5 Episode results for "Michael Corvette"
Michael Corbat | All Markets Summit by Yahoo Finance
"Upwork has the world's largest network of independent professionals so if you go to designer a video editor or social media specialist for six days or six months upwork is how and it's basically like they're right here in your office except they're not here here so they can't hear greg's remarkably loud typing anybody high ticket back you can hear that. From anywhere and upward professionals are proven rated and reviewed when you need demand talent on demand. Work is how michael. Corbett has been cities. Ceo since two thousand twelve city is one of the largest consumer and investment banking groups in the world with two hundred thousand employees in one hundred sixty countries. After thirty seven years at city corbett recently announced he'd be stepping down as ceo handing the reins to jane. Frazier will become the first woman to lead a big wall street bank. I'm here with city. See michael corbin mike. Nice to see you and good to be with you. Thanks for having me. So let's jump right in. I want to ask you about the latest earnings report. You guys beat expectations especially with fixed. Income equities trading house the bank with covid nineteen. Well i would say so far. We've we've come through it. I think in a very strong fashion. And i think throughout twenty twenty. We've continued to demonstrate significant earnings power of franchise which has shown itself in terms of at this point. Three quarters of the way through the year revenue growth of three percent despite the crisis strong quarter net income of three point two billion dollars a dollar forty share the underlying diversity of our business model. I think has served as well if you look in there. You mentioned The the performance of our markets business business forty two percent equities business up eight percent are banking business up. Thirteen percent consumer anything not doing quite as well as some of those areas. You talked about number one number. Two stock has also lagged a little bit the market and some of your peers. What's the explanation. Air show a start with the consumer banking piece. I didn't clearly from an industry. Not just shitty. But an industry perspective obviously The revenues in that business remained under pressure due to the impact of the of the pandemic from a city perspective. That's manifested itself or showing itself predominantly in the declining credit card. Spending credit card is a big business for us A big part of Our clients spend Historically has been on the travel and leisure space and so we haven't been able to To obviously escape that. But i think at the same time through the programs that we've offered in terms of forbearance and other things i think we've seen a consumer not just here in the us but around the world in many cases in many ways shown phenomenal resiliency. She savings rates up We see delinquencies and we see credit charge offs actually at levels below where we were a year ago. I think which many people would would believe site to be to be extraordinary And again this quarter From from an income perspective our consumer franchised made one point. Four billion dollars despite those despite those Those those challenges that are out there. I think andy from a share price perspective You know that cities performance relative to other banks has varied through the crisis. And you know that that could continue Overtime as we move past this crisis and demonstrate our resiliency and again. I think the way we've come through the past nine months Has has shown that so far. We believe their stock price. Adjust accordingly Back in march along with other. Us banks we took the proactive steps to suspend share repurchases to further bolster. Our capital were capitals up at a eleven point. Eight percent common equity tier one ratio and obviously gives us a position of strength. We continue to to pay Our dividend We'll get a fifty one cent per quarter dividend that we know we came into the crisis. Bang we we continue to pay and you know. We're committed to continue to do that like i have to also ask you about The fact that city was fine. Four hundred million dollars earlier this month for lacking adequate controls entered into consent order with a federal reserve should investors be concerned about that. Well i would say i you know we. We are disappointed that we've fallen short of our regulators expectations and As we said very publicly as institution we are fully committed to thoroughly addressing. The issues identified in those consent. Words as part of that. There are four main areas of focus in their Around risk management data governance controls and compliance. And i think what Importantly what ties. These together is You know the The the need or desire to continue the modernisation of our infrastructure our governance in our process. And we have had remediation programs in place while we've been making progress against those who are simply not where we need to be and and we acknowledge that you seem black monday nine eleven two thousand eight hundred thousand nine. How does this downturn compared to that. Well i i think i andy. We need to recognize kind of what this is at. Its core. this is a pandemic as they health crisis and Will not be solved until we have a an answer to that too. We have a healthy answer to that clearly. A manifestation of this health crisis is Economic challenges not just here but around the us. So i think different From some other crises that have affected the financial markets The financial markets are not at the center of this. Right it is. It is a derivative effect of the health pandemic and i think the the great news or the silver lining in this is that i think the the financial system globally and in particular in the. Us comes into this as a source of strength we talked about capital. We talked about liquidity. We talked about reserving. And i think very importantly what's different this time In particular from the last crisis is the fact that the bank in particular the big banks right have played a very important or the very important role as that Transmission mechanism between government programs fiscal monetary. Whether it's central bank or broader government programs and the real economy right so whether it was the early days of the crisis when the fed was injecting liquidity or they were putting in place certain types of lending facilities and liquidity facilities for the market to take advantage of it was the bank in particular the big banks that actually really brought those to life. So how would you characterize. Us economy right now and how critical is another round of stimulus. This point well. I would say that The us economy has actually performed better than expectations. Right if we take a look at you know what you would think would be happening around. Gdp around unemployment around the challenges of of individuals families small business. Bigger business I think so far the programs that have been put in place by the fed. There's programs that have been put in place coming out of treasury. i think have served as well What we don't know from where we are is what the forward trajectory looks like. And so i think right now. We're all trying to watch the data to see that as we head back into colder weather as we head back into flu season. Do we actually see a continual uptick or resurgence in terms of cova cases of as of late. We've seen a bit of that. I would say in some cases that was expected but really what we wanna see is again. We want to see that curve. Turn and bend and start to go back down and and clearly I think we we all have optimism. And there's a lot of work going on in terms of The the vaccine. And the antivirus out there and you know. Hopefully that's not in it. That's not too far in in the future. And that we can get out. We can get that scale that we can give people the benefit of that so that we can start to have a more Expedited return to normalcy our willingness to to use mass transportation our willingness to to go into crowded space our willingness to go indoors into a restaurant. I think all of those things are critical from a stimulus perspective. I think without a doubt People recognized that there that we probably do need another round. I think we've got the ability to be more targeted this time. In terms of those businesses those geographies those Those areas that have been more acutely affected by the virus. And i think at this point it feels like to me. It's not about. Are we going to get it. It's when will it come and exactly how. How will that be designed as we go forward. You mentioned the fed. And i wanted to ask you about jay powell in his policies and specifically about negative rates. Mike an and how concerned are you about that or maybe you think that's something we drink too. Well i would. i would say one. India's that is a a company as a bank that operates all over the world and one hundred markets all over the world. we've experienced negative rates right. We've seen them in europe. We've seen him in japan. We've seen him in different places in the world so negative rates aren't while they while they might be new to the us when they come. They're certainly not new To a company like city in the way we operate I would argue. And i think that Chair powell has has argued argued this and or stated in his testimony that The transmission mechanism of negative rates Isn't necessarily that effective in the places where we've seen it. I think it creates strange behaviors. That create strange bubbles and I would say you know has has an in in totality. Been all that successful. I think what i've heard is chair. Polish spoken is a reluctance to go there and I think you know kind of feeling that. There's maybe some other tools in the toolbox. That could be more effective. I think is an example away from the fed. I think moving away from the monetary side of things. Being the answer may be taking a harder. look at what type of fiscal programs. you know. we've had a lot of talk about infrastructure other things that are out there that could actually provide a lot of benefit broadly across the us economy or other economies. And so again. We're in unprecedented times. I think that we should continue to to think. Act creatively in terms of how we attack this for me. Negative rates is is probably not not from what. We've seen the the the next best place to go right. Are you guys at the bank concerned about a contested election. You guys discussed what that might mean for capital markets or the functioning of lending or just the bank's business. It's a it's a scenario that people talk about And i would say that it's kind of one of the things that we we are and certainly will be keeping an eye on again we are a political institution and you know the people speak the people. Vote and You know we we. We certainly respect that. That process In terms of kind of market disruption. Or how that plays forward you know hopefully The the result clear whatever they are and hopefully there's a smooth transition around that but again i think the the markets in city will certainly be prepared. in you know i would you know this year. We we've gone through Unprecedented periods of volatility of volumes. And i think the markets have stood up. Stood up very well to that. Talk about your employees. Your team's working from home in how you manage that with such a large global as you say institution. What's that been like an in. How's it going. Well we we've got Around the globe said operating at about one hundred countries and territories around the world. We've got about two hundred little over two hundred thousand employees You know at the at the peak of working remotely. We had the vast vast ninety percent plus of our people working remotely and i would say that the investments that we made in systems and infrastructure so far have served us really well in my operations and technology colleagues have done a great job that you know during peak periods. We've had in excess of one hundred and fifty thousand of our colleagues in our systems working online Through the shitty systems. And you know they've they've stood up stood up very well and i think that a year ago if you and i would have had this conversation and said and i said let me tell you what we're prepared for and let me tell you what i think you know. We can do the kind of numbers i'm talking about. You probably would have wished me well but probably thought i was a little bit crazy in terms of The ability to do that. Well i think here we find ourselves and and and that in fact has happened It is our it is our goal. It is our objective to to get our people back in the office safely and as part of that were were being driven by the data. It's not about a date. It's about the data and so again when you look at the places we come to work. We've probably got about sixty percent or a bit over sixty percent of people back in china and taiwan. We've got over thirty percent of our people back on average across a across asia. And i would say in europe and the us probably more in the low single digits to low teens. Looks like the chief. Executive is not a little bit. Yeah i'm here i'm here. Yeah i've I've i've been back for For a while and Again here here at headquarters we've probably got somewhere about ten ten twelve percent of our staff in and and obviously that You know depending on the trajectory of things will Continue to continue to come up but i. I really commend our people in terms of the work that they've done in the safe environment that they've created for us to return to in september. You lost a one of one billion dollars in strategic initiatives to address the racial wealth gap. Why did you do that. Well you know. I that clearly The events not just of this year. But you know how things should have. have moved or lack of movement over time Certainly hasn't hasn't been lost on us. And when you think of cities central role in local economies and the financial lives of americans. We believe that we can have a significant impact on helping in this case to address in to close the racial wealth gap so in june as protests for racial injustice. Racial justice intensified. I challenged cities. Business leaders might team to develop solutions that you know we could go out and attempt to tackle systemic racism in our local in our local economies and communities and the announcement we made indie around our action for racial equity Was our response and you know what we did in there as try to go at this with a pretty comprehensive approach to providing greater access to banking and credit and communities of color by the way what we do right that is our day job increasing investment in black owned businesses expanding homeownership among black americans. And if you go back the last ten years or so we have what will not being the largest bank or the largest Realty real estate bank in the us we have consistently been largest lender to the low and moderate income housing across the us. And so that we thought we could bring some ex- expertise to and and obviously advancing anti-racist practices in the financial services industry so in our billion dollar commitment five hundred and fifty million dollars to support homeownership for people of color. Three hundred and fifty million dollars in procurement opportunities for black owned businesses so so as a company that manages big businesses. And you know we spend a law and our communities. We obviously have the ability to to drive that. spend And to push that spend and really try and support black on our black owned some suppliers. Fifty million impacting investing for Capital for black entrepreneur again kind of reaching out there one hundred million in support for the minority depository institutions right the minority depository institutions operated a number of these neighborhoods that have been significantly affected in the in the covid pandemic and ways that we can support them. And whether that's with money's that's with lending support whether that's helping to provide them Expertise or other things that we can do to help them to help them. Continue to to build their their institutions and finally one hundred million dollars from foundation and grants to support community change agents for addressing racial equity so You know real real money. Real tangible actions Were excited as an institution around it. We've already begun to to get out there and to kind of put these monies into put into put our efforts to work and The the institution is completely behind it. And i think excited by it in finally a mike. I'd be remiss if i didn't ask you about this major change in the car. That is taking place right now yearly being bank after okay. The thirty seven years right. I tried thirty seven years. And jane frazier is taking over as the first woman to lead a major. Us bank in february. What's your legacy. What can we expect from jean. How's the transition going. My thinking was influenced by a few things right. One is going back to twenty seventeen when we did our big investor day. We embarked on a three year plan. That would take through the end of twenty twenty and it's always been my ambition to to see that through Second is you mentioned. I have a ready now. Successor right. jane has been with us for for going on sixteen years. She's had a number of jobs across your organization. She and i have worked always very very closely together. And in many ways we've been preparing her for quite a while as i kind of think about The accomplishments kind of what happened On on my watch obviously coming out of the crisis. We increased net income from around seven seven and a half billion dollars to over nineteen billion dollars. Last year we More than doubled our return on assets in terms of our portfolio our return on tangible common equity went from about five percent to north of twelve percent closing the gap with with our peers. We went from returning hardly any capital in twenty twelve to returning nearly eighty billion dollars in capital do our shareholders in the last six years and we've reduced our share count by about thirty percent so and i think all of that hard work and What what we've done. So far i think is very positively manifested manifesting itself in terms of how we're coming through covert in terms of our performance of of our resilience. And i think the the trajectory that the firm on so I'm proud of what we've done. And i say i'm very confident. In terms of the great management team. We have in place it. I know james could be of antastic. Ceo we wish you well. Michael corvette ceo city. Thank you so much for joining us. Thanks for having me.
National Affairs Panel on Canadas foreign policy
"I'm Jonathan. Goldstein host of wiretap each week. You're invited to listen in on my telephone conversations whether funny, sad, wistful or even slightly strange. You never know just what you might hear on wiretap. I show I didn't think that people actually listened to it. The breath of genius. It's not just that you're funny, but you can be cripplingly pointedly depressing. The wiretap archives available on CBC. Listen spotify, apple podcasts and wherever you get your podcasts. This is a CBC podcast. Our attorneys. The UN Security Council is recognition of our work on the world stage over many decades use our presence to advance. The caused championed peace and security, conflict, resolution, reconciliation, climate, action, salable development and gender equality. You can imagine the Justin. Trudeau dreamed giving that kind of speech. That Ireland's Leo Varadkar gave. Canada's prime minister campaigned hard on getting back to the UN Security Council for Canada. But in the end this country lost to Ireland and Norway. And so, where exactly does this leave Canada on the world stage? We're going to look at that with a special edition of our national affairs. Pedal Robert Fowler was Canada's longest serving ambassador to the United Nations and U N Special Envoy to share and Ben. Roswell is president of the Canadian International Council an independent nonprofit organization focused on engaging citizens in Canada's role in the world. He's also a former Canadian ambassador to Venezuela Good Morning Tea both thank you. Good Morning Matt I want to talk about some of the specific challenges that this country faces in this world in a moment, but first what is one word that you would use to describe Canada's policy at this time Ben Roswell? outdated. Robert Fowler. toured. What foreign policy. Well those are three, but we'll give you that. UNPACK those a little bit, and you can start with with what foreign policy Robert De. Do we really not have a foreign policy in this country? other than desperately trying to make make happy that mendacious miscreants in the White House No. And then when you say that our foreign policy is outdated What would you say that? Well. I'd argue that the foundations on which it built the system of rules and institutions that we call a rules-based international order. may no longer be there, and so there's this edifice that we've been relying on to give a shelter but the foundations that rests on. have totally given away and. That means that all of the assumptions we have for how we're going to keep ourselves safe how we're going to keep ourselves prosperous. needs to be rethought. How did we get to the point where we have an outdated foreign policy? Well the world has changed quite quickly and quite rapidly, so it's not necessarily a criticism of the government to say. our foreign policy is outdated it in two thousand fifteen when Justin Trudeau came to power, there were still wasn't rules-based international order, and it made sense to double down on multi-lateralism in the UN and. this and to continue to build the the norms and institutions because we've benefited so much for three generation, but since then you've got the two most powerful countries in the world. Backing away from those roles in those institutions, and indicating that they're no longer going to be constrained by them, and that's gotten us into an era of. Of Power Politics. that has resulted in some pretty hostile things being done by the two most powerful countries in the world to us and I think we deal with either sort of one off and find them surprising and shocking and frustrating. but perhaps don't look at the larger pattern that reveals it when the two most powerful countries in the world. Are, no longer paying attention to the rules that will send a signal to all the other powers that it's every country for itself and we'll find ourselves back with the underlying Anneke. It has always. underpinned the international system before we came up with this really kind of remarkable series of Rosen institutions after. the last great period of disorder in the nineteen forty Robert Fowler is this a matter of the world changing or his candidate dropped. The ball has the prime minister and his government. Imagine. I haven't even had a chance to say. Hi Ben But I agree with Ben Rules have changed. and China and the United Stage simply refuse to abide by the rules, and if they're not abiding by the rules, nobody else feels so constrained, but foreign policy is more than that foreign policy is. Also about interpersonal relations about relations between. Nations founded on knowledge and respect and trust, and those fields that have to be constantly tilled, and frankly we have failed to do that. We have we have failed to mount. Maintain those relationships relying instead. On brave pontiff occasions about right and justice with very very little, follow-through and I think that was. what caused our come up and S- last week in the General Assembly in the vote for the Security Council. I'm told. I'm told that our opponents to excellent candid this Norway and and. we're circulating but video clips of the Prime Minister's twenty one second pause. When asked to comment on trump suggestion that he would send the military into crush protesters. and that pause for most every other country in the world was extremely elegant queant. What it? What it said was that? If you elect county you're electing a second trump. Blow to the Security Council. That extreme. You're electing a second trump vote. To the Security Council Yeah Because a lot of people took that as the prime minister didn't know what to say. The prime minister need to be very careful with his words. The prime minister was telegraphing something by saying nothing. You're saying that in that twenty one seconds the prime minister. Aligned himself somehow with the United States and criticize the prime. Minister Mad when I'm saying is that the prime minister refused over all those long seconds. To offer any criticism at all of the polling things the primary president of the United States was saying to an about his own citizens and and other countries in the world. We're saying my heavens if you can't even criticize trump for that. you must be in his pocket. You must be a vassal state. Why did I wanNA talk about those the two superpowers in in China and the United States, but if we're talking about the United Nations, why did it matter that Canada? Get a seat on the Security Council I can ask you Robert Fowler. There are a lot of people who say that the UN is a diminished institution, and and why do we want to be part of something Perhaps has its glory days in the rear view mirror. Well. Look first of all. You guys are too young to remember cartoon called Pogo. But There's a wonderful cartoon. Moment in Pogo and riffing off Admiral Farragut. He looks up and says I have seen the enemy, and they as US The UN is us. the UN hasn't failed the. UN didn't didn't fail. In Rwanda the members of the security. Council, principally, the Americans failed to agree to act to stop the genocide in Rwanda, and and I could give you many many examples of the same thing. based on what Ben told us I agree that if the two principal powers to permanent members of the Security Council and please. Let's add Moscow it to be a third. if they clearly are saying they don't care about the rules anymore. Then a rules based system isn't worth very much and a system built on such rules like a of international order like the. UN Won't be worth very much either, but it has maintained the peace for an awfully long time. If it is flawed, it is because we have made and make it flaw in some ways. It's designed to be flawed. Veto of the five permanent members then rose well. What would a seat on the UN Security Council have given us. Well I was really struck by the threat, the branch of the opposition to candidate from within Kinda years ago. This would have been such a no brainer was such a no brainer. Wait a minute. Wait a man. No Brainer Ben! I won that election and it was tough. But support it though that's what that's what I'm referring to the opposition within Canada to us. Pursuing the described the description of it being a vanity project and who cares about the all that that's that was what surprised me I know I know we find it hard in in the nineties, and and and pulled that off with quite an impressive result, but the the lack of interest that Canadian citizens had in a seat on the security. Council in the body that sets the rules that govern the rules based international system. I think points to the fact that there's. It is no longer performing that function that setting rules are campaign was predicated on how we would be. Using our moral leadership to advance more. order to create new rules in new norms, and I think that's why that left less sort of an empty taste in the mouths of many Canadians, but the. Canadians a other countries don't like to be told that we're moral. Leaders particularly when they look at our record. in terms of things like at a aid and generosity per capita in terms of security and peacekeeping willingness to to take risks and spend money to defend others at our record and found that all those. All those fine words about moral leadership ranked pretty hollow. I'm Alina, Hudgens Lyle and I'm the Rodwell and where the hosts of inappropriate questions did you lose weight? How're you doing? How'd you get pregnant? We talked to people who have been off these questions we ask where these questions come from, and we learned some more respectful of been curious, so whether you've asked an inappropriate question or been asked an inappropriate question gum. Get inappropriate with us. Inappropriate questions is available. Now you can find it on the BBC. Listen APP or wherever you find podcasts. Throughout the nineteen eighties, a strange phenomenon was sweeping North America, they were in a panic and like people in panic, they solutions allegations of underground satanic cults, portering and terrorizing children. The thing is. There were no satanic cults preying on children and nearly thirty years later, the people touched by it all are still picking up the pieces. To Work Fiction, this is a work of history. Satanic panic. The latest CBC I'm cover. Available now. You both have mentioned the two superpowers. Let's talk about China and candidates relationship with China. There are two on their number of Canadian citizens a to in Michael Covert and Michael Tabor. who find themselves in prison now? Facing espionage charges No one is entirely sure where this is going to go Robert. What can or should candidate due to get these two Canadians home. Well Have Matt it is five hundred sixty three days that those two Michael's have been staring at cement wall in ten foot square. Cell. what Michael Corvette calls his his cement desert. And I believe the first obligation of government is to look after defending the health and safety of their citizens, and we have not done that vis-a-vis those two fellows in China and is that why you signed this letter with eighteen other diplomats and foreign former parliamentarians, saying that the justice minister should end the extradition case against among Lonzo while way. yes, but we don't only say he should do it. We say he can do it. It is entirely within his re-met to do it. you know F-, The our government keeps saying that well we must allow the legal process to proceed, and of course it's really administered process more than the legal process for extradition. Remember. What had been Burg said? It's not what a lawyer tells me I must do humanity reason. Justice tells me I must do what do you? What do you think the message I? Want to bring Ben and listen to this in a moment. What do you think the message would be? If Canada were to send Lonzo back to China and hope that to these two men would ultimately be free. What is what is the message? Like. Let's be clear Matt where we are not going to send her back until we have a deal, a firm absolute clear. on a mess up old deal that our guys come home. And she goes there. Wherever there might be, but we're not. GonNa we're not gonNA send her back in the hope that they'll be nice and send. Our guys worry that it sends a message that that this is appeasement that you can do this now and who knows what will happen down the road. Every single country. Says brave things about not negotiating for for for hostages or not making significant concessions to terrorists and every single one of them blinks. Every single one of them. Does it just just recently? president trump has made very clear that he will negotiate anytime anywhere with anybody to bring Americans home. his his national security adviser. Claims that his administration has already brought thirty eight Americans held captive home. They admit that they're engaging in prisoner exchanges with insurgents and terrorists. O'Brien says when we have opportunities to get someone home. We do that and secretary pump pail has. Has said very clearly just some weeks ago. We will not rest until we bring every American detained in Iran and around the world back home to their loved ones as well as the way forward to get these two men home. I feel terribly for Michael. Corrigan Michael's Babar 'cause they're suffering on behalf of all of day. Are hostages to pressure Canada into giving way? If my contention is correct that there was basically national order has gone by the wayside, and that we're dealing in a world of power politics I think the way to answer questions like this. Really difficult on is will I'd to kind of power will detract. That, we need to get used to the language of Tar Baltics, and to be asking ourselves those questions, I certainly take Roberts point about. The absolute imperative of taking care of our own wherever they happen to be to be taken hostages. They've been taken hostage now. and I certainly defer to Bob experience as a former hostages, but I am worried that a concession on such a blatantly aggressive move by a superpower that signaled no end of its willingness to engage in greater hostility. by itself would be an invitation for others to be taken hostage, or for some other retaliatory some some other act. Of of hostility by China against us, so I don't think we could actually deal with the detainee issue on its own I. Think we need to couple it with a new strategy for us to show that we're willing to stand up to China and possibly by joining forces with other countries that have also been the victim of Chinese bullying. There's any number of countries around the world that are getting arm by China and this new what they call Wolf Warrior diplomacy, and they think there is some merit to looking at how there may be some safety numbers in dealing with. a superpower has essentially laid down the gauntlet to the rest of the world to say it's my way or the highway on that point. Let me bring in off. The voice who is waiting to come in? We had difficulty in connecting with her earlier, but Lynette is an associate professor of political science. She's a China expert at the Munk School of Global Affairs and public policy at the University of Toronto Limit Good Morning to you. Man What is? Oh, that's okay. What's what's if you listen to? What's Robert Fowler is is saying that Canada has a responsibility to bring its own home, and this happens on a regular basis around the world. What do you make of the idea that Canada's should free? Mum on Joe the CFO of Wa wa, and that extradition process in the hopes that that would bring Michael SPA for. Michael covered back to Canada. Level my heart goes out to the two MICHAELS. I think this is a very difficult situation, and from a personal perspective I totally understand the plea that the cult family has put out to all the Canadians. I totally sympathize before. But I think there is a difference between doing things fall short term expediency reason. And also some long term solution to what is I think agreed policy challenge for a long long time. I think this is the time as you know, argued in my piece global mail about a month ago. These time for us to. To really rethink oh because foreign policy challenge. Our entire foreign policy orientation. And I think I think the pandemic couple with the tension of to Michael's really presents within within within opportunity so I think the biggest challenge now right now. presented by the two Michael Keyes. How do to deal with the too big to spouse? Right the rise of China as increasingly belligerent Paulo, as well as the United States, which actually put us in this position in the first place, and is not learning as much weight in helping us to get out of this dilemma. You know I think the way forward is really full for Canada to lead. And initiate the conversation with our allies, and the way that we should be broaching infringing the conversation is. You know a lot of us have actually suffered individually about with economic coercion with will China and depending has shows that you know there's typically a collective action problem in bringing people together, but everyone has actually suffered in the pandemic because of China's authoritarian nature of its system, which means is covered in precious time has had been lost so really. We have every every interest to work together to come up with some sort of solution some alliance. Push against, China, let's talk. Let's talk about the United States Robert Fowler I can hear in the background there, sorry. One one of the things the main points we made in the letter to the prime minister a couple of days ago was that we need to clear decks of this to michaels among issue in order to do what Bozell in that and banner saying, and that is step back and seriously rethink our relationship with China. What about the United States? What about resetting that relationship with the United States? Robert probably listening. We're not gonNA. Reset any relationship with the United States until November the fourth. but but but let me just go back to the to to China that the the the fact of our two michaels in captivity, and the continuing endlessly drawn out Sega of among extradition is poisoning whatever relationship we have with China and indeed. To change that relationship. We've got a clear our decks of this issue. And and I with the greatest respect. Ben I think it's Hubris to suggest that whatever we do in this matter is suddenly going to impact on China's future behavior. It's not China will do what China does, and China has made very very clear repeatedly that that bet is the. China is the only influence on China then Roswell again. The United States in part. I raised the United States. Yes, because it's a superpower, but also because in this situation, Canada's squeezed between China and the United States. So, what should candidate do? Shirt perhaps before the election, or after this election November when it comes to the relationship with the US. Let me just say that. When it comes to hostile foreign powers, Canada does have a track record of standing up hostile superpowers. We don't do it alone. We do it collectively I mean. We did stand up to the Soviet Union. we did so with the United States that's not likely to be the way that things will go in this case, but. We are a master at banning together with other countries in order to search. Some degree of Rule based behavior in the international system in the short-term. Yeah, China's not going to be influenced, but if they face an increasingly organized group of nations willing to stand up to them systematically, that will ultimately shape their behavior. We have this I. think There's still in this stage of of flexing their muscles and seeing how much they can get away with that will continue until they're constrained, won't be constrained by one country alone. They won't even be constrained by the United States. But they will be constrained by a group of countries they collectively have more power than China. That's the the terms that we need to start thinking unfamiliar for us and Canadian foreign policy to think in those terms, but if you look back at the long suite of Canadian International, history that is. Get Canada has played power politics over the course of its history and by banding together with the right countries on the right issues and on the right basis. We have actually been able to prevail. Countries that are every bit as nasty as trying to showing now see. There's an opportunity. It seems as though there's an opportunity to reshape the foreign policy so just in the last couple of seconds that we have lynette. What do you see? Is that opportunity? We definitely need to reorient ourselves away from the United. States and has but to some extent I mean to Michael to them are really premacy suggests there's something very wrong with foreign pulse, your teach right and it, and if not just bending with the within the lines is how we broached the compensation that the conversation is is about this every interest for us to for them. Them, to work with us, even the two Michaels, our comedian, because this is a problem that is common to everybody, not just to Canadian, so the two Michael's case will become a presence whether we like it or not. Rob Fowler. What are you see just in a couple of seconds? What do you see the opportunity in this moment to rethink who we are in the world? I like like Ben I'm a multilateral and I think there's still room for effective consultation among nations, and I never answered your question Matt, but in ninety nine in two thousand, and we did a hell of a lot on the Security Council. We ended the twenty-seven year long war and Angola and we established new norms for peacekeeping and the protection of civilians in armed conflict. The most vulnerable children and women and those those actions are very much evident today we can do things but let's not get too sanctimonious about Broad, legal principles and Let's think about the health and safety of these two Canadian bring them home and then reset the whole thing that our relations with China reset. Yes, eventually our relations with the United States. It's good to speak with you all about this more certainly in days ahead in the meantime. Thank you. Thank you? Ben Roswell President of the Canadian. International Council former ambassador to Venezuela Lynette on China expert at the Munk School of Global Affairs and Robert Fowler. Was the longest serving ambassador to the united. Nations for Canada. This is the current stay with us. For. More CBC PODCASTS GO TO CBC DOT CA slash podcasts.
Citigroup CEO Michael Corbat discusses the recession, the coronavirus pandemic, and negative rates
"Michael Corbat has spent the majority of his life in the banking industry working thirty-seven years at Citigroup. The last eight of them as the company's CEO. He's worked his way through economic catastrophes. Whether Market crashes and is even faced off against the federal government, but none of those have prepared him for the crisis. We're facing today city is one of the largest consumer and Investment Banking groups in the world with more than two hundred thousand employees in a hundred and sixty countries most of whom are now working remotely as a result of the covid-19 pack MC in this episode of influencers. I speak with Michael Corbett about managing City while working from home his looming retirement and the role banks have played in keeping the home icon Ami afloat in 2020. I'm here with City CEO Michael Corbat. Mike. Nice to see you any good to pay with you. Thanks for having me. So let's Jump Right In I want to ask you about the latest wage earnings report. You guys beat expectations, especially with fixed income and equities trading. How is the bank weathered covid-19? Well, I would say so far we've come back to it. I think in a very strong fashion and I think throughout twenty-twenty we've continued to demonstrate the significant earnings power of our franchise which has shown itself in terms of at this point three quarters of the way through the year Revenue growth of 3% Despite the crisis a strong quarter net income of 3.2 billion dollars a dollar forty a share the underlying diversity of our business model I think is served as well. If you look in there you mentioned the the performance of our markets business fixed-income business up 42% equities business up. 8% are banking business up 13% So across-the-board. I think very good strong performance. And at the same time, you know from those earnings. It's allowed to continue to add to our reserves. So again not knowing necessarily where this Health crisis is going to take us. We've more than doubled our reserves so far this year taking our reserves up to 20,000 billion dollars. And so I think that combination of the diversification of our earnings the the power of the business model and our ability to make sure from a capital from a liquidity and from a reserving perspective that we we go into this from a position or we're operating in it from from a position of strength. Consumer banking not doing quite as well as some of those other areas you talked about number one and number two. The stock is also lacked a little bit. The market is some of your peers what's the explanation they're dead. So they'll start with a consumer banking peace. I didn't clearly from an industry not just a city but an industry perspective obviously the revenues in that business remain under project due to the impact of the of the pandemic from a city perspective that's manifested itself or shown itself predominantly in the declining credit card spending credit card is a big business for us. That's a big part of our clients spend historically has been on the travel and Leisure space and so we haven't been able to to obviously escaped that but I think at the same time through the programs that we've offered in terms of a forbearance and and other things I think we've seen a consumer not just here in the US but around the world that's in many cases are many ways showing phenomenal Brazil. Yep. CBC Savings rates up. We see delinquencies and we see a credit charge-offs actually at levels below where we were a year ago. I think which many people would would believe an off-site to be to be extraordinary and again in this quarter, you know from a from a an income perspective our consumer franchise made one point four billion dollars despite those despite those those those challenges that are out there. I think Andy from a a share-price perspective, you know that City's performance relative to other Banks has varied through the crisis and you know that that could continue over time is we move past this crisis and demonstrate our resiliency. And again, I think the way we've come through the past nine months has has shown that so far we believe the stock price will adjust accordingly back in March along with other US Banks. We took the proactive step to suspend share repurchases to home. Further bolster our Capital capitals up at a 11.8% common Equity Tier 1 ratio and and obviously gives us a position of strength we continue to pay our dividends up. We're going to $0.51 per quarter dividend that we you know, we came into the crisis paying we we continue to pay and you know, we're committed to continue to do that. And I think when you go out and talk to our investors do they have varying varying reasons for kind of how things are behaving in these highly volatile markets and I would say that there is a huge degree of uncertainty. We are a global wage business and and this pandemic is not us it clearly is is global. So I think time and consistency of results will lead to strong strong stock performance. And if you look back before January before all this started January, February US Bank stocks were performing pretty well and City shares were above were above $80. So our goal is to make sure we do the right things we make wage. Decisions and we come out even stronger on the other side of this and we think the stock will react to that like I have to also ask you about the fact that city was fined four hundred million dollars earlier this month for lacking adequate risk controls and entered into a consent order with a Federal Reserve should investors be concerned about that. Well, I would say first, you know, we are disappointed that we fall short of our Regulators expectations and as we've said very publicly as an institution, we are fully committed to thoroughly addressing the issues identified in those consent words as part of that. There are four main areas of focus in there around risk management data governance controls and compliance and I think what important what ties these together is, you know, the the the need or desire to continue the modernization of our infrastructure our governance in our process dead. And we have had remediation programs in place. And while we've been making progress against those we're simply not where we need to be and and we acknowledge that and and I would say wow. This is is disappointing. We are committed to addressing the issues and you know continuing to kind of push forward in those areas that we've described. You know, we've already begun making structural changes celebrating our programs and Investments and you know as a firm, I think we're absolutely laser focused on automating processes ensuring accurate data can be assessed quickly and and we're I you know is reproducing management regulatory reports it again, nine months into the crisis, you know, those systems have served us well, but we can certainly make them better. Speaking of this crisis. I mean Michael you been at the bank since what I think 1987. So you'll 8383. Excuse me. I don't put a short Change you there. You've seen Black Monday 9/11 2008/2009. How does this downturn compared to that? Well, I think first Andy, we need to recognize kind of what this is. And you add its core. This is a pandemic. It is a Health crisis and will not be solved until we have a an answer to that too. We have a healthy answer to that page really a manifestation of this Health crisis is significant economic challenge is not just here but around the us so I think different from some other crisis has affected the financial markets the financial markets are not at the center of this right it is it is a derivative effect of the health pandemic and I think the you know the grey dog Use your the silver lining in this is that I think the the financial system globally and in particular in the US comes into this as a source of strength we talked about Capital we talked about liquidity talked about reserving and I think very importantly what's different this time in particular from the last crisis is the fact that the banks and in particular the big Banks right have played a very important or the very important role as that transmission mechanism between government programs fiscal monetary, whether it's a central bank or or broader government programs and the real economy, right? So whether it was the early days of the crisis when the Fed was injecting liquidity or they were putting in place certain types of lending facilities and liquidity facilities for the markets to take advantage of it was the bank and in particular the big banks that actually really brought those to life you moved to p p p and you know, unplugged It ended volumes of loan processing and again, it was all banks. But in particular the big banks that really got this out into our communities quickly that was so important to the to the businesses to the people and to the future trajectories of communities and kind of how this thing would continue to play forward. So a Health crisis with economic ramifications a good news is I think the financial system and in particular the banks come out this as a source of strength in our actually part of the solution rather than part of the problem, which has been the the case, you know, sometimes historically off, right right. So how would you characterize US economy right now and how critical is another round of stimulus to this point? Well, I would say that the US economy has actually performed better than expectations. Right? If we if we take a look at you know, what you would think would be happening. Around GDP around unemployment around the challenges of of individuals family small business bigger business. I think you know so far the programs that have written down put in place by the FED those programs that have been put in place coming out of Treasury, I think if served as well what we don't know from where we are as what the forward trajectory looks like. And so I think right now we're all trying to watch the data to see that as we head back into Colder Weather as we head back into flu season do we actually see a a continual kick or Resurgence in terms of of Kovac cases of as of late? We've seen a bit of that I would say in some cases that was expected. But really what we want to see is again, we want to see that curve turn and then and start to go back down and and clearly I think we we all have optimism and there's a lot of work going on in terms of the the vaccine and the antivirus out their birth. And you know, hopefully that's not in the that's not too far in the in the future and that we can get that out we can get that scaled and we can give people the benefit of that so that we can start to have a couple more expedited return to normalcy our willingness to to use mass transportation or willingness to go into crowded space or willingness to go indoors into a restaurant. I think all of those things are critical from a stimulus perspective. I think without a doubt people recognized that there that we probably do need in another round. I think we've got the ability to be more complicated this time in terms of those businesses those geographies those those areas that have been more acutely affected by the virus wage and I think at this point it sure feels like to me it's not about are we going to get it? It's when will it come and exactly how how will that be designed as we go off? Forward you mentioned the fed and I want to ask you about Jay Powell and his policies and specifically about negative rates Mike. And how concerned are you about that? Or maybe you think that's something we should turn to? Well, I would say I would say one in D is that is a a company as a bank that operates all over the world and a hundred markets all over the world wage. We've experienced negative rates, right? We've seen them in Europe. We've seen him in Japan. We've seen him in different places in the world. So negative rates aren't while they while they might be new to the US when they come they're certainly not new to a company like City in the way. We operate I would argue and I think that chair Powell has has argued and argued this and or stated in his testimony Thursday at the transmission mechanism of negative rates isn't necessarily that effective in the places where we've seen it. I think it creates a pig Change behaviors. It creates strange Bubbles and I would say, you know hasn't hasn't in in totality been all that successful. I think what I've heard of Polish spoken is a a reluctance to go there and I think you know kind of feeling that there's maybe some other tools in the toolbox that could be more effective. I think as an example away from the FED, I think moving away from the monetary side of things being the answer may be taking a harder. Look at what type of fiscal program, you know, we've had a lot of talk about infrastructure other things that are out there that could actually provide a lot of benefit broadly across the US economy or other economies. And so again, we're in unprecedented times and I think that we should continue to to think and act creatively in terms of how we attack this and for me negative rates is is probably not not from what we've seen the Dead. The the next door best place to go right? Are you guys at the bank concerned about a contested election and you guys discussed what that might mean for Capital markets off the functioning of of lending or just the bank's business, you know, it's a it's a scenario that that people talk about and I would say that it's, you know, kind of one of the things that way we we are and certainly will be keeping an eye on again. We are a a political institution and you know the people speak to people vote and you know, we met we we certainly respect that that process in terms of kind of Market disruption or how that plays forward, you know, hopefully the the results are clear whatever they are. I hopefully there's a smooth transition around that but again, I think the the markets in city will certainly be prepared and you know, I would you know this year we we've gone through unprecedented. Zavala. Yep. Lydia volumes and I think the markets have stood up stood up very well to that. Talk about your employees and your teams working from home and how you manage that with such a large Global as you say institution. What's that been like and how's it going? Well, we've wage got around the globe as I said, you know operating in about a hundred countries and territories around the world. We've got about 200 little over two hundred thousand employees, you know at the at the peak of working remotely. We had the vast vast majority ninety percent plus of our people working remotely and I would say that the Investments that we made in systems and infrastructure wage so far observed this really well in my operations and Technology colleagues have done a great job that you know, during Peak periods. We've had in excess of a hundred and fifty thousand of our colleagues in our systems, you know, working online through the city systems and you know, they've they've stood up stood up very well and I think that, you know a year ago if you and I would have had this conversation and said And I said, you know, let me tell you what we're prepared for and let me tell you what I think you know, we can do to kind of numbers I'm talking about. You probably would have wished me well, but probably thought I was a little bit crazy in terms of the ability to do that. Well, I think here we find ourselves and and that in fact has happened. It is our it is our goal. It is our objective to to get our people back in the office safely. And as part of that we're we're being driven by the data. It's not about a date. It's about the data. And so again when you look at the places we come to work. We've probably got about 60% or a bit over 60% of people back in in China and Taiwan. We've got over 30% of our people back on average across across Asia and I would say in Europe in the US were probably more in the low single-digits to low teens in terms of where we are and obviously watching things closely. But but again, I think the the Investments that we had made in in in in a number of areas have served as well. For and so you know, I think we're we're prepared for whatever course this thing, you know takes as we go forward looks like the chief executive is knocked a little bit. I'm sorry is what is looks like you're back a little bit. Yeah, I'm here. I'm here. Yeah, I've I've been back for for a while. And again here here at headquarters. We've got somewhere about ten ten twelve percent of our staff in and and obviously that you know, depending on the trajectory of things will continue to continue to come up but I I really commend our people in terms of the work that they've done in the safe environment that they've created for us to return to In September, you launched a 1.1 billion dollars in strategic initiatives to address the racial wealth Gap. Why did you do that often? You know, I that, you know clearly the events not just of this year, but you know how things have have have moved or lack of movement over time certainly hasn't hasn't been lost on us. And when you think of cities Central role in local economies in the financial lives of Americans, we believe that we can have a significant impact on helping in this case to address and to close the racial wealth Gap. So in June as protest for racial Injustice a racial Justice intensified, I challenge City's Business Leaders my team to develop solutions that you know, we could go ahead and attempt to tackle systemic racism in our loan. In our local economies and and communities and the announcement we made Andy around our action for racial Equity was our response and and you know, what we did in there is trying to go at this with a pretty comprehensive approach to providing greater access to Banking and credit and communities of color. By the way what we do right that is our day job increasing investment in public own businesses expanding homeownership among black Americans and if you go back to the last ten years or so we have what well not being the largest bank or the largest real estate real estate back in the US. We have consistently been the largest lender to the low and and moderate-income housing across the u.s. And so that we thought, you know, we could bring some expertise to home and and obviously advancing anti-racist practices in the financial services industry. So in are billion-dollar commitment 550 million dollars to support homeownership for people of color dead. 350 million dollars in procurement opportunities for black owned businesses. So so as a company that manages big businesses and you know, we spend a lot in our communities we obviously have the ability to to drive that spend and to push that spend and really try and support black-owned are black bones suppliers fifty million and impacting Investing For capital for black entrepreneurs again kind of reaching out there a hundred million in support for the minority depository institutions, right the minority depository institutions operated a number of these neighborhoods that have been significantly affected in the in the covid-19 demek and ways that we can support them and whether that's with monies, well that's with lending support whether that's helping to provide them expertise or or other things that we can do to help them to help them continue to build their their institutions wage. And finally a hundred million dollars from our foundation in Grants to support Community change agents for addressing racial Equity. So, you know real real money real changeable actions were excited as an institution around it. We've already begun to get out there and to kind of put these monies and to put in to put our efforts to work and the inspection is completely behind it and I think excited by it and finally Mike I'd be remiss if I didn't ask you about this major Changing of the Guard that has taken place right now. You're leaving the bank after okay. I'm going to do the math thirty seven years, right? That's right. Thirty seven years and Jane Fraser is taking over as the first woman to lead a major US Bank in February off your legacy. What can we expect from Gene? How's the transition going? Well, I would say, you know first maybe talk a little bit about why now and kind of how I came to my decision and I would start out by saying that was really no one thing that led me to my decision. But my my thinking was influenced by a few things right one is going back to 2017 when we did our big investor day. We embarked on a 3-year plan that would take us through the ages of twenty twenty and it's kind of always been my ambition to to see that through second is you mentioned. I have a ready now successor, right? Jane has been with us for life for going on sixteen years. She's had a number of jobs across the organization. She and I have worked always very very closely together and you know in many ways we've been, you know repairing her for quite a while for this and and by the way, I think she's she's ready for the job and I think third that as proud as I am of all that we've that I've accomplished You know during my time here and this is CEO. There's obviously more work that needs to be done. And I think as we come through and come out if covid-19. Our portfolio our return on tangible common Equity went from above 5% to north of 12% closing the Gap with with our peers. We went from returning hardly any capital in 2012 The Returning nearly eighty billion dollars in capital do our shareholders in the last six years and we've reduced our share count by about 30% So and I think all of that hard work and what what we've done so far I think is, you know, very positively manifested manifesting itself in terms of how we're we're coming through covert in terms of our performance of of our resilience and I think the the, you know trajectory that the firm is, so I'm proud of proud of what we've done and I I'd say I'm very confident in terms of the great management team we have in place and I know James going to be a fantastic CEO We wish you well, Michael Corvette seat you of city. Thank you so much for joining us. Thanks for having me.
Mad Money w/Jim Cramer 11/27/18
"At fidelity, you get value. You find anywhere else decisions. They're clear costs they're lower than ever and account fees. There's zero so you can invest with zero trade offs open an account today at fidelity dot com slash trading zero account minimums in zero counties apply to retail brokerage accounts. Only expenses charged by investments such as funds managed accounts, HSA's commissions interest charges or other expenses for transactions may still apply. See fidelity dot com slash commissions for details. Fidelity brokerage services LLC member NYSE SIPC. My mission is simple to make you money on your level. The playing field investors. Summer, and I promised help you find bad money starts out. Hey, I'm Craig well going to make money. Welcome to Klay Mark of wanna make friends. I'm just trying to be somebody my job, but just entertainment educated. Teachers, so call me at one eight hundred seven three CBC or tweet me at Jim Cramer. How are we going to know in this pain is over every where we open Dow sharply down and that had a sharp rally up now only gain one hundred and eight points, that'd be two point three three percent. Nasdaq inching up point zero one percent, I gotta consider what makes for a sustainable bottom as opposed to fail bottom that leads to still more like down, and that is the real conundrum of this market. Most stocks are in a bear phase here. Say all stocks just most for example, if you're in recession proof stocks and they deliver surprise surprising upside numbers, those stocks go up and then up in up each time. Someone was raises the price. They go up. But I can't believe how well Johnson Johnson behaving core oxygen sation Cuffy cessation stock like JJ's incredibly well run. And it's hidden all time high did pets got hammer when the company reported, but it's sort of through the Ernie spirit. We now know that the seniors that laid the stock low right back up puck and gamble cuckoo vein. Refused to quit. Dane and no bear market. And then there's the greatest story of all time. Bryson. Well, it's got a decent balance sheet three point nine seven percent yield. No international exposure, no tariffs or anything else that has anything to do with the government except for maybe the government allows sprint to merge with T mobile, which will all be Lau all the wireless companies to raise their prices as a consumer. I've much prefer we have real any trust enforcement. But if you have rising you can profit from the industry's anticompetitive behaviour. Those slowdown stocks of the chosen ones they can rally on bad days and good day. Sometimes I think that I think it's kind of like getting the David blades levitating them in this market. There's close as it gets to bulletproof even though they're valuations have gotten very very stretched. It's the David blame Moammar. Now, why are there session names keep climbing because pick money generally bears, but it doesn't want to leave the table. So when these fund managers finished telling everything that's not working, they by the recession east does because these are the only stocks that perform welders Florida big does that when they buy most doctored. They're fighting the fed and they're fighting the president. That's just too hard for most amid rather go and clerks by fries. Now, what about the other side of the trailer? How can you recognize when the beer market in the rest of the stocks is over? Okay. Well, let's talk about apple. This doc is front and center in the torture market that none dare call bare except for me. I want you to listen to apple which you know, I believe you should not trait. I want you listen to about health grace losing twenty five percent of its value listened to two hundred billion dollar vantage going. I can't fight. It. Anyone see it? And when she. See there you go. Okay. Apple caimant. What I tell you apple came into October with a full head of steam. In fact, it hit an all time high of two hundred thirty three dollars over the slide began the next day, not coincidentally the day that vice president Pence changed our policy toward China from simple trade war, something a lot more bellicose, Pensa speech, many things to people, but the most important takeaway for you was that the White House no longer seems to care about how much trade we do China worse. Pennsylvania clear that there will be consequences for companies that to a lot of manufacturing the People's Republic when they could be doing it here in America. What American company employs the most people in China? I don't know man, according to that apple Chinese website when translated into English added. No apple created is supported four point eight million jobs of the pure see a more than double the number of workers, the company directly indirectly support in the United States. Pence wants China contain at times, even sounds like wants regime change the economic sabotage. I mean, you view the world through that lens companies that trade with China or trading with the enemy so ever since that Penn speech, the stocks been going down earlier this month apple reporter ferry strong quarter one that I liked, but it did not matter. The company announced it would no longer break out the number of phones it sold because that's no longer Representative their business that line that one line hijacked everything. Good since then we've heard endless reports of supplier cutbacks to apple that have led pretty much. Every analyst is expect that the company's having trouble selling phones, these two issues, China and the perceived weakness in the iphone have crushed apple stock everytime. Analysts cut his price target or make some new cut numbers. Always the same things that just describe this. That goes down every time. We're worried about the trade war. The stock goes there every time everytime. Everytime. Then last night, the president gives a rambling relatively incoherent to be diplomatic interview with the Wall Street Journal, and he says the practice you put a ten percent tariff on the hitherto tariff-free iphones that are made in China. He said the American sewer could handle it. Thank you. Suddenly the reality of the tariffs at home. If Trump pulls the trigger you'd better believe during says Smith's need to come down. If the president does this apple arguably, America's greatest company the jewel, we'll be putting it on tenable position. If it decides to pull some manufacturing from China say to please Trump it runs the risk of the Chinese putting tariffs on its goods, if the Chinese wanna play really tough, they may subtly call for a boycott on apple phones to prevent them from leaving to me. This is over Dickey's apple should be punished. It should be celebrated. Apple shareholders have become pinatas as analysts fight to cut numbers and spread fear. I will not play that game. I think apple stock at twelve times. Next year's earnings is eight bargain. It's a bargain, there's beginning reflect all the bad, and none of the good, including great news this evening from Salesforce, which we will talk to I bet apples buying back stock all the way down and could be a coil spring or any good news tariff, or otherwise, here's the bottom line in this tough tough market as long as we don't know if there's a real iphone slowdown and until the president takes Apple's iphone off the trade table. You can't expect an end of the pain. I think it's worth it to hold the stock the or even by some. But this very moment. I feel very alone. Maybe just maybe that's exactly what it feels like to be your bottom. At least in this one important stock if not the rest of the tech sector, it's go to Bill in Florida Bill Howdy. They're the hardest working manage show business. I sure can you do Jim I three twenty this morning because I heard some other guys we're getting up at three thirty. I got the jump on. What's up? Thanks for everything. So question about the cloud kings try to get through some things quickly. We had the IBM red hat deal. Right. They had SNP. I mean SAP buying quality tricks. Tweet at news of bucket. I'm big into oracle. Then we had to cloud cannon. It's it's fancy CEO's on just wondering if this all jitters, the competitive climate with the cloud, and if Microsoft in particular should be worried. Well, this is a great question because I happen to believe he usually from the cloud. I've not backed away. I see no slowdown. I think the data centers good. I think customers are getting digitized. I think Microsoft is doing terrifically. I think Salesforce is doing great. And I gotta tell you. I think even alphabets going to step up and start doing some right things. So odd not backing away. Everybody else has but I'm with you, sir. Let's go to ally in Florida. He like, hey, Jim. I watch your show what I can notice about a month ago. You made a call CVS over Walgreens WBA, right? I I've been watching them casually for a while before that, and I continue to be more closely afterward what I've noted that since you're call more or less. The opposite has occurred with WBAI outperforming CVS. I was hoping to get your take on that physically. What you prediction going forward? Remember sita? See we are CBS's had a gigantic move. I mean, I mean, I've been like in the stock just moved from seventy five to eighty in the last couple of days, and I think that's pretty darn good. Walgreens is up from eighty to eighty three during the state period. I'll take my view, but it doesn't matter. I like them both and what I really like these questions because they are about areas that I think are make sense CVS with the deal, and the cloud stocks enough is enough at the negative pile up and up and up and up by most stocks are in bear market modem getting tired of it. And that's why the pain and stocks like apple. Leads to head. But it's still worth owning. Oh, man tonight. What does the market fear index? Tell us about the long term potential of the market you not want to miss this. I am tracking down the technical sides offer unemotional -pinion on the state of the averages. Then I called like I see even when the market watchers don't like it fed them defending my takes but first sales for supportable a quarter of the clothes. Ceo. Mark Betty, I've talked to be exclusively next to stay with framer. Don't miss a second of that money. Follow at Jim Cramer on Twitter have a question. Tweet Graber hashtag mad tweets sin Jimmy mail to mad money at CNBC dot com or give us a call at one eight hundred seven four three CNBC something. Ed tha mad money doesn't see in BC dot com. Brought to you by fidelity where decisions are clear and costs are lower than ever. Learn more about our industry leading value and open an account today at fidelity dot com slash trading. Fidelity brokerage services LLC member NYSE SIPC. Countering the gloom finally a silver lining in the cloud. The cloud plays Salesforce, just another powerful quarter with an even better forecasts here break it down is Mark Benny up the visionary chairman and co-founder and Cossio of Salesforce, Mr. benef-. Welcome back mad money. Mark is good to see you. It looks like that the fears that a lot of people had that maybe this was going to be the big shortfall all the guidance cut. They didn't come true today. Well, Jim we just had a great quarter here at Salesforce in. I'll tell you. I've got a lot to talk to you about it before. I do I really have to tell you something really important which is over last two weeks. We've had just terrible fires here in San Francisco. And I just want to extend my sincere. Thanks to all the firefighters first responders, and my heart is also with the victims and those families have lost their homes over fourteen thousand families have lost their homes here in San Francisco, Jim and five hundred businesses as well and more than half of the first responders also lost their homes at this time of the year. I want everyone to know that they have our sincere gratitude and our hearts remain with all those who've had such a terrible suffering over last two weeks here. And how do we help with the fires? How do we help Jim worst? Jim we're giving two million dollars today to the victim recovery friends, including the north valley community foundation, and we'd love to encourage. Others to go ahead, and please give to these families who have lost so much, and we will let him you say, and we will do that. Absolutely. Of course. 'cause that is you, and that's one of the reasons why we come to expect Salesforce to get the finest people in the country because that's your top priority. The the numbers here are bid stunning in the sense that you're really still talking about beating numbers by hundreds of millions of dollars. Even when people did not expect this to be an important quarter. Because so many people worried about a worldwide slowdown. I don't see a slowdown around the globe. As a matter of fact, I seat excel ration-, particularly in Europe. Jim. We see hitting our big goal, which is twenty two twenty three billion dollars in revenue within two fiscal years by school year, twenty two and the Dow tighten that up here. We are we're giving fiscal year twenty guidance for the first time at sixteen billion. We are really excited. Salesforce remains the fastest growing enterprise software company of all time. That's incredible. Now what for instance, I'm looking at the numbers I compiled for what you could do for fiscal fourth quarter twenty nineteen guidance next quarter, you blew the revenues away in terms of what you give a forecast, but the everyone's focused initially order. I mean, Jim these revenue numbers are incredible. When you say. Great basin for the quarter. Right. Awesome. I'm saying that people should be focused on the ravaged because that's how I gauge your strength. Well, you can see we had a great quarter. The third quarter was phenomenal. You see we're giving phenomenal guidance for the fourth quarter. And I hope you know, certainly, we're all praying and hoping to improve on that by the way. And now we can see a strong fiscal year ahead in fiscal year twenty as well. I don't think the company has ever been stronger, Ben a better position. And the reason why is every company that we're dealing with is going through a huge digital transformation and every digital transformation. Jim begins and ends with the customer, and you just look at one of the largest deals. We did this. This quarter is a nine figure deal with one of the largest banks in the world. And they're just rebuilding how they deal with their customers. That's an amazing amazing story for us just to see everybody. Go through the strengthening nine figure Gil would mean, basically that the redoing everything is customer facing. Everything that is customer facing for one of the top five financial institutions in the world. And another one that I can give you the actual name for is doing something just as exciting a CitiBank, and you know, Michael NFL tastic job is CEO city, we've been working on the retail transformation there and this quarter. They opened the door for us. And now we're doing the wealth transformation as well. We couldn't be more excited about everything that CitiBank is doing. It's Michael corvette is this. So I think this people who are trying to understand the enthusiasm. You know, I've had for your stock since was at eight dollars. They're trying to figure out. Okay. Why does city need Einstein? Analytics why do they need a marketing cloud? I mean, it's just a back. Well, every company is transforming their relationship with their customer, and we're going from a world where if you don't have a digital one on one relationship with your customer. You're just not going to be that successful. And you can look at some of the huge successes that we've had in the quarter. And I've got some great stories to tell you, Jim. But you know, one of the stories that I love is Uber. Of course, we've all called are Uber. Well, goober has a tremendous need to have a relationship not only with you the consumer. But also with the driver their own internal operations. That's been exciting story with us. And as we've been able to improve our relationship with their and other executives in the company we've seen them with really transformed their relationships with their customers. So I have a lot of partnerships last time I saw you as out that we are excited about the app partnership. This does that blurs your producers ulcers at two three year transformation. Spent a great opportunity for us. We've worked on that for so long. Of course, we all use our apple products all the time at Salesforce. Now, we have a strategic alliance with apple. We're encouraging our customers to do what we do which is take their information on the road. All of our products work natively now on IOS, we have the ability to automate every enterprise around that incredible platform, and we see customers doing that. I'll tell you a great story during the quarter. Jim, Liz service master, this is a company that has a lot of brands, but you might know some of them like terminates and others. You know, this is a huge field service operation, but it's also the integration of their call center their contact center. They're trying to build a three hundred and sixty degrees view of the customer. So of course, you're working with their technicians in the field. They need to have a strong institutional memory of you back in headquarters that's a digital transformation. That is so exciting for so many companies where they protect their homes. I gotta ask you. There is a sense on wall. Street very different when we were out there, frankly that the whole customer relations management that also the data center all the analytics has slowed the transformation has slowed. How is that disconnect? Possible. Well, you can look in all the serum companies. I mean, we're the largest and most important CRM company in the world. We're number one in CRM by market share and revenue and by as you can see again by revenue growth, but a look it's a big industry and all the players are doing well because every company is going through this customer transformation who's not going through a customer transformation. And what I mean everywhere I go in the world this is happening, and it's been going on in. It's not going to stop anytime soon. And you said it, right? It's about sales. It's about service. It's about marketing it's about commerce. It's about analytics it's about applications. It's about good building community or in the case of one of great customer that we have DuPont. It's about immigration, and you know, we have this fantastic acquisition this year meal, soft, right and the ability to integrate everything together this is so important for somebody of our customers. No. I know you're working with Ed Breen to make that happen over the three way split. I want one less thing. Great executive at bream gay. He's fabulous any sense. We've had Tim cook for regulation you've been at the vanguard of saying that preps Facebook has not been as customer Centric. Is there any way they can redeem themselves. Do they need a big change? They need someone at the top. Or chairman who understands the importance of the customer is opposed to the data. Well, Jim, you know, that every company has to hold themselves to a new level of trust. And if your brand is not about trust, you're gonna you're going to have customer issues in you can see that in that brand. But you can also see their executives are walking back out employs are walking out. And that that happens with a lot of companies in tech right now, we've had a lot of walkouts this quarter, Jim. And the reason why is because it's it's kind of a message to the executives. It's time to transform and let me tell you why that is because in technology over the last two decades, the most important thing has been the idea that is the best idea wins that has been what gets you funded. That's your all your company that's been your highest value. The best idea wins no longer true. The current highest value is trust. And if trust is not your highest value, if the most important thing to you and your company is not trust you need to look again. And that's what's happening with these guys today. Well, I think trust also is good for business as well. As being good for the soul. Absolutely, Jamie, totally pre sheet that chairman in Costa, yell of Salesforce with a very big holidays tag same to you Mark. And let's remember what he said about the firefighters first responders in the city, they cannot be left to their own devices. Thank you Mark fanny off what a quarter met monies back after the break. The fact of the matter was he was crow. This is a story that is not well known that stuck in my mind about this in the white, but it really should be especially maybe now. Oh my God. Rachel, Maddow and MSNBC present bagman. Listen for free wherever you get your podcasts. Let me tell you a little something about the Canucks of being a commentator. You know, what's really not worth it? Taking a stand. You're not rewarded for taking a stand. Not smart perhaps not anymore. Fight any sense of self preservation whatsoever. I'd never do it for you. I just can't help. But the incentives are all in the other direction. You're rewarded for cliff accounting for saying on the one hand on the other you can make your life a lot easier by either say nothing or carrying yourself internal optimists or pessimists which is equally on help. And you know, what people really hate when you change your mind when you reassess the situation based on new facts when you're wishy washy, not willing to offer declared a view routinely, just presenting both sides and nothing more you make your life Trump free. When you take a stay at, you know, you're going to get pummeled as I've been pummeled processing the perils of the current situation rather than spending more time with the potential upside project right now, head of the g twenty and j pal speech. I know we're edit very important juncture, and I want people to realize the dangers if not one, but if our leaders do the wrong thing, I think it's my point out this dangerous. Why because I'm hoping that this time that that we'll finally take me seriously eleven years ago, I came out here, and I screamed. In the federal market committee. Literally laughed at me. They turned out to be sadly mistaken. The fed is a learning animal, then maybe they'll be more open to criticism this time around maybe the listen, but I'm not saying the fed will necessarily do the wrong thing. I'm certainly not saying you need to sell it. That's absolutely not what I'm saying. Is that what I'm doing my travel chest, which you can follow along by joining the action was plus dot com club, although we are carrying a higher cash position because of the risks that I perceive let me put it to you like this. I can people on Twitter claiming that I told them that you'll regret not selling things at this level at the Ted screws up and goes full-bore against inflation. That's very reasonable statement of ESP the vet drops the ball. Hey, we're in real trouble. However, that's a mighty big. If I'm not saying you need to tell everything because the fed will make the wrong call. I don't know what shape pals going to. I think it's possible. Look at the data. See it like they see a weekday Connie's become away from me commerce, and employment and probably are on the side of. Caution giving us one more rate hike, and then deciding to wait and see before he tightens again. That's poon. I don't want rash. I want prudence. It's even possible that he won't tighten next month that dovish fed could stop rolling pair in its tracks at the same time. If the president were simply to say, he wants China have a little more time for raising the towers from ten to twenty five percent practices sign of good faith practices. It's time. For instance, sign that our companies have a little more time to move then stops again four, but if Trump doesn't do that, then I expect more downside. Look, we are very binary moment here. These are not controversial statements. In fact, the idea that more rate hikes in higher towers are bad for business is the most conventional conventional wisdom this stuff is straightforward as it gets unless you we've become so hot that we can handle many more rate hikes or the tariff somehow promote commerce and higher earnings for many industries as the president cleaned in that completely bizarre alibi in view at the Wall Street Journal yesterday, but let's come back to regional premise. Which is how easy it would be for me to say nothing. Just adopt a permanent position, and it turned cheerleader or journal bear I came out here every day. Instead, it was the seventh any of the bull market would anyone really mind, that's the kind of cautious nonsense that you you have. You could have said every day for the last three years, and it's always lapped up strangely win hedge funds say by journalists or if I came out and said, stop worrying about your stocks here. Inex- fines, and it's all good. Everything's good. It's all good. Good. Good. I maybe I could give it some extra respectability by saying and don't forget, I subscribed to the Warren Buffett school stop picking don't do it. Again. That's regarding to sagely unassailable problem is that none of that is actually vice that is all help at all helpful for regular investors yet to try to explain the risks and the rewards you have to try to help people boy gigantic downside, even if the market come back over five year periods with the case for two thousand seven two thousand well right now, I think that's still have a lot of risk and not a lot of reward unless Jay pal and President Trump do the Putin things, and they might not do them. And that's something a lot of people don't want to hear I'm especially exasperated. When I try to warn people that you shouldn't be too excited about the upcoming g twenty meeting, and then I get excoriated for being credibly bearish. Listen. I love to be proven wrong. But I don't think the presence all that eager to make a deal with China. Something I've been saying for ages, even if you think that's good foreign policy. It's definitely bad for the stock market. Let me give you the real pucks in the matter. The fact is I'm informer Boston bearish in my career. And for good reason since I got started. This business doubt had gone has gone from one thousand to twenty five thousand good call. I have to say myself, and I'm going to say it because I want to explain why you should bother him listening. If the in the times that I got really bearish one thousand nine hundred seven two thousand two thousand seven it was right to be bears. I missed a big time in one thousand nine hundred ninety nine thousand nine hundred eight you can meet about confessions. The street at it. I don't know three out of four hundred bad as my late mom always said if you don't stick up for yourself. No one else will. So crystal clear, I am not a super bear right now. Not after how over so we got to be an after how tremendous the Salesforce quarter was, but I do think that could be a lot that could go wrong. That's out of the hands of our great companies. Stocks often won't go up on. Good news. And then get crushed when bad news or even middling information. As was the case with the retailers last week when we say things about him last night they valley today and apple for the last two months. That's wrong. I try to call us. I see it even though it can be really uncomfortable. For me. I'm doing my best year. You get my honest opinion. Nobody put a gun your head and said you need to listen to me. But here's the bottom line. If you want wishy washy opinions or permanent bullishness. We've me you got a lot of different options to choose from. But as far as I'm concerned that kind of analysis is not very useful. I'd rather try to get it right and help people which is why out here every every night, including tonight and tell you the truth is, I see it even when it causes me to get pilloried on social media. And even when I get it wrong either through lack of understanding or simple, bad luck. Let's go to fill in Florida. Philip. Hey, mister, Kramer. How's it going? It's going real. Well, how about you fill it? Oh, really good. My question is about the company Intel they have a new design on the new product. And apparently, it's not going to be as good as the competition time around your opinion. I think that Lisa sue Advanced Micro has done a remarkable job events, micro stock has gone all the way down from thirty four to as recently as nineteen. I think that's an overreaction, and you should buy AMD. I think AMD is taken leaps and bounds above intelligent, lots of different things. And we're really rivaling my old friend in video. So I would rather buy Lisa sues stock A M D. Let's go to Ralph in New Jersey's Ralph L O gen Z. I'm looking at kill Ray. He L R Y the Canadian or Masuda going candidates company. Gimblett candidate Paul the rate today. I can't find any logic in this stock. Appeal is January the night object to live in nineteen at seventeen. It's up to three hundred close today at one hundred fourteen dollars with a market cap of ten and a half billion Jim based on the last quarterly revenues a ten million dollars. There are no earnings yet. It gives it a multiple of two hundred fifty times, and writes revenues can follow you for a long time. I understand investing for value. Ryan, come growth, even speculation. I even remember Amazon, and okay, generating revenue generating revenues no warnings. All right. So many players in this space until the next now till till is not when you want to be you wanna be in in canopy because they got more than four billion dollars in cash that was giving them by constellation brands CG. I'm interviewing Bruce Lynn at deal Konami on Thursday. I feel that everything go there marijuana cannabis dot should be sold the only one more thought. And if you do an owner. Someone is canopy or derivative -ly through constellation brands, which gave them the money. Look sometimes you put your neck cap there. Okay. I'm just gonna come out and say, I think there's a lot going wrong right now. And it less the fed and the president do the right thing we're going to get the lower levels there. Okay. What's more money? What could the BIC single about the overall market unpatented calculus planned out in? It's real surprising. Then what constellation brands Canada goose and five below can tell us about long and short-term potential miss bargain. All your calls rapid fire tonight condition. Lightning round. So stay with Kramer. Tomorrow kickoff. The trading day was squawk on the street. From post nine at the NYSE. Every time you look they can plant trees because and then you've got to kick it back the state, and he's talking about Brooklyn. Hey, all she grows in Brooklyn. It all starts at nine AM eastern. We've had moments in this bear market where suddenly everything look like. Well, maybe it was going to be okay aren't over sixteen the average Israeli like crazy Dow gaining nearly five hundred fifty points, and there was a widespread sense that it last the pain might be over. But I thought that might be a little too optimistic. So we checked in with our resident volatility expert. Mark sebastian. Here's a brilliant technician. It's the fat of option pit dot com. As well as being my colleague at real money dot com, and is fun to read, and he told us, no way, expect downside. What was that a good call? So after yesterday's bounce. If you want to go back to he's the source here because the CBO volatility index. Also, there is the vix for short or the fear gauge because does such a good job of measuring the overall level of panic in the stock market is something that this man. What's to say? He knows it better than anyone. I've ever seen him. What does he say? What is the best and say, let's start by taking a look at this pair of shorts the S and P five hundred and the volatility index over the past four months. Is so telling it's incredible. Remember, historically, the vixen the S and P are supposed to be trading in opposite directions the vix works by measuring. The implied volatility of S and P five hundred options over the next month, and planning institutional investors like the by puts and calls is it kind of insurance against wild swings in the market. So when they expect a lot of autistic, the prices that insurance goes up when they expect less volatility price of insurance goes down. That's what makes the dick such a good. Tell of what's about to car now on October eleventh when the meltdown had really gotten going. Okay. Sebastian points out that the volatility index peaked at just under twenty nine intra-day. They don't tell the twenty four th you've been as the stock market continued decline the vix made eight lower. Hi, Pete just hundred twenty eight inch today that's used for Sebastian. When the vixen the S and P start moving in the same direction. It's all finished sign that a big move is ready to change your actions. Even if the change only temporary. So when the SNP makes a lower low, but the vix fails to make a higher. Hi, Sebastian tends to take a. Sign that a bottom may be at hand. Sure. Enough that same day the S and P made its lowest low yet. Okay. There goes the vix once again failed to make the higher high and suddenly the market quote fire with a massive premium for the next week. It seemed like the situation had stabilized the S and P five hundred rand from two six four zero twenty six twenty six forty two two thousand eight hundred in a straight line, and it was breathtaking. Meanwhile, volatility next was behaving itself tanking while the way down to sixteen as it should. Okay. That's exactly what it should happen is the level of fewer seen it. Of course. It turns out the fear was justified because the averages peaked again on November seventh and the stocks put right back down and hideous route that lasts until yesterday pants, and you notice maybe the bounces temporary. Maybe not well, let's take a look at the second pair charts. It's the same pictures of the SNP and the volatility next with a different emphasis. These bashes noted something interesting about the latest leg of the bear market, basically action in the vix. There's been very little panic. As the S and P plummeted. Once again, the vix pretty much traded sideways in shortest Oxford steadily going lower one of the worst break in years. The fear index barely reacted to Sebastian that suggest that the climate was not driven by panic. If anything it was kind of expected just as the SNP reaches lowest level since early February. Okay. You go. You know, the vix is barely over twenty. Remember it shot up to Twenty-eight when we fell off a cliff in October. What gives here does this mean that the volatility is broken is the fear game. Stop working Sebastian thinks it's simpler than that markets can indeed four without the vix rally. I'll be an only for short time. In fact, we've seen this before. So what happened the last time? He hasn't got slammed and the Vicks fell along with it rather. Then rallying like you'd expect. Okay. Let's sue map. This is really instructive. This deck spare chart shows the SNP in the volatility index going back to the beginning of the year. Remember, how the averages fell apart starting in January? Okay. You game with tariffs hideous meltdown in February that was off actually trading with the vix. You'll notice there was a nice bounce in late February. Okay. Got a nice bounce lateness the SPX late February and early March. But then quickly went back into health mod giving up all of those gains. But look at the facts in this interesting spice about thirty five during the first phase of. Climb. Then during the second breakdown in late March, it only takes up the low twenties to Sebastian. This looks like a lot like what we've just seen in the past couple of months during the first leg of the decline in switch directions in October the vix went crazy. Okay. But during the second leg data November the vix just shrugged. Didn't do anything. Why does this matter because when the vixen the P start behaving like this has it almost always a sign that the stock market is actually trying to find a bottom. Wouldn't that be something? Here's how it works and October the meltdown took us by surprise. And everyone doubt. So traders bought protection, the former put options on the S and P five hundred. And that's why the Vic surge, however, hit is the client last week. We really didn't see a ton of put by if anything traders well had been selling the protection both of puts on the SNP and in the form of call options in the volatility next itself. Why does this make sense because this horrible last week was we finally become jaded? I'm not saying, we're jaded nothing. This. -sarily? But if you're going to get a sustainable bottom short-term, bows, the bulls need to capitulate, and that's what he's saying happened last week people need to give up he saying that's been happening for month one signing capitulation when the stock market gets crushing traders, aren't that surprised the cell over knocked-over blindsided a lot of people the solve in the last couple of weeks. Nobody even investors who thought we were ready to rally knew that. There was another downlink possibility Sebastian there's one last pair charges very instructive to this is the vix on top of the CBO vix volatility index if you can remember any calculus think of the vix as taking the derivative of the vix it shows, you the expected volatility on the volatility index and inventions as the action here is super bullish super bullish. Why because it's the volatility index tried to creep higher. Okay. You're you're watching the house about over the last couple of weeks. The visit X has been in free fall. In other words, money managers who are betting on the viks itself. They believe all Tony's going down not up. And it's the fear index is ready. Galore. So and says that incredible sign that's incredible side. And it says he's saying listen, we kind of a bottom at hand in the market. In fact, he thinks is possibly may have already bought them. Just like we bought him in April when the market sold off in the vix did next to nothing bottom line for what it's worth niece charges interpret by marks a business. It's just it's time to start doing some by. He thinks you might not get another chance as good as this one for the rest of two thousand eighteen I don't know if he's right? But don't you find it Harding? When you consider how right. That's bashing has been in the past. Maybe the vix is signaling the fed might be one and wait mode one rate, and then wait and see or that the president actually have something positive up asleep. When he has done it with the Chinese president this weekend stranger things have happened. And if they do the bear might finally at last hibernate yet monies back yet. And then the lightning round is over. Are you ready? Howard in Colorado power. Pick will yet the right back at you cheap. What's going on? Wanted to find out. I have a physician go TV DB those guys. Next week. I liked that. I liked them very much. I think it's a great stock here. And I think that people are underestimating the power of what they're doing Brandon price software, which is on fire. Let's go to Gabby in Arizona. Kim, thanks for taking my call. No problem. About well power ache. That bill. Okay. The senior tear at you. When you do see your housing. We don't recommend any t- else. Other than Ben toss. Deb Capellas been cannon down. So many times this crazy five percent. Cost is the way we plant anything. How point Anthony? Julia Jin, thanks for taking my call. Thank you to do for the law golf there. Willard flood. Thank you. Yes. Dip it for you eighty five and eighty I had a good quarter. A lot of people felt that there's some sort of slowdown down in their business. It was not bad. And I think the stocks abide. Let's go to that document. Tim could attain in Maryland tip. Kramer, love your show. Perfect. Okay. Years ago, recommended iridium communication is it still a by. Yeah. Yeah. It's fine. I haven't really worked at it took the law that would go and get myself at asked him credit that went to the longtime. But the answer is. Yes. Because it unique niece business Joseph in New York Joseph. Hey, how you doing Jim? I just. Sure. Thank you. It's time caller. Yes show. How 'bout Huntington Bank court? Does that working there too that I like a lot? I like city which is trading at tangible book by quarterback doing great, John. And I like J P Morgan where Jamie diamond is doing pick. Nobody seems to care right now. They will one day. Let's go to Bill in Florida bell. Jim. Now, a good time to buy Wren gold mine or do you have a favorite other goal? I like gold bullion I like Randgold, but only because I think that people should have some exposure to goal. I am not a big old bull right now. I regard it as insurance gave in the align. I day d'arthur Creamer. Are you doing not bad? You see the way moral? He's get along with Everest staring at Twitter pictures. No, I missed that. I'm gonna have to check that out. Thank you. Jim might today is being found bought. And scientific bef that I'll Mamluk can I say, I think that s axis. CBS axis, and I think he's going to be in the AFC kipton. I like Boston scientific I need to go to care an in Indiana. Karen? How you doing? I'm doing well, how about your good? I'm from the Kelley school of business Indiana University. How much we have when we were at Kelly fabulous kids fund. Absolutely. To get your thoughts on L K Q. I screwed up on this one. I really liked it. Kushner, plenty spent I've misjudged how four the auto cycle was my bad. It's not working. Let's go to Steve in Pennsylvania state. Hey. Okay. All right. Remember five and six we're all we're in the high. We are. This was still the year that we won the Super Bowl people. Forget that. It's driving me. Crazy. What does not? Puente power light. How much have I paid those guys overtime define utility nothing. The right. I think it doesn't and that leads I was thinking. How? Mike big round is sponsored by TD Ameritrade. Long term versus short term. It's the oldest dilemma in the book right now. There are tons of terrific long-term situations that could stupi hurry. Think in the short-term. Let me give you some tables. What does start with five below? Here's an outstanding regional national retailer meets a concept of regionally in the Philadelphia area. And now can go national without a problem company has about seven hundred twenty five stores mainly in the northeast, but there's room for twenty five hundred Dacian wide, which is a terrific trajectory that will give you excellent long-term growth. The stores have treasurer on feel in the merchandises as they say handpicked trend, right, and wow, they're putting up new locations like crazy. So what's the problem? Five below reports from September fifth. Let's say the president decides to let the tariffs go from ten to twenty five percent Chinese tires Pablo. Sources a lot of merchandise from China would they have to go to five fifty and below. So while we have this stock in the bullpen for the action alerts plus dot com club. How can we not wait to see what happens with the towers and with the verbiage? On the conference call next up Canada goose it just reported one of the biggest beats of the year earning forty six cents while she was only looking for twenty six cents management raise the revenue quote forecast for twenty percent. Thirty percent that's phenomenal. The company's direct consumer business has soared and there's much higher margins than traditional retail seventy-five percent against fifty six percent, brick and mortar. So what's the worry? This warning shareholders not the company, but shareholders dumped ten million shares at sixty five dollars and fifteen cents spot secondary that caught stock was poorly placed and trade him well blow that price almost immediately close to sixty two dollars and eighty two cents. What matter longer term, I think not this is a great concept grits acution, but don't you think the people be worried that insiders bailing in this market? I bet that we they're not how there's a nice discount for terrific piece of merchandise. Finally, there's constellation brands company behind the Delo corona, Victoria and Pacific fabulous seller, by the way at bar San Miguel, my small plate restaurant in Brooklyn. It also. A great deal premium wind, I just bought a whole release of prisoner this weekend. And if you're concerned marijuana's going to disrupt the alcohol business constellations back in canopy quoth, the biggest and best Canadian cannabis company on looking forward to speaking to the CEO of canopy Bruce Lynn deal Konomi conference on Thursday. One thing is clear. They may be the only winner coming out of the Canadian legalisation because that's the only player with the capital to split it. And you need a ton of money to do. So so what's my reluctance with constellation now? The stock is down more than forty points from its high. I think the market has turned on fears typically and alcohol in general, why things have disappointing sales. It ain't. How's Bush Beth crazy thing, that's a competitor? I think is losing share to constellation but in a bear market who the heck cares. People sell them. Good news. The last quarter was terrific and bad news. Other companies in the beer business had quarters. These are the dilemmas. I find every day. I am confident that longer term five below will grow nationally and success with Canada. Goose is the best power company out there discount and. And constellations the best way to play beer. And but but if I tell you to buy them right here, and they keep going down off stuff my neck out for nothing at least right now. And if they go back up your now who remember even care that? I was right. So if you had the patience if you're willing to accept some short term pain in expectation of longer term gain I like five below Canada goose and constellation brands here if he can't handle the potential pain, though, those stocks may not for you stick. I've been waiting for an app is stock to start down. And then go higher that pattern has not occurred. The day. I think it's a positive. I've been waiting for Salesforce to the court and Kupa put forecast it reported a great number and gave a great forecast. These to should make a difference as the worst stocks are stocks intact. Typically, anything related to the cloud. I think that the cloud is very strong and that the bears are wrong like tennis, always working somewhere. I puncture to find just few right here on my buddy object. I'll see you tune Morrow.
Fast Money 07/09/19
"Asia remains the fastest growing region in the world and will make up two thirds of global middle class consumption by the year twenty fifty at matthews asia we've been investing in asia for over twenty five years and are mission is to champion asia focused investment smith solutions me profit from this grow and build wealth from global clients over the long term find out what a dedicated allocation to asia connect to your portfolio at matthews asia dot com slash opportunity money starts right now coming out of the market that overlooking new york city's times square i'm melissa leo traders on the desk pizza jerian tim seymour dennis and a guy dami tonight's wall street ceo's are cashing in with some of the biggest pay raises of s and p five hundred companies but shareholders have been left in the dust we've got the details plus boeing ending the day in the green despite deliveries dropping thirty seven percent of the first half of the year is all about and he's already priced into this stuff technicians explains why he says by boeing now but first we start off with a maker break moments before the markets that's right all wall through this breaks racism two days of testimony from fed chair jerome powell and capitol hill along with the fed minutes which will also be released tomorrow and it's all going down as the market however is at record highs so penthouse deliver in his the fed about this far another referendum rally guy why the tiger why survivor amazing guy soulless munoz that right i know brutal oh yeah no it's not it's not a driver survi allowed ten seconds of needless chit chat could we clearly i say nine minute i thought i thought the market's it's gonna roll over quite some time to question is can the feds say what the market needs to hear in order to have this rally continue well he s and p five hundred at all time high the vix sense of fifteen handle and everybody feels pretty a confidence at this roger's gonna continue i can't imagine imagine what he could possibly say the could be any more dovish than they've been but it's three interesting here's the answer questions more is that right yes and the questions my if i may senator congress lawrence last guy first question i ask us send the president talks about the economy me in the history of the public you might be right if that's the case why you even considering lowering rates and i gotta tell you something there's no way he has a good as i say that inflation is it had no time means and i go back to pass you got some senator currently only now i understand i understand the righteousness around the fed and or injure interest rates i do think of a deleterious effect on the world let alone are economy for a long time but do you think the economy right now relative to all these other times the fed has been in play does not deserve a fed cuts interesting that's extrordinary but i'm not i'm not the guy says every other day the this is the greatest economy ever and people are are a what's the word he's looking for people were jealous of our economy that we're the envy of the rest of the world so those are his words not mine i happen to think the economy is slowing down not only here but globally and maybe maybe it's the right thing to do but you know what these these definition of insanity is doing the same thing over again hoping for a different a different reaction and that's what's so what's different this time is that here we are in this longest expansion in the last hundred years and you ask the one that you say that every other a major economy is jealous of here's the issue you know we've had ten years of basically zero interest rates and now negative interest interest rates and were talking about he said a cut really soon after the latest latest raise right in december and we have a situation here where we're gonna be cutting interest rates rates have never been cut from this low of spot you know at the at the this point where two and a quarter to a half whatever it is and when you look around the world and you look at sovereign debt you start to sit here so oh wait a minute me this is just been rolling credit crisis pretend years right so we came out of there quickly we're the ones who actually starting raising rates quicker then everybody out now were all racing the cut him off of these levels to me that seems very dangerous and that's what's very different this time about a rate cut if you're thinking that this is gonna be positive risk that i tell you what you sound very bearish you sound like the last ten years sort of that's a bearish tone in terms of how this marcus upside so what i would say this i i'm looking at right now and i if i think the powell and those guys are looking at the global economy as much as they are usa kind of man that maybe they shouldn't be but i think that's all part of how they're viewing this whole thing so i think that's part of did they make a mistake and december i think most of the desk i would say probably they did so are they gonna make up for that now and do this and i would way everybody is still convinced that a cut in december with this massive massive problem i've heard a rate i've heard for days and days and days strategist economist come on here and say that eight twenty five basis points cut it's not gonna do anything for the economy it's just taking back what we did in december so why is that such a i just don't get it the ultimate you're bringing up the point that i think is really where we are people not sure the fed needs to do much more than twenty five basis points and if so where are equities relative to the move it they've had where they priced in fifty and in fact they probably price in seventy five do a full point by the middle of twenty twenty and i think prefer for the market up more fed as i said yesterday on the show more fair than not necessarily more hikes or cuts but the more headlines out of the fed over the next two weeks from powell between minutes between the fed meeting next week that obviously this all rests on it's hard to feel feel the equities or any place where they can rally more right and then we're going to get earning season between now and the fed meeting already eighty percent of the sp five hundred companies have pre announced what did we hear from a phd sf yesterday good and believe me the weakness and in the auto market blaming the china trade of issue here in terms of the weakest then we had pepsi today sugar water while he writes pretty good quarter what is it do it was down from the game which will get to that point that's my point with the markets at or close to recognize and accompany reports earnings that are good doesn't raise the guidance what do you get right he gets off get a little bit a little bit of right back and we watch these really weird situation earning season well i think we've gotta look at it this way mel is is we've been in this rotational market for a very long time at all how many times we've set on this desk and said well the fang trades what's really pulling a city upside and all of a sudden the industrials are really falling acidy upside energy started pulling us not too many months ago so there's been different aspects of the markets continue to pull this market's up towards and now at these high so it's just a matter of i think pepsi if you're up twenty plus percent in a company like pepsi here today i don't know what their delivery had to offense to get them a little bit high that's exactly right but i think there are other places people could rotate to the heavens made that move and maybe you don't quite frankly right in the same world cokes had a pretty decent year but nothing close to what he's so far so i think there are other names out there that could roasting no i think rotation is a great thing to spin on it but also said you're point yes you have to deliver not only after delivered this quarter guidance as to be more than just strong it has to be outstanding i don't think we're gonna hear that and it's interesting interesting you know the fake into a lot of things but when you're in opponent and i view the rest of the world is are ponant i mean i'm sort of in trump's camp but if you're opponent is weakening themselves don't weaken yourself along with him step on their neck in stepping on their doesn't mean lowering rates alone with some i'm probably one of the only people in the world on hold on a second you have an opportunity now it's not raining were not letting usa kind of make up for it isn't lowering rates in my opinion is jimmy snuka your look superfly baby would be fed chair snooka yeah but they don't know what they want we were kudlow this morning we have it in me talking about leaving a greater he's in the strong dollar out of hand on what the white house things and i thought that was a pathetic performance of that the guy was half asleep low energy and i just you know everything that he said with the odds is what what's coming out about you post job being safe is that there's it's just not gonna is that almost more of a negative positive when he says something like that much i just think people are looking at the market win win some sense of extremes that are about to be upon us based upon where we came from people wonder whether we have another december up are sleep when in fact nothing fundamentally changed since december other than a fed who obviously made it radical pivot and therefore if that's that is not your friend for the rest of the you know in the next couple of weeks where we get all this fed i think equity investors are wondering whether actually there's there's major drawing down the bottom line here is the market and we have in front of us has earnings are gonna be weaker the market knows that and it knows it in the context of bond yields better seventy basis points lower which has a lot to do with where equities are that's the big question would be a great guests at this point bertel who would be a crazy you're not the one marriage should that be honest but worthy other wind a real memorial one original number one jay really regret if he were here okay let's bring in matt as investors eagerly await jerome pals testimony tomorrow next guest says don't get too excited just yet the market usually gets it wrong when it comes to the fed's next move let's bring in jay z joe's idle chief investment strategist at blackstone joe always great to see you sir how about the braves z z yeah jay z owes you you say ten fifteen percent correction firm here's realistic while they know what's gonna precipitate that you're view it is the markets are much more dovish on central bank policy than the fed is right the markets went from you know five months ago pricing in two hikes to as of last week pricing in three cuts and we know that the market is always bad when it comes to predicting both the magnitude and timing of fed actions so why should this time be any different you've got markets sat are up over twenty percent in the last six months on anticipation of unaggressive rate cut a path and yet i don't think growth is nearly week enough to justify it nor is inflation necessarily week enough to justify that aggressive russia's level of of cutting so you have this mismatch between what the market expects really aggressive couch and i think what the federal deliver which is gonna be something less i think that's gonna create volatility in downside for equities over the course of six months it's clear that there isn't a vast disparity parity in terms of what the market seems to have been expecting what the fed seems to be ready to do but very recently the markets have really recalibrated quickly as well to be fair to the markets i mean when we got the jobs that we saw fed funds fishery calorie very quickly fifty is off the table a hundred percent for july not sure where they stand at this very moment in time but let's say we get that july cut isn't that what the markets one after that it's it's who knows it's whatever jerome powell sort of jawbone scaredy yeah i don't think it's gonna be necessarily enough though because they'll get twenty five basis points most likely in july but then they're going to want more and you have to think about the combination of earnings and interest rates right and we we start talking about earnings just a minute ago because we are earning season and well a lot of people are are overlooking it's affected earnings have been incredibly weak the first quarter they're awful basically down forty basis points on a year over year basis second quarter earnings don't look much better so you don't have the earnings growth in you have a market that one at much more aggressive fed cuts touch but they're not gonna quite get it so in other words i think were set up for for some downside now it's interesting is the relationship between the market and the fed is basically turned on its head from what you would normally expect if you look at every fed cuts cycle going back to nineteen fifties what you find is normally the markets flat in the six months leading up to the first caught because the markets sniffing on weakness sniffing out problems so equities you're generally flat in the six months leading up to the first cut and then six months after the fed cuts these markets up twelve percent twelve twelve months later top twenty percent were up twenty percent coming into the first cut in other words the markets already done all the work that they expect the fed to do where we go from here but i think is really important that's part of the discussion we're having is it that tina situation is it because rates are now so low end were contemplating a cut off of such a low base that equities money had the go into equities you understand what i mean like i think were speaking the same language and that sets up a very dangerous situation in my opinion and the point is i think they're trying to put lipstick on a pig and saying it's an insurance cuts but really it feels like it's the start of a rake cutting cycle and especially when you consider what's going on with sovereign debt around the world yeah i mean i think if it's just in insurance cut if it's just a one and done then there's nothing but downside for the markets because markets are sniffing out problems that i don't think exist right what the market is saying is there's no inflation and because there's no inflation you have to cut aggressively well if you look at the components of inflation for a second look at core cpr right and that's if cpr minus this food and energy the single largest component of course cpr at sixty percent is housing if you look at rental vacancy rates the lowest levels we've seen since the nineteen eighties in d a call it the stock of single family homes with the lowest levels we've seen since the nineties in other words you have real tight housing markets and that leaves the upward pricing pressure that's point number one the other forty percent of of course he poi are things that could be impacted by terrorists and you saw that type of you saw those comments coming out of the i assume survey where companies across many different industries were talking about supply chain problems in higher input costs so in other words a market that says hey there's no inflation out there all of a sudden you look at the biggest components of and you think well you know maybe there could be which means the feds not cutting simple is fifteen at ten fifty percent correction in the markets by definition gonna bring in more fed a it's a good question 'em we've seen this sort of light said put 'em if we go back to where we were at the beginning of the year i dunno it could very well be but i don't think we get any insurance co when were up twenty percent year today but i think you bring up a good point if we get like a a fifteen to twenty percent correction and if you get a panic in the market it probably does bring it back on the table which by the way if you're looking at this over the course of the next six months i would view that as an opportunity because i think what's clear is that this is not the end of the cycle so if you get that that downturn you do get that panic i would lean into cyclicals sectors i would lean into you know the tax industrials out lean into credit and things like that because we're not looking at the end of an expansion here were a hundred and twenty one months and counting and we could go a lot longer in my opinion so great deceive thank you tracy tracy joe joe why confuse people object just i don't that's what we do on this show you want to pay attention to cheapest theorized that question because you at the fed would step in well the fact that we know will absolutely step in there i i would also say that yeah i know the markets up twenty percent from december but it was down twenty percent so you get a place where it's hard to really know what's what's the world that we're living a but look tech i mean look at amazon amazon's within walks out of all time people say we haven't seen rotation and they all leaders are back in play i mean they're back and play an amazon we haven't talked about on the show i feel like a long time and the fact that right there billy argument first cut the president and a people make is yeah i mean we have strong jobs every however no inflation air isn't your jc just now inflation in all the wrong places nobody wants to acknowledge it least of which is the fed and be careful what you wish for melissa late because i shouldn't i'm just saying in general says those things like once you're once that genie's out of the bottle and i'm not talking about barber in genie ireland the plane which is ridiculous people have been saying that since two thousand nine they went zero interest rates and it's never happened i think that there's so many different factors at force you're in play that relative to laugh cycles where we've seen inflation become a problem just look at technology changes that will keep in mind flation scenario if anything the byproduct of the credit crisis is deflation look at japan that were fighting junior no genie junior no not me up that got yours levi hot i was thinking how parents following its earnings reports conference call is underway will bring in the very latest from wall street they're making big bucks shareholders are left in the dust and that has one of her traders sounding the alarm we will explain later more following partisan deliveries dropped sharply one proposition says the worst is over forty aerospace giant you'll tell us what has him pressing by why we're live in times square new york city much more fast money right after this hey i'm john harwood host of cnbc speakeasy podcast listen into my in depth conversations nations with politically decision makers folks like john delaney the first declared democratic presidential candidate for election twenty twenty along with senator sherrod brown senator elizabeth warren and stephanie sri oc of emily's list those interviews and more on easy podcast subscribe today welcome back to fast money financials have been lagging the broader markets over the last year and while that might hurt investors pockets the company's ceo seven laughing all the way so bank or the wall street journal jeffries richard handler and more than doubled his paycheck the forty five million in twenty eighteen oh jeffrey shareholder saw eight fifteen percent drop other wall street ceo jamie diamond james gorman larry fink michael corvette all cashing in as their stocks fox on as well so high pay lower returns hurt their financial well and we spent a lot of time talking about financial crisis and it's certainly a case of going into an account the glory years for banks were two thousand and three third two thousand and eight were financial engineering basically almost sunk a lot of these guys and these they were well paid and there were zero accountability when we talk about banks and asset class i also think that people are or maligning the banks as a group dan 'em that that ultimately i'm just kidding me well i don't know why anyway as as as a group is underperformed the snp by all of a hundred basis points this year despite all the shopping with deal kurban all the pressure in terms of negative negative interest rates so i you know i i think ceos need to be i think shareholders of the companies need to hold the ceos accountable to the profitability the company now and five years in the future whether we've changed that that was a big issue the facts yeah i said what's really disappointing here's that obviously a lot of usa got bailed out they would have gone out of business ceos would have been out of butts just like a tens and tens of thousands of planning we would have been and i think what's going on right now is a real shame i think were over banked as a country still and i think we'll continue to see a consolidation and i think that it's really important just remember you know deutsche bank is gonna be firing eighteen thousand thousand people we all know some of these people they will not find jobs again and it just seems that as people are replacing it seems like the people at the top the ones that got the bail out the real bailouts ten years ago other ones at third base keeps skipping higher i'd like to actually argue outside because when i hear you say that jamie diamonds one of the only guys left to is there before the financial crisis through the financial crisis you look at these banks and it's all new guy i mean corvette wasn't there you'll recall there they might have been there but they weren't the guy end they were not as ceo in charge of everything so because of that i think you have to look at this a little bit differently up look at what these guys do in a completely different environments and then their predecessors have going in and doing it on their hands that's only did i had the position just say they just regular deal still on jp morgan last time i checked aren't there recor profitability i mean were talking about guys that are under performing never been more prompted this all this divide among people who believe that the stock prices actually reflect the value of the franchise and the people who believe that the stock prices do not reflect the value of the franchise right there somehow under about not fully appreciated yet in the marketplace you think that there were out in fact denver taking risk but they really didn't understand and i really important to remember that as recently as two thousand and twelve there were tempus teapot and some of these best of breed banks okay so there's still a situation or there has been for years where some of the people running these places to get paid tens of millions of dollars a year do not know what's going on as far as risktaking dennis rather exercise that tempest in a cheap shakespeare thing right i mean most things from shakespeare what don't look at me quizzically i just wanting where you were suggesting that imbedded in that question to begin this block why should ceo pay somehow be linked the stock performance i don't think any of us want that quite frankly i think he was exactly opposite because you could be in a position where you could do a lot of things to make style higher and then get paid so i don't think you want that in terms of the banks city school report in about a week or so i think on fifteenth of july you know that's the stockton when it gets to these levels in terms of price of tangible book it's a little ahead of itself you'll look and see when they report tangible book will be on the side of sixty six dollars this stocks trading closer the seventies and eighties in my opinion we've got a quick markets last year checkout shares of team mobile the soccer jumping after hours unusual replaced red hat and the s and p five hundred affective monday july fifteenth of course this is after red hat closed this deal with i b m today you see the shares up by two point six percent obviously they say i'm a big question is will the sprint t mobile deal actually go through we're supposed to care about that sometime maybe this week when you think i think that definitely should go through i mean when you think about the gop believe they have between horizon tnt and you think the way they're stacking up assets user to wireless access they're coming together and so i think you do need a much stronger number three player in the market and that will make it much more competitive environment earlier this year when there is news at the steelers could happen on the show i believe and t mobile went down and thinking about six seven down to the low sixties we had a conversation this is the wrong reaction we talked about john lesser sort of being the man and what he's done with that company over the last few years now you wake up today and the stock inside the side of seventy five dollars probably higher now people knocking valuation and when you compare it to its peers it is ridiculous but they probably are deserving of that all right we've got at the break i'm leslie you're watching fast money on cnbc person business worldwide here's what else is coming up on well it's one small step for man richard branson space company plans to go public but will tell you why it might be one giant leap protect investors plus check out this doubt donor the stock is getting crushed this year then you won't believe or one top technician thinks it's ending next there's much more fast money right after this technology is becoming more open data more accessible on the world more innovative we're combining the industry expertise of i b m would be open source leadership of red hat to bring you more freedom more security more flexibility let's unlock the world's potential let's put smart to work learn more at i b m dot com slash red hat welcome back to fast money by selling any of the day in the green despite deliveries dropping sharply in the first half of the year as its bestselling planes sits on the runway about if i chicago beer with more on that found an becomes the seven three seven max is grounded melissa we saw the same thing for the third straight month when boeing announced its in june orders and deliveries for the month of june there were no max orders third third straight month but we've seen that end the backlog dropped by three planes though it's still about forty four hundred in terms of deliveries the first half numbers from boeing relative to where they were in the first half of last year and the year before huge fall often seven three seven deliveries by the way they're still delivering some seven three seven angie's but because they are not delivering max's that's why the numbers are far lower take a look at shares of airbus and i point this out because airbus also announced its orders in deliveries from june in the first half today and here's something that people have not heard in a long time airbus is on pace to deliver more commercial airplanes then boeing for the first time in seven years if they continue through the rest of the year at the current and pays especially with eighty three twenty eight at the pace of deliveries they will out pays boeing in that regard quickly take a look at shares of boeing remember it reports earnings later this month end the focus right now seven three seven max productions got you guys have been holds at forty two most analysts believe this stock is likely while under pressure to stay in that three forty five to three sixty range but if they cut production again that's when people believe this dot takes another step lower failed to say that or is it fair to say that airbus has one orders on the back of boeing's problems because initially when this whole thing happened argument was that it's very hard to move those orders into losers orders airbus because the backlog is so long i'm not sure they want a lot of orders if you took a look at the most recent orders for the month of june yes there were some orders fifty eight three twenty three twenty neo whatever variation of that single while playing the counterpart to the seven three seven melissa but not a huge number of them this is a segment segment that has for the most part been filled out over the next four to six years so it's not like you have a lot of airlines that are sitting there saying why i need these these planes i need to go and play some big order right now most airlines that one have already placed that order that that said airbus is in a position where he can fill some slots right now maybe it's a couple of years down the road those there's lots of boeing we'd like to fill but obviously with the max being grounded it's tougher right now all right phil thank you fell about in chicago today says he action today signed the worst is over and keep well i think it's interesting because of the fact i kept waiting for this moment where we'd actually see the stock comeback under a get close to three hundred again we haven't seen it it's gotten the three thirties in a bounce right back up so i've watched implied volatility options 'cause my whole theory on this whole thing what's gonna be it gets anywhere near three hundred i'd like to buy the stock start selling calls against it without large implied volatility we don't have that anymore the volatility has really been sucked out of boeing despite the fact fact at the seven thirty seven is still grounded their delivery numbers all the numbers today were absolutely off i mean still talking about that airbus obviously if i think taking a little something and maybe i think one thing tilt might be missing is the more opportunity for airbus ticket in there the better opportunity for them that does hurt bowling eventually so how long does this actually grounding of the seven thirty seven and lack of orders for that that could be something that could be really impactful down the line for vote all right well our next guest says the skies are clear for takeoff rebelling after a turbulent first half of the tractor todd gordon trading out over the plasma todd when you're looking at saint louis oh yeah let's first look at the industrials before we get into the technicals of boeing boeing be the being the biggest component of exo i we have a certainly a cautionary tale here in exo iso exo i up here you could see struggling to hold onto that two hundred day moving average with a broader markets were doing just fine with it here's a problem down here this is xl i divided into spx so so xl lie over here spx over here if this wine is dropping it means the first one is weakening against the second one which is of course yes and p and clearly there's been massive underperformance in industrial so again being boat bollywood being the largest component that's that's an issue so obviously lice huge run up here in boeing we'd be gone to consolidate but again i'll draw your attention down to the lower a ratio here you're seeing other performance of boeing against xl lie so xl are and for me spx bowling underperforming exceleye that is a bit of an issue before we flip off the screen owes listen it a pizza levels back there if you just look at the depths of prior corrections here i highlight of i don't wanna flip chart year so i'm not gonna hit clear but if you look at prior corrections you're talking about thirty percent twenty seven percent twentyfive percent and again twentyfive percent we should hold if we counterbalance we go below a thirty percent death that's about the three ten level in boeing if you break a little three ten you will have counterbalanced all prior corrections and perhaps you're not in a correction anymore so if you're looking at pickup shares i will i will watch that three ten level in boeing so that's the weekly boeing let's look at another one that's really dragged exo i exo i down which is of course three am same kind of concept relative strength of x y into three m we have thrim massively underperforming yeah so i no surprise there this is a weekly chart this isn't even a daily you see this is a two hour week moving average i really like you could see we have broken below it where the broader market has no problem staying above the average price last two hundred weeks so this is the weekly drop down to the daily here and again this is a nasty kind kind of drop below the two hundred day we came up get through the two hundred day for coming back to retest if you wanna be a short seller if you wanna try hedge maybe stops above that two hundred day and again just look at how much three amazon formed yet so i which again is uninformed spx so certainly weighing on the broader markets all right thank you had gordon training announces dot com without any by three in no it's better spend it on this on the vacuum when we said this was this didn't underperforming now for watch things down thirty something percent in this analyst find it comes out and downgrades the stock yeah i guess better late than never but good for him or her bowling quickly can we yeah we sure as we talk about it which i think we should i think he made great points but i'll say this last quarter twenty two billion dollars in revenue everybody thinks this is a commercial airline company and it is but that's only half their revenue there's a six billion dollar defense aspect of this but i think the market is now mispricing quite frankly go back to last quarter wasn't a disaster they stopped stop buying back stock i get it no more guidance i get it but you're talking about a company valuation wise which hasn't been at these levels maybe ever and i understand there's some of that some of the headwinds and somebody unknowns but i think the stock is runs yeah i i agree with you you're assessment of the company business i will also say hunter k who's probably one of the best on this airline are certainly on this plane manufacture a downgrade today basically thirty bucks a share roughly half of that was due to max being grounded he says two million a month equals seventy eight billion but also it's it's gonna retard some of these other initiatives they have like dna and so which is eight major accretion 'em which was gonna be a major christian profitability going forward that's new midsize aircraft people at home and that means a and i do think you have to think about these downgrades will be continuing to trickle in a bit on ball all right coming up check out these bad genes i'm not talking about to do their alright alright newly public companies levi falling apart at themes after the company's earnings report will bring in the very latest speaking of ideas sir richard branson's virgin galactic public later this year via fax special purpose acquisition company will tell you what that means that if this face could see out of this world returns for fast when he's still at ernie's alert on denim retailer levi strauss courtney reagan's back and headquarters at the latest on the conference call court i'm melissa shares of levi strauss are under pressure here after hours profit was hit by negative currency impacts higher advertising expenses and the cost of growing its direct to consumer business believe the revenues came in slightly better than expectations in total despite according to see a chip bird eight quote challenging retail and macroeconomic environment sales actually growing all geographic regions across men's women's tops and bottoms europe with the strongest region revenue they're up nine percent filled in egypt six percent three percent of america is not levi's direct consumer business that increase nine percent wholesale business a lot of as her department stores up three percent to women's is a key growth area it's a smaller business the men's but the total category sixteen percent in the quarter that was more than twice that of the larger men's business growth now gross margin did couldn't track slightly from last year and that was largely due to be unfavorable currency impact and that drag was partially offset by less discounted sales now levi's working hard to market it's cool reflected expensive as i mentioned but at least it paid off at catella in the second quarter we again dominated coach shallows could go to uniform festival season but levi's five oh one cutoff shorts which were up more than fifty lucian burgled says that it's l a's graphic t shirt every second levi plans open nearly a hundred new of its own stores in this fiscal year also back over to you all courtney thank you corny reagan back at headquarters what do you make of these results guy valuations and committed treats its closest twentyone times twenty times let's say next year's earnings i mean that to me in this space is expensive i don't think you have the dps grow listen i love my levi's i got my five but once when i was in high school and unrelated my size if you wanna buy me a pair thirty or thirty two but with that said i run out and buy already seems like a long gated already though he knows legs out understanding the legs what i like most about what they're doing is they're investing in the direct to consumer which is exactly where they they they have three different areas they talk about china they talk about women they talking about direct consumer they're investing in those we see the women's brand starting to work a little bit better for them sixteen percent grocers talking about it seems to me like this whole thing came down to a currency issue and you know what he earnings were still there i know it twenty times that sounds like a lot i don't i don't know that i agree with that i think they're actually because they've got that revenue growth right now guy and the last couple of quarters all the different regions they continue to grow a little bit i think because of that i'm actually intrigued by this is seventeen dollars on me i feel i think down near twenty odd by the stuff i don't get this i mean the company attributed the lower income versus expectations tations to the forty nine million dollar costs associated with you i peel in march and higher advertising koss i've never heard that from a knife yell out of the gate the missing and that's because of the cost of ice peo well if that's the case then you know you're it'd be could that be costs of the banking related to it too but but the bottom line is that should be one off that should not be something that bothers you mean outside of guy switching from wrangler since i never have right lers i mean i i do sort of level one no lease levi's levi off but again up double digits in in every kind of consumer demographic emerging market india brazil i mean this is really the story for this company goes back to why a lot of people were chasing these demographics along time ago in emerging markets we buses there all right so i had to infinity it'd be on the billionaire sir richard branson taking up space tourism company virgin galactic public will this be the next frontier for investing plus it is the ultimate thing fox battle is target home depot walmart costco store this year but that's nothing compared where one traders suzy sali's cutting we've got the details after the welcome back to fast money sir richard branson space tourism ventura virgin galactic planning to go public after merging with investment social company investment company social capital founded by tech investor jamal polly habitat both were on squawk box this morning where ask you how version galactic compares to a company like tesla here's what he said we have to remember when tussle in public but i think to odd billion dollar market cap it's something that's now ten next in ten years you know if we're lucky to have the same trajectory in the same customer love i think that we would all look back and say we've done something absolutely fantastic 'em in human technology and investors jumping to the billionaire space race and specifically in virgin galactic you know it's funny i remember back in two thousand and ten when you on musk was bringing this company public they literally raise two hundred and twenty five million dollars and you think about it and now has a forty billion dollar market cap twentyfive a billion dollars in sales nine years later and it's pretty interesting when you think about this and i know one of the other parts of the conversation with the total addressable market or space in ten years there's something there estimates between low single digit billions and like twenty billion or something like that so if you were thinking about how you invest in the public markets and having access to something that really shouldn't be public this merger and it's gonna be ultimately a public company they have access to trump and he's been amazing investor for the last ten years in the private markets and then richard branson who's been doing it for forty years it's a pretty interesting way to say you know what i'm gonna put a small amount of capital into this thing and let it run if you've done that and tesla in two thousand ten eleven twelve you would have been happy i mean similarities at least on the surface are very i mean a virgin galactic taking a deposit some customers for a trip in space that will happen later on when they get the rockets and their ships going at cetera they wanna move to more mass market to bring the cost of that space travel down to grop greater audience just like the model three for tesla i mean it became know somebody saying i'm gonna spread oh no i know i have no interest i don't wanna i don't wanna got on one of the galactic thing but i will tell you this this blocked again go back the blocks but how do you play this ideal thing where are we right now i ask it easy questions you're asking me like mark nasdaq market site on i might exchanges you do wise guy because magic made an all time high today if you look and it's right at eighteenth time shorter is not expensive now were they were born in july twenty fifth that's not true then she said how do you make one frenzy that go into it but said that for a while while while i look you you as an investor you should be chasing 'em eight plus management teams wiz upbeat product and that's how you're gonna do well if you get a new product that's even better richard branson's proven to be an eight plus manager it's that simple and it's it's hard to believe that he will be overly sensational on something he spent a lotta time in because if anything i think he's acting under sold a lot of his stuff and i mean as he is not hype machine even though he's a great marketing spokesman for his company's i couldn't agree more film because you know whenever i do the pitch that thing we do here the our our power power over there about this i start with management and that's that's truly is always where you start and when you're looking across steer point i mean richard branson is good as they get whatever you wanna say about alon must this guy is something special now a lotta people dislike way goes and whatever but here's something special so i think you'll look for those kinds of people and if you've got grow you can get past some of these words that might exist for at least a little while and i think that's where looking at one of the most interesting things today with a tremendous putting up a hundred million dollars in right right and the other thing back the guys that vaccine imaging even doing really interesting that this is a fact they raise six seven hundred million dollars or whatever do this deal so this is gonna be one way the companies go public we just saw last month we saw slack go public through a direct listing and then we saw the insurance and the left and the numbers go through it's kind of interesting there's a lot of ways to get to the public markets now and i don't know what that is telling you but it's interesting for investors who plays all this innovation that have been locked out and now you're getting multiple ways to get involved in the next leg is a trade i hope i landlord edina freeman was lifting photograph religion i'm sure washington richard branson he's watching right now in france trip coming up walmart's also hitting all time highs they target not far behind these big boss breakout some more room to run we're live at the nasdaq in times square much more fast money still ahead welcome back to fast checkout shares of walmart and costco hitting all time highs today is the big box boom continues the bills theme the big box stores are the cream of the retail trade crop this year the costco target walmart home depot all up more than twenty twenty percent in twenty nineteen do these names have more room to run him well i tell you what they want all we've laid out there and are set up the marketing it is that consumer staples and essentially some discretionary but big box i look i don't like walmart and in fact relative to that i love home depot and i think the home depot has eight significant motor on it they're professional services are gonna mitigate some of the margin pressure that will be coming from these trips from these tariff wars but look let's be clear this is a place where people have been running for cover based finally expectations of economy yeah i don't know that i feel i don't feel the same way about running for cover i think they look at somebody like target for instance they look at the growth and look at where the p is right now this company it's a fraction of what you're looking at it with walmart so i grew up with walmart but i think people for just looking at these companies and they falling in love with the idea that they couldn't compete and actually go head to head and wins amazon i think that's the part that's the part i think it makes it interesting to me i think cosco's another one of those trades a little bit more expensive but the fact that it's got that money that's always coming in this is a company that continues the work well antic and fight on the internet if they have to although they really don't have to compete there is much as he mentioned the casca this earlier this spring garden carter braxton were not tony brash and carter bri worth when the stock was to forty eight the market if you're cold was rolling over in tuscaloosa hanging in there right around at the time all time highs and he said the stock was gonna break out we agreed on the death valuations expensive but the stock performance was telling you something we wake up to to seventy and i think that starting guard from years well we added to her name so they all time high list today but the options market betting cosco in walmart will not be the only big box heavyweights breaking record's one traded spending nearly three million dollars but they now which company might be i would be options action yeah so pete just mentioned it and that's probably one of the names who is looking at because targets are well above average call volume today this is the second time we've seen one of these big trades and if somebody was rolling from the july eighty two and a half calls which are now in the money out to the january twenty twenty ninety two and a half calls about six thousand of those traded those twenty twenty call her going for about four and a half fox that puts the break even on this traded around ninety seven dollars and a little over six months time that's up about ten percent firm where the stock is currently trading into pizza point this thing is pretty little lesson fifteen times earnings over the last ten years that's about the historical multiple and if you take a look even none of tariff wars at day earnings estimates for target going forward we're looking at about a seven percent increase year on year so most of be expected growth in the stock price here wouldn't be coming necessarily for multiple expansion most of it would actually becoming firm earnings growth that what you were looking at i saw that that area as well today i i liked what i saw their ashley i added calls ira's already long stock and i have one by right position on there but i actually fought calls is well looking for upside because of all those that was huge i don't wanna go this far although i don't wanna go two thousand twenty i don't wanna go borrow brought brought a little a little bit closer in terms of strike anton all right mike thank you michael in san francisco more options action checkout are full show friday five thirty pm eastern time goes up next final trade it's time for the final transfer lepto around the horn marianne earlier in the show we were talking about ceos of his bags particularly in are they overpaid pay everything else i think city is finally make that move to the upside giddy up i bought the stock today soul cycle i think it's going to subpoena and tagged teaming to use the the wrestling lexicon and there's been a part of the show tonight and j p morgan i mean first of all just a company that's gonna return forty billion to shareholders over the next twelve months by the way last two quarters effectively recor profitability i don't understand the problem there j p one thousand anything more chicken have a little wrinkle on his whole trade k r e the regional bank index that thing that and it's one of the worst looking trucks it so poorly looking sharp dan this thing is a disaster and will do it will do it tomorrow or later on the week are horrible this light fluffy economy all by going here i don't like basically you're saying you're selling these positions all right that gorilla monsoon was attacked the gorilla now as a family reunion sweater reports at the end of the month out a nice day today i believe the stocks what's up well international let's go fat does the first day back tomorrow five more fast money 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