more to his apple position wishes he could only the entire company like we talked about with tesla i think this stock is going a lot higher. >> he has been loading up. >> he has been loading up. >> we say the dow is off its worst levels of the day. it's still a 200-point decline that does it for us thanks for watching. "power" starts now. >> i'm melissa lee a sell-off on the street turkey's financial crisis one factor, but china may now be the biggest con ttagion risks shares of macy's getting battered despite its earnings beat what's going on there and the other retail names and saving capitalism. elizabeth warren unveiling her plan to redistribute trillions of dollars from shareholders to the middle class she spoke to our own jim cramer about that should a company have more than just a responsibility to its shareholders "power lunch" starts right now

and we do welcome you to "power lunch." i'm bill griffeth. stocks are posting their biggest one-day decline since late june. the dow dropping below its 50-day moving average. we were down about 330 points at the lows of the day. utilities are bucking that trend, posting strong gains today. telecom is also trading higher the emerging markets, etfs and chinese internet stocks are getting whacked on those china fears we have been talking about. we will drill down on some of those names in just a moment and check out a couple of individual movers today. shares of ge hitting a nine-year low below $12 a share. constellation brands plunging over word that its buying

cannabis. i'm michelle caruso-cabrera. let's get straight to what's driving the big sell-off at this hour bob pisani is at the new york stock exchange. >> on the surface a lot of this is about contagion concerns on turkey but overall it's really about slower global growth here's where we stand, the major issues turkey a contagion, indonesia raised rates proactively to stave off any contagion, argentina raised rates it was a big shock when tencent reported a decline in profits year over year chinese tech companies don't do that that reignited concerns. you can see what a strong dollar and slower global growth does to these commodity names. look, this is today. we're way past 20% declines in a number of these names. this has been going on for a

while, partly on that strong dollar, but slower global growth energy, we've got oil right at 65 we're ready to crack $65 on oil. it doesn't matter what you're looking at oil services, oil drillers, big oil like conoco, it doesn't matter everything is down 4% to 6%. again, this is just today. i'm not even taking for the whole week emerging markets, we've been talking about that for a long time you can see what's going on here eems down, that's down 10% in the last week and a half south africa, brazil, chile, it doesn't matter the whole emerging market world is down 2% to 4% more so if you are commodity or export-related in the kmaut tco field. that's why south africa and brazil are a little weaker overall. sector leaders as you heard there, how often do you see utilities, real estate, consumer staples and telecom. these are relatively small sectors, but again down six basis points on the 10-year, this is the kind of action that

you get. tencent's first profit drop in a decade taking down the other chinese internet names, capping off what has been months of pain for the group. dom chu is tracking them at the big wall. >> that's right. a number of these major chinese internet stocks like you and bob just mentioned at the middle of so much of the trading action today. tencent falling because of those sales growth concerns. also moves by chinese regulators to block the sale of one of its big gaming franchises. now, that tencent drop just adds fuel to the downside buyer in those chinese internet names here's what it comes down to, this is the stock everyone is worried about. alibaba, now down over 20% from its record high in june. important, because many consider it to be the bluest of blue chip names in the chinese internet. the amazon or the alphabet of the chinese internet xiaomi closing down 22% its high from last month.

baidu is down 23% from may so that's a big move lower as well. 10 ce tencent, we told you about those problems, 27%, and huya, a gaming streaming platform has lost half of its values since its highs earlier this year. so a lot of red. a lot of blood on the street when it comes to chinewhich chi internets. >> is china feeling the ripple effects from turkey's economic crisis >> turkey has been at the forefront of this currency crisis, but that's made investors more discerning of other emerging markets like china. now, china's $14 trillion economy matters much more to global markets it's 15 times the size of turkey we've already seen signs of a slowdown the chinese yuan declining 9% against the dollar since mid-april. the last time we saw such a pronounced move in the yuan was

in 2015 when beijing responded by tightening currency controls to temporarily stem the decline but it had longer term negative implications the concern is that emerging market countries, which will use similar measures to stop their currencies from falling, in addition to raising rates. this morning turkey's banking regulators reduced the amount of swap market contractsto offshore banks that they can undertake. it's a move that should discourage short selling the lira is seeing some relief today, up by around 5% there's also a report that qatar has pledged about $15 billion in investment to turkey michelle, that could be an interesting twist in this whole story. will the middle east use this as an opportunity to help some of these distressed nations as they look to diversify away from oil. >> we asked about the spillover effect is turkey spilling over into china. you can look at china the last six months and wonder if china's problems are its own we started to see corporate defaults there there's a lot of signs before

turkey went in the tank that they might be in trouble. >> what also helps them, though, is most of their bonds are chinese yuan denominated what does hurt them, though, is this trade battle. it makes their exports less appealing, perhaps, to the rest of the world. >> thanks, seema. >> so let's talk more about this fears about the emerging markets and china's slowdown fueling today's sell-off, i guess. how worried should we be at this point? joining us, lisa erickson, head of traditional investments at u.s. bank wealth management and chad from washington crossing advisers this is when we get into deep waters when we try to come up for a reason every single day for a market move. yesterday nothing happened and we were saying -- >> the lira has recovered. >> exactly but today we're getting this sell-off here. so big your bogey. >> strap on your seat belt this is a garden variety of

emerging market meltdown we think that it is specific to turkey although china does have issues, credit growth is decelerating, even though those central banks are loosening up the credit line, it doesn't look like there's enough demand. so we're advising investors to lighten up on emerging markets or avoid it altogether, stay dollar denominated and that this can last several months. this doesn't have to last several trading sessions. >> do i hear a warning that u.s. stocks could be affected while that goes on >> well, yeah. our call is that u.s. stocks, it's a low return environment and you can see long end to the yield curve continue to rally. this could accelerate. you're going to see global growth fears over the course of the next several months. >> there's been so much time, so many words, so much ink spent on whether or not there's going to be contagion for what's going on in the emerging markets. do we need to go that far in order to feel the impact on stocks that are sitting pretty

close to record highs in a monetary tightening cycle? could it just be an uptick in the dollar, a slowdown in china, that roils the stock market here >> we're actually advising our clients to really stand pat. while certainly there's a number of developments we want to continue to watch, including some of the news that we've been talking about, if you step back and look at the overall economic picture, on a top down basis for the u.s., things actually look fairly good. so as we monitor our u.s. economic dashboard of both concurrent and leading economic indicators, what we actually see is that two-thirds are still in positive territory then you go to the bottom-up picture and look at the underlying companies and again, earnings look very solid, estimated coming in at 20% for 2018 and still decent for 2019. >> so this is an isolated issue for turkey, number one and china's slowdown isn't going to affect us that much or not? >> well, certainly we do need to watch the global developments and what's going on in the global economy

if we look more broadly, we do see signs of softening, both here in the u.s. and globally and even a little more so globally you do have these one-off events we believe it's important to monitor. if you look at turkey specifically, it's a small percent of cap and also gdp, but there is basically the main thing we need to watch going forward is ongoing investor reaction and whether that raises risk aversion levels certainly china is a much bigger issue and so that is one we want to watch. >> so i hear you say, okay, the dashboard for u.s. economy looking good, et cetera. but to chad's point, is this going to be a high return environment or a low return environment? >> so we see it as a modest return environment so i'm going to pick my place in the middle here right now where we are is really neutral on u.s. equities we are advising again our clients to stand patton their positions, not to panic, because certainly there's a lot of positive things, but there are risks that we need to monitor. >> all right, we won't panic

then lisa and chad, thank you both. >> that's what we do on cable, though we're euphoric, we panic. >> it's always the extremes, right? >> today's big sell-off comes as investors get their first big piece of data about growth in the third quarter. steve liesman breaking down the retail sales number. >> the good thing is i have no idea what you guys were talking about. the market has other things on its mind it would appear other than u.s. data because it was mostly all strong, including retail sales for july and second quarter productivity i'll get you those details in just a second. it all amounts to putting together another strong quarter for u.s. growth. here's the rapid update. we have nine economists right there now, gdp estimates 3.3%. this is the first big range of data the range is 3% to 4.3%. q2 is down a tick from the 4.1%. let's look at who is where here. atlanta fed at the top 4.3%.

moody's at 3.7 they put it together for us. amherst right in the middle and oxford and mufg at the bottom. note june was revised down to 0.2 at strong for july, 0.6. clothing strong after a weak couple -- past couple of months. food and drink as well department stores had been weak, bounced back this month. there it is, retailers where the internet folks are and gasoline prices still high so gasoline stores did well as well. productivity for the second quarter also the strongest in three years and also production, showed good manufacturing growth this third quarter, it's officially going to be reported by the government october 26th that's the last gdp number

before the november election assuming people are swayed by things like economic growth, which i don't even remember except a lot of people talking about it. >> and i guess we'll get a jobs report too on that friday before, right? >> i guess so. >> november 6 is election day. >> then it will be. >> thank you, steve. >> pleasure. my palms are nice and dry. >> take your word for it. sell-off on wall street right now. retail is getting whacked, even though macy's reported better than expected. really good numbers. onat is wrg? we'll tackle that next, here on "power lunch." this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's.

shares of macy's tumbling more than 10% today even though the company reported better than expected earnings in sales this morning. courtney reagan looking at that for us right now >> i've been looking. >> and you're still looking. >> all the analysts say that profit taking is the reason for the sell-off macy's shares had gained 36% since it's last earnings release in mid-may macy's shares down double digits the price is just about where it was a month ago. the sell-off did begin premarket when only we had the main financial metrics at that point, all of which by the way beat analysts' expectations revenues beat. down slightly from last year, down 1%. comparable sales increased half a percent when analysts thought that would fall. macy'supping its full-year forecast i spoke to the ceo and he said

macy's strategy and a strong economy drove sales which improved throughout the quarter. july was the strongest month, may the weakest after the friends and family sale shifted into april online sales are up double digits so that's 36 quarters of double-digit growth there. transactions grew across the stores with subsequent foot traffic in what he called good shape. didn't give us a number. he also said most categories from dresses to jewelry to men's and kids were strong and macy's is selling more at full price with the average price per item up 5%. so that's good gross margins, a little weak if you want to pick on that, but that's kind of it. >> you know, i'm reminded when archaeologists come upon a structure they can't figure out what its purpose was, the default answer was it must have been for religious purposes. so now when we have a stock that goes down for no apparent reason, profit taking is our default answer. >> the folks that study this day in and day out and get paid to

figure out these moves, that's what they're saying. >> the same thing we said about home depot on monday, right? good numbers, bad stock. >> what's funny about home depot in particular, i had our folks here run a kensho analysis because home depot does beat so often. the last five years for home depot on the days that it beats earnings, it's actually only up 60% of the time. so that means 40% of the time it's down when it reports good earnings sometimes these things happen, right? >> for more on macy's let's bring jay and brian. brian, i'll start with you, is it profit taking >> for religious purposes. >> it is profit taking i mean i think you said stock up 100% from a year ago it was trading at 3.5 times ebitda the market was worried it was

going to survive so i think you do have profit taking. remember, comparisons get tougher from here. so there's a lot of investors who are locking in those gains worrying about what's going to happen in the third and fourth quarters when that's really when the retail recovery started a year ago so i think that's what's happening to the stock today. >> that's an interesting idea. is it possible this is as good as it gets >> i'm going with religious purposes yes, it's certainly possible they're looking at it saying last fourth quarter even for macy's was really good it was macy's first really good quarter so they look at it and go we get one more quarter of good news and then we have to deal with the fourth quarter. >> those are tough kaumcomps, i other words. >> on the other hand, we've got the best consumer we've had in 25 years how is it not going to be a strong fourth quarter? the setup is good for the fourth quarter unless something happens. tariffs isn't going to make the difference we didn't have the tax cut for either the retailer or the

purchaser in retailing we're going to see a strong fourth quarter unless we get some really weird event and nobody is betting on that. >> the dilemma is we've seen a rally across the board for retailers this year. how much of it is already in the stock. the anticipation of a strong fourth quarter, here we are, brian, we talked about home depot. here we are with macy's, pretty good quarter, the stock is down. how many more stocks in your coverage universe are you concerned about having good earnings, but the stock will trade off? >> yeah, i think that is across the board here people are going to want to see -- yes, the third quarter, we do have the hurricane compares remember, some distribution centers were disrupted, a lot of stores were closed early september, so we have that i think as we head into the fourth quarter, people are going to want to see how can we comp the comp think about it, you're the brand new cfo, it's your first earnings call, you're thinking

about giving guidance. of course you want to give conservative guidance for growth margins in the back half of the low. keep the bar low they raised earnings 20 cents and think there's 25 cents potentially upside beyond that you can't blame the ceo for giving gross margins that are conservative. >> retail has come through the dark cloud all these stocks are up dramatically yeah, we're talking about sell-offs but we had you on and were wondering how many of these guys are going to go bankrupt. >> that hasn't changed i still have 20 on my list that might go bankrupt. i still think it will be record store closings this year and record bankruptcies this year. that doesn't mean macy's didn't have one heck of a good number. >> does that mean macy's is right sized? >> macy's is and kohl's is and there's a lot of people that will benefit from this a lot of people won't.

>> jan, brian, thanks. warren buffett added apple and two big names, cutting stakes in tesla. we're going to whale watch, as we call it we'll tell you who is buying and selling. energy is the worst performing sector in today's sell-off, wti is off about 3% and that's dragging exxon, chevron and the other energy names down with it we'll discuss more as "power lunch" comes right back.

three of tesla's biggest

share holders cutting their stakes even before elon musk's tweet about going quiet. here's a look at what all the big names are buying and sellers. >> t. rowe and fidelity both slashing their share in tesla. the company surged almost 30% in the quarter so it's likely they were looking to capture some profit there tesla off about 4% in the six weeks since quarter end. amid confusion over the last weeks over the potential take private and regulatory concerns over tesla's announcement or potential announcement there is very little hedge fund ownership in the long side with just over 1% of the company, but it's been among the most popular shorts with 27% of the float held short other big moves in the quarter included berkshire hathaway continuing to add its stake in apple. warren buffett's firm booted std

its ownership by 5%. he told cnbc in the past he'd own 100% of the company if he could. >> that would be a lot of money. >> a lot of money. >> we'll let you get back to your whale watching. coming up, we will debate the future of capitalism, nothing less senator elizabeth warren saying companies need to be accountable to more than just shareholders we'll hear from her coming up. and we're also watching today's big sell-off of course chevron, caterpillar and boeing the worst performers in the dow. choronhearkets when we come back. t when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. my dbut now, i take used tometamucil every day.sh it traps and removes the waste that weighs me down, so i feel lighter.

try metamucil, and begin to feel what lighter feels like. whenshe was pregnant,ter failed, in-laws were coming, a little bit of water, it really- it rocked our world. i had no idea the amount of damage that water could do. we called usaa. and they greeted me as they always do. sergeant baker, how are you? they were on it. it was unbelievable. having insurance is something everyone needs, but having usaa- now that's a privilege. we're the baker's and we're usaa members for life.

usaa. get your insurance quote today.

hello, everyone, i'm sue herera here's your cnbc news update at this hour. residents of an island in southwestern japan are preparing to evacuate as weather officials warn of a major volcanic eruption officials reporting repeated earthquakes deep underground this morning. according to the latest cnbc survey monkey survey, small business confidence continues to climb to record levels jobs and the economy have become

the top issues for companies. walmart is teaming up with ellen degeneres on a women's fashion line called ev1 set to debut on september 10th. it will feature 60 items ranging from denim, t-shirts bearing quotes by ellen, accessories, footwear, all priced at $30 or less. adidas is partnering with twitter on a new series of live stream high school football games all over the country it is called friday night stripes and will broadcast friday night games from september 7th through november 9th. that's the news update at this hour i will sending it back to you guys we've got a sell-off on wall street as global worries -- >> are weighing on markets we're still firmly in the check with the nasdaq feeling the brunt of the pain aztec stocks are really feeling pressure from the downturn in the chinese internet sector. we've got the dow down by 222

points, s&p down by 27 or almost a full percent and the nasdaq down 1.4%. now let's get to dom chu who's taking a closer look at stocks and the sectors taking down this market today. >> the dow was down 334 points at the low so far today. if you take a look overall at the movements that we've seen, you are seeing some of the s&p 500 get a little bit of momentum back to the upside but just in the last 20 minutes or so, we've seen that move again to the downside the sectors that are leading the way so far right now, we've got rau real estate, utilities, telecom the only one in the green, less economically cyclical. i want to hone in on energy because energy is far and away the worst performing sector out there as oil prices tank given that surprise build in u.s. oil inventories. that's going to be a huge one. i want to focus in on a couple of different places in the market a lot of traders are keeping a close eye on one of them is in technology if you look at those tech

stocks, the semi conductors specifically, smh, that's the ticker, one of the most closely watched funds in the space it briefly hit correction levels, down 10% or more from its all-time highs a number of big names trading in the red including micron down 6% and nxp, aploplied material, intel. another one to focus in on the home builders, itb, is down half a percent today, but briefly entered bear market territory some traders call it down 20% from its 52-week high late in january. among the names leading that sector to the downside you've got lenar, lowe's, kb home a lot of these guys down more than 1% so that home market continues to be possibly a bellwether, a canary in the coal mine for the rest of the market. if those home prices start to roll over. we'll see what happens to the rest of the economy. >> all right, dom, thank you

very much. let's take the traders' take on what's driving this sell-off today. joining us from my old stomping grounds, kenny, dried the coffee dry rub on the ribeye this morning. >> that was great. >> you had me drooling at 8:00 this morning and matt matt, i'll start with you, my skeptical friend what's this sell-off about today, do you think? >> well, you know, it's not just turkey, it's not just what's going on in china. you can make the case that it's oil. look at energy energy has really propelled this market to a new low after those oil inventory numbers came out so that would be one thing i would look at. that was such a bullish trade. people expected oil to have a massive rise we're not seeing it, it's breaking down and i think people are starting to get nervous. so that would be one thing that i would be looking at. >> kenny, what are you looking at >> well, the flow is like dom said, it's going to the fences

a lot of investors are taking advantage of significant price moves, certainly in the tech sector and taking money out of tech and putting it back to work in defense but the key has been turkey and where it's going to go and how it's going to spread, what it means for europe, what's it mean for places like italy which supposedly has big exposure to turkish banks so there's a lot of talk about the italian banks. but matt is right as well. look what's happening to commodities, look what's happening to oil we're getting a stronger dollar. is the economy really as strong as they say it is. >> what if it's china? we had a number of people on last week saying move along, whaur what you should be more worried about is china and the slowdown. >> it certainly might be more meaningful in tech you saw that in tech yet i don't really think -- quite honestly, it's that mood where people are just taking

anything negative and throwing everything out the window. whether it's turkey, whether it's china, whether it's oil, copper, commodities, they have taking advantage of the negativity and rebalance you can't discount china but you can't discount turkey either. >> what i'll be worried about, guys, and i'll toss this to you, matt, technology is a leadership group in the market. if you have technology feeling the pressure because of what we're seeing potentially in china, being led by chinese internet stocks and then you have banks also losing ground, you've got the two biggest sectors all of a sudden losing ground, facing headwind. what does that do to the overall markets, matt? >> we talked about technology being the bellwether, five or six stocks carrying us the first half of the year we saw a rotation in the financials financials have held their gains here in the u.s. for the most part now we're seeing a defensive rotation we're starting to see financials get a boost. we're starting to see some of those big drug companies start to get a boost today so they can rotate into a

defensive name we've learned that the u.s. has got a lot of leverage over china. we've seen how they have suffered so far this year and we haven't seen that suffering. i'm not so worried about china just yet i think they should be more worried about us going forward it certainly seems like we've got the hammer in this one. >> all you need to see are the 11 sectors of the s&p to get a sense of this market day when you see who's leading the way. when the dow is down 330 points, you've got green sectors in real estate, utilities, telecom i mean that's the very definition of defensive right there. >> that's right. >> i was going to say all of those respond to lower interest rates, people are buying treasuries and pushing the 10-year lower because of the defensive nature of it, right? so that feeds into the whole idea, kenny? >> it does, but listen, you could see this all flip around tomorrow we saw it even from monday to tuesday. monday the market was down, tuesday they rallied it -- or tuesday they knocked it down, wednesday they rallied it. today they're knocking it down

again so this could call change overnight. once again we'll see bargain hunting going on as people think maybe this move is a little exaggerated. certainly some sectors maybe not. maybe tech will suffer a little bit more but you're going to see a rebound in some of the sectors that have gotten unnecessarily beaten up. >> you would advocate bargain hunting here >> absolutely. >> because we don't know what's going on in turkey, but we're still lower from the open on friday >> right, okay, we're still lower, but look what's happened around the world yeah, we're going to get dragged down with it, but i think we'll be the first one to balance. there's a lot of opportunities out there as some of these stocks just got unnecessarily beaten up. >> i suspect that matt has some stock he'd like to sell you, though, if you're bargain hunting. good to see you both thanks for joining us today. twitter suspending alex jones over a tweet this comes before a big interview tonight on nbc lester holt sitting down with twitter ceo jack dorsey.

>> jack dorsey telling our own lester holt that the suspension of alex jones is a, quote, time-out and whether he felt the move seemed like a minor response, here's what dorsey had to say >> i feel, you know, any suspension, whether it be a permanent one or a temporary one makes someone think about their actions and their behaviors. >> you think alex jones is going to change his behavior based on a time-out >> i don't know. we have found that it does have the potential to change -- impact and change behavior so whether it works in this case to change some of those behaviors and change some of those actions, i don't know, but this is consistent with how we enforce. >> as lester holt notes, the video that got alex jones into trouble, a video calling on people to get their battle rifles ready against the media dorsey acknowledging that sent a chill up his spine and that his platform, he says, will not

allow calls to incite violence dorsey's similar follows similar moves by apple, youtube, facebook and spotify, which removed content from alex jones or his site infowars triggering that much broader discussion about the responsibility that big tech companies have overseeing controversial content on their platforms and products. >> do you know how much of that -- have you been able to see all of that? i'm very curious whether or not lester asked about the new editorial writer for "the new york times" who has on twitter in the past written some very, very hateful things and if that came up. i'm not sure you've been able to get full access to it. >> no. unfortunately, michelle, not full access for me yet but you can see the full interview tonight with lester holt there. >> we'll see if he asks about that it's on nbc nightly news with lester holt. thanks, josh. rick santelli is tracking the action at the cme. >> you know, bill, it's one of these interesting sessions where

everybody is coming in, lots of volume today in the treasury complex, much of it of course safe harbor type trades and everybody seems to be discussing the chinese stock market with regard to the most conversation around the water cooler. look at a two-day of 2s and open it up to july 17th because we haven't closed under 2.60 since the 20th of july we have a 2.83 low and haven't closed at that level since, well, right around may 20th, 25th i started that chart there because in july we had 22 sessions, from june 21st to july 20th where we were in the 2.80s. should we breach that and test that may low that was at 2.78, that would definitely change the tone of the technicals in this market i guess what i'm saying is we

have a lot of support under the market in the 2.80s and should we start to broach theach that,u might see a lot of aggressive buying going on as shorts decide it's time to cover. >> rick, thanks. coming up, another big interview today. jim cramer sitting down with senator elizabeth warren she's introducing legislation to reform capitalism. does the government need to hold companies accountable or should their customers do it? we'll discuss that next, on "power lunch."

senator elizabeth warren sitting down with jim cramer on "mad money" tonight discussing a bill she's just introduced the accountable capitalism act how does she plan to get more accountability into capitalism >> let's get these corporations to charter federally, the ones that have more than a billion dollars of sales every year, and

let's have a couple of features. the first one, let's put some employees on the board the second one, let's change the compensation structure for the ceos to say that the ceos will not be permitted to juice the price and then once they juice the price, make a quick sale, make a bazillion dollars and keep emphasizing the incentives. that's what we've got now, for short termism. i want to get rid of it. >> let's bring in jeffrey meyer, director of undergraduate studies in the department of economics at harvard university and a director of economic studies at the cato institute. good to have you here. >> nice to be here. >> i'm pleased to say there are defenders of the free market at harvard. i was getting worried there. >> very few of us. >> what do you think of elizabeth warren's proposal to, quote, save capitalism >> i think unfortunately it is seriously misguided. i think it will help to destroy capitalism the crucial thing is that this

new federal charter that most corporations would have to apply for and obey certain rules about compensation, about employee representatives on the board will create a whole set of new rules that the federal government will enforce. those rules will not be clean, explicit or simple they'll be messy, they'll be complicated. huge ability for companies to evade and avoid and for the government to enforce those rules is just a recipe for more crony capitalism, not for more productive capitalism. >> but you know what she's trying to solve, income inequality which has been established is growing so how do you solve that >> well, i think it's still an open question as to whether policies should be trying to reduce income inequality there are many reasons for income inequality. many of them suggest we should try to reduce it all sorts of government policies that create income inequality

don't make sense but it is not necessarily undesirable, it is what it is in any case, the right way to reduce inequality and the right way to help people who are very poor is through a social safety net of the kind that we already have that has welfare and food stamps and medicaid and things like that, not to interfere with capitalism, which is going to make a lot more people have low income and be poor, in particular by driving corporations out of this country to somewhere else that doesn't regulate them in this misguided way. >> and that's what i wanted to get at, jeffrey. you were talking about all the rules and crony capitalism that this would create as a side effect of this legislation, but ultimately what happens is companies go to places where there are the least regulations, that are friendlier to them doing business the u.s. in the end would lose out, right that's what you see, the extrapolation of this being? >> exactly there's lots of evidence from differences in tax rates on capital across states, across

countries over time. capital is mobile. it can move all over the world and it obviously does, for many reasons, but one of them is because of differences in tax rates and differences in regulation if we make it more onerous for companies to locate in the u.s., they're going to locate somewhere else and that hurts the group senator warren is trying to help they will have no jobs instead of jobs with wages that she thinks are too low. >> but the comeback is we still have the best rule of law in the united states. when it comes to enforcing private contracts, all of the things that happen here are a reason why on the left the argue that corporations should pay more and do more because our system is better and they can thrive here more >> but the question is whether this new regulation promotes the continued honoring of the rule of law or makes it worse, my claim is it's going to make it worse because it's one more way in which those that are more

ethically challenged, who are more willing to break the rules, more political insiders, will be able to circumvent these rules and those rules will only apply to the companies that are honest and law abiding. that diminishes their willingness to abide by the rules and that undermines the rule of law rather than promoting it. >> we had on the ceo of mars north america about a year or so ago. mars, very secretive company for years and then suddenly they were appearing on tv and we asked her why are you coming on cnbc here's what she said >> consumers who really are the ones that we're really, really watching, they want to know more about the companies behind the brand. so before we could talk through our brands now they're saying, especially millenials, we want to know more about the company. >> when we went on further with that discussion, it really became clear that answering the millenial desire for more social activism, for more statements about what a society should be

like was something that they were really thinking about, that it was a consumer-driven decision to be more -- explain more about the company what do you do in that environment? you know, the old days, milton friedman would say you answer to the shareholder. what about that, when your customer is demanding more political stuff? >> but those two things go together, the milton friedman view and the view that that ceo expressed. if a lot of customers don't like a particular company's lack of transparency, they can organize boycotts, they don't buy the product, they don't buy the stocks that drives down the value of the company and then the management and the remaining shareholders will respond to that by trying to be more socially responsible or consumer friendly or environmentally friendly or whatever the concern is we see all sorts of examples of that the mark et is a much better wa to get companies to respond to

investor and consumer needs than this top-down rule that will ending up just generating more insiders and less accountability >> you're not a stock market predictor or strategist, professor -- >> who is? >> but if such a rule were in place, would we see the stock market respond by going lower? n place would we see the stock market respond by going lower? >> yes, i'm not a predictor, but i think other things equal, it certainly should lower the value of the existing u.s. corporations and they will tend to respond to that by locating somewhere else as we discussed a few minutes ago. >> did you ever interact with elizabeth warren. >> we were colleagues but i never interacted the law school and the economics department department overlap too much. >> professor myron, thanks so much. >> my pleasure. >> they wouldn't have overlapped at all >> yes >> you never --

>> never overlapped either >> see the whole interview with elizabeth warren tune in to "mad money" tonight here on cnbc. >> wait, you went to harvard. >> yes, you knew that. >> you only told me a few times. >> you know some people call harvard square red square these days. >> all right down we go honda had to recall millions of cars due to faulty air bags. but even years later, many of those cars still have not been fixed. phil lebeau live in miami. i wondered what you were doing in miami you are hunting down those cars, phil >> we are, bill. what do you do if the people won't bring the recalled car into shop? you go looking for the recalled car. on the hunt for faulty and teiay deadly air bags. when "power lunch" returns this wi-fi is fast.

i know! i know! i know! i know! when did brian move back in? brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. honda had to recall 37 million vehicles with potentially deadly air bags. bye but five years later, thousands of models still have yet to be repaired phil lebeau is in miami with more on how honda is trying the find those car owners. phil >> bill, it's about going out

into the neighborhoods where you belief the owners live, finding their vehicles and trying to convince them to get their air bags replaced. we wpt out with some of the honda tombs here in miami they knocked door the door. sometimes they get people who say yeah i sold the car. sure i'll get it fixed we saw a couple of the repairs that were done when we were going along with these mobile teams. they have them in every state. honda has replaced 70% of the models that need to have a new air bag put in here's a little bit of the frustration that the teams go through when they are knocking door to door and not always finding the car owners. >> showed up to an incomplete address, spoke to the neighbor, got the direct apartment owner found the owner's son states the father no longer owns i. showed up to the site, vehicle is not on the side left marketing materials on the door went to the neighbor house with a vehicle matching the description. we knocked on the neighbor's door spoke to him and he

observed us to do repays on his vehicle how many automobiles are out there? the worldwide estimate is 35 million. the leading brand in terms of those who still need to have air bags radio placed. chrysler, over 4 million honda still has 3.6 million cars where they need to replace the air bag. what the problem is is the inflater that was made by takata for millions of the vehicles, in warm, humid conditions, as they get older they can explode and send shrapnel and metal into driver there have been fatales around the world linked to these air bags it is fascinating watching them going door to door we saw one where they looked at the air bag, took it off and

guess what there was no air bag in the vehicle. that's what happens when you have a used vehicle sold from owner to owner and owner, may have had a couple of wrecks over the last ten to 15 years. >> phil lebeau joining us from florida. stocks are lower off the lowest level of the session. will the rebound hold. tesla trading where it was before elon musk tweeted about the company going harvey former s.e.c. chairman harvey pith joins us. the second hour of "power lunch" is next.

i'm michelle caruso-cabrera. here's what's on the menu for the second hour of "power lunch. all the focus has been on turkey is it really china that visitors should be watching that's fuelling the fear today we will talk more about it. elon musk's tweet about funding secured could spark a big fight with the s.e.c. and could cost the company millions also potentially criminal prosecution. harvey pith is going the join us. missing out on the retail rally, walmart, the world's biggest retailer underperformed the industry down 8% this year. how about tomorrow's earnings?

are they going to turn things around. >> we have the preview, as "power lunch" starts right now >> welcome to "power lunch" i'm melissa lee. a selloff on wall street as international fears are hitting all three indexes. having their biggest drop since late june. the dow falling below it is 50 day moving average worst performing sector here, energy, as oil is tumbling materials also weak. on pace to close at correction levels with a lot of the metals, copper and zinc for instance at one year lows right now and a strong dollar. retail is also weak as macy's coal's gap and nordstrom are amongst the worst performers there. netflix is hitting their lowest level in three months. tesla falling again as questions continue withb the company's future. we begin with the markets

where oversea's action seems to be sparking the selloff. bob pisani >> you look at the major indexes and you say it looks like a general market takedown. everything is down about 1%. the russell 2000 the nasdaq, the s&p, everything is down 1% each the mid cap down about 1% that's not quite what's going on yes, europe is down 1% look below, you can see damage, dollar strength, slowing global growth and contagion emerging market down metals, energy materials day after day commodity stocks hit on the stronger dollar and slowing growth concerns. look a the names that you know, shreveport mcnaran, alcoa, gold names, gold names keep dropping, 52-week lows again same situation with the energy names. oil hovering around 65 oil services, big drillers,

doesn't matter, everything is down 4 to 5% same thing with emerging market etfs weak in general. particularly those geared tiger woods commodities like chilleck or south africa or brazil. special weakness the leaders today, the ten year yield down several basis points. and you see utilities, real estate, consumer staples and telecom. these are the big four defensive names the only four sectors that are in the green back to you. >> thanks bob. how big of a revving are emerging markets right now let's bring in ron and -- gentlemen, good to have you here we had a lot of people tell us don't bother about turkey. china is another story there are chinese bond defaults we haven't seen before how they are going to stimulate the economy because they are starting to see slowdown

are we starting to worry. >> the united states economy is very strong so we are immune the all of this. we heard it in 1994, 1997, 1998. no, we are not entirely immune yes i would be a little bit worried it's not panic time when you look at currencies in free fall some states that failed like venezuela and other problems that are building up emerging market problems can lead to developed market problems if there is no adequate market response. and we have geopolitical tendencies that we didn't have back then. >> john, are you concerned >> i agree with ron's comments it is this tug-of-war that we have continued to see throughout if year. you have strong underlying economic data. the uss a bright spot and some of the data we received this morning was supportive of that we have earnings season, which is a tail wind to the markets. on the other hand there are a

lot of geopolitics, concerns a tit for tat game with china as far as trade that we continue to is he bubble up to the top now another fire is starting of course with turkey and fear that this is going to spread through contagion, whether it is exposure in european banks or other emerging markets more broadly. add the strengthening u.s. dollar and i think it is a recipe for heightened levels of volatility. >> you wonder what the federal reserve is thinking about all of this i moon to some degree they are responsible for some of this. >> as they were in 1994 and 1997 and other periods. >> well, but this time is definitely different given what we have been through the last decade. >> you have been hearing this all day long nothing happened in 1997 to the us, in 1998. >> the other currency crashes. >> right that were only halted by the fed in 1997 not pursuing a tighter monetary policy, in 1998, easing after russia and long term

capital a big hedge fund collapsed and bailed out the banking system at the time u.s. banks are much more highly levered at the time. we might see other parts of the word where that's true but again the only thing that stopped these crises back then from becoming a u.s. issue was the fed policy response. >> do we need to start talking about crises and fed implementation with the market at close to record highs, isn't it just things like a stronger dollar, slowing growth in china that could change the risk/reward of this market >> absolutely. crisis or no crisis you could say the same thing in 1994, 1997, and in 1998 when the economy here was quite strong. the thing that appears different in the u.s. is i don't think they are a lot of levered bets like a long term capital which in '98 when it blew up almost took the banking system with it and the fed had to step in that's not the say there aren't levered bets elsewhere in the world that could spark a

contagion. >> joe, you sun like you are defensive. what are you telling people to do >> have a balanced point of view and keeping everything in perspective. we are defensive in the sense that we are neutral equities we do think there are some opportunities. i mentioned earlier here in the u.s. it is clearly a bright spot it is one way to be defensive yet at the same time try to gain exposure to the part of the world that is likely to continue to grow. so it's having -- to the united states it's recognizing that a lot of the flare-ups that we continue to see -- turkey is an example of it. i don't want to be dismissive of the riff the risk of contagion is real but our basis is that seems will sort of calm down and tensions between u.s. and turkey certainly calmed i think it's about having the right exposure to risque sets and keeping a long term folk us in view in chris, in 198 and

1998 these things started in the summer and credits schenn doed in the fall. >> and 1998 was a midterm year. ten cent reported its first profit loss in a decade. joining us over the phone is rob sanderson of mjm this ten cent announcement was a blow for investors what does it many for alibaba and jd there are different but there is a sentiment factor that is similar? >> there is no doubt ten cent is an, treatmently important company for the internet ecosystem, more important to china than facebook is for the u.s. in terms of ecosystem. rattles what is already sketchy uncertain hands as we try to dissect the chinese macro situation. i don't think there is a lot of

direct take aways. what ten cent was struggling with was really about approval of game titles and of course censorship on media is a much different dynamic in china than it is in other markets and the retail companies like in alibaba or jd or many others really aren't subject to the same sort of scrutiny as the media companies like ten cent. >> rob you highlighted something i want to ask you about. when you talk about trying to die seth the macro in china i know you are a stock-specific analyst. but what happens there in the overall economy must be important to the companies that you cover. what's your sense when you are reading the paper now we are seeing rising corporate defaults, a potential slowdown, the government feeling like they have to once again subsidize the economy. >> you have got traditional manufacturing rust belt sector that is -- most people understanding of the fabric of

chinese economy is centered in its history. but over the past several years you have had this really strong growth in the services economy and consumption, to the tune of like 20% compounded for the last several years. it's really become a much bigger driver and one -- you know, the old china sort offette ceding way to new china and you have a great consumption growth story that has global investors excited about the prospects of china that's all i think very much intact of course the total which he is going to weigh on the components of the economy there is no doubt about that but i do think that the consumption growth story still has some very favorable secular drivers behind it. >> i see you have buy ratings still on alibaba and on jd.com but does ten cent's report give you pause at all >> not so much because it's really company specific. the one number i didn't like was that their ad revenue was a little bit light that's not necessarily sub to

the sensor approval dynamic. it may be a little bit of a signal there but the other indicators that we watched particularly the consumg offion line physical goods those metrics came out two nights ago and were robust at 25% growth. we see signs there are still healthy trends underneath the currency fluctuation and the macro concerns. >> alibaba is expected to report nest week. the expectation is 61% or so revenue growth there >> yes. >> would you buy this weakness into the report? >> you know, i think -- i would. i think that the quarter is the toughest of the year, and it has a difficult comparison from a year ago acceleration in growth. i think that's well understood and largely derisked and then the event path for alibaba looks much better after the june comp us because it gets easier and their monetization ramp is expected to run through the year investors are confident in management because they have had

a very strong track record in driving monetization gains then of course they have their analyst day in september which i think will be a good even for people to understand the new investment areas and the opportunities for alibaba ahead. >> and then singles day in november another catalyst rob thanks lot for joining news thank you. >> rob sanderson, mkm. as we all know, he tweeted funding secure now those two words could lead to an s.e.c. investigation if it hasn't already what tracks exactly does the s.e.c. have to go after elon musk we have former s.e.c. chair harvey poit to weigh in. corona beer maker constellation brands ups its bet on cannabis. good move as beer sales fizzle. and tariffs are threatening newspapers and 600,000 jobs in the industry that and much more on "power lunch. really helped me up my game.

i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade.

this wi-fi is fast. i know! i know! i know! i know! when did brian move back in?

brian's back? he doesn't get my room. he's only going to be here for like a week. like a month, tops. oh boy. wi-fi fast enough for the whole family is simple, easy, awesome. in many cultures, young men would stay with their families until their 40's. it's been a week since elon musk tweeted about taking tesla private. new details today. goldman sachs confirming it is providing financial advice tots company as it considers going private. but a big question still remains z elon musk actually have funding secured when he said he did in that initial tweet last week if not, what does this mean for

any s.e.c. investigation joining us, harvey pith former s.e.c. chair and now ceo of colorama partners. welcome back. >> thank you >> if you were sitting in the chair still what questions would you be asking about the tweets of elon musk's >> i think the most critical factor is did he have a legally enforceable right or agreement to have funding provided for the transaction? it appears from his own subsequent posting that he did not. and that would be a very serious problem, because he effectively assured the public the financing was already in place for a transaction of the magnitude he was describing. >> was that potentially then stock manipulation >> well, it would be manipulation if his intent was to influencethe price.

but it would be fraud if the facts were not true, if he did not have funding secured, as he said, then that would be a false statement. and the market blipped upwards, 11%, based on his tweet. >> he said subsequently that he had two meetings with the head of the saudi public investment fund, pif it's called, and that he walked away convinced that they wanted to take tesla private. that's not a mitigating factor in your viewpoint? >> it wouldn't be to me, simply because he was convinced does not mean that he had funding secured. and as a business man, he understands that when funding is secured, he can draw on that funding. he did not have that situation, apparently and if that's the case, then

whatever he felt the saudis might do is not secured funding. >> is secured in the eye of the beholder or does the s.e.c. have actual rules as to what secured means? >> the real issue is what the impression conveyed to the marketplace was. >> he said he walked away from those meetings convinced that he had the fundsing in place. >> i'm sure if he said that he must have thought it, but that doesn't account for having secured funding. secured funding means a contractual commitment and that is not what he apparently had, based on his subsequent posting. >> higher altitude what do you think of elon musk as a ceo and how he's been performing especiallily in last six months or so here? >> well, i think he is a man of

great vision there is no question about this. and the cars he has actually produced are quite spectacular the difficulty is he doesn't seem able to produce them sufficiently to meet the demand he has created and he is burning cash at incredible levels. those are very serious deficiencies and that's why his tweets just made the whole situation much more complex. >> similar question about the board. and then in particular, about the special committee members who have been tasked with deciding about whether or not to do the whole take private deal if indeed they get the funding secured. there has been a criticism that at least two out of three, we will show them to you in a second were not sufficiently independent enough of him. >> that's a difficult issue, but i would say you need three people if you have a three-person committee who have

absolutely no financial or personal ties to the person making the going private transaction. they may qualify based on he can change listing rules as independent, but it's independence in fact not independence as technical matter that counts. >> what do you think, i mean, if there were things that elon musk did that violated certain securities regulations harvey, do you think that the s.e.c. should pursue the harshest penalties that are possible? i mean is the s.e.c. in any sort of a pick? this is the kind of ceo that you want out there in the united states, an innovator, someone who is a visionary, someone who has create aid mazing thing. yet if you give him a slap on the wrist and he does something worse down the line the s.e.c. has failed shareholders. >> you have really quite accurately summarized the

difficulties the good thing about the s.e.c. and its very hard working staff is they are very much determined to do what they believe justice requires they are not going to take positions for public approval or because a person has a personality or stature they will look at the issues and decide whether in their view investors were misled. and if so, then they will go after him with the full force of the law. >> we will leave it there, harvey thank you. >> thanks, harvey. >> my pleasure. >> harvey pith. coming up, corona beer maker constellation doubles down on cannabis ony be a game changer for the ecomas beer sales decline? should you get in on this trade? that's next. money on car i nsurance? yea,that and homeowners, renters, motorcycle and boat insurance. huh.that's nice.

what happens when you catch a fish? gecko: whoa. geico. more than just car insurance. see how much you could save at geico.com. i'm ok!

welcome back to "power lunch. it's time for trading nation look at constellation brands on track for its worst day since january 30 2013. spirits company is upping its stake in the cannabis firm canopy growth with a $4 billion investment at a 50% premium. is this pot play a bust?

foers, and stacey join us. pot is going to be big makes sense maybe that a liquor company wants to do this what do you think is doing on here >> here's why the market hates it they paid $4 billion for a company that was worth $5 billion and only got 38% of it market thinks they paid too much. >> they also got warrants that could get them to above 50% but not enough for you >> not enough. the market thinks they paid rich the problem is yes, pot is certainly the next frontier for growth but it's fraught with risk there is regulatory risk session is not a friend of the industry it is a plant based products that very ripe for price competent tig. bakecally, anybody can produce it so they are a great company, tremendous distributor, tr marketeers but could they be

undercut through prices by somebody else once pot goes global >> low barriers to entry. >> right. >> stacey, you are cautious as well >>er with. our consumer analyst covers this name with a neutral rating and a $199 price target. what his non-sonnan consensus view is he is cautious he thinks the market is underpricing as well as a overhang of political risks. i am confident lk calling it a non-consensus view as you look at what analysts are rating this they definitely have more buys than sells we are specifically in the neutral camp but the options are interesting. it continues, has been and continues to be bullish with investors buying up side call spreads and selling downside puts, a level they seem comfortable getting in is between 195 and $200 but fundamentally we have

cautious outlook here. >> i bet the plays got cheaper today. thank you. good to have you, on. more trading nation on our website or follow us on twitter @trading nation. >> coming up a closer look at the red flags in china that could spell more trouble for global markets more trouble than turkey is causing. "power lunch" is back in two. >> now the latest from trading nation.cnbc.com and a word from our sponsor.

♪ that's confident. but it's not kayak confident. kayak searches hundreds of travel and airline sites to find the best flight for me. so i'm more than confident. how's your family? kayak. search one and done.

welcome back to cnbc we have a selloff here in the markets. the dow jones industrial average is lower by 282 points the nasdaq is in negative territory, ditto for the s&p 500, which is off about 33 points nasdaq is lower by 127 all three major averages are lower by more than 1%. industrial names are weighing on the dow.

caterpillar boeing and dow dupont are the biggest laggards. anything with exposure to china. sem i stocks, leading the declines with 2 and 6% declines. the fang stocks are all moving lower as well, led by netflix, which hit the lowest level in three months off by nearly 4% facebook, amazon, alphabet all off by a little more than 2% sue herera has a news update. here's what is happening at this hour. qatar is promising $15 billion for direct investment for turkey according to turkish officials the pledge comes as president order want met with qatar's leader al tanny. turkey's currency has been under severe pressure as you know as strong inflation rattles the country's economy and heavy u.s. tariffs were imposed. fall manafort's lawyers will be making their closing nargts a virginia courtroom this afternoon.

earlier today prosecutors asked for guilty verdicts on all 18 financial fraud counts facing the trump campaign chief. at&t is being sued for $224 million by a california man who accuses the telecom company of negligence and willing cooperation with a hacker who stole $24 million worth of cc by hijacking the victim's cell phone account. touchdown disputes those allegations. and a forgotten relic of the cold war is getting protected status in berlin a local official on a walk near germany's foreign intelligence service came across a stretch of the concrete wall that at one time separated east and west berlin from 1961 until 1990. it had been partially hidden behind some bushes for all of that time. amazing stoerp that's the news update this hour. >> how do you lose a piece of wall >> especially because people took down chunks of it as

souvenirs. >> did you see that. >> i saw the wall. >> not that wall. >> the wall behind the bush? >> i wasn't looking for walls behind bushes while i was on vacation. the oil market close forth the day. let's get to jackie deangelis at the commodities desk. >> crude prices falling to lows not seen since june. 64.51. settled around 65 here about a 3% drop. the drop came on the back of an inventory build here in the united states. almost 7 million barrels this is the time of year you should be seeing draw downs. this is not supportive in terms of pricing the supply/demand balance is delicate early building could tip the scales so could the iranian barrels the drop in stocks adding to the pressure on oil concerns over global growth and concerns offer oil demands. back to you. >> thank you. much of the attention has

been on turkey some are starting to worry that china may start to become the real problem as signs of problems start to emerge. >> it is the most component of the msci emerging markets index it has a third of the weighting in that index in the china large cap etf off of its lows of the day, still down nearly 4%. on the two day side of things it is a sharp move lower, 4% this today's trading. its worse day since february 7th. wos week since march that etf is in bear market territory, down more than 23% from its 52 week high we saw in laid january a huge move lower since the highs we had seen. among the stocks leading the chinese markets and the etfs to the downside, jd.com huia,ed by you and alibaba lot of red on the board for

those chinese internet names ten cent down sharply on pace for its worst day since early february concerns about sales, as well as one of its top gaming franchises that's getting cracked down by the government michelle, the big story here will be tomorrow morning when jd.com reports its earnings. could it be that stock that provides a tourniquet for the market. >> or does it confirm our worst fears? we will find out thank you, dom how real is the slowdown in china? how concerned should investors at home be let's bring in two gentlemen to discuss. peter it's one thing to talk about turkey, which is less than 1 trillion dollars when it comes to their gdp it's another to be talking about china. if the slow dope is real -- let me ask you, do you think it's real would it have big implications for the u.s. >> china's economy is $12 trillion plus just to give the

differential it is slowing but i don't know how much is organic slowing versus forced slowing in terms of deleveraging. it's not really deleverages. it's trying to slow credit growth on the other hand they are now trying to accelerate credit growth to try to stem the slowing. trying to figure out what's goingan in china is difficult. i think growth is okay i don't think it's dramatically faltering. but they also share another characteristic, china and tucky. that's too much debt, particularly on the corporate level. a lot of it is dollar denominated. so it's making them even more sensitive to weakness in their currency. >> the chinese government is famous for micro managing the level of credit. brooklyn, what do you think? how worried are you? >> clearly the chinese authorities have lot of willingness to participate in in mashttle they wasn't to affect growth in their economy, want the

rebalance their economy and get it to point where it is on a bit more sustainable path. it knows about these leverage issues et has been trying to deal with corruption issues for a number of years and had certainly made progress on that front but the problem is the trump factor came in trump came in and started throwing fuel on the fire, started, you know, throwing rocks at places like turkey and making things quite worse. i think it really emphasizes how vulnerable an export based economy like china really is to disruptions in u.s. trade relations and global trade orders i think it's really brought a new perspective in terms the outlook for china and the willingness and the ability for the chinese authorities to pick up that slack. >> picking up on that point in terms of how intertwined china is with the u.s. it is sbs enter twined with the emerging market. could that glimmer of a slowdown be exacerbated by what's going on in emerging markets in a slow

down for a demand of chinese goods? >> absolutely. china has a huge demand for commodities? who produces those commodities a lot of the emerging markets. they are all in the same beg in terms of economic growth if china sneezes everything around it is going to catch a cold particularly in the emerging markets europe and the u.s. have a more diversified economy. we are going to be affected as well we do business not only with china but everybody else who does business with china. >> how do you think it affects their strategy in terms of dealing with the u.s. right now if at all. >> it is a squeeze on them on one hand they don't want to give in. on the other hand they don't want to sacrifice their economy. they don't want weak innocence

the yuan >> any predictions where this goes or how they try to resolve with it the united states or what they do to their economy to weather this >> it is tough you have a lack of trust on both sides. the chinese not trusting what is happening with trump and his negotiations with other countries, and certainly the trump administration seems to have a lack of trust with the chinese authorities and their at to follow through or hole them accountable on what's dealt. so i think that, you know, as we are talking about all these different things and elements, it just spells out the recipe that this is going to take a very long time to work ow some of the details to get on the same page and figure out what the right possess we for point is, what the u.s. is willing to accept from china and some of these hard decisions about where china is its 2025 plan and where it thinks its strengths are, it's more hegemonic ideals. trump doesn't like that.

he doesn't want that to continue where do we end up we are going to end up quite a ways down the road before we figure that out. >> bumpily alone the way there, today. he was shocked to see the chinese currency we were showing it while you are speaking it's awfully close to seven. we have been talking about the turkish currency selling off, but certainly the yuan is as well. we have an update on the riot blockchain. they say the s.e.c. initiated an investigation that may result in a stop order according to the 10q filed yesterday the stock order would prevent the company and shareholders from selling stock under particular registration statements in july the company received letter from the s.e.c. that the commission issued an order recommending designate shags to section 8e of the national

securities act of 1983 rye yt's ceo john o'roarke didn't respond to our comment. an investigation into riot bl k blockchain caused the stock to fall about 9% today. coming up, newspaper jobs are in jeopardy because, get this, the trade war. we speak to a publisher who is questioning just who is being helped by these tariffs. not amics, herane says not his industry he joins us next we're putting ai into everything, and everything into the cloud. it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments.

in this lab, researchers are working with watson to help them find new treatments. that's smart for medicine. at this bank, the world's most encrypted mainframe is helping prevent cybercrime. that's smart for everyone. and in africa, iot sensors and the ibm cloud are protecting endangered animals. that's smart for rhinos. yeah. rhinos. because smart only really matters, when we put it to work- not just for a few of us, but for all of us. let's put smart to work. today's senior living communities have never been better, with amazing amenities like movie theaters, exercise rooms and swimming pools, public cafes, bars and bistros even pet care services. and there's never been an easier way to get great advice. a place for mom is a free service that pairs you with a local advisor to help you sort through your options and find a perfect place. a place for mom. you know your family we know senior living.

together we'll make the right choice.

turns out the global trade war is heting the heard land in another way. we talked about agriculture. but newspaper readers for example, in wisconsin are learning that the tariff battle between the u.s. and canada is hitting close to home there. joining us is patrick wood, group publisher of multimedia cancels. they print 21 publications around the state of wisconsin. you recently ran a letter from thepublisher in your newspaper saying that's tariffs could affect 600,000 jobs in the united states. we are talking about the tariffs imposed on the materials used

for newsprint which have increased your prices by as much as 30% how does that translate into 600,000 jobs being affected? >> to give you a little bit of backgrounds, 20 years ago there were 15 newsprint mills in the united states. and now there are five newsprint mills. of which three of those five are owned by canadian companies. they are registered in the united states but they are owned either partially or fully by canadian companies so there are two american mills left, reason by americans. that would maybe affect 2,000 jobs at the most i'm rounding up. to put tariffs -- basically what happened is two years ago a hedge fund, one rock partners in new york city, bought a newspaper mill on north pacific in the state of washington, actually longview washington, in the north west, and petitioned to have tariffs put on the

canadian paper mills so that they could raise their prices without, you know, vug all of their customers run away from them. >> right. >> so tariffs came on the canadian mills and what happened is they passed it on to the printing companies, who passed all the costs onto the newspapers >> you don't think you could pass it on to your subscribers, i assume i was reading how you are trying to cut back on color and fewer pages to try and cut costs at the same time. but what do you think would happen if you tried the raise prices >> well there is a lot of price sensitivity. right now we are at the higher end of our subscription prices why should our subscribers have to pay for content that a lot of people are getting out there for free if you look at the aggregators like dealing and facebook they are taking our content, if they had royalties put in place we would get a certain amount --

kind of like a juke box in a bar. if someone listens to song part of the royalty goes back to the creator, the musicians in that song if the aggregators would do that with our content rather than having our subscribers only paying for it wielding sitting paper. >> as you know, many newspapers are going to digital, for offers reasons. will this force you to become more of a digital entity with your various publications? >> we have digital sats for every one of our newspapers. people are platform agnostic they don't care how they get their content so we have to give it to them anyway that they want our largest market is green bay. than was you a, and small community towns. all of these these are small rural communities.

we are doing all the local news there. no one else is if somebody were to happen to us, you would lose the fabric of the community the accountability for the council meeting and the southern cal boards and everything else. if something were to happen to us, we do a tremendous stewardship for the communities by giving them the news every week. >> i would ask you, you know, what is going to solve this short of ending the tariffs, but nothing is happening yet the fact is, you have these tariffs in place your costs have gone up 30%. what are you going to do what are you going to do >> we have stayed ahead of the curve. we cut about 9% of our expenses out of our company. >> if this goes on much longer >> well, we have to look at other ways of doing -- we are looking strategically at what are our assets we have adistribution smpl systems, delivering phone books and any samples that people want in these areas we are -- we know that people

drink coffee with newspapers so we are selling knickol aid coffee through our newspapers through your franchise they can got it on line or basic chi we are advertising it through all the newspapers and digital. but we really need getting a graters to pay for contenant they are using as well. >> patrick, got it we wish you well thank you for joining us >> small newspapers, et cetera a heart breaking struggle. coming up, what to expect from wul mart's reportings next ♪ ♪ our new, hot, fresh breakfast will get you the readiest.

(buzzer sound) holiday inn express. be the readiest.

investors watching wal-mart as the company gets ready to report earnings after the bell. actually, it is before the bell tomorrow. it has been a busy week for retail with macy's getting crushed. what should we expect from the world's biggest retailer joining us is analyst at consumer edge research. great to have you with us. a lot of folks will point to me and point to home depot saying these are strong reports. wal-mart is in a bit of a different situation because the

rally hasn't really existed at least for this calendar year. they started getting dinged in december. it is entering the earnings report in a different position in terms of momentum. >> there is almost a subtle art as to what is expected given the previous couple of days or the narrative into any given print. wooing wal-mart has upsided the comp to the bottom line. it is because of investments that are more far reaching and driving return on capitals and also helping the business. >> in terms of the business, it has a greater exposure. the comparable would be a target. it has a greater exposure to growth streams and the margins are so razor thin could it feel the pinch more so than competitors from things like rising transportation costs because of the trucker shortage? >> that is a head wind to be

sure. they are part of the pinch. wal-mart is really much more effective at merchandising in grocery and around fresh and some higher end products. digital, we found that their digital efforts have completed a customer relationship. those things can offset that. a little bit of inflation can go a long way. into more inflation it helps a retailer. working capital works for you. we think that is going on at wal-mart. >> we will ask the control room to bring up a two-year chart. you mentioned the digital relationship with customers. for a long time the narrative of wal-mart was they are not getting digital right. suddenly they got the internet right. and then the quarter came and the internet didn't look so good. what is the status about the relationship about harnessing the internet with sales? >> there are a ton of headlines around digital and big numbers

when they start to grow digital and these things can be confused with the core metrics that matter, same store sales and microscopic moves. you are comparing apples and oranges in this industry. that is what is coming together. wal-mart has invested in tools. they have invested in brands. they have invested in outreach. and not everything goes well. sometimes you get investors used to some very big numbers. target had some of this happen, as well. what we think is that their entire relationship, their holistic relationship with the customer is forming and really playing good defense with the competitive threats out there. >> david, thanks. >> it will be interesting to see what the market does with it tomorrow as we have seen with other retailers this week that have provided good numbers. >> i think your opening point is spot on.

everything else rallied into it. >>chk ea ie.st the opposit > ecplses next. you always pay your insurance on time. tap one little bumper and up go your rates. what good is your insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call for a free quote today.

liberty mutual insurance. ♪ liberty. liberty. liberty. liberty. ♪ stop fearing your alarm clock... with new*! zzzquil pure zzzs. a drug-free blend of botanicals with melatonin ...that supports your natural sleep cycle... ...so you can seize the morning. new! zzzquil pure zzzs.

check please. >> you have to watch jim cramer interviewing elizabeth warren tonight on mad money. talk about her plan to have accountable capitalism or

whatever -- >> capitalism inherently is accountable. inherently accountable. it has shareholders involved and consumers involved. >> the beautiful thing about capitalism is there is nothing coercive about it. you do not have to buy that thing. you buy that because you want to, because you perceive it to have value. all of this other gobbly gook just makes me crazy. >> you are leading the witness there. >> let them watch the interview first. i finished the most remarkable book this morning. my daughter gave me this for my birthday. it's called "educated. i'm late to the party on this. a young woman who grew up in a family that lived off the grid, they were home schooled. she got an educational opportunity that led her to a

phd at cambridge. it is a heroing story that she went there with her family. it's a meditation on identity and the role family plays. read it. it's a fabulous book. >> thanks for watching "power lunch. "closing bell" starts right now. welcome to "closing bell." a quick check on the markets, red arrows across the board. we are off session lows. the dow right now down a little more than 200 points. it was down 334 at the low part of the session. the nasdaq is the loser. >> tech is a big story not only here but watching chinese internet stocks. dow and s&p down for a fifth time in six sessions. we begin with breaking news on