tv Fast Money Halftime Report CNBC October 29, 2019 12:00pm-1:00pm EDT
made in brazil i'm not familiar with the details of that one. >> let me just ask you this question then. moving forward, will you commit to making it a practice when other countries are clearly paying attention enough to make significant changes to their pilot manuals based on major operational changes that boeing will send these notifications of changes to the other users of these aircrafts so at least they have the opportunity to train their pilots you denied them the opportunity, sir. >> senator, we are committed to sharing that information and that's part of our international collaboration. but i also want to note again that the discussion around mcas training and whether it would be included in the training manuals, that was an active iterative discussion with the faa. it was a decision made on safety we try to put information in the training manuals that focuses on the effects of failures, and
things that will be valuable to the pilots it's not always the case that more information adds to safety. though in this case we understand this, this is one of the additions going forward. >> brazil thought it added to their safety i want to touch a little bit on senator fisher, the question that she raised earlier. all these changes have taken place, of course over the years. and this plane is still working off its original certification from 1967. this is despite the fact that pilots have told me the max 8 is in no way functionally similar to the original 737s that took to the skies 52 years ago. i said in the last hearing that we had, seems to me like there's been so many significant modifications, it's almost as if you took a canoe and turned it into a cruise ship mr. hamilton, can you tell me how many derivative certificates boeing has received for the 737
since initially being certified over 50 years ago? >> i -- senator, i don't have the exact number in my head. it's approximately 14. >> 14 or 814 >> 14 derivatives. >> 14 derivatives. i'll take the action to follow up on that >> appreciate that the last thing i'm going to ask, do you believe the 737 max is functionally the same plane that was certified in 1967? >> senator, as i mentioned to the earlier senator, safety standards have evolved as the airplane has evolved and one of the important things to understand is what's really important also is for the pilots as they transition from an earlier version of the 737 to the newer version that the airplane behaves and handles in the same way that was important from a handling characteristic standpoint >> important enough for brazil
to mention but not for us. >> with respect to that, senator, so there is a joint operation evaluation board that determines the training. but other regulators can determine what training they want to do above and beyond based on their information i don't know the specifics of the brazilian document that you're referencing we can follow up on that >> thank you thank you, senator rosen senator blount >> thank you, chairman mr. muilenburg, i don't want to absolve you from both the opportunity, the responsible to go back and look at that long question from senator tester and answer it for the record, but for now, one of the sources -- one of the central thoughts in that question was should -- why shouldn't we change this process and go back to where it's no longer cooperative or the faa takes full responsibility?
give me the answer to that should this process be changed where the federal government is fully responsible with employees only hired by the federal government what impact would that have on safety >> senator, i believe the data clearly shows that creation of the delegated authority process, and its implementation has enhanced safety over the last couple decades i mentioned earlier a 95% improvement in aviation safety over the last couple of decades. i think a portion of that can be attributed to the delegative process. but the fundamental process of strong government oversight combined with deep industry technical knowledge and the right balance is a strong safety process. i firmly believe that's one of the things that's contributed to aviation safety. that process demands oversight, and we are fully supportive of strong oversight
we also fully support the idea of tapping deep industry technical expertise. and that combination is the safest combination >> what do you think the view of the industry technicians is of their responsibility there do you think they feel the right to level both responsibility and liability of providing the information that they need to provide? >> senator, they do. and i can tell you that's the culture of our company i respect the comments that were made today and the questions that have been raised about our culture. we deserve the scrutiny. but i've been at this company for 34 years i know the people of boeing. you all know the people of boeing these are 150,000 people that every day come to work because they have an important mission they are honest, they are resolute in their efforts. they are committed to safety that's our culture
every employee at boeing, that's just how we think about the work we do. and we're going to continue to improve as a company i'm not saying we've done everything right as i've noted today, we've gotten some things wrong this is a great company with a great legacy committed to excellence where we can improve we will where we can learn, we will. but our culture is about safety. that's at the core of boeing it's been that way for 103 years. >> mr. hamilton, i had two or three questions that senator rosen just asked pursuing that further. but you have a 1967 certification that's had 14 variants since 1967. you have a significantly different plane. just based on the 14th variant of the original plane. what difference do you think it would have made if the certification process would have been -- or have gone back to if
you were certifying a new plane? would that have made a difference in the mcas system? you've been doing this a long time what difference would it have made if we had not built on the previous half century of this plane's history and just started with a new plane would that have been better or worse? >> you know, the -- in part 21 of the federal regulations, it spells out the change product rule, which is how you assess for a derivative type certification. and it's a process that's in the usfa's regulations, also in european and other countries regulations. it requires you to look at all significant changes and step up. i think there's an assumption here that a derivative type cert is less robust than a new type cert i think when you look at a new type cert, you oftentimes have
some exceptions or equivalent levels of safety similar to a derivative i'm not sure it would have resulted in a safer airplane it might have driven some different design decisions, though fundamentally one thing that happened in these two accidents was the assumption around how we expected crews to respond under certain situations, which proved to be not -- did not happen. i think, you know, that's a fundamental issue that we have to address as an industry. >> thank you, mr. chairman >> senator, senator blunt. senator blackburn? >> thank you, mr. chairman thank you for being here today and for taking our questions i will tell you this, as you responded, you've addressed senator, senator, senator. i think you should be addressing victims. they're the ones we're asking questions on behalf of
they're the ones who have come today on behalf of their family members. another thing i want to ask you, you've mentioned a couple of times a lack of awareness of emails or documents or communications you know, mr. muilenburg, we have something around here before we vote, we say we read the bill so that we know that's in it if we need to ask questions, we ask questions. we develop that awareness that is so necessary to make good decisions and to have a full view of the situation that is in front of us. it is disconcerting to hear someone who is to be the leader of a company to say i wasn't aware. i didn't know. or had not read that
nobody made me aware of that i depended on that we call that passing the buck. it is your responsibility if you're going to lead the company to have that awareness so have you at this point read each and every page of every document that is relative to this situation in this case? >> senator, i can't said i read every product and every page i know we presented more than 500,000 pages of documents i accept your input and criticism. i'm accountable. our company is accountable >> i appreciate that, but i think that it is be unsettling to hear you say i haven't read that let me move on i believe you're in the business of safety as a priority.
and even though you say you don't sell safety, let's talk a little bit about the simulators. you had pilots that were training i as training in fligh correct? >> you're referring during the max development? >> yes >> yes >> okay. so the simulators that were being used for training, were they built by the same engineers with the same components, the same sensors, the same systems as the max system? >> senator, we have a wide variety of simulators. some of which are what we call conformed simulators, which represent the actual hardware and software of the airplane >> so it is conceivable that some of the pilots were not training on this specific simulator. and then you also -- mr. peters
started down a line of questioning with you about the pilots, the pilots that were trained. you only had highly experienced pilots in simulators before flying the new max system, correct? >> natte esenator, i was referrr boeing test pilots we also have pilots from other organizations that participate >> why would you not choose pilots with a variety of experience, a wide range of experience there are pilots with a wide range of experience that will be in that cockpit flying that plane in realtime. >> senator, i agree with your view on the necessity of having a variety of pilot experiences involved in the testing process. again, our boeing pilots are not the only testers in the process.
>> let's take it this way. what changes are you going to make in the simulators and in the training that is going to bring to account for human factor >> senator, we made several changes and have more to come. but to start, the baseline training program for the max is a 24-day training program, which includes heavy use of simulators, advanced simulators. we've also modified the computer-based training for the incremental training between the ng and the max we added visibility to the training materials for the mcas system that we talked about. that new training is being evaluated and will ultimately be certified by the regulators to make it a baseline in the program. we're also investing r & d in advance of the -- >> i appreciate all of that. i appreciate your answer
prior to these occurrences, did you feel that your training was not sufficient >> senator, no we implemented the training that was planned and certified for the airplane >> okay. yield back >> thank you, senator blackburn. senator scott? >> thank you, mr. chairman my heart goes out to the families i just can't imagine, you know, the impact on these families after these tragic accidents so i'm from florida. air travel is a big deal for us. 126 million people traveled to florida last year, the majority of them came by aircraft the safety of everybody is important. the president and ceo of your commercial airlines was let go after this
so what is your process to hold people accountabilile to make s this doesn't happen again? >> senator, first of all, my company and i are accountable. i believe that accountability starts with me my board took some actions which i fully support that allows me to focus more on safety. every action we take is focused on safety. i have also taken some management actions those are focused on operational excellence and safety going forward. as other reviews are completed, if we see additional actions that need to be taken, we won't hesitate but in some cases accountability also includes improvements to the processes and organization structure. and that gets to some of the changes we announced on our safety review boards, our new safety organization, our new
board safety committee, and the realignment of all 50,000 of our engineers to our chief engineer? terms of reporting structure, all of those accountability actions are important and they are all focused on safety. >> so, if anybody -- if any of your -- whether it's engineers, non-engineers, if somebody has a concern in the future about safety, what's the process you have created to make sure that it gets to you and you can react to it? ultimately, as the ceo, the buck stops with you >> yeah. senator, that's been one of the key learnings from this whole process. we need to elevate the visibility on safety issues that might come up at the ground floor level. make sure they get the right visibility and action. a couple things to do there, one, restructure safety review boards i now get a weekly update on safety review boards from across the boeing enterprise at a detailed level, which i found to
be very helpful. we've also, with the stand up of our new safety organization under beth pastor, instead of having those safety teams under our businesses, they're separated and report up through our chief engineer any safety concerns that employees have will come through that organization. we set up a new anonymous reporting system for those employees that might want to make anonymous reports to facilitate that. and we continue to have a full range of ethics hotlines across our enterprise that encourage employees to make their inputs the we have a culture of asking our employees to speak up. we want them to speak up we want to make sure they're heard and that we take action. >> have you made any changes at the board level to increase the accountability for all employees? >> senator, our board has been very engaged in this entire process. one of the things we did is now about six months ago i asked our board to set up an independent
review led by admiral giambasciani that committee came forward with a number of recommendations. some of which we implemented our board will continue to be engaged in that process. this new safety organization that i talked about in addition to reporting to the chief engineer and to me, it also provides audit, if you will, back into our board. our board has set up a new aerospace safety committee that's now permanent headed up by admiral giambiasciani friday we added another board member, admiral richardson he will be a member of that committee. our safety administration will have an independent reporting line to them as well >> i didn't get to hear all the testimony. have you made any recommendations to this committee on things at the
federal level we ought to be doing differently to make sure boeing, airbus, anybody else, this doesn't happen again? >> we've discussed a number of options there. there are a number of things to fix related to the airplane. there's opportunities to reform the process and how we work together as a government and industry we're -- >> thank you thank you, senator scott >> thank you, mr. chairman i also want to express my sympathies and condolences to the family members here. we have a safe commercial aviation industry in america, but i think we always have to look at ways to improve it, industry, airlines, faa, congress so i'm sure it's difficult for
the family members to be here, but it's important that you're here i want to thank you for that i will start with a bit of a parochial question mr. muilenburg, mr. hamilton, alaska airlines, my state's airline, a very good airline, certainly critically important to my state. i know it is to the ranking members state as well, they fly almost all 737 boeings we alaskans travel a lot i had many constituents in the aftermath of these max crashes that have asked me are the 737s that we're flying on all the time in alaska to and from seattle and other places, are they safe? can you -- can both of you assure my constituents that these 737s are safe that are
such an important component of the alaska air travel? >> senator, the 737 ng fleet that alaska operates is a safe fleet. it's a safe airplane it's got about 200 million hours of air safety track record behind it. >> mr. hamilton? >> i agree with mr. muilenburg's comments i also want to state we have a weekly meeting we review all reports coming in from the fleet on whether or not they are potential safety issue or not. >> so the max issues that we're focused on here with regard to 737s are not issues that exist with your other line of 737s, 800s, 900s >> no. >> that's correct. >> let me ask -- i know the house side was looking at this, as we focus, as this committee
is on the tragic lessons learned from the max 737 accident, should we also take the time to make sure the other 737 models that are receiving less attention now are nevertheless continuing to be safe and to take the opportunity to look at the faa certification process on those to make sure that that is not bedevilled with some challenges that we are discussing here with regard to the max? would you agree that's an opportunity to not just focus on the max, but the overall process to reboot the focus both at your company but also within the faa on safety? >> senator, i believe there are a number of independent reviews under way right now looking at that broader certification process. some of which begun to report out. we support that broader look >> so models that are not just the max? >> all models.
we are taking an end to end comprehensive look at the certification process. and i believe there are a number of government independent reviews focused on that. >> let me ask for both of you, i keep hearing from safety experts about the importance of what they refer to as functional safety that is the way that different systems work together with the operator as opposed to looking at each system as it's added to a new model in a vacuum. it seems to me that this issue of functional safety is a core issue as it relates to the max given what has happened. can you tell the committee about what your company's approach to this issue of functional safety is when adding new systems to an existing aircraft like the 737 obviously there was a failure
here on that issue how are you working to improve that does the faa do enough to focus on this idea of functional safety, not just the individual additions to existing and older models >> i'll ask john to take that question >> senator, i think it starts with our requirements breakdown, system level requirements. competent level requirements, validating at the competent level, system level and airplane level how any change met the requirements and interacted across at the simor airplaystemt level. you also talked about regulatory requirements >> does the faa focus enough, you think, on functional safety? >> there's been some rather recent changes in what we call development assurance that i think is continuing to mature.
and dwaagain, this looks at the functional safety and things you look at, the breakdown of requirements and how different systems interact with that i think we -- as mr. muilenburg pointed out, some recent industry committee reports have discussed this and i think we'll support those recommendations and the faa's actions going forward. >> thank you thank you, mr. chairman. >> thank you, senator sullivan thank you to the panel. we appreciate you being with us. i'm sure we'll be questioning you further as we continue to get more reports our second panel of witnesses will be escorted in now. we thank you two gentlemen for being with us. >> welcome to "the halftime report." you've been watching dennis muilenburg testifying before the
senate commerce committee one year to the date that a lion air flight crashed in indonesia killing all 189 people on board. the first of two deadly crashes involving the 737 max jet. mr. muilenburg began by addressing families of the victims telling them we're deeply sorry, we'll never forget the victims and admitting that mistakes were made in making sure those planes were safe to fly. >> phil lebeau is watching all of this today. >> i would give dennis muilenburg a "c," if someone said grade his performance today. the first half he did not get a lot of tough questions, but that changed in the second half of the hearing. when a number of senators said you're the ceo, the buck stops with you, how could this happen? here's a taste of some questioning and commentary he heard. >> you should take, you know, offense to the fact that people say it's a great company not being run correctly.
for the 346 people who trusted boeing without a second thought, we need to get this right. >> boeing came to my office shortly after these crashes and said they were the result of pilot error. those pilots never had a chance. these loved ones never had a chance they were in flying coffins. >> that's just a taste of some comments that we heard from the senates who were questioning dennis muilenburg today. time and again dennis muilenburg came back to basically the same theme we've heard from boeing for the last year. we have a culture of safety. yes, mistakes were made. we'll correct those mistakes there were a lot of questions regarding the faa and the certification process. that got into the weeds of how this happened. you can bet there will be tough questions for the faa when it comes to that issue. with regard to boeing and how dennis muilenburg did today, i would say he did average at
best the last hour was bruising on him. >> the question then is, if that's your assessment, i heard today described as a second job interview for dennis muilenburg, can he keep his job performing average at best? >> after we asked him that question, should you stay on as ceo of boeing, i do not think that they are going to make a change in the ceo position while they're trying to "a," get this plane certified by the end of the year and then convince the airlines it's safe to fly. you're looking at a process that will go at least well into february or march from it kind of settles down. then maybe the board might look at, you know, is dennis muilenburg the right person to run this company as i said this morning, i have no indication they're looking to replace him. but it's pretty clear that the questions that he got today and what you're hearing, what others are hearing, that has to be front and center for the board of directors is he the right person to lead this company >> we appreciate it. >> you bet it.
>> phil lebeau with us steph, i turn to you first, the only one on the desk today who owns boeing shares, what do you think about what you heard today? >> obviously it's a tragedy. it will take a while to get through the whole process. i think they are making progress from a business point of view. from a stock point of view they're doing a lot of test hours. 1500 test hours. 800 flights. when they get this plane back into production, that's when the free cash flow story starts. that means, i think they can do $31 a share in free cash flow generation from 2020 to 2022 from a financial point of view i'm holding on to it because i think the long-term story is okay they have to get this plane in the air. they have to get out of the papers on an every-day basis for the stock to really take off. >> >> i will ask you a question that you may not want to answer
but i'll ask it any way. sometimes when you own a stock, one reason you give for owning it is the person leading that company. i think of larry culp with general electric and the reason you believe in that story. do you believe dennis muilenburg should remain ceo? >> through this transition absolutely the last thing this company needs is to have an interim ceo. i like they separated the chairmanship role from the ceo role that's a good thing. at least he can focus all of his efforts on fixing this, getting this plane back in production. afterwards, i don't know i don't give him a "c. i give him a "b. i think it's tough to go in front of congress with all these questions. they're firing they have the right to do so but it's a tough -- you're in a lose-lose situation i think. >> some would say maybe he brought that on himself with his actions from the time of the crashes from today it wasn't exactly the most
forthcoming or public ceo that we've seen in an instance where maybe he should have been. >> i think in the beginning he didn't do a good job i think you're right on that over the last quarter or two, i think he has i thought he did a decent job on the last conference call when they reported earnings in terms of giving more information and being more forthcoming and more humble she have done it earlier on. he's doing it now. let's get this job done. let's fix it and move on >> the remarkable thing about this story from an investment standpoint is the fact that shares are up year to date you could easily see an instance where given all that's gone on around this company, the crashes, the terrible tragedy around that one thing. the other part of the story, what did they know, when did they know it, you could see this from a stock perspective being destructive. it hasn't been as much as you think. yet nobody owns the stock other than steph i'm wondering why.
>> steph has a longer term perspective in her investments i think it aligns correctly with boeing this is a free cash flow generation story that will return once again. there will be delays will there be a response, a legislative response to what we're hearing today? will there be fixes that will be mandated from congress from the senate that will delay the process. that pushes outside the fourth quarter the return this comes down to do people get on the plane and fly on that plane once again do they feel comfort in flying on the 737 max i don't know the answer to that. i suspect the answer will be yes. i think that you're owning this stock because of the free cash flow generation. i also think the result of this has a much broader regulatory response that's going to be in certain instances the lifting of regulation may not be such a good thing we've loosened regulation dramatically in the aviation industry we've taken away funding from
yoef sig oversight agencies it's proper after this to ask if that's the proper direction to go in. >> josh? >> everyone who has been in this business more than 15 knows you buy the congressional hearings, you don't sell on the congressional hearings there's nothing left to be said about the situation. we all agree it's a tragedy. we all agree it will cost them a lot of money we all agree it's a stain on their reputation you buy when they're in front of congress >> the other issue is what we heard of gary kelly from southwest last week. raising the issue about switching suppliers. maybe not altogether but bringing somebody else into the fold as well >> like who? >> he was talking about the idea of airbus. >> flipping over to airbus the problem there -- >> that will take ten years. >> that's john's point when he was arguing back and forth last week with phil look, do you know what the backlog is there it's extraordinary
it sounds great but how do you implement that getting back to boeing, once they can get thank you all of this, scott, obviously it's going to take more time, but this is a name and steph has been great hold nothing this when you look at it it's been banging around between a fairly tight range for a while. i kept thinking it would break back down to last year's december lows, never happened. this is a stock we all know going forward, free cash flow. all the different story lines, the real thing is what do they do about china in the future that's something big for them. that is -- is he still going to be the right ceo for the job >> let's check on the markets. s&p hitting an all-time high for the second day in a row. it's a huge week between earnings, the fed meeting which begins today we have tony dwyer with us at the table. we hit new highs this week earnings better than expected?
>> revenue is better than expected >> where do we go from here? >> a months ago it looked like all was lost a negative earnings report >> which we did. earnings growth has been negative >> but it's hard to make the case that you have a negative earnings environment when top line growth is positive. if it's buy backs and financial engineering, people like to talk about it if that was the negative top line growth wouldn't be up we believe that we're coming out of the third mini recession of this cycle similar to the post-2011/2012 european debt crisis, similar to the asian commodity crisis of 2015 and 2016. in both of those occurrences, the s&p 500 led lower. we're on offense our target is 33.50.
>> for 20. >> are we pauling some of thpul some of that higher as we go into the first half of the year? >> it blows me away that the barron's poll has never been below 28%. the only time you got to 38%, 1999, 2005, 2016 >> how do you get that sentiment that this negative to shift and push closer to your target >> only one answer to that question everyone's sentiment improves when price goes up everyone's sentiment deterior e deteriorates when price go down. i want to point out a couple things a lot of things we were worried about resolved themselves to the upside i'm not talking about headlines but sectors in the market. let's look at regional banks
they're at the highest level since august notable. this is where credit flows to small businesses and regular people these are not wall street banks. but let's look at wall street banks as well. xlf, break out highest level since september 2018 up 30% off the december low. notable. now industrials. we're all worried about manufacturing, recession the industrials are right at the peak of this horizontal resistance they have been sitting below all this time. that could be a monster break out to new highs look at some of these names individually tens minus twos. in august we had the yield curve invert momentarily, but still it did. that's been steepening ever since. we're at 20 bips what else do you want? yesterday you had quietly google make a new 52-week high. apple added $90 billion in market cap in october alone. small caps have been rallying.
a lot of these things we've been concerned about they're resolving. he won't get into the global breakout of things happening in japan, europe, the russian stock market, brazilian. just understand this rally i'm talking about in banks and industrials this is happening against the context of essentially breakout in markets that have been stuck >> can i ask a question? within earnings in this quarter we have seen capex improve see sequentially i know a lot of that is amazon do you think we're on the cusp of seeing capex improve? to josh's point, you need capex to improve for these sectors to continue to outperform the other question is earnings revisions for next year are only down 1%. 11% growth do you think that's doable in >> let's do the last one first it's more important. conventional wisdom is when the
outyear earnings revisions are lower that will be bad i'm at 1.76 next year. street is at 1.81. i'm expecting a multiple expansion. that sounds bananas. who would pay more for disappointing earnings that's what happens. 2011, 2018 are the two negative years. capex, in late 2017 you could see you were in a global synchronized recovery. the citi group surprise indices for the g 10 were off the charts everything was wonderful people like me got on the set and said you have to buy the next thing because the global economy is doing great the global rate of manufacturing on the rate of change is as bad as it has been since 2009 and it's inflecting, it's less bad in this game you don't want to buy great. you want to buy bad that is
inflecting as less bad >> this is the beginning of the next big breakout? >> this is the same -- we keep looking for what we already found. we're in a manufacturing recession. that's the end of the sentence we're coming out of it now similar to those other two you had an offensive leadership -- >> are these the chutes of the next big breakout? >> correct >> put up the xli. put up three-year chart xli. these are all your big industrial names these are the companies that have exposure to the manufacturing recession here, weakness overseas, the litany of things look at this horizontal resistance level that we have been bumping our heads up against for a long time. if that resolves to the upside, you could say the market is stupid or recognize, hey, these stocks have paid their dues in purgatory, going nowhere, and now there's an inflection point. >> and the negative earnings that are coming out of the industrials are being rewarded
>> correct >> to your point, prices and how companies and stocks react to earnings and news is very important. >> semiconductors made a new high yesterday i think also look at smh these are, in my opinion, semiconductors are the new industrials, the new transports. they are in everything that gets sold you don't have that breaking out to multi-year highs as you do now if you think we're on the verbal of t verge of the manufacturing recession getting significantly worse. we could be wrong. markets could be wrong everyone could be totally wrong. it happened before but that's not a high probability wager in my view >> i think the reality is this tony, you've been right. you talked about three mini recessions we heard others out there -- the "r" word was out there everywhere a few months ago,
then what changed? earnings we are at 52-week highs. look at the semis, those have exploded to the upside look across at health care today. we're talking just today, look at pfizer's numbers. look at merck's numbers, look at united health's numbers, these numbers are strong but the negativity going in and that whole idea, scott, was something that permeated throughout the market everybody talked about everything negative. >> rightfully so, though earnings are still negative. we had a kumbaya moment in trade, but there's a story out there today that the so-called phase one may not be signed at aipac. >> it's phase point five, it will be signed >> what i got wrong at the end of last year i didn't expect the fed to ighten. when the fed tightened and made long-term yields come down, how do you know offense is working now? because the ten-year note yield has bottomed you have worse economic data but
long-dated maturities are going up that's telling you that the fed caught up to the market. >> fed will cut tomorrow, right? >> fed should cut tomorrow >> then pause? >> the best they got is 1.6 to 1.7 core inflation >> you think they'll still sound dovish >> absolutely. >> isn't the risk that they -- >> the data is getting less worse. in their mind the data is still going down ism going negative you have data showing slowdown the key to me is the rate of change they're looking at the absolute data think about this, scott. do you think the fed in september and december of last year would have raised rates if they knew in march they would take a half million jobs out of the picture? >> the fed was also probably slow to understand the impact of trade and tariffs? >> the best thing i can tell the viewers, my clients is this, the guys and gals printing the money
told you they'll print more money. forget about right or wrong, good or bad, that's the fact >> okay. that's back to the paul tutor jones thing of what was it six months ago when the fed embarks on an easing cycle you buy stocks. >> that's been the story of 2019 the fed addressed liquidity in the last 30 days i don't care about the 25 basis point cut, whether you get that or not, you have the liquidity so are we in the middle or precipice in a chase for performance because today on october 29th there's not much time left in the calendar year and everybody will scramble to save their jobs because they've been defensive and underperforming? >> i looked at mike santoli on the closing bell on the 22nd, i said i think it's a career ending call. it's tough to be bullish
i think we're in the by begeging of a 30% move. i get that by the data coming out of the last two mini recessions -- >> so growth or value. >> value >> hold on hold on. we're at the beginning of a 30% move for the s&p >> you have a good shot at -- where do i get that? on the fundamental basis, when the two-ten curve inverts, which i killed you all with, when it inverts you move to the peak of the cycle, 34% when you have a low core inflation, low interest rate environment >> so then we can have you back and then talk about yew foreya, the blow-off top and how bull markets don't end? >> but let me say this -- i do want to say something. >> we have to go after this. i've gone too long >> it was an easier call right now listen to the desk, listen to me i'm sure the viewers are saying here comes the bull, we're at a
new high >> let me check while you talk >> i think they can pause here everybody sees the breakout. it's too obvious you can come back, retest that breakout point and then grip it and rip it earnings, the global economy is turning. the guys printing the money are telling you they'll do more of it corporate credit and household credit is wide open. >> great seeing you. thank you for your insights. we always like the information coming up, the state of retail and the consumer. we have the lululemon ceo joining us next. shares of that cpa aomnyre only up 70% this year that exclusive interview straight ahead on the half
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. shares of lululemon soaring this year up 70% courtney reagan joins us from the wwd retail summit in new york with that company's ceo courtney >> thank you very much i'm joined by calvin mcdonald, ceo of lululemon scott teed up a perfect first question shares are up about 70% so far this year. you laid out a pretty ambitious growth plan. citi put out a note yesterday saying lulu has to have a flewless quaflew le flawless quarter or there's a disappointment they are worried that promos are higher than previously have you been more promotional than planned >> we never used pricing or
promotions to deliver or top line protect we used promotion to grow our top line business and there's been no change to that approach this quarter or from a year-to-date basis >> so investors should not be concerned about margin pressure based on this take >> we have not changed our approach i'm pleased with our innovation. in the last earnings call you pointed out two things that are a bit out of your control. the athletic space in general, and the fact that you believe there is less seasonality and a product that lululemon sells if two of the three factors are out of your control, can you continue this growth streak?
we can leverage our bottom's business where we're incredibly strong we can leverage the fact that guests are interacting with the product. it is solving problems and when we look at the opportunity of what's happening in the athletic space in general, i do think we're influencing it we're benefiting from the fact that people are just more concerned with how they feel >> you looked at health care, generic items, how are you looking a the that opportunity >> what's exciting looking at our five-year broet plan, dougrl
of that growth is coming from our core business. we will test and play into new opportunities as a means to interact and build a relationship with our guest. our five-year plan is no dependency on it we see opportunity for future growt growth >> benefits are varying a bit based on what you're earning can you give us updates on how that can have a financial impact on the company >> we learned initially that we could play with the price points one of the initial reads was what is the right value proposition and how will guests respond? the last few test markets we've been in four now, just recently in chicago, which was great. it supported our lincoln park
experiential store we tested $150 that seam seems to be the price comfortable with guests are responding well it's the minute knackal expression of how our vision of igniting community and living the sweat life comes to life we're excited about the read on the pilot so far and look for exciting opportunity with that moving forward when you say they're responding, are they buying more, interacting more with the brand? >> all of the above. a big part of the essence of the membership is driving loyalty. it's interacting with sweat through the community and with ambassadors and studios, and interacting with the brand more. we see a lot of benefit coming out of the program >> pete has a question back in the studio
>> i've been a long-time holder of the stock not just the stores themselves expanding. but what you're putting out in terms of what the men are looking to buy >> it's a great question we're reallybusiness, not just performance from a year to date basis, part of our five-year broet pl atn within the men'se our awar category is still low. that's where the opportunity lies we'lntinue to expand the product. we see it both an opportunity around run and train yoga which is our own sweat category. abc is a great anchor, there is a lot of opportunity to expand beyond dhthat i see the growth coming in from acquiring more men, driving
market share with them and driving share with the men as they experienced through lululemon and get them to spend more >> i am a shareholder as well. my question revolved around athletic footwear. can you tell me who you would grab over the next five years of this plan? >> we know footwear is a competitive category it is hard to point directly to one particular player. what's exciting as i mention we see an opportunity and we tested footwear and away in which we cancel through our guests and in the coming and a few years, we are excited about some white space needs to be identifiied an launching and casting and whether to grow where there. our plan is not relied on
footwear at all. we'll see how guests respond >> calvin, i would be remissed if i did not ask about china is that still the plan as anything changed as we move forward with this trade war between the u.s. and china >> i was just there a week ago touring the market we doubled our store's count and we'll end the year at 30 we started with 15 the success of your brand, the momentum around the sweat life within china i lead energized and excited and there is no change the community is strong. brands have nothing on potential awareness or consideration i am excited on what the team has done and what our potential is there >> calvin mcdonald, ceo of lululemon, thank you for joining us today in the summit of the
new york i will send it back to you >> thank you so much for bringing that review to the "halftime report." >> it was mid september and jim sat down with us at the annual conference he said this about that stock right there. jim chanos >> grub hub is making also no money. there is just no margins in this business you are putting two more hands-on the stretch of the restaurant guys say pay the delivery company and driver for money they are not making. >> okay t that was jim chanos back in september. that was grub hub today. down 43% their guidance was below expectations and competition is taking a big way out of this company. did you guys see anything like this 43% in a day for a company like this you can't have growth slowing and investment rising for growth
stock or expensive stock for sure not to mention competitions. i really do think down this much is a no touch. you have no idea at the e >> pointing the sales on the stocks today >> new sales >> i love it when you do that. >> chanos gave you a sale. >> chanos laid out simply why this is not a good business even in the absence competition because of how little drivers are making because how little restaurant owners want to pay for another driver uber eats, jim's actual quote was this is like grub hub is locked in a cage with a psychopath with an ax. if uber is in this business, they're not going to lose it and now you throw indic
in disappointment and huge technical break down of the charts who's looking for this thing not valuable people, not traders. that's why it is so hard for this type of situation to bottlbotto bottom >> that's a tough chart. that's 44% let's talk about some moves you had before we go to final trade selling verizon. selling twitter. talk to us we don't have much time so be quick. >> i had the barbell being defensive and offensive. i want to get a little more offensive until the end of the year watching at&t like that yesterday, twitter, i think it is that money until the end of the year i like the 2020 set up i will buy back in january, put the money into amazon which i think it had a much better quarter. >> for those who may not know or tuning in for the first time
just billing uilding up for poss we only got 15 seconds >> facebook. >> lesley? >> nxpi. >> ihi, medical devices. >> a busy hour following boeing. "the exchange" with kelly starts now. >> thank you, scott. here is what's ahead boeing ceo is facing a lashing on capitol hill and it will continue into tomorrow we'll talk about why investors are not careful of the consequences here. we'll discuss that >> california is the most popular state in the nation. it is facing potential blackouts that's affecting millions of homes and still battling the kwie wildfires. we'll look at the missteps could a hawkish statemt