tv Power Lunch CNBC August 15, 2019 2:00pm-3:00pm EDT
remains slightly quote unquote normal territory there you have it again for the ten-year below 1.5 pesce. just a moment ago. that does it for the change. i'll go join tyler for "power lunch" which begins right now. >> kelly, thank you very much and welcome to "power lunch. here is is what is new at 2:00 for a thursday with wall street whiplash. stocks on a bumpy ride as the trade tensions with china remain on high alert. we've got the details for you. plus, the it's prime time for retail amazon's prime day create iing shopping frenzy for everyone even rival walmart so can a strong consumer send us back to record highs in the stock market plus, electric shock ge sink iing after a madoff whistleblower says the company is a bigger fraud than enron and world com combined we'll tell you why he says the company is heading for bankruptcy "power lunch" starts right now
let's check where we stand on this wild markets day stocks taking a dive in just the past few minutes, now down 130 points all the major indexes reversing at the ten-year yield hits its lows of the day. and that is a sign of worrisome growth ahead let's go to bob pisani hi, bob. >> hello, tyler. again, markets roughly tracking bond yields. take a look at a chart we've shown a lot recently the intraday of the ten-year versus the stock market here we saw a program come through as yields dip below 1.5% here we've been trading practically in lock step with those yields today. see the market here with the ten-year yield on the top there in the s&p on the bottom this is an intraday. and pretty much moving in lock
step i want to note two weak sectors today. retailers are continuing to get slammed today. macy's gap, l brand, all down another 4% these all of them are down about 20% this month i want to highlight transports common theme here. logistics and trucking like jb hunt and rooyder ryder, all wear today. rough month for transports all down double digits so far and we're just halfway through august back to you. >> thank you very much so with bond yields screaming and trade tensions rise iing, w should investors do with their money? david kelly is chief global strategist with jpmorgan funds and john is chief investment strategist with oppenheimer asset management david, what are bond yields telling you and what did that very brief two-hour inversion of the yield curve signal to you if anything >> well, i think bond market is
is a little bit hysterical here, but it's because of a wave of money around the world looking for a home and i think just pushing down these yields. i don't think the inversion tells us we're heading for a recession. i think it's a bit of a broken barometer, but there are lot of other traffic lights which are flashing orange, also. i think what's happening is the trade tepgss are catching up with the market and i think people realize it's slowing global growth and this uncertainty raises the risk of recession to its highest level since the 2008 debacle >> john, usually, we don't import recessions from other countries, but right now, there are forget what article i was reading this morning, there are a number other countries right at the flat line of growth or negative growth. germany, great britain, brazil, mexico argentina. what would the transmission mechanism be for a recession to
come from overseas here? >> i don't think it would be based on what's happening right now. i don't think you can imply that there's a recession around the corner based on what the bond market is doing. have to agree david. it might in some way increase percentage chance of a recession. and you can't help but notice an amber light on the dashboard, but relative to what the bond market is doing, this reminds me of when the bond market thought yields were going to rise in the fourth quarter of last year. if you remember we were at what was it r, three and a quarter some time in november and we had been last year, we had a number of times the ten-year was over the 3% market. now with other country, you have to look at the id owe sin cattic problems within those countries as well as you have to considerf
physical versus monetary stimulus usually, you'll find a kind of an odd pro and negative on that kind of thing. where they're not participating and the u.s. we've got fiscal stimulus occurring via re relatively accommodative fed president wouldn't agree with that and you've also got good opportunity here if you take a look and you consider the position that we're in related to the trade war at this point isn't that bad based on the economic data we're seeing >> david, i asked you what you think is the catalyst for the last 20 minutes or so, where bond yields took this fresh dive, ten-year below 1.5% and it's back there now in the stock market selling off more, too >> well it's very hard to know what moves the bond market minute to minute if it's clear stock market is fall uing, the bond market here. but over all, this is about trade tensions it's difficult to get a global
recession. only one or two things that can cause it one is a global financial crisis and the other is trade every country exports more gdp than we do germany, taiwan, korea japan. these are big export power houses and they're getting hurt by the same disease right now. so this is a particularly bad way, you know, bad illness for the global economy and that's what's hurting the whole global economy. it is hard if r us to import recession this way, but we're doung our best >> and there were headlines this morning, the european central bank, david, had an official come out, talk to the "wall street journal" about how in september, they're preparing major stimulus >> preparing major easing, i have no idea how, why they think that would the stimulate anything it's absolutely ludicrous they didn't look at the transmission mechanisms by which low interest
rates are supposed to stimulate the economy. it is not working and they should you know stop doing that and talk to the germans perhaps about fiscal stimulus in germany which is one area that could prudently expand its deficit given its economic and debt position >> john, david does not think the inverted yield curve is an infallible predictor of a recession, but he believes that the odds or like likelihood of risks of recession are rising and it's time to become more caution. you take the other side of this argument as i understand it. you remain overweight u.s. equities, favor cyclical sectors which would suggest a growing economy and you think defensive sectors are overbought expl explain why you say stay with it >> tyler, one thing the current embrace of defensive sectors by many investors has been b going on for months now. i think for most of the year and
within cyclical, within the cyclical space, you've got to consider just suppose we get an agreement, some kind of resolution with china. we don't propose going to be a heaven on earth kind of solution but something akin to or on parallel to the assault agreement that happened many years ago between the u.s. and soviet ewan yoyuewan youunion. in this case, parallel to trade as opposed to limiting nuclear ballistic missiles but what we think is is, if we get a trade deal with china, you're going to see a 180 degree turn in terms of expectations and protections, global growth, u.s. growth. >> doesn't that feel like a big if >> i don't think so. and every day that china doesn't come to the table or can't agree, find a point of an agreement with the u.s., what it
leads to is is more companies are changing their plans in terms of their trade, their trade route. moving away from the china supply chain and when you look at that, that is a compounded effect that china's bound to recognize. very smart and they're looking at that i'm sure relative to the u.s., the president's got an election coming up. i think he's going to, isn't he going to be in new hampshire on thursday lot of action here all kinds of things preparing for that then on top of it from both side of the aisle, there's bound to be a push for drug pricing as well as take iing a look at infrastructure, which are areas that voters would probably like to hear about and they'd like to get away from worrying about are my consumer goods going to cost me more after christmas. >> let's show the mexican peso swr mexico did cut its overnight rate from 8% to eight and a quarter. as we see and have seen global
central banks doing this all along, what does that do to add to the bond market, global bond market rally and does it help or hurt efforts in the u.s. to achieve some kind of policy stimulus >> well, it hurts efforts because of course currency manipulation sa zero sum game. while one of the only positives you could say for the u.s. cutting interest rates here is it might lower the dollar from too high a position and help our trade. so i think emerging markets are taking on the chin of this and the rest of the world is getting hurt by this but we need to be careful. i think this is hurting china more than the united states, but i think they can take the pain more and there is not, there isn't an election in china in 450 days it's in the united states. and i think they're thinking let's just wait it out >> all right, gentlemen, thank you very much. david, john, back meantime to bob pisani at the new york stock exchange hey, bob >> and of course we're still
watching market near the lows for the day. i want to point out the yields when the ten-year broke through 1.5%, we saw some sell programs come through we have pointed out many times, very close relationship between bond yields and stock markets. just been calling around try in to see if there was any catalyst i understand the bank of mexico may have cut its interest rates 25 basis points. trying to confirm. that may have been a potential catalyst dwe trying to confirm that now we saw heavy volume in predictively in certain etfs associated with the bond market. ief is the seven to ten-year if you put it up, the exchange traded fund for the seven to ten-year, some of the other longer duration bonds also spiked up on that news tlt, the 20 year plus i saw a lot of volume going through on that. you see the spike up
now the move down. tlt. the 20 plus bond etfs. so all these have fast volume here just prior to 2:00 p.m. eastern time and again, guy, just trying to track down the source of the move it may have been othing. may have been a lot of pressure on the markets overall, but i want to check that move from the mexican bank central bank >> thank you very much robert and rick santelli is tracking action at the cme some and has been some action lately, rick >> oh, there's action every day and today's action's particularly interesting as you look at an intraday chart of boons, we've seen they plumeted before their close. what was going on there? i'll tell you what my version of story is finnish governor, bank of finland, also a rate set iting b member, did a "wall street journal" interview several hours ago and basically i'll paraphrase what he said. he said many may be surprised at the stimulus that's coming in
the september 12th ecb meeting this follows a pattern lately of the ecb getting in frontof everybody. whether it was putting pressure on power before our meeting and these issues are really at the epicenter of what's going on with interest rates in foreign change and all of the connectivity there so if ecb is going to give more stimulus at the basic end of mario draghi's tenure before we get new leadership of course, then that is going to put even more pressure op the markon the markets. what happens is speculators institution, much buying goes on in front of these hints about more qe, more stimulus. that brought boone rates down rather democratically. the euro currency also followed. how can does that correlate with tens listen el arian said it this morning. many respects since all stimulus
is spongeable, the ecb is is setting policy for many of the central banks in the world by making the first move in the chess game then those hints being much activity into that sector and that pressure's rates and puts pressure on other central banks to try to make sure they keep up so their currencies don't appreciate you can see our dollar is still firm and that's one of f the lynch pins in how the counterintuitive nature of this story as the fed tries to get ahead of weakness, but they really end up doing is losing a bit of control not necessarily their fault, but dollar denominated funding issues around the world think emerging markets keep coming back from this back loop keeping the dollar high. this may sound perverse, but for many who may want central bank control to moderate and the markets to do more, what they do best, i think in order to see that happen, you're going to end up when it occur, seeing the dollar slip.
don't see that in place at this time >> rick thank you. rick santelli at the cme as we watch some extremely important levels in the bond markets this afternoon. want to also keep an eye on shares of ge, which are plumeting today on pace for their worst day since the crash of 1987. today, a whistleblower who gained fame for warning about bernie madoff's fraud is warning about a fraud at this company he calls bigger than enron. morgan bren ennan is joining us with r more. >> yeah, this is definitely a developing situation quote a big r fraud than enron and worldcom combined. that's what he had to say about this earl yerl today and in this report for general electric's accounting, 169 page report that was out. as you mentioned, shares are plunge iing on the allegations which ge's accounting fraud aamounts to $40 billion.
he joined us on cnbc today take a listen. >> ge is losing $5.27 for each dollar of premium income they're taking in. that's unsustainable and growing. for 2018, they grew at 60% going to make this company probably file for prupsy >> so markopolos arguing ge will need more in long-term care reserves, including 18 billion requiring cash immediately also tied to baker hughes. he discussed the gcas business on the network with us today as well ge responding to this report detailed this morning, but larry making a very pointed statement a few moments ago as well, calling the report quote, market manipulation, saying it contains statements of fact and if these claims could have been corrected if he had checked them with ge before publishing the report
also argue ining about accurate financial analysis given the fact he didn't reach out to the company. so that he and his undisclosed hedge fund partner can personally profit and he's working with an undisclosed u.s. based hedge fund shorting ge right now. is is not giving us any of those details or what name so that certainly, that tie seen as a conflict of interest is raising eyebrows on. none the less, when you look at the long-term care business and ge's history of accounting and its financials, it is not necessarily surprising to the analyst -- or more issues being raised where the company's numbers are concerned. we'll see. we're going to keep digging? >> it was also known that
general electric write ent righp to the edge in many ways they were aggressive in terms of their accounting, but the individuals who ran ge, whether it was mr. flannery and his team, mr. culp and his team and immelt and his team, they had to know that by signing financial statements, they were pledging under penalty of going to jail that those statements were accurate and correct >> yeah. yeah and i think when you look at what's going on with ge right now, i mean you have regulators who have been investigating the company from several different agent issicies who have been lo at their accounting practices and long-term care insurance for example. the way they've looked at their industrial services, revenue businesses and some of those long-term contracts.
so certainly, there has been investigation into this company. it continues to be ongoing ink one of the most surprising things today with mark the report and what he had to say on b cnbc is the fact that he allegations that the current executive team and his team who have been in place since last october, are basically just as guilty of quote unquote cooking the books as those previous executiexe executive teams before him strong statements, but we'll see how all of this plays out and how ge counters. certainly this is a company that has historically not always given the most detail about its finances in its financial accounting practices and in its earn, they've tried to lift the veil and get more transparent, but as this report alleges, there's still more to go here. so we'll see right now, the stock is really plunging and we'll see how this plays
out. >> on that note, i want to share a comment from stanley about general electric he was short the company on and off for a lot of the recent past and was not a big fan of previous management, but he said i believe in culp. culp bought the stock earlier this week. druken miller says i have bought stock today. a big voice of support for a stock that is very heart hit today including by these allegations. shares are still down b about 12%. they are under $8 at the moment. coming up, the bond market has been flashing a major recession warning. if not an infallible one, but what are economists saying a rapid update on the economy is is next and retail sales were better than expected walmart reports strong results will the consumer hold steady and retail problems, or are retail problems more about the decline of the mall. "power lunch" will explore that
up .2. a lot of data yet to come, but second quarter tracking 1.9. we're down to where economists think we ought to be, which is roughly trend growth for the economy, but some think we're hotter and to your point, stanley is at 260. right there around the median at 2.2. gold mman sachs, bank of americ 2.1. deutsche bank, 1.6 big spread not unusual this time really only one month's worth of data in for the quarter. we track what is is tratracking every time a piece of days in, it goes to the model why? because there isn't a perfect model, but the median does a better job 2.1 is where we're tracking and we'll be following it closely. t not 1, 0, negative >> pretty good >> it's not what the bond market is >> it's not amazing, but if you had said in the fourth quarter,
hey, the market, remember when we sold off the lows, initial concerns about recession and that we would have a 3% quarter. what was it 2.1 bizarre how much of disconnect there is thanks talk about the retail sales report, better than expegted in part thanks to amazon's prime day. and walmart saw a boost to its own sales thanks to its rival's event. walmart is up. not everyone is benefitting from retail's prime time. tapestry, the owner of coach and kate spade down 20% today. 24% now. on weak guidance and look at macy's, lower again today by 4.5 a% with us now to discuss this, senior analyst at googenheim bob, i'll start with you what's the read through from walmart for the rest of retail
>> i think walmart had a tremendous amount of momentum from the business and continue to execute well. the tougher the environment, the better position walmart is is. >> is this a a tough environment? because the retail sales report made it sound pretty strong. >> walmart's a big part of that environment and i think that they're taking share in many categories including grocery. the traffic's good their e commerce is good i think walmart's got its act together and a lot of people are being challenged by what walmart has, the successes and strategies they're in. >> what happens to the main line department stores? >> hi, kelly well they continue to struggle i think, i mean the other thing we're seeing, you ask if the consumer was healthy yes, the consumer is very healthy now. you see that in walmart's numbers, the quarter, the com compscomps accelerated then you see all these retail upstarts like the
real real and revolve. even a newly public grocery store called grocery outlet reported i think it was yesterday. their numbers were really good so there's growth out there, but it's not in the department store space. that space continues to be very, very difficult >> patrick, what would happen, what could cause the consumer to become more timid? >> well, i think what's going on now with the stock market, the volatility in the market, the sudden tweets from the president about china and the way the market has been are reacting, tt gets picked up by main street as well as wall street and we're heading into the final stretch, back to school only three month frs the official r start of holiday shop i that could hurt and there's growing talk out there b about recession. so consumers pick up on that as well >> all right bob, when it comes to macy's,
which i believe you cover, what do they need to do now this is getting xes tennell. they need to come up with something major, don't they? >> the traffic issue in the malls remains challenging. they're try iing a lot of different thing, but continue to struggle >> i noticed they rolleded out the bloomingdale's subscription as a service box they have that brand maybe a better position in the market to pull on, but are we talking consolidation? you know are we talking about monotizing the real estate i mean at some point, when they're down, what is is t, 60 plus percent and trading at $60 a share, what do they need to do so they're not the next j.c. penny? >> it's about driving the top line and driving traffic into the stores you talked about the subscription model they have a partnership with thread up in terms of resale of
clothing the various initiatives, so they have a lot of things they're doing. it's opinion a really tough environment for that traffic scenario, the mall base d retailers. >> what would you stick with you mentioned the grocery outlet and some newer players on the scene. these recent ipos, people want a more proven business model do we need to wait for that? is this the future of retail now? >> well surgeonly i would stick with eququalify like walmart and target names i'm no longer a south side analyst so these are not stock recommendation, but slirn those names. yeah, these names that get beat up the high flying retail growth names that get beat up on a real big down market day. those tend to bounce back quickly.
some names like you just mentioned. the faster growing the ones that are r sort of reinventing retail so much going on right now in terms of artificial intelligence delivery et cetera, et set ra there's growth out there, but not in the mid area of retail, which is primarily the department store space >> bob and patrick, thank you so much appreciate it. >> a new record low on the 30-year yield today. came below 2%. so is the bond market overreacting to whatever weakness there is in the economy or is it really suggesting that a recession is around the corner and the cisco inferno. earning say iing it's getting burned by the trade war with china. the cisco inferno, coming up from fidelity. oard a visual snapshot of your investments. key portfolio events. all in one place.
nation team. ma matt -- the charts would indicate that his ttorically, we stock move it is the way it does, it moves lower still, right? >> e yeah, it does it's amazing every time the report the stock goes bonkers this is the 13th quarter in a row where it's seen a big gap. sometimes up, sometimes down this time, it's down i think it could go lower. tends to stay down at least for a little while, but also broke a key level. it's 2i level, the low from may and june so that lower low tells us we can go lower however, look iing at the 44.5 level is a great start to buy it ths a 38.2 retracement, sorry, the rally from 2016 and or the trend line from the summer of 2017 comes in. so if the broad market sees another flush move, another washout, i think 44.5 would be a great spot to buy it
>> as you say, that's not that much lower than where we are now. at 46 and change mark, you like, you think the guidance was the main problem here and you like t on evaluation basis >> yeah at the end of the day, it's a great large cap company to own got a strong balance sheet and that's really important when you're late cycle. earnings weren't bad pretty much in line. right down the middle of the fairway, but guidance was week their revenue growth was much, much lower than it's really because of the macro issues. global growth slowing. trade, all that stuff. so there's some head wind here, but here's a stock cheaper than the s&p 500 with a higher yield and they're in a position where mergings are likely to expand because they're going to continue to generate more and more sales from software and services so i think it's a great long-term buy. >> thank you very much appreciate it. and for more trading nation, head to our website or follow us on twit ter at trading nation.
and ahead on "power lunch," "the wall street journal" editorial board releasing a harsh op-ed on the economic impact of trump administration's trade policies what are they are drupi idubbin navarro recession. plus, chip stocks are getting whipped around a top analyst says there's more pain ahead and speaking of trade, one u.s. company was set to become the first ever u.s. american rice export rer to china. now that deal could be on the back burner. all this when "power lunch" returns.
democratic presidential contender pete buttigieg calling out congressman steve king for his comments on rape and incest. in iowa, king questioned whether humanity would exist if not for rape and incest. it's extreme hi disturbing and i would think anybody who said something that extreme would resign, but i doubt he'll do it so we'll just have to beat him the old fashioned way. thankfully there's a terrific candidate in j.d >> tiffany is hoping to reach a new mer base with a new line for men. this fall, they'll launch its first comprehensive men's collection including necklaces and bracelets. prices will range from $20 to 1500 and pair of handmade nike track shoe frs the 1972 olympic trials has sold for $50,000. dave russell says they were just sitting in the rafters of his garage for a long time only ten pairs were made and
they were sold to a hotel chain building a nike themed property. that's the news update this hour back to you. >> i think those were the old waffle trainers with the waffle pattern on the soles back in the days of '72. bill bauerman. >> they were called moon shoes >> no kidding. moon shows >> because of the craters. the waffles created craters. >> thanks. you know your shoes. >> i do. let's check on the markets the dow fighting to climb back into positive territory. it got there it is there. look at that 23 points higher it did drop about 100 points at the top of the hour. that was as the ten year yield broke below 1.5%. it is back above at 1.525. >> just barely now in a tweet earlier this afternoon, president trump said the u.s. quote will soon be winning big on trade and
everyone knows that including china. but "the wall street journal's" editorial board begs to differ they've slammed the trade policies, dubbing the potential downturn quote, the navarro recession. how should investors knave ga navigate the fallout steve, how likely is recession, how worried are you and do you blame trade policy >> i don't think the recession is particularly likely trade policy could induce one at some point, but i don't think anything we've seen so far will create one and also, we've got incredibly low interest rates, which are continuing to go lower that's good for the economy. we just went through a quarterly earnings season that went very well with most companies reporting better than expected earnings revenue growth and earnings growth were both good. better than people thought there was going to be. i think the economy is fine. i don't see an issue >> larry, what about you it is interesting we're all looking to these falling in
negative bond yields as a kags nair sign. if we were assured the xha was o okay, i guess we could take it as a positive. zpl ths right. the turmoil we're seeing are clearly sending a cigal that a secessi recession is knocking on the door small business owners are taking a more defensive measured approach if you're in the shoe business in boston, 70% of imports are comeing from china if you're in the lob b center business and you're selling lobster to china, business is down 70% but you see what the consumer did in a consume ir driven economy, the consumer did not get the memo on the recession. consumer is alive and well >> larry -- it's interesting you say that because you know the journal's talkingicy and the bi the latest round of tariffs is
that they would hit the consumer we've delayeded about a half to two third, but still over $100 billion is going into effect september 1. why hasn't there been a bigger impact on the u.s. consume r? is it because it's just not that large? >> i think so. the biggest challenge for the economy is the tightness the in the labor market the consumer feels secure about their security they know they can get a job if they need one. the a b global issue if we realize how much better off we are than europe, europe's six to 12 months ahead of us they've got negative interest rates. they're looking at potential for an infrastructure bill in an election season, that becomes irresistible for politicians not to r consider. it's the only card trick that hasn't been played by our politicians in a populous world, going to drive the economy that gives individual investors an opportunity playing defense does not mean playing dead it means looking for opportunities in this
volatility and there's lots infrastructure stocks have been b given up for dead. there's lots of opportunity. a weaker dollar means foreign assets up in value. so i think we have to look outside the box and start thinking differently in these row bow infested waters. >> so steve, a growing economy is is built largely on confidence consumer confidence and business confidence and both can be very fragile. when the stock markets a lot of money the way it did yesterday, that gets investor's attention all the talk of possible recession. that gets consume r's attention and all of the whip sawing on trade makes it very much more difficult for businesses to plan wouldn't you aagree? >> well, let me add a different take and that is that i think investors for certain should not get so wrapped up in the day-to-day activity of the market i think the markets can be very,
very volatile. i think you have to look at the overall economic facts interest rates are very low. the economy's doing well there are lot of stocks out there with significant dividend yields that investors could buy. you could easily construct a portfolio yielding more than 5%. a whole host of equities. exxon mobil. ford motor at&t all yielding more than 5%. so i don't think the markts's that expensive and i think investors should just play it for the long-term. >> that really wasn't my question my question really goes to, it really goes not to what investors should do. but it goes to, to how consumers and business leaders may react to, to unstable conditions that they see >> well, i think even businesses tend to have a long-term view right now. and yeah, we had a little bit of volatility this week our rates are catching up with
europe and with japan. i think that's more of what's going on in predicting a recession. our interest rates have been the ally so i don't think this volatility to answer your question will really affect the ultimate decision making by businesses or consumers that greatly this last week no >> all right thank you, guys. appreciate it. larry, steve, thanks for joining us and it has been an awful august for the chip stocks semis getting slammed on every negative trade headline. the smh down 6% in august and even bigger decline for nvidia that one down 11% and that company reports results after the bell the chips are down on "power lunch.
august has been a month to forget for the semiconductors. it is one of the worst performing groups in the market. that is why we have such dark lighting on the screen it is all dark it is darkness descending over the semiconductors one of the victims, nvidia and shares down 11% since the beginning of the month when president trump threatened additional tariffs on china as the company gears up for earnings report after the bell, let's talk it through. one analyst doesn't back down, mitch steves from rbc capital market and invida with a bright target thank you very much. i love the travel guides you write. just kidding led's talk about nvidia. what are the numbers this noon. >> we're looking for data center to miss, around $20 million off so around 650 and we think game lg be in line, and benefit from
$25 million of cryptocurrency mining and then finally for the guidance that is where the expectations are low for the july quarter but anything close to in line will be enough as long as the gross margin are close to 60% for the guide. >> so in line a a-plus in your view, basically? >> i thinkin line is good enough considering the results from intel and the other i.t. providers and cisco. expectations are low this is a consensus short into the print. so if that is the case, it means expectations are well below where the street is now. >> why is the stock suffered so much over the past year? >> over the past year it is primarily the cryptocurrency they talk to doing $600 million in cryptocurrency and we have a revenue of $1.2 billion and that ended up causing negative preannouncements back in january and i think the october frame as well it was a negative guide down so now that you're going off the easier comparison, that is out
of the model, it should be data center, core gaming business and switch revenue that will work in its favor now it is coming off the lows from the cryptocurrency pull down. >> and what happens, mitch, is the u.s./china talks hang in the balance and the stocks are left at the whims of them >> yeah, at the end of the day, you can't do anything about what trump is going to do or say or tweet. i think that is impossible so all can you do is wait for that to get resolved and at the end of the day be exposed to the best tax toin individualia and if you look over five years as long as you're bullish in the future, you have to be long nvidia so i won't try to predict what trump will do with the u.s. and china but if they get a resolution there, i wouldn't be surprised if the stock goes up 10% or so. >> on of nvidia, how important
is the gaming business to them >> i would say the majority of the value is in data center, 60% of the focus is on data center and 30% on gaming and the remaining business will be about 10%, primary auto business but auto and self-driving vehicles doesn't start until the end of 2020. >> thanks, mitch we appreciate your time. despite china's edict against u.s. agricultural products there is one company ready to be the first u.s. company to send rice to china. contessa brewer is at sun valley rice in arbuckle, california as they wait to hear if the order is canceled. >> this company sun valley rice grows, mills and distributes rice and they export to places like europe and the middle east and japan but never sent it to china. no u.s. company has. but they want to badly. for one reason, u.s. rice is
considered a premium product it is short grain and considered a luxury and affordable luxury for the middle class in china. and china is the biggest rice market in the world. consuming 36 times more than the united states. sun valley founder and ceo ken legrand has spent more than a million dollars in 15 years trying to open up the chinese market in june, amid this trade war, grant lant -- landed his first ever contract. despite the ban on agriculture he's optimistic the chinese government will permit him to move forward >> the indications that they're giving our customer which is really who they work with are all green lights we're a licensed supplier, we've been licensed by the chinese government as a supplier so nothing's off track there >> reporter: the harvest ripens at the end of september and if
this deal remains a-go, the first shipment will be tiny. 2% of what they ship in a week but the potential here, the u.s. rice industry is a $34 billion industry and the profit margins are slim kevin legrand tells me 3% to 5% and he's hoping in china he could double that profit margin but that depends on a trade truce. >> thank you contessa, we appreciate it in arbuckle, california. just over an hour left in the trading day. could get busy folks much more on the markets coming up after this.
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welcome back as we watch markets here the main news of the afternoon has been what is happened in bond yields. the 10-year interest rate be low 1.5% and 1.38% in the 30-year. >> and below 2%. i heard mohamed today say something in some quarters inflammatory, now is the time to load up and do a big infrastructure project at 1.98% and pay for it that way. >> you have people calling on the u.s. to issue 50 and 100-year debt and screaming there is no fiscal discipline so that agitation will get worse. >> this remains to me a very headline vulnerable market this morning the market moves up
on the news that china -- they might have heard that song, just meet me in the middle. if you meet us in the middle maybe we could get a deal done and sent markets higher on monday it was other stuff and on tuesday it was other stuff that sent the market gyrating. >> and watch europe and the ecb, what they do in september. thanks for watching "power lunch," everyone. >> "closing bell" right now. >> welcome to the "closing bell" i'll will fred cross it is already a volatile day for markets and individual movers, including ge tanking some 11% after the company was accused of fraud. coming up exclusively we'll hear from a board member. the chair of the audit committee no less. 59 minutes left to go. so much to discuss >> i'm morgan brennan in for sara eisen, let's look at what is driving the action. conflicting tariff news as china and the u.s. attempt to set the news for trade dea