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tv   Worldwide Exchange  CNBC  August 16, 2019 5:00am-6:00am EDT

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it is 5:00 a.m. at cnbc global headquarters. a wild run wall street on pace for the worst week since may could a friday rally turn around those fading fortunes? trade truce. could that be ahead? president trump trying a new tactic to get his chinese counterpart to the negotiating table. and pressure on powell, two key fed heads are pushing for another rate cut sooner rather than later and not if but when. billionaire hedge fund manager ray dalio out with new odds for a u.s. recession before the 2020
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election and general electric's ceo wants investors to know he believes in the company after the stock suffers its worst day of trading in a decade find out what he's doing it's friday, august 16th "worldwide exchange" begins right now. ♪ good morning i'm courtney reagan. brian sullivan is reporting live from hong kong, a very global show this morning. brian, a busy weekend coming up, right? >> yeah. this place could be electric it could be rocking later on tonight. we're in a public park in hong kong the reason we're here is that there is a major rally, yet another one, expected for this evening. it's called the power to the people rally it will feature a speaker named
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joshua wong. he was really the leader of the 2014 protests. he ended up going to jail. they're setting up the stage there. in a few hours, 8:00 p.m. here, 8:00 a.m. your time back east, this should be filled with thousands or tens of thousands of people. the question for the cnbc audience, the question for the global markets is what is the reaction going to be what is the reaction of the hong kong police? what will the reaction be of the chinese government and potentially the peoples liberation army. we showed you a bunch of trucks lined up over the border in shenzhen yesterday will they respond? how will this rally end? it is scheduled to be a peaceful one. we'll be here all night. where we are right here, these are a number of wall street firms, they are in the buildings behind us. this is a high-end shopping district you have high-end stores over here the question everyone is watching is how will this play out. ultimately also, courtney, how does this whole thing play out
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all these protests entering their 11th week. we'll find out where they'll go. coming up, we'll hear from an investment banker who will talk about why the political future and the financial future of hong kong are intertwined they are one and the same. that's why we've been here the hang seng has been dropping for weeks. >> thank you very much, brian. back home, here is how your money and the global markets are setting up their friday morning. stock futures are indicating a higher open. we're higher by 250 points the s&p 500 higher by 28 the nasdaq higher by 97. that was the only one of the three major averages that ended negative yesterday the blue chips on pace for the worst week since may and invests are continuing to focus on the bond market we had that inversion earlier in the week, flashing that recession warning sign we keep watching that.
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the two-year note yielding higher than the ten-year note. the 30-year falling to its lowest level the two-year at 1.519. the ten-year, you can see it's higher, but just by a bit. 1.554. we saw that dip below the yield on the ten-year to hit a new low. let's go worldwide and check in on how things were going while you were sleeping. in asia, mostly higher markets just slightly for the nikkei the hang seng higher by almost a percent. the kospi, the outlier here, down 0.6%. in europe, a technical glitch actually delayed the start of trading on the uk ftse the issue lasted more than an hour the longest outage since 2011. everything is up and running now. no word on what caused the glitch you can see the ftse 100 is higher after that delay that's higher
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the german index is up as well as france. joining me now is cnbc contributor peter boockvar what a week we've had futures right now indicating a higher open. we're setting some potential red records this week as we end the week for the major averages. what should investors be expecting today? is this a relief rally that could be counted on if this holds? >> i think the headlines that trump and xi are actually speaking again, we have been hearing this, it's been going on for a year now when we hear about constructive talks, they have not been that constructive because there's no deal both sides, unless they're willing to compromise, there's unlikely to be a deal. all this data that has been soft outside of the u.s. consumer data has people worried about growth that's reflected in the yield curve. so the rallies will be
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questioned the selloffs will be feared. and until there's more clarity on trade, until we see what the fed will do, certainly what the ecb will do in the middle of september in terms of where global bond yields are, markets will be on edge. >> it's amazing when we think about what's going on globally of course we're focused on the u.s., that's where we sit. argentina lost half of its value in one day earlier this week we're seeing global markets obviously flashing some warning signs. how much should we be reading into that for the action in the united states when we're looking at indications of economic slowdowns. >> we are in the longest expansion on record as we know when you're this deep into it, you have to watch your back. you have to ask yourself, okay, we've never done this before in terms of length of expansion what's going to hurt it. what will kill it? typically it's the fed that kills it or it's some sort of government policy now we have the fed, we have nine legacy rate hikes and the
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quantitative tightening that's filtering through and we have this trade fight that's slowing global growth. we have government policy that is now trying to kill this economic expansion >> though kashkari and bullard are suggesting a rate cut sooner rather than later. >> that's the fallback position. weak growth, cut rates the problem is they're not analyzing what will likely be the ineffectiveness of cutting rates. if you're looking to buy a house, the bond market cut rates by 100 basis points. has it helped home purchases not really it's helped refinancing. we have unaffordability issues also so monetary impotence will be a problem. they have to be careful about
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cutting too much i don't want them to repeat the mistakes of the boj and the ecb of damaging their banks and getting trapped at the zero bound and the negative bound >> i want to take a minute and have you listen to something ray dalio spoke exclusively with cnbc, out with odds for a u.s. recession before the next election take a listen. >> of course recessions are always inevitable. the only question is when. >> do you see one coming >> yeah. i think in the next two years, let's say prior to the next election, there's probably a 40% chance of recession. and i think that you're seeing this around the world. what do you make of that 40% chance >> the manufacturing and trade side is already in a recession the u.s. consumer is keeping us out. the question in determining whether the u.s. economy goes into recession is what does the consumer do. that will be determined by hiring and wages and the stock
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market you get a stock market decline, you tip over the consumer. you get further weakness in manufacturing that spills over into services, you get a slowdown in hiring, a slowdown in wage growth, a crimp on consumer spending and you get a recession. i would say the odds are higher than that because of where we're going here and the inability of central banks to save the day. the biggest stimulus plan we can have now is getting rid of the tariffs. >> peter boockvar, thank you for being with us. shares of general electric are trying to claw back some of their massive losses from yesterday. frank holland joins us with more ge is up about 1.5% this morning after the stock fell 11% yesterday. it the worst day since 2008 the move follows the report that larry culp bought nearly $2 million worth of stock
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this comes after ge was accused of being a bigger fraud than enron. in a report they said ge will be hiding the extent of its accounting issues, especially from the long-term care position culp said the accusations are false and driven by market manipulation, pure and simple. leslie sideman also pushed back on the report in an interview on "closing bell. >> i think the report is full of opinions, and this is one of those cases where i'm not sure that the author of the report really understands the accounting in this area. we have generally accepted accounting principles, then we have statutory accounting principles, then we have other people who just, you know, inject their own opinions. >> ge's accounting practices are under investigation by the department of justice and the s.e.c. related to its insurance business and problems in its power division
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the company has denied accounting fraud in response to lawsuits and says it is cooperating with investigators >> that's a story we'll keep following. when we come back, the art of the deal. president trump out with a new tactic to try and salvage trade talks with china, linking negotiations with unrest in hong kon kong >> see china a humane way solve the problem in hong kong i have a lot of confidence in president xi i have no doubt he would solve that problem quickly and hong kong is where we find brian sullivan. he has more. hi, brian. >> hi. in fact, we're here at one of the scenes of a big political rally. tonight this will be filled behind us. coming up, we have breaking news, one of hong kong's leading executives reportedly fired over the ongoing protests it's the intersection of politics and finance in hong kong and china tethbrk.ve that news for you afr e ea
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. welcome back to "worldwide exchange." i'm brian sullivan we are live in hong kong where later on, in a couple of hours, 8:00 p.m. local time, 8:00 a.m. new york time there will be a protest here called power to the people we are expecting speakers, including one of the leaders of the 2014 protest movement, a fella named joshua wong.
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this should be filled with tens of thousands of rallyists, protesters, demonstrators, later on tonight we'll be here. in the meantime there continues to be a lot of news as the situation remains fluid. it looks like we have the first and largest executive casualty of the intersection between these protests and pressure from beijing and the mainland chinese government moments ago there was reports that rupert hogg, ceo of cathay pacific airways resigned from the board and his position as ceo. we have to get more information. the reality is cathay pacific airways, the biggest carrier in hong kong has been under incredible political pressure because two of their pilots were fired for proceeding to have supported the hong kong protests a lot of pressure coming down from the beijing government saying cathay pacific, you need to remain apolitical or support us you can't have your pilots doing this moments ago rupert hogg
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resigning as ceo of cathay pacific. now, this gives us the perfect avenue towards the intersection of politics and finance. we've seen the hong kong stock market fall the last couple of weeks. we've seen the u.s. market get rattled. yields have come down. our market is volatile in part because of what is going on here and all under the overarching umbrella of the trade war. earlier today we spoke with an investment banker who has been doing business here for decades. i asked him is there a way to separate the political and the financial future of hong kong? >> you can try to, but ultimately it's about investor sentiment and peoples individual perceptions as opposed to fact what is sentiment now and how has it changed the last couple of month >> for the first time i'm talking to people who are long-term residents here with significant capital here, and they're thinking maybe they'll get another residence somewhere else >> where >> some of them are looking in
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asia themselves. some of them are looking at australia, new zealand, canada others are look at going back to the uk >> so there you go let's dive now more in on this topic. joined by grant strudwick. thank you very much for joining us first off, i want your reaction to the news that the ceo of cathay pacific resigned/been asked to resign or fired from his position at hong kong's largest airlines do you think he'll be the first of many political casualties in this fight >> thanks. it's quite unsettling news to hear of that resignation we're well aware of the difficulties that cathay has been facing over the course of recent days. our advice to companies has been to take a neutral position to
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support their people in their quests to have their own opinions, but also to be careful around how those opinions might be linked to their company brand. and to make sure they don't partake in illegal protest action, which is part of the issue with the pilots of cathay pacific. our message to companies is to very much keep peoples comments private, and not to link them to the companies, which can bring about further scrutiny, if you'd likers like, as we saw with cathay pacific. >> there's a story today that the star of mulan, the hit disney movie, is facing a backlash in hong kong because some pro hong kong police comments she made in the media, social media, got everybody riled up here. it's easier said than done what advice would you give to the ceo of a hong kong-based
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company or an american, british, aussie company operating here to keep their employees from getting intertwined in politics? >> i think it's a case of encouraging their people to first of all not to express their views on social media. also to ensure those views are moderate they're not extreme. they're trying to keep their views that are de-linked from the company position that is easier said than done. the issue here is that the higher someone is in an organization up the senior management chain the more difficult it is to de-link those comments made on social media to the companies themselves people need to make sure they're maintaining social media discipline and they're not linking their comments in any direct way to the company brand. it's a challenge we've had recent discussions
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with clients that are finding that those people, they want to encourage them to have views, and have them in an open and democratic way, but to keep them within the bounds of legality and not partake in illegal protests and to message that sentiment across the social media platforms. >> how do you see this ultimately playing out i think there's a feeling that maybe a hope in beijing and in hong kong that when september comes around, many of the protesters here later tonight, they're college students, college restarts, they will fritter away and go back to school how do you see this ending do you see this ending peacefully or with the hong kong police and/or even the peoples liberation army having to quell it >> there's a lot of speculation as to what will occur, when will this end, how will this end. the important thing that we are saying to clients is they need to expect some degree of protest
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action to occur into the medium term, and they should be prepared for managing the risks over the medium term some are looking much longer term now, but we're fining those that are concerned about the current situation are concerned about the physical risks of business continuity. they're concerned about their peoples safety i think we see that we will see some protests into the near future and they need to maintain the current status of caring for their people, advising them cautiously about how they get involved, and ensuring they as an organization are always managing all of the risks from a tactical to a strategic level. we are speaking to companies doing just that. they're looking at the situation but thinking longer term now, about the long-term implications >> grant, thank you very much for joining us on "worldwide exchange." thank you. courtney, easier said than done. there will be tens of thousands
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of people here later on today. i guarantee you, many of these people are college students, but we've seen protesters of all ages if you're a company like a cathay pacific, the task of keeping every one of your employees from not coming here, not publicizing it, not being vocal on social media, whether it's twitter or webo or whatever it is, it's nearly an impossible job. i think the ceo of katcat catha pacific found that out the hard way a short time ago >> brian, thank you. stay safe while you're there in hong kong. still on deck, the chips surge. why shares of nvidia are set to soar after a wild 2019. and breaking down two sdifrnt sto different stories in the retail space. what walmart is doing that macy's is not. at comcast, we didn't build the nation's
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let's check some of the big stocks on the move nvidia's second quarter profit and revenue fell but still beat forecasts. the graphics chip for video games is bringing the business back to normalized levels. this comes amid the backdrop of a slowing industry
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nvidia shares are higher by 5% in the early going. applied materials third quarter revenue topped forecasts but the chip equipment maker doesn't see a recovery in the memory chip market spending by customers was lower in the quarter than a year ago that stocker is higher by 1%. and shares of dillards are down sharply the department store's second quarter revenue missing forecasts. same-store sales fell 2% as higher markdowns and lackluster sales for women's apparel cut into profits dillard's shares down almost 10% premarket. still to come, president trump says the trade deal with china could be over quickly, but our next guest says not so fast. and much more from cnbc's exclusive sitdown from ray dalio. his take on interest rate cuts and why they may not be enough to stave off another u.s. recession. "worldwide exchange" is back after this cards right-
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welcome back to "worldwide exchange." we are at the scene of what is going to be a protest, maybe a large one later on tonight in hong kong. if it seems at home that the volume of protests, not just this year but in years past has ramped up, it has. in 1997, of course, you had many protests about the handover. that was expected.
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2003, you had some fairly large protests occurring in the streets of hong kong in 2012 and then again in 2014, all the way from september to december, what they called the umbrella revolution or the umbrella protests. this year, april, it began, 130,000 marchers, then 1 million and more than 1 million in june. not sure how many we'll get here tonight. we'll be here all day on cnbc covering hong kong and the markets at home. we're back on "wex" after this
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brand power. helping you buy better. futures pointing to a huge jump at the open as investors wrap up a wild week on wall street. a u.s./china trade truce we'll bring you the latest headlines from washington and beijing. and a legendary hedge fund manager sounds off on the global economy, the fed, and whether china could be weapon izing its u.s. treasury holdings it's friday, august 16, 2019, you're watching "worldwide exchange" on cnbc. ♪ welcome back thank you for being with us on this friday morning. i'm courtney reagan. brian sullivan is reporting live in hong kong much more from brian in just a moment but first i want to get you up
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to date on what's going on around the world in trading. we're halfway through the 5:00 a.m. hour. futures are pointing to a second day of gains after a wild week for wall street. the dow on track for its worst week since may as investors flo flocked to treasuries. futures are pointing us higher by 245 points on the dow we have four hours go until that opening bell sounds. the yield on the ten-year is sitting at 1.566 watching that level as well as the yield on the two-year, 1.523. the 30-year yield back above its all-time low of 1.916, which was hit yesterday. it's sitting just above 2% for the yield on the 30-year let's check the asian markets. we saw mostly higher closes with the exception of the kospi that's down 0.6% hang seng higher by 1% in europe there was a technical glitch that delayed the start of trading on the uk ftse
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the issue did last for more than an hour. that was the longest outage since 2011 the good news is everything is up and running now, but there's no word on what caused that glitch france is leading the way here -- no italy is higher by 1% president trump striking a new tone in his trade talks with china. tying those negotiations to the unrest in hong kong. speaking outside his golf club in bedminster, new jersey, here he is last night >> well, i am concerned. i wouldn't want to see a violent crackdown. i put a little bit of a memo out last night he's a man i like a lot. i get along with him very well president xi i said i would be willing to bet that if he sat down with the protesters, a group of representative protesters, i bet he would work it out in 15 minutes. he'd work it out quickly i know it's not the kind of thing he does but it wouldn't be
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a bad idea both sides of the story are covered for you this morning with eunice yoon and brian sullivan eunice, we will start with you first. thank you very much. beijing revealed its concerns that president trump could eventually link the hong kong situation to the trade deal. the foreign ministry had made some comments about president trump's previous tweets on hong kong saying that president trump had stated before that the chinese should resolve the issue by themselves without our advice and that china hopes the u.s. will stick to that china has long been repeatedly saying that the hong kong affair is an internal chinese affair. the talk now here is that there is a possibility that president trump could use hong kong as leverage in those trade discussions. overnight we heard president trump saying that he believed that the chinese wanted a trade
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deal, that the chinese were ready to ramp up their purchases of u.s. agriculture goods very quickly. he also stated that he and president xi jinping were going to be speaking on the phone very soon the foreign ministry wouldn't confirm that phone call. but there is a lot of speculation and chatter about what those two would discuss one prevailing idea is tha president trump is trying to send a message to president xi that the u.s. is being restrained, and that he himself is being restrained when it comes to hong kong but at the same time his mind can change on hong kong quickly if the two sides don't make a trade deal. >> i think his mind can change on a lot of things quickly that's the least of what we've learned about this president eunice, thank you. let's get over to brian sullivan who is live in hong kong eunice mentioned a resolution.
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what are the pos asible outcomes that could happen in hong kong >> flip a coin we don't know. by the way, every time we take a step forward there's things that happen president trump recently just appointing a uighur american diplomat to a post uighurs are an ethnic minority in china who many claim are being repressed by the chinese government you have trump making nice words about president xi jinping, who is on a retreat the last week or so at the same time doing things like that appointment which are sure to get the ire of the beijing government one step forward, one step back. how ever you want to frame it, i don't know time will tell how this plays out, whether it fizzles out as all the students behind us tonight will go back to college, or will it be done by force, hong kong police, maybe the pla, the peoples liberation army.
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and we showed you those trucks they amassed about 20 miles or so that way from here. one business angles you have to watch, i'm kind of stepping and talking my own book here is oil and gas. here's the reason. china's oil imports have surged in the last year much of that coming from saudi arabia and perhaps iran. china importing about 9.5 million barrels a day, up 10%, 15% from last year if what happens here slows down this economy, if it slows down the chinese economy, if the trade war does that, if natural forces do that, we could see the chinese importing less oil, and when you already have an oversupplied market prices could continue to come down. if you care about u.s. jobs, the u.s. shale oil boom, 12.5 million barrels a day, millions of jobs directly and indirectly tied to that, if oil prices go down because china softens, the impact could be felt not just in
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beijing, shanghai or hong kong, but in midland, texas and williston, north dakota. it's a global economy and the price of oil and gas has a lot of jobs in industrial production, steel tubing, trucking, shipping, all at stake. >> global demand a very big important part of that oil picture. thank you very much, brian we'll talk about trade and geopolitical news now with caesar rojas and clayton also joins us clayton, we talked about the positioning of the united states administration with president trump and president xi we have president trump saying, hey, the trade war will be short. then we have president xi's folks saying let's meet halfway. we can do this does that suggest to you that china thinks united states is not as strong as perhaps we think we are here in the
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negotiations >> i think it does that suggests the chinese look at trump's position and see he has a weaker hand, maybe not just economically but more importantly politically. i think people try to assume that trump is playing three dimensional chess more than he is most of what president trump is doing is intended to benefit himself politically, set himself up for a 2020 re-election. i think the chinese realize this and see his move to delay tariffs as a clear sign that the trade war is starting to weigh on his re-election chances, and that weakens his position. the markets and invest pay close attention to any tweet that comes out, any headline with trade and china. today we're higher, but it's been a very wild and rough week if you're bullish for the u.s. stock market what do you think investors need to be prepared for when it comes to china's potential retaliation? >> the view is that there could be unconventional measures that could be taken either reduction in treasuries,
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the renminbi, or a ban of exports or rare earth materials. to the extent we continue to see a continued and protected trade war between the u.s. and china, our view is that investors need to prepare for continued and persistent uncertainty >> that makes sense. can i talk for a quick second about president trump and his criticism continuing of the fed, chairman powell. he wants us to cut rates further. what do you make of all of that? what do you make of the positioning of the fed they continue to cut rates, at least they did, which is what trump wanted he wants more. if they cut again, is that a dangerous position for them to be in? what we've been highlighting is that the u.s. financial and mick conditions are basically allowing for a more aggressive trade stance why is this? we still have robust growth.
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we still have relatively high equity markets we have now prospects of lower interest rates two of the drivers were lower broet pr growth prospects and higher trade uncertainty. so there are possibilities for additional dovishness by the central bank, we expect that will reinforce the aggressive stance been the u.s. administration on trade. >> we're going into the weekend. a lot of uncertainty this week what is your expectation for the commentary between the two countries, between the u.s. and china and what would you suggest all of us brace for? >> i think the first expectation is that you're likely to see trump continue to push forward this message of china wants a deal, it's because of the pressure i put on them they're willing to meet my
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demands. all of that is a way for him to reassure his base, reassure his political supporters that this is all going to work out well for them i think that continues we continue to see or we still won't see really any strong confirmation of continued talks or potential changes in the chinese position i think the chinese at this point are waiting and seeing where do we go from here does trump renew the temporary gem license license on huawei through the 19th, and i think they'll hold back a detailed response until they get those things in hand. >> still a lot of uncertainties and unknowns gentlemen, thank you for being here to help us try to get a better handle on things. coming up, has the death of retail been greatly exaggerated? what walmart's big beat means for you and your money our expert guests will tell you atich names to watch th's coming up next on "worldwide exchange.ent.
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retail earnings season is officially under way walmart shares jumping more than 6% yesterday after its results topped estimates president trump took motus tweeting that the retail giant is a great indicator of how the country is doing and touting walmart's outstanding numbers. joining me now is jan kniffen. walmart had great numbers, macy's, not so much, tapestry was hit hard is the consumer strong or not strong >> the consumer is very strong >> okay. >> unemployment the lowest in 50 years. nonsupervisory wages are rising more than 3% a year. that's a healthy consumer. they're not overlevered. there's nothing going wrong with the consumer
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there's plenty going wrong with mall-based retail. the problem is that people are not going to the mall. they're not going to the mall not because they don't have money, but because they're not happy with the shopping experience, they're buying online they're buying from walmart or target or amazon qu who would have thought walmart, amazon and target could be doing well at the same time. >> you said macy's ceo is doing the right things you wouldn't know that if you looked at the stock price performance. >> jeff is doing the right things yes. macy's has too many stores, they have too big boxes he's going through and putting in all kinds of lease departments in the boxes he has off-price going into the boxes. they're doing the right things they're growing nicely online. it takes money to do that. macy's will be the last mand standing in department stores, but they're tied to the mall and
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mall traffic is dropping about 7% per year and has been for ten years now. it's not going to change that will continue to happen we have 1,200 closed malls macies is doing the right things, we're not sure that's enough what are they pays like a 7%, 8% dividend now that's no danger these guys have great cash flow. they buy back stock. they're doing all the right things, yet it's not enough for the marketplace. >> okay. so help us do some homework for what's to come next week we have a lot more retailers to report it sounds like you think target will turn in a decent report is that because they're doing the right things because the consumer is strong a combination of the two >> longer-term i like amazon and walmart better than target shorter term they've done all the right things they've gone through and increased contribution from online, they've invested in online, they invested in sprucing up the stores, they've done a better job with stock
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outs they've done retailing 101 and the strategic part well. i think they're a small player in that space. and i think that it's hard to compete against amazon and walmart when you're trying to do it online and out of stores, because walmart owns the stores, amazon owns online and they're both trying to own each other. that's hard if you're in the middle of it longer term i'm not as optimistic on target but i'm optimistic for now because i believe all three of those players are gaining market share and winning gain in the minds of the consumer >> so the consumer is fine, they have a lot of choice so up your game to get those dollars. >> and you shouldn't be upping your game if you're investing in retail on the mall people in the mall are losing traffic, they're losing footsteps, they're not well positioned to play online. that's going to be a tough thing if you're a mall-based retailer. a lot of these people reporting
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next week are mall-based retailers. >> okay. on deck s recession on the horizon? ray dalio has a major warning about the stated of the ecomony. what the bridgewater founder told cnbc next
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it's time now for the executive recap. general electric's ceo larry culp buying another $2 million worth of stock in the company.
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most of his latest purchase came after harry markopolos yesterday called the conglomerate a bigger fraud than enron japan passing china as the largest foreign holder of u.s. debt in june japan holds 1$1.1 trillion in u.s. treasuries. china has been slowing its purchases with some speculating beijing could use the action as a tactic in the trade war with the u.s. and bridgewater founder ray dalio says there's a 40% chance of a u.s. recession before the 2020 election. and in an interview with cnbc, the hedge fund manager said bigger interest rate cuts are needed from the fed. >> i think you will see greater interest rate cuts as you start to see the world economy starting to slow down. i think you're seeing that being led now by the bonds in other words, long-term interest rates are falling faster than short-term interest rates.
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and that is inverting the yield curve. when that happens, it means that cash is more attractive than bonds. and as a result you tend to see then the movement towards cash and the slowing up of lending. so we have a situation in which there's a lot of pressure to cut rates. >> for more of the interview with ray dalio, head to cnbc.com joining me now is patrick palfrey from credit suisse thank you for being with us today. i will pick up on part of what mr. dalio said, believing there's a 40% chance of a u.s. recession before 2020. what do you make of those odds >> when you look at the indicators, i understand why he gets there right now we believe there's some interesting dynamics which are impacting it primarily the fact that the long end is falling because the industrial data is slowing and because there's a global
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overseas reach for yield someone in germany or japan is coming to the u.s. to get yield on the portfolio that's sort of suppressing the long end of the curve. the curve may not be the best indicato indicator. when we look around the spectrum, ism looks healthy. the consumer looks great it's partly an indicator there's a lot of things to look at >> we talk a lot about the consumer 70% of gdp is tied to consumer spending activity. could the consumer prevent a recession? >> absolutely. when you and i go out to the mall, there's still people in the store shopping we go out to denne dinner, ther people eating in restaurants we're at a point in the cycle where people are being pulled in from the labor market who weren't in the job market before that means people are getting raises and more people are getting employed >> i feel like your outlook is
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rosier what would you be advising clients and investors? longer term we're optimistic we're not heading in a recession. over the next one to two year's, the deceleration in industrial data makes it deaf cult for stocks to do well over that timeframe. for those people with a longer horizon, it's a great opportunity. for those looking over the next one to two years, we need to see the ism manufacturing, industrial production. we need to see that stabilize. we're not seeing that now. >> all right patrick, thank you for being here today we're approaching the end of the hour let's head back to brian in hong kong you have a couple fun things to talk about maybe fun isn't the right word but out of the box things. we talk a lot about manufacturing. all the things here in the united states that we're importing that are made over in
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asia you found an example the other way around in hong kong. >> yeah. it's an example that a lot of people who will be here later tonight will not be happy about and have not been happy about. just to wrap it up so we'll be here all night we're here in a public park where in a few hours we expect thousands, maybe 10,000, maybe 100,000 rallyists, protesters, marchers, demonstrators, they will be listening to speeches. it's called the power to the people march it's starting to fill in already. you're referring this, the protesters have a lot of macro demands. they want the ceo of hong kong to resign. they want elections. one thing they also want is for the u.s. government to stop allowing sale of tear gas here that's right most of the tear gas that we have seen in videos around here being put on protesters is made in homer city, pennsylvania. so we talk about products made
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in asia imported to the united states unfortunately the tear gas here that has been used on protest made in pennsylvania some of the protesters say listen, u.s. government, we need your help a lot of ways, one way you can help us is by stopping the sale of tear gas from pennsylvania into hong kong. that's one thing as well we talked about cathay pacific, their ceo resigning. probably forced out of that airline today. tw two of their pilots were fired earlier for participating in the rallies. we'll be here all night. we'll see what the reaction is that's what the global markets and the world's eyes are watching, how is this handled? how is it handled by the hong kong police and by beijing or the peoples liberation army? will they come in? will the protesters remain peaceful a lot of questions the answers will be developed throughout the night >> brian, thank you for doing this for us. keep yourself safe over there in
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hong kong. that's it for "worldwide exchange" this morning futures are higher as we get closer to that opening bell. dow indicated higher by 250 points "squawk box" begins right now. good morning the dow on track for the worst week since may put your rally caps on for the start of this friday we're set for a rebound. ray dalio out with new odds for a u.s. recession before the 2020 election. we'll show you what he said in an exclusive cnbc interview. and general electric's ceo is putting his money where his mouth is again, i guess, buying ge shares after the stock suffered its worst day of trading in a decade. it's friday, august 16, 2019 "squawk box" begins right now.
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♪ live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box" on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is off today. our guest host is joe lavorgna great to see you >> thank you >> have a lot to talk about. questions about recession. >> yes >> we'll jump into that in a moment are you worried about recession at this point? >> not as much as everyone else, because i'm of the view that the fed will save us temporarily >> we'll dig deeper into that question it looks like u.s. equity futures are reacting positively. dow futures indicated up by 250 points, after the dow eked out a gain of almo

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