we are taking the steps to make sure we are ready to handle these volumes. this is a name we've been watching very closely around talks whether we'll see more consolidation in the railroad space following canadian

national's $30 billion offer for kansas city southern shares are down nearly 2% in extended trade wilf. >> seema, thanks for that. shares are interactive brokers moving higher. the company beating on both the top and bottom lienes. up 2% in after hours trade joining us now is the founder and chairman thomas peterffy good to see you thanks for joining us. >> thank you for having me. >> so clearly both the beat relative to expectations but more impressively the year-over-year comparison to last quarter we could look at any number of metrics, revenue up 53% customer counts up 74% can that momentum continue >> i doubt it, frankly so i don't think that we will be able to maintain this state of growth, but also i don't think that we will quite go back to

the previous level i think we'll end up somewhere between the two. >> interestingly we've spoken with the ceos of citi and bank of america recently and they were not pessimistic about the pace in capital markets generally after the extraordinary last couple of quarters is that sort of the tone you're striking as well >> yes, probably look, the level of spending by the government is certainl going to fuel the markets and put more money into people's pockets. we're probably going to have some inflation, so that's all positive what i see on the negative side is maybe international tensions and probably higher taxes. >> so what are you seeing in your clients' risk tolerance

right now and their exposure overall to the market? >> so they have -- they have taken some money off the table in the last, you know, several weeks. but they sort of seem to have stabilized we are running i would say maybe 30% growth rate at this very moment so that's what it looks like at this moment. i can't see what is going to happen in the far distant future so, you know, it's up to us to keep adding product and improving the services and do whatever we can to take as much share as we possibly can >> well, on that note, what are you doing in crypto? and are you finding yourself

going up against the likes of coinbase, which recently went public, robinhood and others and do you see a race to the bottom in fees like we saw with stocks come in for bitcoin. >> yeah, absolutely the same story will happen. we are working on crypto and i don't want to go into too many of the details because other people are probably working on it too i don't want to necessarily want to lay down a path to where we're going up until we're ready to come out with it, which i expect will be in the height of the summer but, you know, so is everybody else working on it and there will be strong competition, probably even more in crypto than in the stock market because there are many younger companies who are going into this space. so i think prices will -- i mean

prices narrow down and profits -- markets will be very efficient and it will not be very high. >> well, keep us posted on those plans as you roll them out thomas peterffy, thank you for joining us with a quick take on the earnings, we appreciate it, before interactive brokers. netflix shares selling off after a much weaker than expected subscriber growth despite better profit and buyback. we will discuss whether the slump will continue. check out roku moving lower in sympathy. we'll be right back. sponsibl esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes.

join the pursuit of outperformance at pgim. the investment management business of prudential.

want to save hundreds on your wireless bill? with xfinity mobile, you can. how about saving hundreds on the new samsung galaxy s21 ultra 5g? you can do that too. all on the most reliable network? sure thing! and with fast, nationwide 5g included - at no extra cost? we've got you covered. so join the carrier rated #1 in customer satisfaction... ...and learn how much you can save

at xfinitymobile.com/mysavings. netflix shares falling sharply on the back of a quarterly report just announced moments ago, down 10 sp.5%. let's bring in ed lee from "the new york times" and our own alex sherman, cnbc.com. we only have time for a quick take from each of you, alex, so make it a hot one. what's the headline of your story out on netflix tomorrow morning? >> here's the headline short term -- this was not a great quarter for netflix. they overindexed early in covid where they had so many subscribers, simply not enough

subscribers left in the first quarter. they missed expectations and they're forecasting only 1 million subscribers for the second quarter which is really low. long term not so bad netflix reassuring investors that they do expect growth to accelerate in the second half of this year. >> what do you make of this buyback, is that desperation or is it sensible >> i think it's sensible it's a sign the balance sheet is strong, they don't need to borrow money and so they're self funding and have real profits. i think competitors are gaining steam despite the pandemic pull forward that they had but it's got a strong balance sheet, a lot of cash coming in and i think they'll be ahead of the game in terms of others in terms of ramping productions back up and that's where they'll win over the back half of the year. >> gentlemen, that's all we have time for we'll have you both back on often. thank you very much. alex sherman, ed lee

netflix down 10.5% after hours. we are just minutes away from the reading of the verdict in the derek chauvin trial let's get to our own shepard smith for more. >> sara, thanks very much. there is breaking news now on cnbc the moment for which the nation has been waiting and bracing we're about to learn the verdict in the murder trial of derek chauvin, the now fired minneapolis cop charged with killing george floyd the jury got the case late yesterday afternoon after closing arguments, then deliberated for 10.5 hours by our count and made their decision about an hour and a half ago the verdict comes exactly 330 days after george floyd's death. a live look in the courtroom now. as you can see the camera is trained on the great seal of the state of minnesota when the proceedings begin, and we expect that to be at any moment now, the judge had said they'll read this verdict any time between 4:30 and 5:00 p.m the idea to get all the players

into the courtroom after they had cleared out the rest of the building with very high security so when the camera shows the courtroom and the judge, we'll take you there for uninterrupted charge three different charges for the jury to consider second-degree murder, third-degree murder and second-degree manslaughter second-degree murder is the most severe charge. for a conviction on this counting the jury must have founding derek chauvin committed assault in the third degree. an assault which caused bodily harm now, intent to kill george floyd is not required for a guilty verdict on this or any of the other charges. the maximum sentence for murder 2 is 40 years in prison. also for consideration of the jury, third-degree murder. that's the sort of middle charge that the jury has been contemplating. again, for a conviction on this count, the jury must have founding that derek chauvin killed george floyd, and i'll quote now because it's the specifics of the statute,

quoting, by perpetuating an act imminently dangerous to others and a depraved mind. the maximum penalty for murder 3 is 25 years in prison. the least serious charge is second-degree manslaughter or man 2 as they may call it in the courtroom. for a conviction here, prosecutors must have to prove that the jury -- to the jury that chauvin was negligent and that his actions created an unreasonable risk of death or great bodily harm. one matter of note first, though, i mentioned for murder 2, the maximum penalty is 40 years in prison. for murder 3, the maximum penalty is 25 years in prison. but when you look into the sentencing guidelines in the state of minnesota, derek chauvin is a man with no prior felonies and as a result under the guidelines, he would likely

receive, unless the judge goes outside the guidelines, 12.5 years in prison for either the charge of murder 2 or murder 3 if he's convicted. keep in mind, we don't know whether derek chauvin is convicted on any of these counts it is certainly possible that the jury reached a unanimous decision that he is not guilty on all three counts. if that is the case, derek chauvin will be free to go, following these proceedings. if he's found guilty on any of these counts, we'll then have a news conference from inside the courtroom. the judge will thank the jury and as you may have seen over time, we'll have statements from likely -- certainly the prosecution. whether the defense decides to make any statements remains to be seen. i can tell you this, the defense attorneys have already made clear that they will seek an appeal if their client is guilty on some of these counts. you wonder about the manslaughter charge, but

certainly if he's found guilty on either of the murder charges, either murder 2 or murder 3. two different things for the defense to consider when requesting an appeal, one is the statements of maxine waters, who came forward and said that people must stand strong and continue confrontations in the street that word "confrontation" has been seized upon largely by right-wing media but also by the judge in this case who yesterday admonished the congresswoman from the los angeles area. said that he wished politicians would be more careful with their words and that they would leave the legal proceedings to the legal minds, respect the separation of powers and let the court do the court's work. the other potentially at least would be this civil settlement that was reached on behalf of george floyd's family just as this trial was beginning you'll remember tens of millions of dollars awarded to the george floyd family in civil damages.

that announcement was made just as the jury was being impanelled now whether either of those two might be seen as grounds for appeal remains to be seen. we'll talk with our legal analyst in just a moment, david henderson and author idolla who is currently a criminal defense attorney first let's go to cnbc's frank holland who's live outside the court house in minneapolis for setting the scene where we are now. hi, frank. >> hey there, shep the tension really starting to build here in downtown minneapolis. the last 24 hours things have been very quiet with the exception of law enforcement and national guard troops. as we've mentioned many times windows are boarded up things have pretty much stopped here in downtown minneapolis that has completely changed after it was found out a verdict was reached. we've seen dozens and hundreds of people filling the streets. everybody senses an event that

could change the entire world could be happening right here. there's just dozens of people just walking around. people just want to get a sense of what's going on of course there is the media here this is one of the most thought about, talked about, watched events in the world at this very moment now, one thing that we want to mention is that yesterday there was a protest on the streets people saying that they wanted to see justice they were calling for justice and saying that if there was not a conviction in this case, they were very worried about what the outcome would be, about the social unrest, the damage to the city and in particular to their community. right now all of us, our eyes on the courthouse here behind me. we know derek chauvin is inside that courthouse. we also know the floyd family is not very far away. they're staying in a hotel just a few blocks from here so both sides of this situation just a couple of yards, a couple of blocks apart. the tension continues to build we're seeing people drive down here you did not see this yesterday no cars in this area

one another thing that we want to talk about is the fact that there is potential for some social unrest, maybe not down here but further away from here, about three miles away we actually have not been over there. there are people in the community that just generally don't like a lot of outsiders there. that's one area to watch here in the minneapolis area there's so much thought, talk, consideration, concern about this verdict we will continue to watch, shep, and continue just to see what happens here in downtown minneapolis and other parts of this community, a community that continues to reel not only from the death of george floyd but the recent police-involved shooting of daunte wright. not that long ago the death of philando castile and so many people have said they're just tired of it they want to see justice in particular in this case. i'm sure there's some people who may see a different side of the story, but many of the people down here in the downtown area say they expect to see a

conviction and are very concerned about what happens if there is not one shep, back to you. >> frank, the judge in this case had made it clear that they were going to clear out the entire courthouse except for those involved in this particular proceeding before they moved forward with this. do we have any indication yet whether they have done that, or is it silence from inside the building at the moment >> reporter: you know, shep, this courthouse that you see behind me, you see the fencing all around it, it's a very secure area. generally cars go in there's a side where people and cars could be leaving. i saw a lot of cars leaving office buildings and parking garages down here. we saw a lot of people -- still, a minimal amount of people trying to get out. we've seen law enforcement officers going inside this debated area obviously security is a concern as we await this verdict to be set. >> frank holland, we'll come back to you repeatedly we've just gotten word from the

attorney, ben crump, who is the family attorney for george floyd's family, he's indicated that the family will make a statement regarding the verdict one hour after the reading of this verdict there will likely be a lot in the courtroom after the reading. we've already been given an indication from the court that people within the proceedings who wish to make statements may do so from inside the courtroom and we'll have those live for you as well. the cameras we're watching here are from outside the court house. let's listen to what's being said there we got word just about an hour ago that the verdict had been reached. the judge had promised throughout the proceedings on background really for the media, not for public consumption but we can tell you now, he had promised that there would be one to two hours notice prior to the

reading of any verdict, for a number of reasons. to clear out the court house for one. to get concerned parties, members of the floyd family, members of the chauvin family who might want to come, all of the attorneys together the jurors had been deliberating and they were going to allow that amount of time. in addition, the judge indicated there would be no verdict read at night the judge had given the jury wide latitude on the amount of time they could deliberate within a particular day. he didn't cut them off at 6:00 p.m. each evening. originally our guidance was that they would go until 9:00 central or 10:00 eastern but he allowed the jury itself to make decisions and they did so last night until just about 8:30 or so eastern time, 7:30 central, and then picked up an hour early this morning the original plan had been for them to start deliberating at 9:00 central time. instead they started an hour

early today. we don't know much of anything about the proceedings inside the jury room. we don't know yet who the foreperson is. in many states, the foreperson is chosen in the early going and sits in what they call chair 1 of the jury box. not here here we don't know who led the proceedings for the jurors themselves the jurors are given instructions by the judge. they were given the witness -- the witness testimony and all of the evidence in the case in digital form so they were able to look back over testimony on their own without calling the judge and the participants back into the courtroom, so they had full access to all of that digitally, electronically they were allowed to ask questions of the judge normally those questions are specifics of procedure, not any details about the case itself outside of what had already been presented in the courtroom but this jury panel did not ask

any questions of the judge as far as we know, did not call the participants back into the courtroom. they reached this verdict without calling on the judge for anything, at least anything that's been made public. i've just been told that derek chauvin is now in the courtroom. 36 minutes past 3:00 there in minneapolis. so derek chauvin and presumably his legal counsel are there. the jury under normal circumstances, the jury would be brought back in the very last minute and then the proceedings would begin. we don't anticipate that once this gets going it will take very long. they'll go through each of the counts separately and then we'll know what the disposition of this jury was. you know, it is impossible to gain anything from the length of time that the jurors deliberated. while those who think, oh, a conviction is a slam dunk on all of these cases, you might think, well, they decided early on, they got through this relatively

quickly, considering the gravity of this case and now they're ready to render a guilty verdict. the opposite works just as well. we may all have our thoughts and opinions after seeing what happened inside the courtroom, seeing the witnesses, seeing all of the demonstrations that were made but the members of the jury might have thought that the defense made such a compelling argument in closing arguments that they found him not guilty on all counts. all of these items are possible and he or she who says they know exactly how this is going to go is not one to whom we're going to pay much of any attention let's bring in our legal eagles now, david henderson is with us, civil rights attorney, former prosecutor and cnbc contributor. in addition, arthur idalla, friend of the program. thank you both david, you've been saying from the beginning that you thought the prosecution had the edge here you made some statements yesterday that you didn't think either side really was very effective in closing arguments how do you feel in this moment

>> shep, i agree with what you just said. betting under circumstances like these is a great way to go broke. it's not possible to know exactly what the outcome is. but with that in mind, this is a quick verdict in light of the fact that we had a trial that lasted almost a month. normally quick verdicts favor the prosecution. in addition to that, the jury didn't ask any questions of judge cahill which also tends to indicate that they didn't have a lot of disagreement back there this happened quickly enough where it's hard to anticipate that it's an acquittal. >> arthur, your thoughts on that >> well, i would normally agree 100%, except shepard when we were much younger, there was a case bigger than this and it was the case of o.j. simpson i think many people were expecting a conviction in that case so although i would agree under typical circumstances, this is a case that clearly is not typical. i am almost shocked that there was not one note. >> that we know about, you're right. >> well.

>> we would know. >> we would have known the big difference here is that the jury was able to bring the law into the courtroom that is not the truth in every jurisdiction that's not the case in every jurisdiction many questions are to the judge to explain to them what's the difference between manslaughter, murder 3 and murder 2. there they had the judge's charge in their hands so they were able to look at it themselves i think we all are a little surprised by how swift this verdict has been reached. >> one of the matters that was of interest, i think, was the fact that the charges themselves indicated you do not have to prove intent not only that, intent is not part of the charge in other words, for murder 2, murder 3 or manslaughter, that he intended to kill george floyd is not even a question here today. the intent is not even being considered david, what they're considering here is whether he died and what derek chauvin did to facilitate

that death >> shep, that's exactly right. normally this causes a lot of confusion for jurors when they're deliberating over cases like this. what you said is correct, it's an unintentional murder. had he killed george floyd intentionally, he would have been charged with a different level of offense, even within the context of second-degree murder the way i typically explain this to people in terms of what we're looking at with causation is years ago i kicked a soccer ball through a church window, my mom still brings it up i say i didn't mean for that to happen she asks did you mean to kick the ball yes. did you know kicking the ball could break the window yes. well, you're responsible for breaking the window. it's similar here about the unintentional murder by derek chauvin to george floyd. >> you mentioned the o.j. simpson trial. one of the big differences in that case, remember, that

particular case the murder wof b would have been in brentwood, which is a completely different environment, a completely different jury pool available. instead based on motions that trial was moved to downtown los angeles. as a result of that, the makeup of the jury was more favorable to o.j. simpson. in this case we have six whites, four blacks, two multi racials on this panel and a mix of men and women. a mix that pretty well matches the makeup of the city of minneapolis and surrounding areas. the makeup of the jury is not one to which either side can really point and say that gave me a disadvantage. >> well, you know, you started off the program talking about appellate issues and regarding the jury and the influence placed on the jury and the reason why i don't think the maxine waters part would be an appealable issue, if there's a conviction, is because the

judge never asked any of the jurors if they heard those comments and would have affected them however, to your other point, the jurors were asked in jury selection if they had heard about the $27 million awarded. many of them, i don't know the exact count who are on the jury did know about it and that could be an issue that you could raise had some sort of effect on their decision-making process because in a way it's the government saying we think chauvin did something wrong so we're giving a lot of money to the deceased family. >> but during voir dire that question was asked and both sides, both defense and state counsel were able to question those jurors it was my understanding that they reached a conclusion that though they had information about it, those individuals would be able to put that aside, not use that as a bias, and act based just on what they see and hear inside that courtroom >> so what happened, shep, i'm in the middle of one of them

right now, a lot of times after jurors deliberate, they then go on your show or other shows and then they talk about what took place in the jury room it's that time where sometimes they give a defendant that little tidbit that they need to go in front of an appellate panel and say you see, your honors, that issue did affect the jury it wasn't supposed to and therefore we're asking for a retrial. >> one thing the jury is not supposed to know about is what happens outside of that courtroom. during the course of the trial over the 13 days or so, the jury was not sequestered. they went home at night to their families, but they were told to stay away from any media involving this case. that said, once they were given the charge and they began deliberations, the jurors were sequestered in a location unknown to us during that time they were told not to see any media, but, david, they have their phones in the modern era, you're still

allowed to have your phones when you're sequestered so you can communicate with your family the temptation must be quite great. >> shep, i agree with you. i've got to say this too you had at least one juror who had never seen the video before. and given that they live in minneapolis, i don't imagine how that could be possible and so i've got to think at some level there are people on this jury who are very different from me i'm constantly inundated with the news with that being said, i think part of what you're getting at is it's not as though not picking up the morning paper and not turning on the evening news is enough to avoid it these days i think that it's very likely that jurors did have some contact with media what was said earlier is true. if someone goes on a talk show a week from now, if chauvin is convicted, and they said i heard what was going on with policing across the country and we just had to do something by making a statement in this case, that's jury misconduct. so we'll have to watch for those things in the coming weeks but ultimately what you're

saying is true, it's very difficult to avoid the press as it affects this case during jury deliberations. >> i want to talk about the two sides and i want to start with you, david, on the prosecution and i'll go to arthur on the defense. the prosecution centered much of its case around this, 9 minutes and 29 seconds it appeared that the prosecution wanted the jury never to forget their star witness their star witness by really any interpretation would be that video. i don't remember a case that i've ever covered or a trial that i've ever covered where there was so much video and audio evidence of the incident taking place did they do an effective job of making that video the star >> i think they did because that's the trial strategy that they went with they didn't do much else shep, i said this the entire time going back to the o.j. simpson trial. we didn't see a johnnie cochran trial personality emerge from

this trial. >> no. >> i don't think that either side did a stellar job from a litigation point of view in terms of how they presented their facts and tried this case. i think the prosecution had an overwhelmingly impactful video in the same way i've never seen a case be centered upon one piece of visual evidence, i've never seen one piece of visual evidence give rise to national and even international protest movements the way that george floyd's death did on the video that everyone has seen so in that regard it was a unique case. i think the lawyering could have been much better in this case, but it may be a situation where the emotional impact of the evidence was so strong it doesn't matter >> with johnnie cochran obviously if it doesn't fit, you must acquit. but, arthur, it felt like the defense stumbled on one of those moments to me, as one who's covered trials for 30 years, not as one who has any idea to try them but it felt to me as an observer that the defense hit upon one of those phrases and let it go, and that was he didn't let up, he

didn't get up. he touched on it a couple of times, but it felt like if you were trying to make the case, all of these other things could have killed him. the environment there, the carbon monoxide coming out, the drug addiction, the repeated use of drugs you could have gone there. but when the prosecution had their opportunity, it was he didn't let up, he didn't get up, and they didn't use it >> well, you know, i agree with david when i was watching right from the opening statements. i was looking for some more theater. i was looking for some more passion. but then, you know, shepard, you have to play to your audience. and i'm not going to put myself in eric nelson's shoes in other words, i may have gone in there and tried the case looking towards my mentor, johnny ie cochran, as an exampl of courtroom theatrics and pulled the jurors in but those particular jurors may have looked at me and i may have

lost all credibility with them for the theatrics of it all. so i'm not going to fault him as much with the way they came across but yes, i agree with you, there wasn't that -- it wasn't that gripping or grasping turn of a phrase what i did think he did effectively eric nelson in his estimations, and, shep, he had to be exhausted because he was kind of a one-man show through this whole trial what i did think he did effectively was he showed the other video, the before video, the struggle you can see how big george floyd is you can see his muscles, you can see his triceps, you can see this was a dangerous situation what did he hound on he harped on the words of the statute, a reasonable police officer, a reasonable police officer in this situation. and he tried to use the other video the best he could to contradict the video that we all have seen hundreds of times. >> david, as a civil rights attorney, i'd be remiss not to go here.

it is without question that the nation is on edge, that the center of this social justice and racial equality movement is george floyd he is the face of this moment. your thoughts about how big of an impac your thoughts on how big of an impact what happens here today will have on a black american community that is suffering and struggling >> that's a tough question because as you were beginning to ask it my initial thought was regardless of the outcome of this case, this case will change american policing probably for the better, it's just a question of how that change comes about now in terms of how is this case effects the black community that's a very different question because people are frustrated. we have seen any number of these cases go to trial or before a grand jury and the overwhelming historic odds are in derek chauvin's favor, not slightly,

overwhelmingly in his favor. now with respect to much of what we've been talking about, race plays a critical issue with regard to the o.j. simpson trial. race played a factor same here. we have an unusual presentation of evidence on behal of the prosecution of the case this is the most diverse jury acquit a white police officer for killing a black person if that's what happens when i factor in the case i look at not just how quick the jury comes back but the make up of the jury and impact of the video, all has a strong influence in the outcome of this trial. >> thank you and david, it's unquestionable what you said is true, the weight of history says that the police officer has the benefit of the doubt here. and statistically over time, police officers being

convicted in matters like this are few and far between, however, this is case was very different in a couple extremely notable ways, in 30 plus years in covering court proceedings like this one i have never seen a police officer on trial whose police chief tested essentially against him. i've never seen a police trainer whose job it is to train people what is right to do and wrong to do, i've never seen the trainer of the defendant come forward and say what he did was not to policy there's a blue wall of silence in america there was not for this trial, at least not in those two instances, and it's notable and likely very important. arthur >> well, shep, you just hit on some excellent points. the police chief part, i mean, i think eric nelson did the best

he could cross-examining him saying that -- and the trainer -- if they testified what chauvin did was to policy and was the right thing to do they're basically implicating themselves, saying, ware guilty as well, we're guilty because we trained him how to do it and he caused someone's death so as odd -- as unique i should say -- as it was to take place, the defense attorney was able to bring out that they had personal motivation to make sure what derek chauvin did was not to policy of the police department, was not sanctioned under their juris jurisdiction i want to touch on one point i didn't know, the jurors were able to have phones. >> during sequestration. >> that's unbelievable to me besides temptation, things just pop up on your phone i guess we're living in a very different world.

when i was a prosecutor you were allowed one phone call to your family while the court officer was listening on the line to what was being said. so we're definitely living in a different time. >> david, one of the points of interest along the way was, at the beginning of this, there were two charges allowed for the jury to consider normally there's a charge and there is lesser included charges there was murder in the second degree, fairly high bar, there was man-two, i believe, then there was a deliberation, and there was a hearing about whether murder in the third-degree would be allowed. you said at the time you thought it was a big win for the prosecution. >> yep, that's right, getting murder three added back in again, you got to consider when we argue about these cases they're mainly historical arguments, you look at what happened before, what's likely to happen in light of the historic evidence. i don't think a police officer

has been convicted of murder in the second degree in the state of minnesota i know officer noor was convicted of third degree murder and looking at the circumstances i thought the prosecution had higher likelihood to get conviction on third degree charge something else this whole set of circumstances impacts is, i think the fact that the judge cahill was reversed by the court of appeals who said you can't throw out the third degree murder charge, put it back in, made him unusuallily cautious moving forward asking him to heel is like asking to be sued in america of course you could try it it's highly unlikely given the caution judge cahill exercised after that charge was included back in for derek chauvin. >> when you look at the tacts here, the -- facts, the closing arguments are not evidence, they're to be summation of the

facts or evidence submitted during the trial but arthur, one of the things we did learn and david pointed out, one of the things we learned as viewers during this trial is that george floyd used drugs more than we realized prior to this trial and closely up to the time of this incident and you wonder how not that piece of i if information woul piece of information would play with the jury as a whole but one in particular juror because if you're defense that's all you need >> yeah, i don't know if that's going to carry the day as much as the medical examiner himself although he tried to correct himself on the stand during testimony his written. >> reporter: did testimony his written report did not indicate it was a clear and obvious death by asphyxiation that's why so many other medical experts were called that's a unique circumstance

typically the prosecutor and medical examiner are in lock-step. they prepare together. and they have the same theory of the case here that was not the case i don't think i've ever been involved in a case where the medical examiner testifies and then the plos cuter calls -- then the prosecutor calls three or four other medical experts to not directly contradict but slightly contradict or add to what the medical examiner, the person who examined george floyd testified too. so they took that finding, the defense did, then they added the drugs, the enlarged heart, clogged artery, 80%, they're trying to say it was a totality of the circumstances and he would have died regardless, but the prosecutor in the rebuttal speech did a masterful job almost rebutting that said this

guy's had a long life without problems and this is the one time he had a problem and it caused his death so we don't want to hear about large hearts or preexts -- preh-existing conditions. >> george floyd's heart being too big and derek chauvin's being too small. i want to say with regard to the medical examiners, they do important work and in my experience they're good people but at the end of the day they work with dead bodies in a lab by themselves. their personality are reflected in the report and

she say my job is to make medical determinations not legal determinations jurors can get confused by that. that's why you saw experts called to explain medical testimony, and that normally doesn't happen in most trials because you can't afford it, guys like dr. tobin charges $700 an hour, when he is up to eat breakfast, driving to and from the courthouse or on the plane so prosecutors had more resources than we have seen, that's in part why the evidence unfolded the way it did. >> david, thanks, let's bring the crowd full there and switch to a few cameras we have you can see the crowds are growing around the facility. the level of security is extraordinary even by today's times. there is a level of beara kade -- barricades followed by

razor wire in what amounts to a ditch and two sets of fencing to keep people out of that courthouse at all cost the national guard have been brought in and minneapolis metro police are all working tonight as we wait to listen to the reading of the verdict against derek chauvin in the case of george floyd >> it's 5:00 on the east coast, 2:00 p.m. on the west coast. 4:00 p.m. in minneapolis, st. paul, where moments from now we expect the verdict to be read in the case of derek chauvin the then-cop accused of killing george floyd i mentioned the crowds are growing and they are momentarily when court proceedings begin you see the seal of the state of minnesota on the left side of your screen, we'll know this is about to get under way when the camera pulls out to reveal the courtroom itself then the judge will take over and then the reading of the verdict followed b