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tv   Closing Bell  CNBC  December 23, 2019 3:00pm-5:00pm EST

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of seats that they were expecting to sell. >> a lot >> how many? >> 40,000 i think. and not many >> yeah. >> not nearly that i don't know, it's tough any chargers fans out there, bill and i, we're with you i don't know where we're going, to be honest with you. >> chargers. >> "closing bell" starts right now. welcome to the "closing bell." i'm morgan brennan in for sara eisen at the boeing post, with that stock rallying up 3%, leading the dow higher that after the company fired ceo dennis muilenburg in the wake of the 737 max crisis we've got full coverage of that and the broader market in this last hour of trading >> and i'm carl quintanilla in for wilfred frost. let's look at what's driving the action today s&p 500, a new intraday high nasdaq also hits a high as well and looks to extend its win streak to nine days. the longest streak since 2017. some mixed data today. new home sales top estimates, but durable goods orders did
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miss the mark. joining us for the hour, stephanie link from nuvine what do you think is driving the action right now, if the calendar is so devoid of data points >> so much for a slow day today, right? you had boeing you had over the weekend, china, small stimulus, which i don't think got a lot of press, it should have. and the data was okay. durable goods can be explained away from boeing for the most part new home sales, up 17% year over year i think that's good. chicago fed at a two-year high i think there's enough momentum between now and the end of the year to kind of continue to see green days maybe we tail off a little bit at the end of the year, but i think we'll continue to see green days into the end of the year >> we're on a nice streak so far. let's dive into the biggest story of the year, that is boeing our phil lebeau has the latest on that. hi again, phil >> hey, carl dennis muilenburg was fired after the board met over the
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weekend. the decision was made sunday night. and this was not him saying, i'll resign. it was the board saying, nope, you're out and david calhoun is the incoming boeing ceo. he takes over on january 13th. really from the get-go this morning, i've heard from number of people that calhoun was reaching out to key stakeholders during that phone call this morning, he said that boeing welcomes rigorous oversight and also told dixon, we want to be regulated. a definite change in tone from boeing's leadership compared to what they've had with the faa over the last six to nine months so does that mean we'll see the max back in the air anytime soon hold on, we've still got to see severalhurdles cleared by this plane before max recertification. and they have started to halt 737 max production starting in january. you're still looking at a first quarter with a number of things that have to happen including max recertification. maybe, maybe you could see the
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assembly line fire back up again. but clearly, the stock moving higher on word that david calhoun has sent a message out that there is a new man in charge at boeing and a new approach to doing business >> all right, phil, thank you. stay right this. let's bring in shelia callalu and david boyd to discuss all of these changes. shelia, i'll start with you. we were speaking a little bit earlier today, since then, you've published a note and have been able to dig in a little bit more to what the leadership changes mean what do they mean? >> i don't think david calhoun will do anything radical, but what boeing needed was someone with operational experience that can get a high-quality product out the door on time without any flaws and will mend the relationship with the faa. and you have that with the ceo and a chairman who was formerly ceo of continental airlines. so that will bring a good relationship with its customer base, and also the lessors, which are one third of the customers. >> mike, are we in uncharted
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territory here in terms of how this crisis is playing out and now the changes with leadership? >> it's never happened before. and the change of leadership is good the problem we have is, what's going to happen out there on the marketplace. airlines -- if they don't want to go with boeing, they can go with airbus. airbus has one production line they might be able to crank up called the a-220 but overall, the airline industry across the globe is going to be in slow growth >> stephanie, i'm wondering, we're hearing more and more, transports don't count because of the mess that boeing is, because of the mess that gm, some others were do you think that's true got to look to some other sectors to get the canary in the coal mine? >> i think you have to look at industrials as a whole it's not just transports and i would say that some of the machinery names are acting quite a bit better look at caterpillar, every day, a little bit of green. look at united rentals as to boeing, i think this is the peak of bad news today, right? i know the stock is up, but this was bad news to lose a ceo
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however, it clears the decks now, right and i think that's what this company needed i think people were losing confidence, investors were losing confidence, right the faa certainly was losing confidence the government is starting to lose confidence. so i think this is -- now we have this put behind us, and you can kind of focus on, okay, next steps. and i think that the timing is obviously key, when they do get certified again, which i do believe they will, this stock goes a lot higher. >> although, the way this typically works, shelia is new ceo comes in and kitchen sinks it, right? should this be prepped from bad news in january? >> we're already pricing in concessions doubling from what they announced in july as well as the charges on the 737 max program. so we've already cut our profitability and cut our free cash flow number by $55 over the next three years we're still pricing that in and maintaining our 420 price target >> and this is really a free cash flow story, 2023, right, and about $32 a share. >> it's about 2022, 2023 and how quickly boeing can get rid of the inventory that it has,
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because it has 400 aircraft just sitting there, consuming that inventory. when it liquidates, when production starts back up and when return to service starts back up. >> phil, has there been any kind of reaction? >> definitely from airlines. i've talked with a number of executives today and everybody saying the same thing is, look, i don't want to give my name or go on the record but i heard from david calhoun today, and boy, that was a nice phone call to get. they understand that it doesn't mean that the max is going to be back in the air any sooner, but it helps to reach out to the customers and it's not just dave calhoun who is doing this. it is stan deal, who's in charge of commercial airplanes. greg smith, the cfo who was on the phone with key stakeholders, kim keating out of washington, d.c. and we've heard from a number of representatives on capitol hill who have said, we welcome the change at boeing i think this all falls under the umbrella of a new approach to doing business nobody's expecting miracles overnight and nobody is saying
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that david calhoun will come in and say all is well, but they do need to turn the corner and this is the first step in doing that. >> mike, a new approach to business but getting to this point, what has it meant in terms of possible tailwind or increased business for airbus? >> well, i think oifverall, they could lose some customers. it's not an outside reality that southwest might say, wait a minute, this single supplier might have to go away. but overall, let's keep in mind, in the u.s., it's been american, southwest, united, and a little bit alaska they're the only ones that have been affected. and other than southwest, they all have different access to airplanes. but i think going forward, if they can get this airplane up smoothly, which i think they will, it's going to take all year, but when they get it up smoothly, the u.s. airline industry will be a whole lot stronger than it was before. >> maybe the thing to watch out for now is carriers saying, we're standing by boeing, right? wouldn't that be a logical thing to have on your radar? >> you've seen the carriers waiver over the last couple of
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weeks and the headlines got more negative, but we have a 4,500 bloc on the 737 max. all but 50 have not changed that was a very good skpign. >> you're starting to see some -- >> go ahead. >> let's keep in mind, there have been sales for the max. iag, the parent of british airways did put in a 200 airplane order the max is going to be here to stay the question is, how much hit is it going to be on boeing but for the u.s., it hasn't been that big a hit, except for southwest airlines and they may make some different fleet changes going forward. >> so, phil, i just -- i wanted to go back to the board of boeing for a minute. there's already been some pushback ralph nader, for example, came on the network earlier in the day, said the entire board needs to see an overhaul would you expect to see that there is going to be more pushback or maybe more critical, i guess, analysis of the
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composition of it? >> good question i'm not expecting major turnover at the board level i think now that you've got larry kellner, a longtime continental executive who is going to be the chairman of the board, perhaps you will see him put out some kind of a clear statement in terms of here's the approach of the board. but, look, usually, in these kinds of situations, you don't hear from the board very often an the ceo has changed here, but this is not a usual situation. having said hat, i do not expect big turnover on the board of directors at boeing >> sheila, before we wrap up this conversation, i'm going to take it back to defense for a minute, because part of the reason that boeing has aggressively been able to underbid competitors and one some of the most high-profile defense contracts in the last couple of years, before all of the max stuff happened, was because of the cash flow and the strength of the commercial business what happens now to that piece of boeing's portfolio? >> it's flat it doesn't move, while the rest of defense is up 5%.
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no, i think what we're overlooking is the president signed a defense bull on friday and we have a defense budget that's $758 billion. and i think self-defense is sdea rally. on boeing, it's pretty flat. all about execution and how they execute on those three program wins >> stephanie's laughing, because she knows i like to talk about aerospace and defense. >> we could talk about it all day long >> phil, sheila, thanks, guys. appreciate it. starting off the hour. still ahead on "closing bell," the fed's pivot from hikes last year to cuts this year has been a major narrative for the market coming up, we'll have a look at what 2020 has in store for the central bank of the economy. and later, fantasy sports cites draft kings as making a play to go public. we'll hear what the ceo said about the decision and discuss the potential risks and rewards. also, as we head to break, here's a check on our data trerk. new home sales are at 1.3% in november and durable goods orders fell in
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november, down 2%, missing estimates of a rise of 1.2%. closing bell will be right bk.ac what i love most about being a scientist at 3m is that
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it is green arrows across the board after both the s&p and the nasdaq hit fresh record intra-day highs earlier in the session. any gain for the major averages, the dow, the s&p, and the nasdaq would mean new record highs this afternoon. so we are watching for that. meantime, let's check in on some individual market movers shares of sarepta therapeutics are jumping today after striking a $1.15 billion licensing agreement with roche under the deal, roche will launch and market sarepta's gene therapy for muscular dystrophy outside the united states. that stock is up just about 8% and jd.com's logistics unit is reportedly in early talks with banks about going public jd logistics is targeting a valuation of at least $30 billion. the listing could take place in the second half of 2020. and as you can see, jd's stock is up about 2.5% on that news. >> all right, about 45 minutes left to go 2019 ended up being fed focused with the fed cutting rates
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multiple times let's get to steve liesman for a check of what investors should expect from the fed and the economy in 2020. >> nothing is more central to the outlook in 2020 than what happens to the trade war it looks to have depressed growth here at home and around the world this year, it led the federal reserve to reverse course and cut rates sharply in 2019 here's what to look out for in 2020 first, the trade war should improve somewhat or at least not get worst. as the year drew to a close, that seemed to be the case already with the announcement of a limited u.s./china phase i deal uncertainties will remain, but businesses will learn to invest and prosper in a world second, assuming a lot of damage hasn't already been done, that should help to improve global growth that should thep lead u.s. growth to #.5% in 2020 or a half point above where it likely closed out 2019. but third, the federal reserve should remain on hold while much of this plays out. it could consider raising rates
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with global growth also firm with global inflation and other central banks start to hike. >> for more on the 2020 fed outlook, let's bring in julia coronado, founder of micropolicy perspectives llc julia, good to have you back >> thank you >> wherever the committee is this much in license plaalignme when surprises often come. do you think it's going to be as mild a fed backdrop as we think? >> it's a good baseline expectation. i think it's a solid way to start. we're certainly ending the year on a high note, both in the markets and in the economy the latest labor market data was fantastic. but we do have a lot of uncertainties, so the trade war was one that steve mentioned but the origin impetus for the global slowdown was china reigning in its excess credit growth and china is dealing with a lot of bad loans and some bank failures and so far, they've managed to keep the train on the tracks with their economy but it's far from a foregone
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conclusion this is a lot of uncertainty for the chinese economy, which is the bellwether for the global manufacturing cycle. so that's a big uncertainty. fading fiscal stimulus is one in the u.s. the budget deal that was passed is fine, but the fading impulse from the tax cut and ultimately we aren't going to get as much growth off of federal spending as we did last year, so we're really kind of looking at this trend-like growth picture. and that leaves very little margin for error if something goes wrong >> steph, how do you think about it i know you've been, what, overweight in cyclicals, to say the least. bullish. believing that the global economy has bottomed is that still how you see it going into 2020? >> i do. i look at china and with they just did over the weekend. and that's just confirming that they continue to put the pedal to the metal on stimulus in one way or another that in turn should help global
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growth skand emerging markets also on lagarde, how she starts her whole policy initiative. i think you have a lot of things happening globally next year that could surprise growth to the upside i don't know about here, about the u.s., and especially the valuations in the u.s. if anything, i think the cyclicals do outperform, because they are cheaper and they have exposure to better growth overseas >> julia, the chairman has said, we need to see inflation that's significant and persistent there are some out there who think that 2020 will be a year of surprises of inflation to the upside, at least in food, for example. how likely do you think that is? >> well, if we do get surprises to the upside in food, the fed always looks through those types of commodity shocks. whether it's energy or whether it's food. if we look at core inflation and the drivers of core inflation, there are a lot of structural headwinds that offset the cyclical pressures we see. so we have not even managed to get to their 2% target, even with what we estimate to be a quarter point contribution to core inflation from tariffs this
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year so, that means there's a lot of these, the technology disruption, the health care disinflation that comes from an aging economy. the rental disinflation. we've had such a boom in rents that it's actually moderating now at the peek of the cycle these are factors that are dampening that cyclical upward pressure that we might otherwise see. so i don't think that the fed is going to have to hike rates based on inflation and the real tricky thing for the committee is that in the absence of inflation, what if we start to see things that we worry about in terms of asset bubbles, financial stability concerns the chair is not somebody that worries a lot about that, but there are people on the committee that start to get nervous every time the stock market is soaring and business corporate debt is reaching record highs that might be more of a conversation on the committee in 2020 >> julia, even if the fed here holds steady and continues to watch the economy closely and
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move accordingly, the fact that we have so much negative yielding debt in other parts of the world, do you think we'll see a shift at some of these central bank places like europe, where they start to say, maybe we've gone too far and look at ways to reign that back in >> rein that back in by raising interest rates >> yeah. >> i don't think so. i don't think that's the zrex they're going in i do think the fact that we do see so much negative-yielding debt around the world highlights the constraints that the fed faces. and what's something that they had to face this year, when the global economy was slowing and yields were going torhe other direction, the fed had to follow suit, even if the u.s. economy was basically okay i think we are in global markets and we are in a very low-growth, low-inflation, low interest rate environment. what breaks us out of that is not immediately obvious. so china is actually starting to face the same kind of demographic pressures, slow growth pressures that europe and
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the u.s. and japan have been facing for years, so there really isn't an obvious engine of sort of that cyclical growth. and we're all kind of confronting these, you know, demographic trends that keep us in this low return, low-interest rate environment and i think that's a reality that the fed is going to face. so i don't think that europe goes the other direction anytime soon nor does japan and the uk is actually looking at possibly cutting, depending on how hard brexit hits their economy. but a lot of these factors are structural, and not cyclical >> i mean, i think if inflation rises, because growth is better, i think investors will be able to deal with that a whole lot better i don't see huge inflation on the rise, right? so that's why -- because i don't see growth huge on the rise. i think it's going to inflect a little bit better next year, globally, but not enough on the inflation side it should be like kind of a goldilocks >> all right we'll see. >> unless it's greenspan
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stagnation, which is a different story. >> we'll talk about that next week >> i think those structural issues are exactly why we asked that question. it's not immediately obvious julia kor fad doe, thank you very much. after the break, wedbush predicting a super cycle ahead in 2020. we'll get the word on the street on that call next. and bob iger has already notched $6 billion movies so far this year. we'll discuss disney's big year at the box office and whether next year can keep pace. ♪ ♪
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welcome back to the "closing bell." we've got 35 minutes left of trading and averages are higher. time now to get to the word on the street wedbush raising its price target on apple to $350 from $325 a new street high. the firm stating that the iphone 11 is just the beginning of a super cycle for cupertino and that apple's upcoming slate of 5g iphones will prove a positive catalyst for that stock. certainly is today, it's up more than 1.5%. next, jpmorgan upgrading 3m to neutral. the firm commenting that while certain chemicals remain a risk,
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a shift towards fundamentals could help that stock. >> rbc released a list of internet speckpicks. some interesting calls out today. apple has doubled off its lows of the year. >> i've been trimming, i've talked about that before >> talked about it on the half for like ten minutes >> i got more press today than when i'm actually on the half. >> more profit taking, that's it and i used the money to buy nvid nvidia, to diversify my portfolio. but i thought this was interesting, because a super cycle, no one ea's really talki about a super cycle. but if they do have a super cycle on the horizon, this thing is going to be much more, in terms of valuation, much higher than 20 times forward. so, by the way there are still seven else on this stock so enough people can turn. >> i want to get your thoughts on 3m. this is a note from steven
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tussauds over at jpmorgan. and one thing he said, we think there are structural profit growth concerns with an inability to leverage concerns while over time and without balance sheet and ability to leverage volume growth into higher margins and goes on from there. do you think there's bigger problems, bigger fish to fry at 3m than just macro and trade issues issues >> i think they're at peak margins. they don't have that recovery, that operating leverage potential. but i think it's more of a neutral versus a sell, especially if we think global growth is going to recover this thing has lagged the group year-to-date and it yields 3%. my only issue is, yeah, peak margins and 17 times forward, it's not that compelling to me >> it's been a pretty soggy story all year long, absolutely. >> coming up, we've got your last chance trade, steph is picking an energy play that's lagged the market so far this year we're going to reveal her call, straight ahead >> and later, we'll speak with "the new york times" reporter, who cowrote that critical piece on dennis muilenburg, just one day before the boeing ceo's departure. as we head to break, though, here's a check on bonds.
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treasury yields kicking off the holiday week with small gains. the benchmark ten-year, currently yielding around 1.39%. "closing bell" will be right back - [spokesman] if you've tried college but never finished, (group cheering) snhu lets you transfer up to 90 credits toward you bachelor's degree.
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we've got 29 minutes left to go the s&p is up fractionally with energy and industrials, the best-performing sectors. we are on record closing high watch for the three major indices, though. here are the three things that are driving the action the s&p 500 setting a new intraday high as the year-end rally rolls on the nasdaq hitting a fresh high, as well. and looking to extend its win streak to nine days, which is the longest since 2017 and mixed data today, as new home sales top estimates, but durable goods orders miss the
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mark >> time now for a cnbc news update with brian sullivan hey, brian >> hey, carl thank you very much. here's what is happening at this hour senate minority leader chuck schumer touring a farm in upstate new york he repeated a democratic request that the senate impeachment trial to have president trump include witnesses. >> a lot of my republican colleagues have said, well, these are pretty serious charges, but i want to know if there's more evidence. so the four witnesses that we have asked for are actually eyewitness to what happened. and i don't know, they could tell -- they could give evidence that's exculpatory of the president. they could give evidence that's negative to the president. >> meantime, thousands rallying in hong kong against police action to freeze the money raised by the fund-raising platform to support the city's anti-government protests the rally organizer accusing authorities of acting arbitrarily without substantial evidence and astronauts onboard the international space station showing everybody on the ground
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how they celebrate christmas in space. apparently they do backflips, but also get care packages filled with goodies and some traditional holiday treats you know, morgan and carl like the old dehydrated passion fruitca fruitcake. just your typical holiday. that's the cnbc news update at this hour. i will send it back to you >> sounds delicious. i know they had more holiday gifts on their way from that boeing star liner that never actually made it to the iss, but looks like they were equipped regardless so good the see. brian sullivan thank you. >> the numbers are in for disney's "the rise of skywalker. julia boorstin is at headquarters with the results. >> well, "star wars: the rise of skywalker" brought in $176 million at the domestic box office, that's the 12th biggest opening of all time, but that is at the lower end of expectations and below the two prior "star wars," which grossed $220 million and nearly $2250 million, respectively. this film performance dragged down by some negative reviews, a 57% score on rotten tomatoes and its audience response was a b
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plus cinema score. that is the lowest rating of the five films that lucas film has released since disney bought the company. but the real test, both for "star wars" and for the state of movie going is what happens at the box office over the next week we'll see if "star wars" draws repeat viewings and reaches beyond its core fan base, or if the combination of reviews and less positive word of mouth than prior "star wars" leads it to a steep drop-off in the box office numbers. now, this year, the box office is down about 3% year-to-date. now, even with that decline and with skywalker not living up to recent "star wars" openingings, disney still dominates with about a third of box office market share carl >> that's an incredible stat, julia. thanks so much despite "star wars" coming in at the low end of estimates, disney, as julia has said, has notched six movies that took in more than a $1 billion at the box office this year gil loreya joins us to talk more about this
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good to talk to you. >> thank you for having me >> obviously, their dominance is unquestioned, but at the margin, does it raise questions about the viability or the usefulness of lucas film within the company? >> it does if you think about the other franchise they wrapped up this year with the avengers, that finished at a high "avengers: end game" finished at it has top-grossing movie, where "star wars" ended up with more on a low with this movie it so raises a question about the value of this franchise as compared to the other franchise they bought for $4 million, which was marvel and avengers. >> they've already amortized the cost on lucas film, right, long ago? >> that's right. but the expectations from disney keep rising. let's not forget that this record year is the year they're going to have to comp next year and the best way to have a tough year is to comp a good year. and if you think about even the marvel movies that they have coming out next year, they're
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going to be marvels with black widow and the eternals it's going to be a down year and even though that's an expectation, this "star wars" movie maybe is the beginning of that off year that disney may end up having next year. >> gayle, the question i keep coming back to is how does disney balance the box office versus the streaming service >> well, that is the big question disney is a fantastic company that has the value of its content has transcended all the forms of distribution, but we are in the midst of a very important transition that transition to direct-to-consumer may get people excited about disney, but let's not forget the experience retailers and brand companies have had with the transition to direct-to-consumer it's a lower margin business and so, disney has to make this transition successfully. it has to make it profitably, and that's a big question over the next few years
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>> steph, is this a transition that you buy into? >> no, i've actually been trimming it. the stock is up 32% year-to-date and i think it's all because of dtc, quite frankly i don't think people really -- the headlines of films and they do have to do well, but i think that's a little bit more -- less important, i should say. everyone wants them to get ott right and espn plus right and all of that. and that's what they need to do. i think it's priced for perfection at this point, at this multiple, given the run that it's had. >> gayle, how do you think about disney i know you mentioned that the expectation is baked in for it to be a down year potentially next year, at least from a box office standpoint, but how does disney, i guess, navigate the content landscape with all of these other streaming services coming online as well? >> well, they've made a very important move to own the distribution they own disney plus, they now own a majority of hulu, they own espn plus. so they've taken matters into their own hands. that doesn't make that business anymore profitable
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they're going to make -- more than all their money on the parks and the broadcast and lose money in the direct-to-consumer business so owning it is good, it's strategically important, but in the short-term, it means a pretty big drag on their profit. >> all right, gil loreya, thanks for joining us today shares of disney are down 1.5% right now. all right, we've got 22 minutes before the bell. here is where we stand right now with the major averages. the dow is up about 0.4%, the s&p is up 0.1%, and the nasdaq is up 0.3% any close higher is a new record close. so we are on watch for that. up next, we've got your last chance trade steph is looking at one oil stock that's up only 2% this year >> a bargain later, fantasy sports company draft kings is on the road to becoming a public company. details on that when "closing bell" comes back ♪
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♪ ♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg.
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welcome back take a look at the s&p sector heat map any close higher, as morgan said before the break, would be a record and 25 more points, you're looking at the best year for the
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s&p since 1997 >> wow, we have less than 19 minutes left here to go. here's a check on the closing bell big board on top, the three major averages all on pace for a record close in the middle, today's biggest dow leaders, boeing, 3m, and apple. and on the bottom, today's dow laggards, disney, american express, and verizon >> so about 18 minutes left in the session. stephanie, let's talk about this last chance trade. >> okay, conocophillips. so a laggard, up 2%, as you mentioned, but it's a flee cash flow yield right now at 9% this company has great assets, high-quality integrated oil company. their assets are in the balken, eag eagleford, this will lead to good solid production growth next year and free cash flow growth, which is why i mentioned the yield before they're going to gender $2.6 billion in free cash flow next year they just announced a new buyback program. they're buying back already 5% of their shares outstanding and
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it's yielding 2% a little flimsy, but i think there's room to go there i like the valuation like that it's lagged. great management team. it's a bet on energy >> where does crude need to be for this stock to outperform the way you see it >> 50. >> the next ten years, they'll generate $50 billion that's a lot so i like the risk/reward, to be honest with you. >> and one of the things you were mentioning, there's a stealth rally afoot with energy overall right now. >> it's really amazing looking at some of these oil services company, i'm in schlumberger, but look at these up 11% and apache is up 17%. it's not going to take much guys, that's the point less than 5% of the s&p 500 in terms of its weighting that's kind of telling, too. >> all right conocophillips, that's your last chance trade this is the last commercial break we are going to take before the close we'll take you inside the market zone next. and as we head to break, here are the biggest winners and losers in the s&p this year. "closing bel
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calhoun. dave calhoun has been the executive chairman at boeing on the board of directors for a couple of years now. has been on the board since 2009 on january 13th, he becomes president and ceo. when you look at his game plan, it really comes down to three things right now, and we're talking broad concepts here. first one, rebuild the faa relationship and to that end, one of his first calls today was to the head of the faa, a reset for the 737 max. that doesn't mean scrapping all the work that's been done, but it does mean taking a fresh look at everything and let's see, how do we get this thing recertified again. finally, repairing airline confidence in boeing, and part of that is calhoun along with stan deal, the head of commercial airplanes, along with greg smith, the cfo, tim keating. guess what they spent today doing. calling key stakeholders, not just one or two, but dozens making it very clear to them that there is no leadership at boeing and there is a new day beginning in terms of trying to get the max certified, recertified, and getting boeing back on track.
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guys, back to you. >> steph, i mean, it was just a couple of weeks ago that the conversation here on this desk was the worst is -- seems to be behind for boeing and maybe the company is turning a corner and then this happens. >> this is a reset, and i think a much-needed reset, because i think muilenburg lost a lot of credibility, a lot not just with investors, but with the faa and that article that came out over the weekend, that was really damning too i think to the point that you can get like no news coming out of this company, like it being quiet, remember a couple of years ago, it was fantastic. they were always in the news every single day and as soon as things went quiet, that's when the stock could recover. and i think that's very much what's going to happen in 2020 for boeing >> phil, wherever a stock rises on the exit of an executive, but in this case adds $3 billion to market cap, it does suggest that investor were ready to say good-bye >> i think investors were ready a while ago. and it was increasingly clear, when you talked with people about dennis muilenburg, it was not a case of, well, boy, will he stick around and stay in this
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job? it was a question of, when did they make a leadership change? and you and i discussed this, carl the question came up when he was on capitol hill. is he going to be replaced and at the time i said, look, that would add a level of uncertainty into what's going on with the max and getting it recertified. but it's clear, the last month, especially, the damaged relationship between boeing and the faa, they needed to make a change >> phil lebeau on boeing phil, thanks as always for coming in from vacation for a full day of work new home sales, meantime, rising in november >> home shoppers in november signed slightly more contracts to buy newly built homes in october, but october's numbers were revised down sharply. still, sales were up 17% annually, and that annualized pace has now been over 700,000 for five of the past six months. the first stocks of the big builders did take a small hit on the news, but they're way up year-to-date, regardless that may be because of the median price of a new home sold in november.
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it jumped 7% annually. more pricey homes selling. fewer, cheaper homes selling, because builders are still not putting up enough entry-level homes to meet that demand. back to you guys >> diana olick, thank you. tom lee, the fact that we've seen housing basically stabilize, basically see some green shoots this year, how in jeopardy is this that we'll now see these inventory shortfalls going into next year >> it's a problem, because home buyers need stuff to buy but it's a good problem to have. i think that it's really reflecting that tail wind. you know, millennials are entering their prime income year it's a huge cohort, causing the number of 30 to 50-year-olds to grow for the first time in more than 12 years. so it's a big tailwind it's important to the economy, because every new home being built is four full-time jobs and obviously, it's credit demand i think this is all pointing to a really good picture for the next few years >> stephanie, how do you play housing right now, if you would? >> i've been selling dr horton it sounds like i'm selling a lot, today, doesn't it
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>> a little bit. >> but sometimes you have to trim if you make good money -- i'm not perfect at market timing, so dr horton i love, but i have been taking profits. but i've been putting that into home epot, because home depot is still down 10% from its high when they reported earnings and i think this whole housing theme will continue. i think this is fabulous for the consumer and i think that median home prices were up mid-single digits also gives consumers confidence of what they own and what it's worth. so i think all of that plays into a very good consumer. so i think 2020 is another good year for the consumer. >> all right meanwhile, sports betting company draft kings is on the road to becoming a public company. julia boorstin has more. julia? >> that's right, morgan. draft kings is merging with diamond eagle acquisition copper it's a special purpose acquisition company that already trades on the nasdaq now, this allows the fantasy sports and sports gambling company draft kings to go public without a typical ipo. shares of diamond eagle soaring today, up nearly 10% diamond eagle will change its
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name to draft kings and change its ticker symbol. the merger is expected to close in the first half of next year and the company will trade on the nasdaq with an estimated market cap of over $3 billion. guys, back over to you >> so, tom lee, if you think the consumer might be a place to focus or continue focusing, you should say, as an investor, does something like the first ever pure play, publicly traded, u.s. sports gambling company make sense? >> i think it's going to appeal to a lot of people, you know, who are into sports betting and it actually has been a big business and this is sort of a high-quality name. so i can see this being a name a lot of people can relate to. but valuation, i don't know the valuation, so i can't really say if it's going to be a great equity >> stephanie, i think what's kind of fascinating about this is the fact that it's once again an example of a spec, a special acquisition company. it's this three-way merger who's going to through the back door take this company public we've been talking so much about
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direct listings, but do you think we'll see more of this type of structure continue to be used >> but spacs are not usually that liquid. that's actually the thing that impressed me, that and along with cap re and wellington backing them and even some big-time players that are backing this entity. ic this one might be a bit more unique and it might, as a result, be pretty successful and more liquid for sure, more interest >> the ownership structure for both has been through multiple chapters in recent years >> finally, elon musk tweeting that his stock is, quote, so high after tesla hit a record in today's trading, it finally hit $420 a share more than a year after his notorious august of '18 funding secured tweet, when he wrote that he planned to take tesla private at that level, comes after tesla reportedly landing this $1.4 billion loan from chinese banks to build out its shanghai gigafactory one thing people have been noticing, steph, is the disparity between the equity and the debt and whether or not that means
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anything, going into year end. >> and apparently it doesn't, at these levels but the news, this is really big news, to secure financing over in china this actually gives more credibility to the growth story and the total addressable market story. i just can't play it, because i can't get my hands around the valuation. it's never been a valuation, though it's been a cult stock, you either believe it in or you don't. i'll miss this one, unfortunately. >> yeah. and tom, i mean, there's the deputy financing secured where china is concerned, but you also have the reports that it has picked a side or it's settled on a site for another gigafactory in germany is this is a situation where this company is going more global and thus going to continue to disrupt the auto manufacturing sector >> i mean, tesla has defied all the skeptics it's been one our granny shops and fit a lot of themes that we think the appropriate for our clients. and i think it's really showing that tesla is kind of -- we've reached that tipping point where electrification is a big deal
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and it's going to transcend just an auto purchase cycle and i think tesla is really affecting people's lives i think it's good news, but it's really impressive the performance this year. >> what makes it a granny shot, tom, given the leverage? >> so valuation, obviously, is -- as stephanie pointed out -- a little tougher to understand but you know a lot of the big stocks over the past decade really had problems with valuations in the beginning. but it's -- you know, there are big planned automation and ai. they're a millennial play. i think millennials really relate to tesla's brand much more than they do to traditional automaker brands and they're a huge luxury seller and it also fits asset heavy i mean, tesla is a really asset heavy company. if inflationary conditions pick up, companies like tesla actually generate better earnings growth over the next decade because, you know, their liability structure improves, but they benefit from the asset turns. >> interesting that's a key point right there we've got less than four minutes left to go here. the dow is up 98 points,
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slipping slightly. shares of aurora cannabis, though, sinking in today's session. and frank collins is at hq with more >> aurora cannabis down just about 10% after the face of the company, chief corporate officer kim batly reresigned over the weekend. aurora detailing its plans for the second year of legal cannabis in canada it's expected to be available to consumers by january cannabis stocks overall expected to get a big boost from licensing changes in ontario that could lead to 1,000 store openings in 2020 jeffries also downgrading the stock that lost 58% of its value, year-to-date. back over to you >> thanks, frank i mean, it's hard to look at, at some point, steph. >> i can't believe somebody had a buy on this, all the way down. the competition has been fierce. the adoption, obviously, very disappointing. and this was truly a bubble a year ago, right? this really was. it's bursting and this is what happens when you see this kind
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of thing happen. >> yeah, tom, is it fair to say what we've seen happen in cannabis stocks in the past year is kind of similar to what we saw happen with bitcoin and cryptocurrencies the year before >> yeah, i guess the charts look similar. i think cannabis kind of reminds me of some of the early internet business models, which was profitless prosperity. there might be growing demand, but until someone can capture value properly, it's going to be tough to be creating something that generates a sustainable return on equity >> that's quite a chart. just under two minutes left to go let's get to rick santelli for a check on bonds hey, rick. >> hey, good afternoon, call intraday of tens you know, we're basically unchanged at 192 but for a while, looked like we were going to test 195 again got close to 194 and failed. as you can see on this one-week chart, it's happened several times. also a bit of a curve flattening day with two-year note yields up two basis points finally, all the talk about corporate bonds this year having a wild year! take a look at year-to-date of
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the barclays investment grade corporate bond index. it's narrowed, encountered a hundred. the tightest it's been all year. and bertha, second session in a row we've stacked right on top and didn't intersect really aggressive, big nasdaq again. >> nasdaq up for the ninth straight session it's the 29th record close of the year and apple a big reason why, on pace for its best year since 2009 the recovery from the financial crisis and chips have followed right along with what a difference a year makes we're not so worried about tariffs anymore. take a look at amd that slumped 14.5% over four perilous sessions going into christmas last year. this year, it's at a new all-time high, and ipos riding right along with genomics and bridge bio among the best performers in biotech >> still a new high, eking out just very, very narrow gains good day for energy, though.
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look at apache, climbing more than 9% after the company entered into a joint venture with total to develop projects off the coast. other exploration and protection stocks like devon also up. big month for all of these some of them up 20% or more. oil close to $61 there's the closing bell again, near the lows for the session. s&p just up two points welcome to the "closing bell." i'm carl quintanilla in for wilfred frost. >> and i'm morgan brennan. fresh record closes for all three of the major averages with the dow finishing the day up 96 points the s&p also finishing up just barely, by finishing up higher and the nasdaq also higher its ninth straight day of gains, which is the longest win streak for the nasdaq since the fall of
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2017 the russell also finishing the day in the green joining us to talk about the market day, stephanie link, head of global equities research at nuvine and tom lee with fund strat global advisers, both still with us. stephanie, i'll start with you what a difference a year makes as we come into christmas eve. >> thanks for the fed, thanks for global stimulus, fiscal and monetary policy. it really does, the combination clearly works. but this year was all about multiple expansion, guys this was not about earnings, right? you went from 13.9 times on forward s&p multiple last december you're now at about 18 times forward. we are getting rich. what we really need to see in 2020 is earnings growth. i think you're going to get it i don't think you're going to get it that much in the first quarter, but i think you'll get it in the second half of the year and that's going to be driver. and what's going to drive that is the global growth story >> tom, you said this year is largely about reversing policy errors over at the fed, and next year would be about, in your words, animal spirits.
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does that mean earnings rebound? or are we relying on p\e expansion once again >> it's exactly what stephanie said you know, i think, when i talked about animal spirits, i think it's really confidence of not only businesses, so capex spending, i think, has upside next year, but it's the recovery in the pmis that's actually going to deliver upside to earnings i think the street is looking to mid-to-high single digits. i think next year's earnings could be up more than 10%. if stephanie's right, we still have a double-digit year for stocks >> wow i would take 10% i was just thinking maybe 5% or so, but take 10%, for sure >> well, historically, single-digit years after big year are not that common, right? >> and think about it, there are sectors that are trading a lot lower multiples than other sectors. technology and the f.a.a.n.g. stock, they're kind of rich, right? but guess what, energy's not they're not expensive if you're going to see a recovery globally industrials still have lagged some of the other higher, more
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exciting places in the market, so there are pockets of where you can actually invest and feel comfortable about on the valuation front in my mind and if you get earnings growth on top of it, that's icing on the cake >> well, the new highs are definitely attracting bulls back into the market. according to a new report out of b of a, more than $16 billion flowed into u.s. equities in the pa past week. that comes as investor settlement climbed to its highest reading since 2018 tom, i'm not sure how you feel about this given that flows and sentiment were something that the bulls used for their wall of worry all year long. >> yeah. well, you know, i think that people withdrew the most money in 2019 and was almost a record outflow for individual investors. so to see some of it come back in is actually good. you know, merrill lynch has another great survey where they look at future expectations by institutional investors. and that actually flipped positive but it's the type of flip that you saw only in '02, '09, and '98. so that sort of flipped from really negative to positive
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tends to have a lot of follow-through so i think it's going to really help 2020. >> stephanie, it's really fascinating, because we've seen so many asset classes rally and log gains this year. but the fact that you've seen it happen within equities and happen within treasuries as well, how unusual is that and would you expect it to continue? >> i think it's very unusual and i don't think it's going to continue but then again, i would have said, sell bonds a year ago, right? maybe buying stocks at this point is not the -- is not the easy thing to do like it was last year. it was hard to buy in december of last year, but it was the right thing to do. you knew things were so depressed. right now you're more at risk on the bonds than you are in stocks again, tocm and i are talking about global growth starting to pick up. >> looking at your 2020 investment themes right now, where exactly should investors be positioning themselves? >> i think one thing that people can connect with what stephanie was just talking about is, there's a lot of earnings reversals taking place
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you know, industrials, tack, energy materials had negative earnings growth this year, as that turns positive, that's an important dynamic. so some of the things that we like are, you want to overweight industrials, tech, financials, energy materials, because there's a big earnings upside. but i think a theme that's going to gain a lot of attraction next year is millennials. millennials are already having an impact on housing they're helping stocks like tesla, may get involved in stocks like draft kings. as we think about the next decade, it's about millennial spend habits, what they like and what they're going to do thaur goi thaur goi it might be a good year, globally, u.s., but it's going to be a better year in e.m., in japan, in europe, that relative to u.s., the bargains just aren't there >> i totally agree with that argument, especially at the
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valuations of where we are e.m. is at 12 times forward. europe is at 15 times. and you can probably make a case that you could see some margin expansion. i feel like i always say that about european companies, and we never really see it. but i do think you can actually see a little bit of a boost. and this is all driven by what we talked about earlier, cyan. if china can stabilize and they continue to stimulate and they're very accommodative on their monetary policy, as well, and we don't have this trade tension, then that's going to be the driver and that's why you are going to want to have exposure and this is why tom and i go back to why we like industrials. it has that -- and morgan. >> tom, i remember when one of your key arguments was that global managers would want to own u.s. isn't that story get a little reversed in 2020 >> yeah, i think if we were to look at a 12-month window and people feel value is a place they want to get more exposure, it makes a lot of sense. e.m. is 63% value, europe is over 50% u.s. is less than 36%. so if value is kboigoing to do l
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that's why that could be the year for em and europe but in the next ten years, i think population growth and tech exposure really will make u.s. stand out for the rest of the world. i think the surprise the next decade is the u.s. stock market could go to a 30 p\e and the rest of the world could still be stuck at a 10 p\e. >> tom has been pushing the u.s. demographic story, which some are using as a negative, but tom is using as a positive >> i think it is absolutely a positive it's a huge tail winder. and i think you want to pay attention to what the plen millennials are doing, but not just the millennials, but gen "z." that's a totally different generation than the millennials. there's going to be these puts and takes to various different generati generations, but i definitely think you want to be there >> it's amazing, we're having this whole conversation. we've got a big presidential election next year how does that affect all of this >> well, it's going to keep it exciting, for sure, because as you know, there's very different policies depending on who wins
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and i think the election cycle means that the primaries in the first part, that's going to be something that keeps everyone on edge ultimately, i think it's going to be buying opportunities but, you know, it's going to be interesting. >> it can't all be perfect, guys come on! >> why not >> because we need is a wall of worry. and when we don't have a wall of worry, then i worry. >> good discussion, stephanie, tom, enjoy vacation. we'll see you soon >> yeah. have a great holiday when we come back, we'll talk more about the crisis at boeing with "new york times" reporter david gels. he wrote a critical piece about muilenburg over the weekend. we'll get his reactionto today's news when "closing bell" returns in 90 seconds. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats...
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♪ whether that's taking in every moment... or capturing a moment worth bringing back. that's room for possibility. ♪ how far we can go, oh oh ♪ has there ever been a day where you're sitting around going, you know what, this is not working. it's better for the company for me to leave. >> andrew, i think it's fair to say, i've thought about it but to be frank, that's not what's in my character i don't see running away from a challenge, resigning, as the right solution >> foempl boeing ceo dennis muilenburg at "the new york times" deal book conference back in november. we now know muilenburg is out. chairman david calhoun will take over effective february 13th david gelles joins us. he wrote a story for "the new
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york times," at boeing, ceo stumbles deepen crisis and scott brenner. thanks for being with us today david, quite a piece it's such a riveting look at the various constituencies that muilenburg repeatedly disappointed i wonder, as you were reporting it over the weekend or before, if you knew that this event today was going to come? >> no, we didn't know it but, listen, you said it, just about every key stakeholder has been frustrated with dennis' performance. the faa, routinely felt like he was front running them, asking him to certify this plane before he was ready lawmakers felt like he was evasive in his congressional testimony. customers were deeply frustrated with gary keller, the ceo of southwest airlines, telling us that his performance had wreaked ask on the availability of the company to schedule its flights. and the victims' families said that his name brought tears to their eyes so there was simply no way that
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the board after this cascade of setbacks, i think, could stand by and let him to continue to run the company. >> scott, a lot has been made of the corporate culture at boeing, and certainly in part from david's own reporting, as well how does that need to change does it need to change and is that basically how we got into the position we're in today? >> i think it does i mean, you have boeing, which is a very representable company, producing great products and they get caught in a situation where they don't have absolute control anymore and normally, they push the data and the data, they believe, should answer any questions. and here we have a situation where the data is not answering all the questions. they are having problems with the faa, i understand, where they are being more, i don't want to use the word arrogant, but they're not being as cooperative as they probably should be. and so, maybe getting an engineer out of that top spot may buy them a little bit of time, but they really do need to
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change a lot of things that they're doing over there at boeing >> and this is a situation -- >> go ahead. >> this is a situation where data wasn't going to get them out of this. and that has been the key. dennis was an engineer he was trying to do this, essentially, buy an engineer's playbook, and he kept trying to be optimistic. and time and again, he got out ahead of himself and wound up promising things that he simply couldn't deliver and instead, he needed to be working to repair relations with his regulator, to calm the nerves and be transparent with customers and none of that was happening >> i was about to say, david reuters has some news today, regarding a statement from the company on his severance, which they say could approach $39 million per some earlier filings. i guess he's allowed some -- he's eligible for some placement services money the heat is not over, whether -- on muilenburg or the board for why they were so overconfident
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>> as for his compensation, the company just told me before i came on the air that they are not making any announcements on that and i understand, according to my sources, that they are still, frankly, trying to figure out exactly what his package is going to be. so we just have to stay tuned on that on the new management team, it bears discussing we have greg smith, the cfo, in as the interim for a period of about three weeks. and dave calhoun, a long time kpes executive, who was named chairman of the boeing company in october, taking over as full time ceo on january 13th already, people are not exactly happy with that. dave was among those who has supported dennis for the past many months, even as recently as last friday. the boeing company said dave calhoun was standing by his statements made earlier, that he and the board supported dennis' performance. and i just spoke with senator richard blumenthal and i think it was already up on our story
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he says that dave is not, you know, the fix. dave is part of this culture and in his interview with me, he called on him to testify as soon as possible. because he believes that dave is representative of the same culture that got us where we are today. >> scott, how do you think this plays out, especially in light of those comments right there? we've already had guests on our air today push back and made the argument that the entire board needs to be looked at, skrut ny scrutinized and revamped right now. >> well, boeing obviously has a public relations crisis that they need to address, but they really need to focus on fixing the issue and getting this plane back in the air. faa is clearly going to take its time, make sure they get everything done, as appropriate. i know the faa administrator sent oa message around to all fa personnel recently saying, get this job done right. don't feel you need to be rushed in any way in the meantime, boeing is, you know, having issues with their customers, making big payouts to
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jetblue and southwest, because their airplanes are grounded, deal with a congress that is going to try and rewrite all of the way products are certified so boeing has a lot on its hands right now, but they really need focus on solving this problem and getting this airplane back up in the air. >> david, what's the next big milestone you're looking for i wonder if you think january brings constructive news about return to service sore is it going to be more about the impact, say, to earnings or cash flow in ways that we don't yet understand >> well, we can't overstate what a profound juncture boeing is at right now. all year, muilenburg said the recertification process would be happening h year we all know now as of last week that's not true. steve dixon, the faa administrator saying this plane will not fly again until 2020. and boeing taking this enormo enormously consequential decision to shut down the 737
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max factory. that decision alone signals that boeing doesn't know when this plane is going to be back in the air. they can't keep piling up these aircraft and they need to stop production of their most important product for months until they can get this sort ed out as for milestones, the faa said it again today, there is no timetable they are working as for next steps, yeah, we've got earnings coming up and boeing's inevitably going to take another multi-billion dollar hit we already know they've begun the process of compensating airlines, including southwest. that's going to be a big, big checks they are writing. but, listen, they need to start the proper process of recertifying the plane that involves more papwork that they have not yet delivered to the faa. it involves the final readout from several tests that were conducted where there were complications if recent weeks and the faa has to go through their rather slow motions of
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doing the certification test flight and making sure all the ducks are in a row so we already know that united, for example, has pushed flights into june. >> yeah, certainly not out of the woods by any stretch a conversation, a topic we'll continue to talk about gentlemen, thanks for joining us today. >> great, thank you. up next, the countdown is on christmas eve is just hours away and the last-minute shopping rush is in full swing. which retailers are best-positioned for that shopping surge we'll discuss that, next >> later on, will there be a video game console under your tree turns out, maybe not we'll explain why when "closing bell" comes back turn on my tv and boom, it's got all my favorite shows right there. i wish my trading platform worked like that. well have you tried thinkorswim? this is totally customizable, so you focus only on what you want. okay, it's got screeners and watchlists. and you can even see how your predictions might affect the value of the stocks you're interested in. now this is what i'm talking about. yeah, it'll free up more time for your...
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welcome back to "closing bell." we're in the final stretch for holiday shopping and for all of you procrastinators out there, today is the final day for amazon prime's free one-day shipping our next guest says holiday sales will see 4% growth compared to last year. but this does come as more than 9,300 retail locations closed their doors, with bankruptcies the driving force. here to break down the retail sector and what we can expect in 2020 is dana telsey at post 9. welcome.
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>> thank you thank you for having me. did you get all of your holiday shopping done? >> for the most part but i will tell you this, the one-day shopping to me is really fascinating. whether it's amazon or walmart, because it seems to me this holiday season is really the first major test case to see how it changes consumer behavior in these last final days and hours of shopping. how are you watching it? >> i think it is changing shopper behavior i think people can procrastinate longer i think they can look earlier. the discounts this last weekend and black friday, it was greater on black friday. still a lot of discounts this weekend, but on average, the discount rate was higher black friday >> so who's winning the holiday wars >> it's about value and convenience. when you think about target and walmart, it's almost off the malls a little bit winning more than on the mall if you're on the mall, are you offering something different is it the aluminlululemons out e the luxury goods players that are out there. everybody has their chance, but you've got to innovate in order
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to win >> when does retail traffic become an important metric again. there's going to be a point where it's going to flatten out, won't it >> we haven't seen that yet, because we've seen traffic be down around 3 to 4% every year but what the real difference is, is the amalls versus everyone else the halo effect of having digital and physical is there. on average, when you open a new store, your online sales can go up 20% plus. when you close a store, your online sales can go down pretty much by 50% or more. >> do you think 2020, we'll be saying good-bye to some legacy names in chapter 11 or worse >> i think we're seeing some more closures in 2020. i think some of the names where you've had partial closures in '19, you'll see more in 2020 we haven't had the big box closures come yet. and we could see some more of those as we get to '21 and beyond >> i've got to get your thoughts on tjx the stock ended the day pretty much unchanged, and that was
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despite senator schumer saying that he wants a federal probe of t.j. maxx, marshal's, and home goods stores over sales of deadly products. basically, the company continuing to sale products that had been recalled. why don't you think it dented the stock more and how big of a risk is it for investors given the fact that this has been a name that's ripped higher this year. >> i think you have a lot of companies that are large public companies, where on average, there are things that have happened i think they take heed to those items, i think they address them, and i think consumers wouldn't be going everywhere if there were safety issues and huge concerns. i think when you call them the end of this week or next week, it will be addressed >> dana telsey, thank you for joining us >> thank you still ahead, rolling the dice fantasy sports company draft king set to become a public company, but it's foregoing the typical ipo process. we'll dig in on those details when "closing bell" returns. most people think of verizon as a reliable phone company.
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here's a look at the "closing bell" big board on the top, all three major averages closing at record highs today. in the middle, the best-performing sectors today, energies, materials. and on the bottom, the worst of the day, utilities, come services and consumer staples. >> it's time now for a cnbc news update with bill griffeth. bill >> morgan, here's what's happening at this hour secretary of state mike pompeo tweeted a photo of him giving
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the oath of office to the new u.s. ambassador to russia. john sullivan. mr. sullivan was the person who told former u.s. ambassador to ukraine, marie yovanovitch, that president trump had lost confidence in her. sullivan replaces jon huntsman, who stepped down from that post in august to run for governor of u.s. next year thousands of civilians have fled the town of northern syria, following continuous bombardment and air raids over the past week by syrian forces the city sits on a key highway, linking damascus with the northern city of aleppo. and down under, firefighters continue to fight those massive wildfires in australia around 200 of them are burning in four states, with new south wales alone accounts for more than half. >> we shouldn't underestimate just how much of the natural environment is being burned and that's got serious ecological impacts as well as the fire
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impact, as well. and i think that will be felt for years to come. >> not good. that is the cnbc news update this hour. back to you guys >> all right, bill, thank you very much. got a news alert on boeing this morning phil lebeau has details on this. phil >> this has to do with boeing suspending 737 max production. that will happen in january. well, today the company is out, telling all of the suppliers who supplied to the 737 line, stop your shipments of parts in mid-january for one month. now, the reason we're doing this now is because those suppliers can now look at their own order books, their own production logs at their facilities and say, okay, how do we manage this? if we're not going to ship to boeing for a month, do we have to do some judgments of our own, whether it's with manpower or shifts et cetera, so again, boeing telling their suppliers, stop shipments on the 737 max for one month starting in mid-january. guys, this is fluid. this could always adjust again over the next couple of weeks, but that's their indication at
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this point to their suppliers. >> i get that this is fluid, phil but the fact that they're saying, stop shipments for a month. is the implication here at least right now or the assumption that that's going to be how long this halt is in place >> no, i think that it's more an indication, morgan, at some point within that one-month time frame, they'll have better clarity. both in terms of whether or not the max is getting recertified and when they might be able to fire up the assembly lines again. >> got it. phil lebeau, thank you >> as we said earlier, daft kings announcing plans to go public in a merger with a special purpose acquisition company, diamond eagle and gaming technology companies sb tech expected to close in the first half of next year. the deal makes draft kings the only vertically integrated pure play sports betting and online gaming company in the u.s. draft kings ceo jason robbins was on squawk this morning following the announcement, explaining why he thinks now is the time to raise some capital >> there's a lot of new states that have recently legalized online sports betting. michigan just recently, colorado
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about a month or so before so we have a lot of really exciting new markets that we would like to launch and that requires capital investments. >> david katz from jeffries is here on set talking more about this story david, good to have you in is now the time to start monetizing the promise of what we know about at least fantasy or sports betting? >> look, i think what the reason we're seeing what we're seeing, as you point out, is that the story of u.s. sports betting is here in the u.s. but there hasn't been any pure play stock to buy. we just hosted, jeffries id, with our uk colleagues and clients a bus trip weeks ago around new jersey, came back with a great set of information. investors were like, that's great, but what can i buy? and i think that's what we're seeing here today. >> how big is the opportunity in the u.s. for sports gambling >> it's a terrific debate that will go on for a while our estimate is $13 billion. i think the estimates in the information provided this
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morning began at 14 and went up to 23. that debate goes on and on i think the pivotal matters are whether or not there is mobile and one of the other pivotal matters that we don't know about, you know, many states is whether in-person registration is required for online wagering. mississippi has no mobile. illinois past does have mobile, but it does require in-person signup in order for that to occur. all of those are going to affect how big the revenue opportunity ultimately is. >> i think pack to a couple of years ago when i was in atlantic citi covering all the casino closures and part to have the reason why we got to this point where you're seeing now the states passing legalization of sports betting is because new jersey was looking to it as an opportunity to turn around and save its gambling business what does this do to the casinos and how much of a case study is new jersey for the rest of the country? >> look, i think one of the critical elements that all of the states are looking at, to your point, morgan is that, you
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know, that they rely on the tax research generated by those casinos. whether it's new jersey or anywhere else. so the licenses are being funneled or filtered through the casinos. and so they are driving that process. now, the fact of the matter is, fan duel is doing quite well in new jersey through their partnership. and there's such a small percentage of the revenue that's actually retail. and so when we go to the casino operators and those management teams and say, these numbers look great, the promise sounds fantastic. what should i do to my model the answer is, nothing yet so what they're making, they are spending on bringing new customers in and so far, there's no measurable impact on ggr on casino for revenue >> in the early days, when this was starting to bubble, people pointed to online poker and a hard reversal of policy that burned a lot of investors. are we past worrying about that? >> we -- look, i think there's a wide range of opinions we are not particularly, you know, worried about that
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what we believe to be the case is that mobile will be the driver of this revenue and profit opportunity and more importantly, the end game wagering opportunity is, you know, potentially very large and there's a range of opinions about that for example, you're watching a game with -- i have a text that's been going on for five years with my cousins and brothers, i bet pete alonzo's hitting this into a parking lot, 20 bucks now we can go on an app and place a bet right in the middle of the game. that's not the case. europe that will be the opportunity right here in the u.s. and you'll start to see that next baseball season zp >> live viewership has a lot invested in this as well that's going to be a big deal for media as well as gambling. david, with thanks up next, if you're expecting a video game console this holiday season, you may be out of luck. we've got the reason why ahead later on, the super rich are setting up for 2020. what millionaires are expecting from the economy and the stock market next year, when "closing bell" comes back
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welcome back video game consoles were once a hot commodity during the holiday season, but it turns out, this year could shake out a bit differently. josh lipton is here with that story. josh >> so, morgan, idc says 37.5 million consoles will ship this year now, that would be a drop of about 13%. i checked in with idc's lewis ward he's the head of gaming over there. he says nintendo fans are still buying consoles, but sony and microsoft fans are actually putting off purchases and in part, that's because they know knew ones are on the way next year ultimately, ward thinks sony is going to sell more, because it has a bigger brand and more markets, but we can't know for sure, he argues, until those companies unveil price points and games. remember, this is a $44 billion
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market gamers expect those new consoles to be faster with better graphics guys, back to you. >> josh, i wonder whether or not that phenomenon of waiting for the next generation is more pronounced in gaming than we already know it is in phones, for example. >> yeah, it's interesting to watch the trends here, carl, you know, for consoles in general, actually, i mentioned, i talked to lewis ward. in terms of growth, there is a $44 billion market he sees growth at about 5% a year on average through 2023, but it will be interesting to watch how that plays out, because that's an industry that faces different pressures. mobile gaming, still coming on strong there's been that resurgence in pc gaming. you also had the rise, we saw it this year, carl, of those streaming game services like google stadia, the idea that you can stream this high-quality content to your tvs, smartphon s stablets, no pricey console needed >> josh, thanks.
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our josh lipton. when we come back, your 2020 trade playbook the u.s. trade battle dominated headlines all year long. how the tariff war could continue into the new year, in a moment - [spokesman] if you've tried college but never finished, (group cheering) snhu lets you transfer up to 90 credits toward you bachelor's degree. - [woman] it doesn't matter how old you are, you can do it, you can finish. - [spokesman] finish your degree at snhu.edu
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one of the biggest stories for the market this year have been tariffs and trade our kayla tausche joins us with how a look at how this could develop in the new year. >> the white house spent the better part of 2019 ratcheting
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up trade tensions with allies and adversaries alike. but with the 2020 election looming, president trump will look to count his wins and keep the stock market humming the trump administration rocked the trade boat in 2019 with unpredictable tariffs and short-lived truces in 2020, international trade will move back toward the status quo. first, china tensions return to a simmer fireworks will fade when the u.s. and china sign off on a phase i deal in early january. a second deal will remain far off, but if china engages on and enforces this first deal, expect tariffs to be rolled back slowly second, farm finances will be in focus. as planting season gets underway, american farmers will size up the pain of the two-year trade war and a salve of new business with china, mexico, canada, and japan. agriculture secretary sonny perdue says new financial aid will be warranted if the ag economy doesn't rebound quickly.
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third, europe will be back in the cross hehairs. as president trump eyes re-election, he'll hone in on a new target, the eu the president's stump speeches will be testing grounds for new tariffs on energy sanctions. but he'll pocket those fights until after november legal experts are divided on whether the u.s. still has the authority to put tariffs on cars after missing a november deadline, but that will not stop president trump from talking or tweeting about it. guys >> i'm sure it's going to be another busy year for you, kayla. stick with us, though, in the meantime, for more on trade, let's bring in jimmy pethokoukis with american enterprise institute. jimmy, thanks for joining us today. at least from a market standpoint, it seems like it's baked in, it's something of a foregone conclusion that this trade war with china is if not de-escalating, at least on pause. what could go wrong with that assumption >> listen, there's no doubt that
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the consensus on wall street almost perfectly reflects what kayla just said, that we're seeing a ratcheting down, a pause, we've got to take a deep breath for 2020. all of that is baked into all the bullish analysises but we have to remember a couple of things. one, the president has enormous power to cause havoc in trade. it's very difficult to strike a trade agreement, but the president can pretty much do whatever he wants, as we found out, as far as raising tariffs he has immense power and at some point during 2020, this is sort of your bearish scenario, democrats are going to figure out that they can out-hawk this president on trade, which is popular. he signed a trade deal, which really doesn't get at sort of the key structural issues with china. ignores the national security implications of a rising china, and democrats figured that out, trump may just respond by turning the heat back up on china. >> yeah, kayla, looking at the packages you just put together,
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if some of these loose trade ends are indeed poised to be tied up next year, at least until after an election, should we expect personnel changes? >> well, morgan, in the last year, we've seen president trump sound out some of his advisers on whether to replace commerce secretary reconcile burr ross. we have heard that larry kudlow had intentions originally to only stay on for a year. that deadline, of course, came and went and we also heard the trade representative, people close to him saying that he really wanted to define his legacy on china and this phase i deal could be that that being said, we do expect departures a to the staff level, but i'm told that most of the senior team has signed on to remain through 2020. >> i was going to say, jimmy, this personal piece today on navarro basically calling him the hawk that survives no matter what iteration of the administration we're in, i mean, having his voice on the hawkish side in the president's ear is going to mean something. >> it does listen, peter navarro is not satisfied with this phase i trade deal, some sort of legacy builder. he views china as a
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geopolitical -- a long-term geopolitical threat, kind of take japan from the 1980s and add in the soviet union and that's what he views it. we're in a long twilight struggle against a totalitarian power. and, you know, them buying more sorghum and some protection is not enough he's going to continue that message to the president and to the extent to which the president accepts that message, we're not sure yet, he still focuses a lot on the economy, but that could change. >> kayla, in terms of trade talks and trade dynamics between the u.s. and the rest of the world, certainly, we've and the investors have been so focused on that with china i know you mentioned europe as well, but what are the other areas to be focused on i would imagine that there's a lot of anticipation that you could start to see some talks materialize with the uk given the brexit clarity or i guess transparency as well now >> at the end of january when some of those places fall into place, you could see the u.s. move forward with some of the
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ground work that former national security adviser john bolton was instrumental in putting together this sort of post-brexit trade deal the details on that are still fairly slim, at this point but europe is going to be in focus, morgan. you have this mid-january deadline for those new tariffs on luxury goods, in response to france's digital services tax. you have talks with the oecd on potentially getting some standardized global tax system that could i voter some of that. and you have the in order stream 2 pipeline that carries gas from russia to germany. the administration has not wanted that to actually be turned online. that could come early next year and that could be a huge point of friction if and when that happens. >> kayla, thank you very much. our kayla tausche and jimmy pethokoukis. still ahead, break out your crystal ball the super rich are looking ahead to 2020. what do they expect for the economy and the stock market we'll discuss that when "closing bell" comes back in a moment [ dramatic music ]
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american millionaires are more cautious about the markets than the economy headed into 2020 a third of millionaires say the economy will be the same as next year, while just under 40% say it will actually be weaker, that's ard doing to the cnbc millionaire survey over 40% say the s&p will be flat to down next year 60% say it will be up more than 10%. most expect total investment returns a little bit more modest between 2% and 6%. 40% say government tis function is the biggest risk to the economy and also the biggest risk to their personal wealth. like the rest of america, millionaire views about the economy and markets depend a lot on their political party, more than their wealth levels two-thirds of democratic millionaires say the economy will be weaker and the s&p will be flat to down, but nearly two-thirds of republicans say the market will be up at least 5% next year
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the millionaires own 85% of total stocks, so their posture going into next year matters >> which is fascinating. we have so many conversations here with market experts who say poll doesn't matter to the market for now but some of these key investors who will be positioning themselves in 2020 it absolutely does >> right it shows how partisan politics really has moved up the food chain, where it matters less about your wealth level, where you're from, your education, what really breaks down your view of the economy and your forecast for the s&p is your politics, which is really startling how deep that sort of is woven into our culture now. >> it's fascinating. robert frank, thank you for joining us viewers can catch more on cnbc.com as well >> lots more stories online. up next the buzz on wall street mike bloomberg is pouring millions of dollars into an unknown digital business he arunded himself earlier this ye the details when "closing bell" comes back
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cnbc.com brian schwartz is with us live, thanks for being here >> thanks for having me. >> break it down, what is hawkfish and what does it mean to bloomberg and his campaign? >> it was originally made right after the 2018 congressional midterm this is year and it was meant to be this counter to donald trump and the rnc's significant data operation that they have ghg on now mike bloomberg met with silicon valley types, ron conway is one of them and him and his team put together this data company behind the scenes that was meant to help democrats with their kind of digital ad game and their voter data analytics going into this election but here is the catch. mike bloomberg is running for president and turned to his own company to help get his campaign a boost going forward. >> brian, people have said why would bloomberg run? the answer to some is well he
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understands the data, he must be seeing something that others are not. do we think that hawkfish is the win throw through which he's looking at this race >> i think you're right. it seems to me this is one of the windows as to one of the platforms he's using to see some sort of path here going forward particularly into february and march, march you have the super tuesday states, he's put a ton of money in to for tv and digital ads. he's been saying he wants to spend up to $100 million on anti-trump digital ads and put up $13 million on facebook and google so far but if you look at what he's doing in tv as well, he's put so many resources into those early states of california and arizona and couple key swing states he thinks he could pick up and i believe you're right, hawkfish may be that window to see how he's looking at the bigger field overall >> so brian, how much is this a near term campaign entity and how much of it is basically
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something that bloomberg is seeing as a longer term i guess resource for the democratic party in general and i ask that in part according to your report, people like former facebook chief marketing officer garry briggs had been on they're serious in terms of recruitment. >> they're earning big players here you mentioned him, the fourmer four square ceo is also involved, part of this leadership team, tom segunda is an adviser for this company, and look, let's be clear, in the short term this is mike bloomberg's data company working directly for his campaign. in the long-term i think there's that really good possibility if he doesn't make it through this prima primary, right now 5% in the polls in around fourth or fifth in most surveys that he will use this company to help democrats at large, but right now this is his company that's going right to him and helping his campaign directly >> all right, brian's full story is up now on cnbc.com. check it out, brian, thanks for joining us
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>> thank you quick programming note, tomorrow as you know is a shortened trading day, and a special christmas eve edition of "closing bell" will be tomorrow at 12:00 noon to 2:00 p.m. eastern on cnbc. >> yes so holiday week but right now santa claus rally seems to be very much intact we have record closes again for the dow, s&p and nasdaq today. >> that does it for "closing bell." >> "fast money" begins right now. >> live from the nasdaq market site this is "fast money." i'm scott walker in for melissa lee. tonight on "fast" getting high, tesla shares crossing the 420 mark as the stock blazes to a new record where does it go from here we'll get some answers, plus today's mystery chart the best performing stock in the 1.500 this year. why the options market is betting on more gains in 2020. and later, with just hours left until christmas, we're

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