but snap looked back >> cannot ignore the technical formation. cannot ignore the strong momentum that it is garnering and a tape that's been very, very volatile trading well >> all right you guys have a great weekend. >> you too, scott. thanks so much for watching. "the exchange" begins right now. thanks very much, scott. welcome, everybody i'm dominic chu in for kelly evans today. here is what's ahead searching for direction, another wild ride for stocks today as the president says we may not have a trade meeting in september. should investors hold tight in this tweet-driven environment or is it time to make some moves? plus, it's not all about the rates. a breakdown of why low mortgage rates do not necessarily mean the housing market is about ready to take off. and warming up, we'll go around the world for a look at the global hot spots that are starting to simmer and could soon become the next big issue for investors. but we begin with today's lower,

bob pisani has the numbers >> we had a nice little rally. the s&p down, the nasdaq, a little bit of balance off the lows for the day as china trade again in focus president trump says he was not yet ready to make a deal with china. so still not clear if those additional rounds of tariffs will come into effect september 1st. combine that with the statement that the u.s. will not be doing business with huawei, although there may be some clarification that we're getting and we have a predictable response you can see semiconductors generally are weak down about 3 or 4%. elsewhere, another trade related group, retailers, j.c. penney, bed, bath, and beyond, gap, they're all weak down 2, 3, 4% j.c. penney big move down. and cummins, caterpillar, 3m, utilities and defense sectors are less weak overall. one sector benefitting from all the volatility stock and futures and options

exchange cboe, home of the vick's volatility index as volumes have been ramping up. don, back to you >> well, thanks, bob it's been a wild ride for sure for the dow jones industrial average. just take a look at the moves that we've seen with this volatility remember, just on monday we saw 767-point drop as the chinese currency unexpectedly devalued another 311 points in the upside with that dip buying coming. only to fall a little bit by 22 points the next day. and then up 371 on thursday. and here we are again down fractionally overall so what exactly do you do with all of this money that you have with this volatility let's talk about it with kim force, chief investment and michael of destination wealth management kim, we'll start with you. this is a market that is still within a stone's throw away from record highs yet, we don't know exactly which way the next leg is.

which way is it in your mind >> uh, i don't think it matters. i think you have to look, if you are not an etf investor but a regular stock investor, you have to look company by company at the prices you own the mat and where they trade right now and make decisions do. they stay, do they go, do you add more? do you reduce? i think that is what you need to do >> so, michael, with that in mind, it seems as though that's a recurring theme. there's a good amount of uncertainty out there about what investors should be doing. what are your clients asking you right now, and how are you advising them? is this the time to buy on dips or should they be lightening >> i think it's time to buy on dips i think when you start to see the markets exhibiting the type of volatility that we are seeing when the united states is still really the best economic story in the world right now, i think that it's time for you to have a list of stocks and when those names dip down, take advantage of those dips

i think that there's a big overreaction right now based on headlines. you know, dom, i want to make a comment on your lead-in about how there might not be any negotiation in september based on what the president said this morning. this is my take. i think that every negative statement is part of the negotiation process. i don't think it means that there's not going to be a deal i just think that's part of the negotiation process. maybe that's a bit half full in perspective. but i think that's really going to be the case there is going to be a deal in time it might be smaller but there will be a deal in my view >> so, kim, i mean, michael brings up an excellent point here we've been driven so much by headlines out of the administration, out of the chinese. is it all in the end noise and if so, what exactly should investors be looking to do if they are not trying to be as headline driven as we are currently in the markets right now? >> right well, i'm going to answer your question, but it's going to be a little on the oblique side

first of all, what is your timeline i think if we look back five years from now, this is going to be a blip. but when you're in it, these look, you know, like momentous moves, right so i think what is your timeline you have to answer that first. and the second thing is, is what is your objective. if your objective is to try to make your portfolio not ride the wave with the markets, you're in the wrong vehicle because -- you know, the total portfolio value will go up and down. so, that being said, i agree with your guest. you know, we don't know what the future is. we have to assume that we're globally connected economy and that we will get deals done. and it's going to look a little bit different. there's going to be winners and losers but you need to look at it on a company-by-company basis with a long enough time horizon that will make you a winner. >> fair enough so nobody has a crystal ball here we get that. but we have a sense of the

overall macro environment right now. michael, you spent a lot of time of putting portfolios together for clients. what are you buying then on these particular dips? >> we're buying tech we're buying names that have been beat up there's selective financial names i think that are opportunities. we're looking at dwebd names -- dividend names there's been a rotation away from high-growth names towards staples. and some are saying that staples right now are expensive. but, you know, you're getting the 3, 4, 5% dividend. you look at the 10-year treasury right now is at 1.7. stocks start to look pretty good at this price. the time horizon as your other guest said i think is important. but i think you look at current cash flow. if i tell you you can buy an asset and that asset makes nothing in terms of capital appreciation but gives you a 3, 3.5 or 4% yield, that has a pretty strong appeal if the treasury is at 1.7%.

and more specifically from an em standpoint, emerging markets, i'd be pretty light in that area i know that some are saying it's going to bounce back, it's inevitable everything eventually bounces back i just think the risk is too great, particularly given the tenner of the conversation >> tenor certainly a big focus thank you very much, guys. well, this week the conversation has shifted from trade wars straight up to trade and currency war this after china allowed the yuan to fall to an 11-year low against the dollar our next guest says if china does not reverse course, could set off another crisis for most more i am joined by dick and before we start off, thank you for joining us we just want to call your attention to what's happening right now intraday with the dollar versus the chinese yuan

is because the currency, the chinese yuan has been gradually getting weaker against the dollar throughout the course of the day. now, dick, as we talk about the currency, why is it that this is the next flashpoint in this whole china/u.s. trade negotiation? >> well, i think if people took a broader view of what's happening with the yuan, i think that basically china's got a problem in trying to restore the value of the yuan as opposed to the united states having a problem with the yuan going down in value for example, if the yuan keeps falling in price, then obviously you are looking at higher inflation rates in china at a time when its economy is weaker. and therefore people could be losing jobs and paying more money for everything that they buy. and that's clearly a political problem. but what i'm interested in is china has 5,000 loans outstanding to countries around the world, 152 countries have

borrowed money from china. the amount of money involved is $6 trillion. if the yuan continues to drop in value, it's going to create significant problems with those loans because china right now is in the same position as the big american banks were in 1975 before natural problems crashed the value of sovereign debt, you know in, that cycle. and i think that china has to be very, very careful to stabilize the value of its currency in order to protect all of the debt it has outstanding around the world. >> so, dick, one of the things that the president, president trump has made very evident to the entire world is that he wants the u.s. currency to relatively devalue against many of our trading partners, especially with china. the u.s. dollar, the world's reserve currency, is there a world in which any kind of dollar depreciation would actually make a dent versus all of the other currencies that

would likely fall to more? >> well, you see, that's the problem. there is a lack of understanding of how important it is that the unitedtes dollar be the world reserve currency you know, 20 years ago, about 75% of the reserves of the central banks around the world were treasuries in the dollar. today it's 60% there is a large number of countries that have formed a yuan block in order to get away from the dollar. russia, for example, is now moved as much of its trading as it can out of the dollar into yen -- i'm sorry, into the euro. you are seeing countries like russia, china, north korea, the union of south africa, brazil perhaps, who are doing more and more transactions in the yuan. so the net effect is if we start tampering with the value of the dollar, sure, maybe we get some small trade benefit, but what happens in terms of borrowing money? what happens in terms of rolling

over the debt that we have now what happens to interest rates, you know in, the united states so i don't think that people are thinking clearly when they say that they want the dollar to weaken in value. it isn't a race to the bottom. it's a problem financially people have got to understand that the dollar, the yuan, and other currencies are tied to financial structures, and they're not looking, talking, or thinking about the impact on financial structures if they allow their occurrencies to decline. >> dick, you brought up interest rates. we've only got a few moments left here. i want to bring up, you've been covering banks and institutions for a long time. are banks ready to thrive or die off in the current yield curve environment? >> the current yield environment, the banks will thrive i mean, basically, you know, interest rates is the price that banks charge for the products that they sell it's also the cost of the money that they take in to sell. and it's furthered the indicator of the value of the assets that they hold.

in the last couple of quarters, decline in the yield curve, you know, across the board has resulted in enormous increases, tens of billions of dollars in the value of the financial assets that banks hold you will see in the second quarter that banks will have better earnings than they had -- i'm sorry in the third quarter, will have better earnings than they've had in the third quarter of the prior year. banks will have very strong earnings in this current quarter. >> all right dick, thank you very much. coming up on the show, here's what's ahead on "the exchange." >> coming up, will lower rates give a jolt to the housing market this fall or will lack of supply and sky-high prices keep weighing on the markets? plus, credit suisse says there may be a sobering early holiday warning out there. and the breakdown of the global hot spots that could move markets and investors seem to be ignoring you're watching "the exchange" on cnbc.

all right of the welcome back we want to take a look at what's happening in the markets and yields right now right now stocks are off their lows of the days and yields are rising after a report that the white house is clarifying the president's statement on not buying from huawei they are now saying that the commerce department process for

special licenses will still go forward as they had planned. so, again, some clarification that perhaps that is what's getting a bit of a boost to the overall markets. well, mortgage rates are at their lowest levels in nearly three years. while that is sparking a rushing to refinancing mortgages applications to purchase a home fell for their fourth straight week for more on what's driving the market right now i am joined by red fin chief economist darrel fairweatherer and diana oleck. interest rates certainly a key focus not just for investors but people looking to buy a home or refinance. is this -- >> interest rates are almost as low as they've been in three years right now. that's brought back refinances refinancing is a no-brainer because you can save thousands of dollars and every month you have more money in your pocket but if you're buying a home, you're looking at the whole economy, you are looking at your own employment situation, you are looking at your investments how they are performing and how

you think they are going to be performing and all of that weighs into your decision to buy a home so just because interest rates have fallen that, doesn't mean we are going to see as big of a surge in home-buying demand as we might have previously just because the economic situation is pretty uncertain right now. >> so, diana, this is interesting to me because as we've seen interest rates for long-term u.s. government debt plummet, we have not seen a corresponding move lower in mortgage rates i am wondering daryl says it's a no-break brainer, but how far do they have to go before it becomes a no-brainer >> a lot of people refinanced right after the housing crash when rates were around 3.5%. so there are a lot of people out there already holding very low-rate mortgages so you're looking maybe to the newer home bummers the millennials are now driving the refinance boom because most people think millennials don't actually own homes but they do and they are refinancing so you have to get a lot lower and rates are not moving as

lower as quickly as the rate on the 10-year treasury because while it loosely fals, you are looking at mortgage backed bonds that go into buying mortgage-backed security so will we see them maybe go much lower maybe a little bit but i don't think you're going to see in the 2% range any time soon >> daryl, this is the season, spring and summer when people look for homes this is the selling season are there signs out there right now that things are actually picking up for that real estate picture or do we see signs of stress in major markets in the u.s. >> it's actually a little bit late in the home-buying season a lot of people are already thinking of their kids going back to school and they're not thinking of making a big move. we may see a stronger than normal fall in wint. but compared to last year when interest rates were really high, we'll probably have a higher

than usual home sales in both fall and winter. >> so, if that is the case, diana, if we do see that kind of a real estate dynamic happen, is there stuff that we should be looking for in terms of housing starts, building permits, pending home sales that could actually indicate that the housing market could still be on at least stable path >> dom, one word, supply that's what this market is all about. you can talk about mortgage interest rates and home prices as much as you want, but really it's about finding that home that you actually want to buy and can afford to buy. and the problem right now is we still have incredibly low supply of homes for sale. home builders are increasing starts slowly, but they're still nowhere where we need to be, and they're not holding prices low enough to get that first-time buyer in so until you start to see builders really focusing on the entry-level and more people putting their homes on the market which we are just not seeing, in fact, we are seeing inventory turn down again, you are not going to see that kind of bump-up that you would normally expect these interest

rates. >> is this a buyer or a seller's market >> it's a good time to be a buyer compared to previous years. we have low interest rates buyers aren't facing bidding wars only 11% of our red fin buyers are facing competition as compared to half last year if you wait till 2020, there's probably going to be more buyers out there trying to take advantage of lower interest rates, and you'll probably have a tougher time winning that home >> thank you, daryl and diana. well, coming up a closer look at a troubling trend in transportation and what it says about the u.s. economy. plus, from hong kong to north korea, geopolitical tensions are rising around the world. the question is which one could have the biggest impact on the markets. that's ahead but "the exchange" is back right now in two minutes

welcome back to "the exchange." markets right now are well off of their lows of the session if you take a look at the dow industrials you're only off about 57 point right now we were down some 285 points at the lows of the day. the s&p again down half a percent and the that's dock composite off three-quarters of a percent. now here are some of the movers this hour. shares of mattel lower following news that the company is cancelling a planned debt sale because of an anonymous whistle-blower letter. those shares off about 14% as

you can see here nectar therapeutics. the biotech company saying that there had been manufacturing issues in two batches of its experimental cancer treatments even with though this 30 plus% drop, it's not even the worst day on record that stock well 40% in june of 2018 still, though, down by 32% shares of dropbox are sinking following earnings while the company beat on the top and bottom lines, revenue per user was below wall street forecast as a result those shares off by about 13%. dropbox not the only company to get what canncked this earning n you've got names like zillow down 18% after cutting its guidance also international favors and fragrances down 16%. craft hinz down 15%. revenues came in below expectation. tesla down 14% beyond meat down 12% as well so all of those stocks big

losers as catalysts were earnings take their toll now let us send it over to susan herera for a cnbc news update >> here's what's happening at this hour, everyone. president trump is voicing optimism that some sort of firearms background check measure will be instituted following the mass shootings in texas and ohio last weekend. this despite threatening to veto a house-passed background check bill earlier this year >> i think we can have some really meaningful background checks we don't want people that are mentally ill, people that are sick, we don't want them having guns >> walmart is removing from its stores nationwide signs, displays, or videos that depict violence employees were also instructed to remove any marketing material, turn off or unplug video game consoles that show violent games. but the company has not changed its policy on gun sales. and smokey the bear turns 75

today. the forest service mascot is famous for his "only you can prevent forest fires." some of his celebrity friends are helping to spread his fire safety messages including betty white and stephen colbert. there you go that's the news update this hour dom, back to you >> well, sue, smokey does look good for 75 years old. i want to be him when i'm 75 years old. thank you very much, susan herera here's what's coming up later on "the exchange." ahead, uber's ceo says the market isn't understanding the company's story. is he right? is retail in for a wild ride this earnings season? a new fbi surveillance program is setting up a clash with facebook. one country is offering mortgages with a negative interest rate. that's all ahead on "the chge." carrying up to 50 times its body weight. it never questions the tasks at hand.

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okay let's catch you up on a few stories that need to be on your radar today. it is time for "rapid fire." leslie picker, morgan brennan and contessa brewer. it's me, dom in the outnumbered spot today >> and on the other side of the

table. >> this is going to be great so first up, ladies, uber shares are sinking today following a big miss on estimates for the second quarter ceo dara khosrowshahi joins squawk on the street earlier today and said the sell-off in shares is just a case of investors misunderstanding the company. >> i think we've got to do a better job in terms of telling our story to the markets i think that the company's executing very, very well. somehow it's not getting through the noise. >> all right so the noise the company reported a loss of $5.2 billion for the quarter only three companies in the entire s&p 500 lost that much money in all of last year. leslie, this was supposed to be the standard bearer of ipos. >> i don't think there's anything to misunderstand about $5 billion losses. i think that is very clear to

the market what that means >> in a qualification by the way. >> in a quarter. it also represents two-thirds of the amount of money they raised in that ipo. so he also went on to say that he believes that the ipo was successful to accomplish what they needed to do. here if you're an investor who is putting money into this company expecting them to reinvestment in their business and you gave them $8 billion in capital, now to see them report a quarterly loss of $5 billion must be kind of shocking to you. >> i mean, morgan, this is something -- i mean, you guys were sitting there listening to this interview doing this interview during the morning hours today. was there anything that stood out to you did it seem as though dara khosrowshahi ceo and the company had their stuff together to make this work going forward? >> i think two thoughts on this. the first is i'm going to take the other side of the debate here and just play devil's advocate and say that you have seen this kind of lyft and uber. we saw lyft some slightly more promising comments out of, you

know, the executives there uber stock traded higher on that as well. yes, they're both involved in ridesharing but two very different companies. and maybe the market isn't totally fully every time, you know, a trade gets executed thinking about it in that way because it is more internationally exposed than lyft and it does have uber eats, it does have some of these other businesses as well so, yes, the long time trajectory to maybe get to a path of profitability longer >> and to that point the fact that he talked about trying to buy caviar before doordash got to it is just an indication that this company is thinking this is the next path the next focus where delivery would be their next growth channel and that it might be a very different company than lyft is and, oh, by the way, if you look at that chart that we just had up that shows the quarterly losses, there is no way around this this is no misunderstanding. it's just ugly it's just an ugly chart. >> uber and lyft, those two, morgan, you want to jump in just

one last thing for you the. >> i think that the key here for investors is maybe long-term you do find a company like uber compelling but you got to wait until that stock lock-up gets out of the way. and the truth of the matter is they said that they have been doing all this investing in 2019 >> uber. well, next up, guys, shares of credit suisse says that an upcoming holiday shopping season could be, quote, sobering for department stores. the bank sites the additional 10% trade tariffs coming september 1 placing added pressure on cost structures heading into the back half of the year it also expects a wave o lowered guidance once retailers start reporting earnings next week we look at these stocks. we see them in the wall, contessa brick and mortar retailers have been hit but it's not just been because of amazon. >> that's true and the tariffs are definitely factoring in, in many different ways but i want to point out if you look at the economic indicators,

it's that the consumers are out there and they're spending money. it's still strong. so what's the problem for department stores? is it the tariffs? is it amazon or is it that we know what it looks like, it's boring, it's confusing, it's overwhelming things aren't organized well once they start going the path that aldi went, remake the inside so it looks like a pleasant place to go in and shop maybe they're going to have some opportunity. >> leslie, i remember when ron johnson the men's ceo of j.c. penney tried to do this interior renovation to make stores in stores, didn't seem to work out there. where exactly do you go shopping for the holiday shopping season, and what takes you there >> i'm an online shopper so you're one of those people. >> i am. but i've always been this way. i grew up in a family with a ton of women, and our way of fun as family get-together what's to go to the mall and shop and i was kind of that one outlier that just never got into the whole shopping thing i'm sure in my parents are watching this they would vouch for me

so online has been my personal way of buying gifts for people >> you and many millions of americans. >> but to that point, i think you have millennials growing up and seeing their mom shop at certain stores and then they grow up and say, no, my mom shopped at that store, i want to do things differently. >> all right so the huge one for shopping next up, the fbi reportedly -- i know everybody wants to talk about this one -- the fbi wants to monitor social media more closely. it could create a potential show-down with facebook. the bureau is soliciting proposals from outside vendors to collect your data to help identify and fight potential threats. but it appears that solicitation violates facebook's ban against the use of its data for surveillance purposes. this goes back to the conflict of privacy versus security on social medicine edda, something, morgan, you and your team at "squawk alley" cover day in and

day out. is this raising red flags with users of facebook? >> i think it is now given the privacy is in focus. you do have this ftc deal between facebook and those regulators as well but let's just take it back to september 28th of 2013 this is a "new york times" headline nsa gathers data on social connections of u.s. citizens you look at some of the works that -- i mean, this type of gathering information combing the internet, finding those connections and building profiles of people has been going on for quite some time it's just i think that now because there is this focus on privacy more so, it's becoming a bigger and bigger deal >> and contessa, i remember the san bernardino shooting, the tragedy there and the iphone that everyone was trying to unlock apple couldn't do it on their own. they finally hired an outside vendor to do it. >> they just said no >> there was talk about putting back doors into all of the smartphones that are sold here in the u.s. this seems like it's kind of resurging that kind of talk again >> it doesn't matter what facebook's policy on surveillance is.

if the information is publicly available, it's not just going to be the fbi that's gathering that information all kinds of consumer data companies are collecting that information and scouring it and using their own algorithms to collect it so if you don't want your information at the fbi, don't put it on facebook >> there's also really important case right now that's ongoing in the appeals court out in california linked in versus high q and it addresses this issue of if it's not password protected, is it okay for algorithms to scrape through that and pull data together? >> hot-button topic for sure, privacy. i just want to bring -- >> we didn't even talk about racial recognition >> or how some planes are actually using that to board you in finally, one of denmark's biggest banks is allowing, get this, guys to take out a ten-year fixed rate mortgage with a negative half percent interest rate, which means customers pay back less than what they actually borrowed.

so if hypothetically you bought a million dollar house and paid off the loan incrementally in ten years you'd only have to pay back around 999,000 or thereabouts. you're basically taking out -- this is the definition of dire straits and money for nothing, right? >> it's what happens when you have piles of cash and a shortage of borrowers that you get these negative rates and i for one, and we in new york city go and sign up for a danish mortgage because i would love to pay back less than i borrowed i'm a very good -- -- here's the question, would it get you to go out and buy a house, leslie? >> it depends on what the real estate values are. >> so you're looking at valuations, not just rates >> exactly it's one thing to buy a house, but it's another thing to buy a house in a market that might feel topee and regardless of what the interest rates are, if you don't plan on staying there for a long period of time >> morgan, you and i both bought houses in the new york suburbs

over the course of the past three to five years. is this something where you would actually go up and trade up to a bigger house >> well, especially if that salt deduction gap. i wonder if having negative rates on mortgages is going to make it that much harder for consumers to get loans because it's that much -- because they're not going to - >> the risk appetite is going to change in terms of the banks i also just think it really speaks to how much easing we've seen from central banks around the world. these record levels of negative yielding debt and just it's like uncharted territory. >> so i have a bonus one that i wanted to throw out to you guys. i know the producers are going to just give me a little bit of bacon on this one. before we go, raise your hand, ladies if you'd sign up for a day to. a california burger chain farmer boys is looking for a bacon intern to test bacon-themed menu items.

they will pay that person a thousand dollars you have to kind of apply social mediawise and say why you should be the one who gets to be paid a thousand dollars to test bacon contessa's not into it right now. i think bacon makes everything taste better but, contessa, you are not into this >> bacon no day, thank you for a thousand dollars >> help me out here. >> 100% i would do this. i would totally do this for a thousand dollars >> i would do it for less than a thousand dollars [ laughter ] >> all right there's a bidding war happening for bacon testing. farmers, you guys hear that, right? all right. thank you very much. leslie picker, also morgan brennan and contessa brewer, stick around we are going to keep you on for some transportation. well, coming up, planes, trains and automobiles frequently used as the gauges of the economy and the transportation index has been stuck in correction territory. should the transportation stocks tremors make investors buckle up for a bumpy ride and then take a look at the dow. we are now 35 points away from

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you need decision tech. only from fidelity. welcome back it is the tremor felt up and down wall street, the dow transports often a proxy for the overall economy. it's stuck in correction territory down about 12% from its recent 52-week high. more fwran lardata may be flashing warning signs that the global economy is starting to slow down. and that is hitting home for some investors let's bring in donald, also jennifer smith, "wall street journal" reporter and of course our own morgan brennan who covers transportation stocks extensively. and with this, donald, we'll start with you this is the idea now that transportation is an indicator for the health not just of the u.s. but the global economy. are there signs now in

transportation that the world is slowing down >> oh, absolutely. we continue to see -- we first saw it in europe as early as the middle of last year. definitely by the end of the year we saw both fedex and xpo warn that indeed softness in europe was going to impact their results. we saw then start to happen in asia, but asia, once it started, caught up quickly, and it actually passed europe in the rates of deceleration. we're down 7 to 8% kind of volume numbers in both of those economies. and in asia in particular we are seeing some rather frightening declines in volume that are just not good indicators for what's happening in the global economy and what's happening in the technology economy tariffs are having an impact >> so, jennifer, this brings up a good point is this something that was in

play before the whole tariff narrative came to wall street, or was this something that was maybe due for at least a u.s. economy that has been an expansion for now the longest it ever has been, and the global economy that has been perhaps rioti riot riding that wave as well and is it manifesting itself in companies that do that kind of work here in the u.s.? >> well, it's a little bit hard to untangle some of that what i can tell you is that the companies that move goods by freight, rail, and via truck in the u.s., they're feeling the impacts of the slowing global economy. and trade uncertainty is certainly playing into that as companies are either pulling imports forward to try to get ahead of tariffs or people are trying to figure out where they're going to source things, how their supply chains might shift and how that might impact the prices they charge their customers. >> so, morgue na, you watch this stuff speaking of granular on a very daily basis, sometimes

hourly and minute by minute. you pay attention to a lot of different data points in your coverage for transportation companies. >> yeah. >> what exactly has stood ut to you so far this year with a data point that you think is most indicative of that slowdown that may or may not with the u.s. economy? >> i think you kind of look across the freight landscape and all of the different data points have been rolling over and showing increasing weakness and weakness that seems to be accelerating you have the air freight numbers eight consecutive months negative rail, if you look at total u.s. rail traffic, it's down 27 of the last 28 weeks. you could say the same thing about some of port numbers, the barge numbers. they're just, in general, maybe e-commerce aside, there seems to be just this weakening of the data right now one of the most interesting i guess correlations that i've seen points it out this week actually came from bmo noting that the air freight numbers actually tend to lead the rail

car load numbers by two months and you are seeing that play out in some of the data right now which is something to keep an eye on i think about with some of those rail stocks >> donald, air freight and rail cargo, those are things that we can kind of keep a close eye on. i remember the day in the hayday of the baltic dry index. we used to look for rates that were charged on kate max and panamex vessels. we looked for how much iron ore was being shipped and coal between australia and china. are any of those ocean vessels telling you what's happening with the u.s. and global economy? >> absolutely. we continue to hear this ongoing talk about how people are pulling forward. i sit there and scratch my head because the actual volume numbers don't necessarily shore that up. you look at, say, long beach, l.a., container ports. so goods coming in, been a great predictor of what's going to happen with retail sales of the united states. and the bottom line is when volumes were down 3.6% in may

and 5.1% in june that's inbound, that's the largest container port in north america. it's more than one-third of the u.s. volume, more than two-thirds of what comes into the west coast when it's down 5.3 -- 6.1 and 5.3, how is that pull forward? if it was pull forward, you would see higher numbers so i always scratch my head. it's like via what mode? it didn't happen in air freight. it didn't happen in the ocean freight. how did you get it across the ocean. >> all right a fascinating conversation for sure donald, jennifer, and our own morgan brennan, thank you very much for that great conversation it's certainly one that will continue well, the u.s. is the latest country to issue a travel warning over hong kong and its protests this as pro-democracy activists took over the hong kong airport marking the tenth straight weekend of demonstrations there. the impact the hong kong unrest could have on markets and other al hotspots to watch that's coming up on the show

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lows s&p 500 off 18%. take a look at the most searched tickers right now on cnbc.com. it's the ten-year treasury note yield. that one being searched the most followed by uber, the dow jones industrial average and and there are two etfs to buy, vanguard yielding 4% and vanguard utility 2.9%. those are two ef dpnchtss yield upters go to in times of interest rates markets driven lower again today. there are other areas of the world that could have an impact on the economy, on the stock market and elsewhere the other global risks investors should be watching, that's coming up next on the show de? exactly. sounds like a case of analysis paralysis.

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defy the laws of human nature,at the summer of audi sales event. get exceptional offers now. from the streets of hong kong to the strait of who muse, tensions on the rise across the globe. markets seem unphase more concerned with bond yields than preks it, ply or tiesing interest rates over iran, is this solid risk assessment or are markets monitoring until

they boil over joining me retired admiral james tef receipt dass, executive with the carlyle group. and vice president of global analysis admiral, reeva, thank you for joining us we'll begin with you, admiral. why skt that the world and markets especially are not paying as much attention to iran as perhaps they should be? >> first of all, i've learned over the course of my long military career not to bet against markets. they tend to be pretty accurate, but i'll give you two reasons. one is event fatigue it just feels like one crisis after another from north korea to iran to hong kong protests. i think there's a fatigue factor that has worked into it. secondly, it's august. people aren't paying at much attention, frankly i suspect a lot of this is being set aside in a mental box that says, well, let's see what it

looks like after labor day i'll tell you, there has been a pretty rich history of august surprises. i can see a big event in the strait of hormuz or a big crackdown in china i think those are both unfortunately possibilities looming at the moment. >> reeva, the added mirl brings up a great point if something were to happen in august, it could be much more pronounced where is the hot spot that people most need to focus on from a market's perspective? >> remember those days when august was a sleepy month. except now you have an italian political crisis, the hormuz threat in the persian gulf remains very serious the most urgent threats we're looking at is still the iranian situation is very serious. this is where we see the growing deterrence dilemma for the

united states, the white house has to keep relying on sanctions. the sanctions are the driver behind iranian aggression. when you're looking at serious of a limited strike, that is still a serious one to look at on the hong kong protests, those are still very per sis accident and still potential for a beijing enter veengs as much as beijing is trying to avoid that. >> is this a possible, admiral, the protests have gone on for months now, what is the time where the chinese government says enough is enough, we'll take action to stabilize, in their words, stabilize the region in hong kong? >> i think there are two red lines here for china one of them is, if the protests overtly turn toward greater autonomy i won't even use the i word, independence, that's not in the realm of possibility but a drive for strengthening autonomy i think that would be a red line

secondly, an increase in the level of violence against elected officials coming in and destroying -- unlikely those are immediate red lines. you'd see the people's army police mobilized on the borders of hong kong brought in to settle this situation. i think, however, a point that mitigates against that is the way in which taiwan is watching these events very closely. china has to kind of steer between coming down hard on hong kong, but, therefore, alienating taiwan it's a difficult patch of water for china to sail through? >> reva, weave just got a few moments. how important is north korea to the market narrative >> that's probably going to rank very low on the list the trump administration is determined to cast north korea as a diplomatic victory despite any progress on denuclearization we will see continued testing. north korea will push the

envelope we'll continue to see the white house downplay it. >> reeva, admiral, thank you for joining us on "the exchange. that does it for the show. "power lunch" begins right now i'm courtney reagan. here is to do at 2:00 on power lunch. trade world whiplash as markets close in on finishing a wild week, president trump fanning the flames saying he's not ready to make a deal with china just yet. should we brace for more summer swoons as trade tensions heat up, semis get slammed. there are a number of traders buying on this dip only 138 days until christmas. wall street already thinks it could be a sober holiday for the major retailers. we've got those details. power lunch starts right now welcome towe