tv Squawk Alley CNBC August 15, 2019 11:00am-12:00pm EDT
good thursday morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post 9 of the new york stock exchange the dow is coming off the worst day of the year. the fourth largest point drop ever interest rate concerns, trade tensions, and global concerns are worrying for everyone. >> not good you have me on >> i disagree! >> okay. don't backtrack. so we've got a rally, but it's pretty darned tentative, let me look at it i look at some internal numbers. very high put/call ratios. investors are definitely buying a lot more put and calls than normal that's usually a good sign usually a sign of short-term bottoms. we don't know for sure the yield curve is not inverted today, but we're also not getting much of a rally in yields at all, which is what we need obviously, we move in relation to the yields and if we can get them moving up, it will be
better it's very difficult to have an opinion on the market. tremendous market confusion. i called people the last few days and they said, bob, give me an opinion are we going to have troops in hong kong or not going to have troops in hong kong? is there going to be progress on the trade talks or not going to be progress on the trade talks just by the end of the year, is the fed going to aggressively cut rates or is the fed not going to aggressively cut rates? and most importantly, bob, can you tell us if the global economy will stabilize by the end of the year or not stabilize? this is a lot to model for aflt lot of these growth ml that people have, bond yields are one of the most important components it's a difficult situation the one thing that makes me a little optimistic is the bull argument, bob, separate the manufacturing economy from the consumer economy and today we had reports from two of the big consumer companies in the world walmart and alibaba. the big u.s. consumer company and the big china u.s. consumer company. and both reports were
outstanding. i think it was really important. walmart raised their numbers overall for 2020 they raised the commentary they had very good commentary. comp store sales, 2.5 to 3%. they said, this is going to be on the high end of that. that was better than they said before alibaba's numbers. revenue is up 42%? you've got -- this is not a start-up this is amazing. the ebitda, the cash flow up 34%. everyone's saying, how you doing this he said, we have 300 million consumers we're selling to and we're selling more to them ever day. that's exactly what walmart said >> what does the volume tell you, bob because in the sell-off, the volume wasn't necessarily there. you said that the comeback has been tentative what does the volume tell you, when does the volume typically come in this time of year? >> we're not seeing -- the volume is heavier on down days than it has been on up days for a while. so let's buy the dip mentality is definitely being tested right now. so that makes me a little
tentative, as well i would like to see a nice big up day and see volume really shoot up tremendously. i don't think we're seeing that right now. >> what do you think is driving the market narrative today overall? you've got the latest in terms of trade headlines between the u.s. and china all the geopolitical stuff but you also have this data, right? we had stronger than expected retail sales and a smattering of other positive data. >> the bull argument is the consumer is doing fine and when the consumer is 70% of the u.s. economy, that's what you ought to concentrate on. and everyone thinks china's falling apart. look at what alibaba said about the health of the consumer over in china there's the bull argument. separate manufacturing from the consumer and things are a lot better and i think there's something -- i think there's some truth in that i think there's something there and something for the bulls to hang on to i think that this rally is very tentative. i'll tell you what would get me concerned. if we ended at the lows today down another 400 or 500 points that's not a good sign overall we haven't had any really bad news other than this vague
threat to retaliate from china today has been pretty good news day on the data front, the ministry of foreign affairs made more positive comments overall alibaba/walmart were good numbers. we're -- on the oversold side, we ought to get a modest bounce today and ought to see a modest move up in yields and that was what moved the markets this is why everybody says, we're not sure, bob. you tell us. remember, pisani's law of broadcast journalism, you know you're in trouble when your best sources call you and ask you what's going on. bob, what do you think's going on here? i'm the stock trader, i'm supposed to interview you, you don't interview me when that happens, you know things are bad and that's been happening a lot. >> are people just literally directionless until powell weighs in. >> i think powell will be very important very soon, but we're still directionless. look at where the strategists are. most of the strategists -- and everybody's looking at year-end numbers. everyone is clustered around
2800 to 300. bank of america is 2,900 see, everything clusters around 2900 some of these guys, tobias has been taking down earnings estimates, but not the price target so now, watch carefully. i think if news doesn't get a little bit better in a while, you'll see them taking down some of those year-end targets fairly quickly. >> how do you think all of this is shaping out for the ipo pipeline there was some chatter that that wework numbers we got, not stellar numbers, and it's a very highly valuated company, there's some chatter that that added to the negative sentiment yesterday. >> are we talking about wework >> wework is a very -- and you have been talking about this, a very particular kind of company, a very particular ipo. you can call it a tech company we all know it's a real estate
company. they have long-term contracts against people who are renting on very short-term obligations any real estate person will tell you that creates a difficult situation as soon as you get a downturn with that said, the ipo business very much functions along the lines of how the economy is doing and how the u.s. stock market is doing. it is not surprising when you have companies that have very thin profit margins or not making money at all and when you get a downturn like this in uncertainty, they'll move to the downside this is a great year for the ipo business it's about time these companies went public, particularly the unicorns whether it's a good market or not, it's time for them to go public it's time for the american consumer to get involved in some of the growth, even if they're mid-stage companies, not late stage or early stage companies i'm in favor of going public now though to these companies. it's time. the venture capital funds cannot sit on them for 10, 12, 15 years. the models don't allow that. they've got to free up some
money and move into some other things and let's let the american consumer invest in some of these things and if the prices are too high, let them drop the prices or sell it >> it's called capitalism. let's not hide behind, you know, private walls of capital don't like that. >> bob, thanks >> okay. >> see you lifting the dough this morning, walmart shares are jumping on that earnings beat. courtney reagan has more on the retailer's quarter >> so the markets, of course, have been worried a little bit about an economic slowdown, but walmart's results show the opposite, at least when you're thinking about the consumer. the world's largest retailer saw its comparable sales top analyst estimates growing at 2.8% that's the 20th straight quarter of growth for that metric. grocery, a big contributor to the gains, although walmart says sales strength was pretty broad-based, picking up after a slower start to the quarter from some disruptive weather. ecommerce sales contributed about half of the sales gains.
u.s. net sales grew 37% and that matches the growth rate we saw from the french quarter. also slightly above the 35% full-year guidance for that metric now, in mid-may, walmart announced it was rolling out free next-day online order delivery in several markets. today, it said it's already available in 75% of the country. that actually was the original goal for the end of the year, so they're ahead of that. and walmart's u.s. operating income also up 4%. that's growing for the fifth straight quarter it was down, though, 2.9% overall. walmart upped its annual forecast for earnings, revenue, and comp sales after beating analyst expectations on all three metrics this quarter that guidance does include the impacts of the list four tariffs, at least as the company currently understands them, was sort of their verbiage this morning. the retailer slightly lowering its international net sales guidance they did cite some economic weakness in candidate skbrekt concerns continuing to way on the business in the uk
i asked ceo brett biggs his view of the u.s. economy. he said, we're watching. tariffs has been on his mind for the last several months and as a cfo, you're also going to look forward to what could be coming. but walmart does pretty well in different kinds of different economic environments. back over to you, jon. >> and turning now to apple. shares are lower a bit this morning, but still hanging in above 200 bucks a share, as u.s./china trade tensions continue to weigh on the stock our next guest out with a new note this morning saying apple's trade-in programs likely to drive the next upgrade cycle, reiterating the firm's confidence in its iphone estimates. joining us now here at post 9 is bank of america, miller's senior apple analyst, womamsy mohan so it seems like you're arguing that apple is trying to get close to that old loving feeling of carrier subsidies by using trade-ins, giving really good value on your old phone, and helping finance the new phone to
spread out payments. but when everybody knows that 5g is coming next cycle, doesn't that hurt the upgrade opportunity this year? >> yeah, that's a good question, jon. and i think the way to think about it is that the install base is close to almost 1 billion users at this point. and our proprietary survey shows that there's about 200 million really old phones. these are 6 and older. at this point, with ios 13 in the works, which is supposed to not support anything before 6s, we think it's a great time to be offering premiums on the older phones if you look at the data that we've looked at, there is a significant amount of premium that apple is offering on these older phones, much more than any third party sites, and this is globally, and the most interesting thing is, in china, they're actually offering the highest premium. and china is a super price-sensitive market so the price elasticity over there really matters so they're trying to combat this
overall effect, and all they need to do is slightly turn that down by a month or two, and you can get as much as 15 million units to the upside. that's a really powerful lever >> that's why i wonder, is this the most important singles day we've seen coming up for apple, november 11th, big invented holiday in china, kind of like amazon prime day here in the u.s. apple has at times engaged in some promotional activity during singles day. this year, emerging markets, a lot of markets outside of the u.s. have been a little weak and they need this, right km >> yeah, i think it's very interesti interesting, emerging markets are becoming more of an area of concern because of demand slowdown and foreign exchange regions. you've seen this price sensitivity turn on and off when you get a little bit of movement in the chinese currency, especially, if that's moving against you, apple has been very careful to make sure that they move in tandem and the vats went on
that h they made sure they got the benefit of that. i think price sensitivity is very important in this market. so can singles be an opportunity for them >> yes, of course. >> let's talk tariffs a little bit more here. we know that 10% tariffs on imported iphones and laptop computers have been pushed off to december. but airpods, apple watch, home pods, some of these other faster growing, very promising businesses are not going to escape those tariffs starting september 1st. how does this play out >> we did our analysis looking at the entire portfolio originally on september 1st tariffs and that was about 75 cents of impact to the business. but now when we look at it, the segment of the products that are going to get impacted is actually quite small it's only about 10% of total apple revenue. and when you think that the u.s. is only 40% of total revenues, you're talking about a 4% exposure to total revenues from a tariff perspective, that's something that's actually manageable a 10% raise on that small piece of the portfolio, not quite as worrisome. if december 15th goes on for the
whole portfolio, clearly that's a larger -- >> so not to beat a dead horse, but are you seeing any incremental signs that they are trying to move significant assembly outside of china? and how long would that take >> carl, they've been trying to do smaller volume things we've seen, for instance, some of the lower-end iphone production that is getting moved out of china trying to build some in india, for instance vietnam is another place you're looking at quantum making watches outside of china there are examples of smaller volume products. and we do some stuff here in the u.s., as well, when it comes to the macro and things like that so there is some evidence that there is some movement in there. it's not en masse yet. it's not for the large volume products you've seen on the news lately, though, there are partners like ineve invenntech that are starting to move out of china. and it's happened on the server side, a little more on the pc side, but i think there's a
directional movement more moving to southeast asia at the moment, and some to mexico, where we got all the tariff whack-a-mole trade war >> iphone season is coming wamsi mohan, thank you whipsaw action once again in the major indices. dom chu will keep us on all of that >> we've got the numbers for you here for those of you viewers or listeners on satellite radio that have been with us since the 5:00 a.m. eastern time hour, just shortly before 5:00 a.m. when we started our live programming here in the united states, we saw futures indicating what would be a fractional bounce off of that massive sell-off we saw friday no surprise there. but shortly before 5:00 a.m. eastern time, right around here is when you got that first headline saying that china is looking at possible counterpressucounte countermeasures or necessary steps to counter the tariffs that the u.s. looks to put into place. that happened shortly before 5:00 a.m. eastern time as a result, we saw a movement lower in those futures
in fact, down to these low levels here, from here to here, the dow futures lost about 400 points now, what turned things around was walmart and its earnings report and also some comments out of china from some of the ministry officials out there that said that they want to meet with the u.s. and meet halfway on negotiations. that saw that rise now collect all of that 400-point loss and then some. but then in regular trading for cash equities, we saw another move again to the downside, over here, after president trump said that the deal for a trade situation has to be on our terms. that's where we are at right now. 150-point gain goes to a 250-point loss, back to a 150-point gain we see a gain in regular cash trading. and now down again to, as you can see, they're down about 30 points for the dow overall, morgan, this is the kind of volatility you can see in the week. and we've condensed it into about five hours or six hours at this point, morgan
i'll send things back over to you. >> the power of a chart, dom that really just says it all dom chu, thank you when we return, the latest on the fallout from the political unrest in hong kong. we go live there and later, alibaba shares higher off an earnings beat. we take a look at what this means in the context of the trade war. from the couldn't be prouders
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so how is technology factoring into plans for greater unrest? well, brian sullivan is live on the ground there and joins us now with the latest. brian? >> reporter: you know, morgan, i think this is the perfect follow-up to your previous guest, because you guys talked about moving supply chains around the manufacturing of stuff. well, what about people? what about human capital intellectual capital that is something that the people of hong kong are talking about, given the political unrest you talk about moving a factory. that's hard to do. you've got to literally buy stuff, move stuff. it takes a long time what about getting someone to work, a finance worker, a lawyer, a banker, a trader getting them to work if the streets are blocked by protesters or perhaps they don't feel safe? that is something where contingency plans are being put in place we have spoken with a couple of representatives of banks and by the way, none of these banks, none of these people are going to go on the record, because, "a," sometimes they can't. "b," they don't want to raise the ire of the hong kong authorities or the chinese
government that said, if things got worse, some of these members, these banks said that they are testing their computer networks, their systems, to make sure they are functional if people need to work from home remember, hong kong, if you've never been here, makes manhattan look like a rural oasis. i mean, this is a dense place. you literally have escalators going up the mountain there. you know, jamming in people. if there were blockades, if protests got out of hand, very difficult to move around, narrow streets. so banks, many i can't name say, if you have to work from home, do i have the systems in place to do that by the numbers, there are about 1,300 american companies doing business in hong kong. some of them may have one employee, some of them may have hundreds of employees. there are 85,000 u.s. expats living here. of course, many more brits, many more aussies, as well. all of these workers, guys, their companies are trying to figure out, can i keep my workers safe if the protests
ramp up or escalate? and if so, are they still able to be productive hong kong today cutting its gross domestic product estimate, guys this year to the big goose egg travel is down, tourism is down, commercial sales are down, economic stimulus, we'll see if it's enough, but we are making technology a priority. >> we're going to see what the stimulus is directed at and how far it goes. we'll talk to you in a little bit. in the meantime, on a similar topic, alibaba is out with a beat on the top and bottom lines boosted by growth in econ and cloud. shares are off 2%, although off of the session highs joseph berger is with us, the ceo of pacific epic, a firm focused on investments in the digital economy. joseph, thanks for the time today. >> good to be here >> how much does hong kong complicate what was already a tough situation? >> so from the research pacific epoch does, our focus is on
research in mainland china if you look at companies like alibaba or ged, as you can see from the most recent results, they're doing quite well and mainland china is really the focus for us and really the focus for these companies, as well so i think overall, as you look at china internet and you look at ecommerce in particular, these companies are going to continue to do well, as that market continues to grow for the internet names there >> joe, what do you read into what some are saying is, um, less than stellar cloud performance here, perhaps versus ten cent what does that mean about the breadth of alibaba's strength? >> yeah, so, alibaba, clearly their primary focus is as an ecommerce platform and trying to attract users into their ecosystem to keep them there, to get them to buy products, as well as to spend more time there. i think, obviously, they're taking advantage of the great infrastructure that they've developed to support millions, hundreds of millions of users
actively using their platform. and the cloud is obviously a good tangential business for them obviously, it's not a big business for them. and i think their focus will continue to be on retaining and enhancing their ecommerce platform >> joe, how much of this, when you look at numbers from the likes of alibaba, how much of this is a reflection of this secular shift and the world technology is playing in consumers' lives increasingly on a daily basis and how much of it is actually a read on the state of the consumer in china specifically >> yeah, i think your point is right on with respect to the semest consumers are looking for cost-effective ways to buy product in a convenient factor and alibaba is delivering on that promise and i think that right now, ecommerce is only 20% of the total spend on the consumer market right now in china. so the ecommerce pie has tremendous growth opportunity. so the likes of alibaba or jd
are definitely benefitting from that shift from offline to online and we think that's going to continue and we think the growth for the companies in the online space is looking very positive going forward. >> what about, finally, how do you characterize the ability of the alibabas of tomorrow to raise money in china from foreign investment >> well, our focus is on the performance of these companies in mainland china and looking at it from the standpoint of what the consumer experience is obviously, if these companies are growing, if they're delivering on their promise to develop more products and services to support the needs of the consumer, then i would think that that would lead to positive investment opportunities from other investors globally >> certainly the hope of a lot of people. we'll see if it happens. joe, please come back. appreciate that, joe berger. >> thank you and now, look at shares of ge those shares are getting crushed
in today's trade down more than 12% we're going to tell you what harry mockapoulo tushe author of the report causing the stock to tank this morning told us after the break. but this year, there's a more thrilling path to follow. (father) kids... ...change of plans! (vo) defy the laws of human nature... ...at the summer of audi sales event get exceptional offers now!
welcome back quote, a bigger fraud than enron and worldcom combined. that's what madoff whistleblower harry markopolos said about general electric's accounting in a scathing new 175-page report out this morning shares are dropping on this news, down about 13% markopolos joined us earlier last hour. take a listen. >> ge is losing $5.27 for each dollar of premium income they are taking in. those losses are unsustainable and they're growing at an ex exponential rate for 2016, they grew at a 16% rate they're growing exponentially
and will make this company probably file for bankruptcy >> ge responding saying they haven't been contacted by mr. markopolos another report was created to help with ge shares. you can see the stock down about 11% right now. certainly lower. carl, we know that markopolos is, you know, in fact working for an undisclosed hedge fund. we pressed him to find out who that was and what that financial situation looked like. a hedge fund that is looking to short the stock, but also coming out and saying that, you know, he's working on behalf of the american public. nonetheless, really kind of going into detail and raising a lot of questions about the cash on the books for ge and how much more they could potentially have to book for insurance reserves and questions around bakers hughes and some of the other business >> the issue itself is not new >> no. >> they are strong allegations >> the strongest thing i heard was their move to boston prodded him to start looking into the company.
seems odd. and we asked him whether or not at some point he would disclose who he's working for, how short they are, how much hep personally stands to benefit from any decline in the share. which, by the way, at 14%, if it gets below that level today, you're talking the worst day in 20-some-odd years. >> he did say he has a generous percentage on the trade, which clearly is short the extent to which it matter who is he's working with we know what they expect to happen, so now we've got to the degree to which he's right what he's pointing out about the report 175 pages, i haven't read it yet. >> yeah, started to go through it and he stands to make money off any sort of whistleblower-related fees and he shared his data with regulators as well we'll see how this one unfolds meanwhile, european markets closing. dom chu joins us with today's action dom? >> reporter: so, jon, a volatile session for european stocks, all of the major averages set to close in negative territory. as you can see behind me, fairly
red across the board the stock 600 index started the day higher before reversing, as china threatened countermeasures in response to that latest round of u.s. tariffs on chinese goods. now, that's weighing on the european bond markets specifically the yield on ten-year german bunds falling to another record low of negative 0.7%, a day after data showing the german economy actually contracted last quarter, as well finally, take a look at the stock of the day amid that flurry of trade headlines. we're talking about danish shipping giant maersk. they issued a stark warning stating that it expects to grow between 2 to 3% this year. they cited a further slowdown in the overall global economy those shares off by about a percent. china and the u.s. together accounted for more than a total of maersk's total revenues last year shipping and transportation c t costs very much a focus when it comes to global trade and the
global economy back over to you guys. >> absolutely. and one to watch right now, because it's ship peaking system as we look for inventories coming in to be built up here for this holiday season, a lot of freight data to keep an eye on, dom. thank you. let's get over to sue herrera now for a news update. >> good morning, morgan. good morning, everyone here's what's happening at this hour israeli prime minister netanyahu reversing himself and now deciding to prohibit representatives ilhan omar and rashida tlaib from visiting next week it followed an intervention from president trump who urged netanyahu on twitter to bar the lawmakers. a source familiar with the matter telling nbc news that jeffrey epstein's autopsy shows his hyoid bone was broken. according to nbc's dr. john torez, that type of injury can happen in strangulation and hanging but occurs more often in strangulation. the fda making a new attempt at adding graphic images to
cigarette packages to discourage smoking. it would include images of cancerous tumors and diseased lungs. most developed countries worldwide have adopted similar graphic warning labels and nasa scientists are crisscrossing greenland on a mission to track melting ice greenland has been melting faster in the last decade and this summer. it has seen two of the biggest melts on record since 2012 you're up to date. that's the news update this hour busy day i'll send it back downtown to you guys, carl >> isn't every day, sue, at this point. every day is busy. >> no summer slowdown here >> welcome to august when we come back, walmart bucking the trend for the dow today. shares are higher on that earnings beat. we'll get more on that, coming up meantime, major averages dow is back in the green after briefly going into the red and the s&p is up 5. johnson & johnson is a baby company.
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welcome back to "squawk alley. stocks are back in the green a mixed picture right now. largely hovering near the flat line after what was a massive sell-off in yesterday's trading session. the dow fell by more than 800 points yesterday, its biggest drop this year and its fourth biggest point drop of all time joining us now, jim lowell and deepak poori gentlemen, good morning to you deep deepak, i'll start with you. key question, given all the volatility we're seeing, all of the uncertainty from a macro
level as well, how are you counseling your clients to be investing right now? >> yeah, i think first, to take a deep breath. markets do have a tendency to correct. you know, 10% or so every once a year so this is not out of the ordinary to see a market correct 6% from the highs that we saw in july and eight of the ten times, the correction stays where it is it's not a start of a bear market it doesn't end up being a 20% or more correction. so i think the markets and the investors needs to take a little bit of a pause maybe looking into the uncertainties that are there, look into the portfolio. and maybe make some changes. and that's what we have been advocating we have been advocating to take some of the risk off the table, because the uncertainties have been increasing. >> risks like what >> equity risks, predominantly so when you look at your -- and i'm hoping this is not the time when the clients are actually making changes to their plans or
the investment policy statement. so hopefully is plan is already in place and the idea would be to take a foot off the pedal, so if you start with 50% equity allocation, you're probably a little bit evaluated so reduce that position to your neutral and maybe even go 5 to 10% underweight. >> jim, i'll put the very same question to you. what are you telling your clients to do right now? >> short-term, you want to make sure that your income needs are being met. longer term, you want to make sure your investor goals haven't changed. and in between those two polls, you want to really really re-examine your risk tolerance, your emotional willingness to ride out what we think is likely going to remain a momentum-driven market with a lot of volatility. not just over the next few weeks or quarters, but obviously, heading into what's going to be a very vitriolic 2020 election year so we would absolutely agree
that our clients have buffers in place. those would be short-term bonds, cash, but we also know that our managers that we invest in are not stockpiling cash they're looking to add to their best ideas at momentum-driven sort of panic-driven sell-offs so better price points all of that said and done, though, there are plenty of cross currents the fed continues to note them and we certainly are paying attention to them. this is a market that is going to remain, i think, challenging, not just for the nerves, but also for those of us who take our task seriously and put shareholder interests first for safeguarding their wealth. >> deepak, you say don't freak out, but also some of the things you're saying are the things people say to us when things are starting to get better, like, focus on higher quality stocks, you didn't say dividends, but buy some assets like gold, take some gains off the table and increase position in cash, fixed income i mean, that sounds like there are enough signals that quite a
bit of caution is due, is what you're saying? >> yes, that's pretty much, i would say, a good assessment we are not in the camp that we are entering a recession, because this is not a recession-proof portfolio, the one that you just articulated, which is what we are right now suggesting to our clients. i think you need to, you know, take into consideration that the consumer in the u.s. is still doing reasonably well. look at the retail sales number today and look at a lot of forward-looking numbers being housing permits, be it money supply, the fed on an easing cycle, maybe introducing some unconventional measures on top of it. i really don't see a recession happening, even though the new york fed model and our own internal models are advocating a one in three chance for a next 12-month recession i would still go with the scenario that we avoid a recession for the time being, and that's why some of these things would make sense, especially when the global central banks are all having this coordinated easing policy
>> hey, jim, we know the consumer is strong and they will be as long as employment remains in tact. so when jobless claims are at a six-week high like they are today, what do you think are going to be the key canaries that foretell a recession, other than classic yield curve in the next, say, few months? >> so setting aside a yield curve inversion, especially if we saw a sustained weakness. we don't expect it we still think it would be a sucker's bet to bet against the u.s. consumer, as they stand today. however, we know there are a lot of pressures from without. and that's really what the fed has been moving on in particularly, europe looks a lot closer to a recession. germany, its leadership, economy, clearly extraordinarily weak and when you look at the overlay from the global landscape and its ability to impose upon our economy, our markets, we think that could trigger a recession, but we would agree, we're not there yet. we may be closer to it, but we're not there yet. >> yeah. on a day where bunds are yielding minus seven-tenths.
meanwhile, airlines and autos have been hit hard by the sell-off boeing touching its lowest level since january now and has news of its own ntoday. phil lebeau is in chicago with that >> shares of boeing coming back just a little bit today. there was some news earlier this morning, headlines out about whether the company is adjusting its plan for when it rolls out the tribb777x they have said all along that they plan to have first flight and first delivery by the end of next year. that remains for the initial 777x, but they are delaying the 777x-8, that's a derivative of the 777x that is being delayed and pushed off further. that comes after the first flight of 777x and in terms of airlines, look at the airline index it has mutual fund around just a little bit within the last week, obviously seeing pressure along with the rest of the market, but not all airline stocks are under
pressure to the same amount. they were all down yesterday, but take a look at what we're seeing in terms of delta versus american airlines and we should point out that american airlines getting dinged in the latest air travel consumer report card, put out by the d.o.t., came out within the last hour they've had these issues with the mechanics, delays, cancellations. they lead in terms of cancellations in the second quarter. and then when you take a look at the auto sector, it's all about china. the trade worries have people not necessarily worried about shipments over to china or coming -- parts coming from china so much, as to what's happening with the consumer in chun china right now, guys, is on pace for one of its worst years ever in terms of percentage decline in sales in fact, electric vehicles, they were actually down last month. take a look at general motors. it has the most exposure among the big three in terms of sales to china running number two in that country right behind volkswagen guys, back to you. >> all right thank you, phil. meanwhile, stocks trying stay in the green. we're going to have more on the
market volatility next but first, rick santelli what are you watching today? >> you know, of course, i'm watching the impact of lower rates on everything, including investor psyche, but today in particular, i'm looking at the dollar and how it fits into the fed's pursuit of inflation, after the break. woman: my reputation was trashed online.
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the trade war for a loss of business at the same time, "the wall street journal" doubles down on its warning to peter navarro and the president. we're all over both stories. plus, that bombshell report on ge sending shares plunging today. we'll have the very latest from pete najarian on how low shares may go and our own megan hsu with her protection playbook. she'll explain where you may want to hide out if the market gets a lot worse from here all at noon on the half. jon, we're a little more than ten away and we'll see you at the top of the hour. >> all right, we'll get there soon now let's get to the cme for rick santelli's santelli exchange rick >> thanks, jon the one piece of the puzzle that seems to not quite fit right in an illogical counterintuitive pattern is the foreign exchange market, specifically the dollar. let's think about this a bit we have central banks literally leapfrogging each other to make sure they have enough stimulus to keep their currencies from getting too strong they don't want to fall behind
the new leader, which in their mind may be the u.s., because it did a quarter point in july. but really, the leader is the ecb, eseptember 12th, we're expecting that there's going to be a stimulus package and there are hints that it may be more than many anticipate we'll have to wait and see but in the end, a weaker dollar does one thing and it's the one thing that the fed wants to want most it's the one thing that all central banks say they want most and that is, more inflation. they want more inflation but in the end, the problem is, is that a weaker dollar is very difficult for the fed to leverage into the equation, especially considering how much ammunition they have to accomplish that. what am i saying well, the foreign exchange market has grown so much what is it now, $5.5 to $6 trillion it's humongous so it really becomes kind of, how much sand can you carry in juni your overnight bag to the beach? if you want to weaken the dollar, you have to exert some pressure and i don't know that the
central bank can, without having a lot of other things go wrong, not the least of which is, wasting bullets on something they can't accomplish with those eight quarter points of insurance they have left so, here's the situation in pursuit of inflation, weaker dollars makes a lot of sense and one reason nobody ever talks about -- you know, managing currencies, for those that live in those countries, kind of has a visibility factor. in other words, if you're in the u.s., yeah, you may sense prices are moving around, but for the most part, prices can go up a little bit from here i mean, what's the difference really from 1.5, up to 2.25% in your own currency, you might not see it as much, but what we need is something very much cleaner. and i'll tell you what i mean. dr. judy shelton was on an interview and she said it was nice to be virtuous in a vacuum, but i don't think we have that luxury in other words, we all have to somewhat play these games and what makes the difference and what's cleaner and what frequence me out when i think about it
philosophically, you know what does all of this cleaner tariffs. i'm not saying i'm for all the wild trade things going on, but in a very simple test tube philosophical experiment, if you want prices to be higher, it's much more efficient to use tariffs and you don't have to manage markets, which is the problem of how we got here central banks got us up to venus, but they are having a heck of a time getting us back morgan, back to you. >> rick santelli, thank you. when we return, finding value in a selloff and protecting your portfolio against global headwinds veteran trader art cashin joins us on the other side of this break. dow is currently up 35 37 points in wt'behas en another volatile session stay with us d personnel... ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.
9 dow is up 31 points. s&p hanging into the 20840s as with brace for what will be an interesting afternoon session as llecset'be a doozy so far "squawk alley" is back in three minutes. - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu.
major averages are looking for some direction here trying to stay in the green following the selloff on wednesday, the worst percentage decline of the year art cashin is here from ubs to see what can help us sustain. >> i thought yesterday the s&p would find some early support around its intraday august low which was 2822 and lacking there we would go down to the 200-day moving average which is 2795 so yesterday there was some hint of capitulation. selling volume swamped buying volume 19-1. that's something that's
extraordinarily rare, and so it gave an idea that there might be some sign of exhaustion there. all the market is doing today is looking at its own internals it's taking its own pulse, its own temperature. can we find stability here are we okay. >> near term it sounds like the selling is flushed out is that the way to think about it >> you can't be absolutely sure, but when you get a 19-1 -- we talk about 9-1 declines over advances, 19-1 is a big deal so it gives you a lot of possibilities. you've got a lot of things coming up. jackson hole coming up next week, all these geopolitical things are not going away. what's going to happen in the streets of hong kong there are reports that they are planning a run on the banks and what not that could get the financial markets all involved, so we've
still got a lot of work to do here. >> cisco is off 7% on that report the quart their they reported was fine the guidance wasn't so hot, but 7% seems like a lot. does that say anything about the psychology of the market >> it is, and it's the guidance again. they are trying to understand how things are you know, we talked about an earnings recession, et cetera, but the guidance is important because all of these executives are looking out, and they have got to make plans about hiring they got to make plans about capital expenditures and whatever, and they are looking at all this confusion. you're a tweet away from this, you're a tweet away from that so the guidance becomes very important, john, because then you kind of get to the look inside the guy's mind. how frightened is he by all of this if he's guiding lower it doesn't mean he doesn't have necessarily the feeling that it's okay to -- to invest in cap "x" or hire
more people. >> the bulls say walmart is a sign that the consumer is strong the bears say it's a strong that consumer is trading down which is it? >> well, i think the consumer is relatively strong. you know, it's not that walmart is so much the dollar store kind of routine, and, of course, they are big into groceries now, so that changes things, but i think -- of all the things that we're look at the consumer is relatively the best off. >> finally as you're talk, 30-year back below 2 the i mean, how long can we sort of just deal with this, a long bond with the one handle >> well, you know, as rick santelli has said over and over again, it's a little bit out of our control. the rest of the world is moving yields down, and you're almost getting caught up in a vacuum with it. >> all right art. thanks we'll watch the action this afternoon, and we'll have nvidia to kick around tonight as well
as well as amat, right >> i'm going to cover that personally, carl that's how much i care. >> must-watch tv there for "closing bell." >> that's been the space to watch and ge will be a topic of discussion this afternoon. >> yeah. >> as it's down double digits. let's get to wopner and "the half." >> carl, thanks. i'm scott wapner stocks in the midst of a terrible week. fears of a recession sending shock waves through the markets. is now the time to buy or beware of an even bigger pullback it's 12 noon this is "the paveltime report. >> finding safety in the turmoil, and looking for opportunity in the volatility. five areas of the market to ride it out walmart soaring. the retail soaring crushing estimates and raising its outlook. is this the ultimate consumer stock to own if you're worried about a recession and the trade war? ge getting whacked a whistleblower raising red flags abou