risk/reward here three points down, possibly ten points up. i would be a buyer >> i don't hear anybody pitching -- well, we've got one >> look. nokia, 5g is coming regardless of whether china and the u.s. figure things out. and nokia is in neutral land >> great stuff thanks for watching, y'all the exchange begins now. thank you, scott hi, everybody. here's what's ahead. hong kong on the brink "mad money's" jim cramer says the worsening situation there trumps the trade war when it comes to markets, so how worried should investors be? we'll have the very latest and ubs now says the yield could drop to 1.25% by year end. what that could do to markets, to housing, and to more. and nike is joining the subscription business with sneakers for kids. the question is, will parents do it and is it a glimpse of the company's future that's all ahead in rapid fire and there will be mac and cheese but we begin today with today's markets and dom chu has those

numbers. >> i'm in for the mac and cheese the markets overall right now, if you take a look at the dow, the s&p 500 and the nasdaq, they're just off their worst levels of the day, but the s&p 500 was down by about 30 points at one point earlier on. i want to call your attention right now to a few sector etfs that we're tracking. real estate on a month-to-date basis, the worst-performing sector one of the worst, industrials and financials i would point out that the worst-performing energy sector, that's the energy sector there, the worst performer, the s&p 500. if you take a look elsewhere in the markets, we're also looking at what's happening with corn prices after a usda crop report showed a bigger than expected jump in supplies that's putting pressure downward on corn prices and then john deere shares, those moving to the downside, you can hear that move right around noon is when that usda crop report came out corn prices lower, deere shares

lower. a lot of stuff in agriculture meets wall street. kelly, back over to you. >> dom, thank you. welcome to "the exchange" everyone, i'm kelly evans. the argentinian peso is plummeting today the etf that tracks that peso down nearly 25% today. meanwhile, fresh data from china show a slowdown in bank lending and the money supply there, suggesting that economy still weakening. and back home, the u.s. ten-year sinking back below 1.7% today. let's pick up there with bob pisani who's looking at how earnings estimates are taking a bit hit. bob? >> it's a worry here, kelly. financials have been a bigger loser, that's one. but down 6% for august, as the bond yields are plunging trade concerns weighing on stocks, but particularly on earnings projections in general. industrials, reits and utilities are on the flat side today 2019 earnings, we're looking flattish is my word. up until a couple of weeks ago

additional tariffs are beginning to impact estimates. energy, for example, and industrial earnings both very tied to the global economy have been coming down fast in the last couple of weeks here. energy earnings are down 21% for the third quarter. industrials have gone from up 6% a few weeks ago to up 2% today that's a big drop. other sectors have been coming down, including specialty retail, for example, which includes many apparel makers like "l" brands and gap with exposure to china earnings, now the group as a whole expected to be down slightly just a few weeks ago, they were expected to be up nearly 9%. not surprisingly, stocks in this sector have been weak for the quarter and for the month. pvh, "l" brands, chico, gap all down on the quarter. and we are moving almost in lockstep with the ten-year yields that's been a problem for the last week. as yields hit new lows, stocks move to new lows >> absolutely. thanks very much, bob pisani goldman sachs putting out a new note lowering its fourth

quarter gdp forecast to 1.8% from 2% due to the trade war with china let's get to eamon javers in washington with the latest on these trade tensions >> the story lines we're looking at this afternoon is increasing pessimism here in the united states in terms of the trade picture and increasing tension in hong kong as those protesters continue to occupy the airport in hong kong so the question is, what is the interrelationship going to be between these two stories. first look at the pessimistic story line that's the goldman sachs note you just mentioned they're lowering their fourth quarter estimate for growth to 1.8% they call that a modest change to the downside. it's caused by sentiment and uncertainty. also, financial conditions and supply chain disruptions, all contributing to the picture there that looks to be worsening, according to goldman sachs, in terms of the prospect for a deal now between now and the 2020 election. meanwhile, the white house is reacting to those protests that we've seen overseas in hong

kong a senior administration official giving me this statement earlier today, saying, as the president has said, this is between hong kong and china, with the understanding that they're looking for democracy and i think most people want democracy. the senior administration official continuing, the united states urges all sides to refrain from violence. so the president here and his administration signaling that they view this as an internal matter inside china for hong kong and china to work out among themselves, simply calling for all sides to refrain from violence here, kelly >> no sign that they're likely to change that stance, eamon >> they have not seemed willing to really insert themselveses into this. the president has been asked about this a number of times over the past week or so and he's sort of taken a light touch here now, remember, he's negotiating with this very same chinese leadership at the same time. so, is he going a little bit lighter on the hong kong situation in order to get that trade deal we just don't know what the push/pull is there >> all right

appreciate, mr. javers, thank you. seema mody has the latest on these demonstrations in hong kong >> that's right. anti-government protests shut down hong kong's airport, one of the world's busiest hubs, handling over 75 million passengers last year alone demonstrators made their way inside the departure and arrival halls, resulting in over 130 flight cancellations, impacting a number of airlines spanning from cathay pacific to american airlines another example of how the protests continue to put immense pressure on chinese authorities. chinese officials condemning the violent demonstrations over the weekend calling them, quote, the first signs of terrorism certainly a developing story >> the language has grown sharper, but the protests continue seema, thanks. the big question now is about how hong kong factors into the larger discussion with tariffs and china. my next guest says the issues with tariffs is who ends up

paying for them to watch global supply chains for clues to that, he's also watching that situation in hong kong very carefully. joining me is william lee, the chief economist of the milken stute. bill, it's great to see you. welcome. >> hi, kelly >> you said hong kong is rapidly changing from a local protest to one with global consequences how so >> i opened up the imf office in hong kong right after the asian crisis the hong kong of today and the hong kong of today is very different. they have very different characteristics than the -- >> bill -- >> so that social sensation is causing the economic shocks to be felt even more so >> and you have to sympathize with their goals here. and the fact that when the handover occurred in 1998, the chinese said they were going to

respect hong kong's rule of law. does anyone respect that >> the huge fear that china's accelerating the timeline, instead of allowing china -- or hong kong that long period of adjustment, that period of adjustment towards being chinese and being china has become shortened is the big fear. and a lot of the extradition laws and a lot of the social protests are against that. but, you know, kelly, the key to hong kong has always been economics is the economic was doing well, there was much less social tension there but the fact that we have the trade tension killing trade and a lot of the trade that has come out of the -- the tensions that have come out of negotiations, that's the thing that really has amplified the tensions there and made things even worse >> so let me ask you about the trade war, so to speak you know, the 10% tariffs on china that president trump announced just a few weeks ago, what effect are those likely to have both in the short run and in the long run, do you think >> the first set of tariffs have had very little effects in terms of the u.s. consumer

they've been pretty much absorbed by the importers and the exporters from the chinese and other foreign exporters. now the next set of tariffs are going to go on to consumer goods and goods where in the wonky terms of us economists, priced inelastic goods. these goods are goods that people buy regardless of how much the price goes up and the price of these inelastic goods means when the tariffs hit, they start to go up in price. but until now, the tariffs haven't been felt by the u.s. consumer >> what do you think about forecasts that are now saying -- let's just look at the state of bond yields globally in the u.s. ten-year in particular, right now we're at session lows for the day, we're under 1.65%. ever since the president announced these tariffs, we've now gone from pricing in one rate cut this year to about three, which would suggest the u.s. entering a deep recession is that likely because of either the direct effect or because of what the slowdown in china, do you think? or are people far too bearish about the impact >> kelly, in your analysis, as we economists like to say, there

is that one omitted variable you didn't fail to mention, which is the fed. what did the fed do during the last press conference? they did not step up to the plate and say, we're going to backstop u.s. growth full stop we'll do whatever it takes to backstop growth. instead, it was a mid-course correction, which was partially interpreted, at least initially, as one and done. and that kind of confusion, i think, is leading to this really pessimism about the american future because business investment is already starting to sag because of this uncertainty. now on top of that, we don't have the fed to backstop of us or at least we're not sure of it that kind of uncertainty is leading to this lowering of long-term rates, lowering of unexpected growth. and if chair powell were to come to a moment in draghi hole and say, we're really going to be there, don't worry it could take one cut or five cuts, but whatever it takes, we'll do whatever it takes depending on what the data say that would not commit him to anything other than, we're there to backstop the economy. and as draghi saved europe back

in 2011 when everything was falling apart, chair powell could save the markets and save the u.s. growth from the markets falling into recession >> bill, powerful stuff. we'll leave it there thank you so much. good to see you. bill lee is the chief economist at the milken institute. here's what else is coming up today. >> announcer: ahead, u.p.bs say the ten-year could drop to 1.25. a look at what that could do to the markets. plus, it was the scandal that rocked college admissions around the world we have a sneak peek of tonight's brand-new "american greed. and nike enters the subscription business with sneakers for kids. will parents buy in? other company out this is "the exchange" on cnbc . our 18 year old was in an accident. usaa took care of her car rental, and getting her car towed. all i had to take care of was making sure

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welcome back stocks are falling again today the dow down nearly 300 points after goldman sachs said the trade war with china could lead to a recession meanwhile, ubs is out there saying the yield on the ten-year note could drop to 1.25% by year end. that doesn't even look extreme anymore. for more on what this means for the market, i'm joined by barry james, president of james investment research. and brian belski is chief investment strategy at bmo capital markets. brian, do you hear or even see what the ten-year is doing now and say, this is terrible for stocks this is great for stocks what's your view >> this is -- i don't know for

stocks you know, so many things you think about when you're trying to explain this market the market doesn't like uncertainty. i'm so tired of talking about that you can't predict the unpredictable, right because, for instance, in the next 30 minutes, we could have another tweet, right and it's just so difficult and that's why you really have to kind of step back and really focus on -- >> is it hard to tell if it's even, if it's this yield -- most people say the yield can only be down here for bad and scary reasons. do you think that's true or is there another way to look at this >> i think there's another way to look at this and it comes about perspective. if you go back to 2008, 2009, we had two recessions collide at the same time. this is like a once in every other generation event, perfect storms, right? you had a credit recession and a credit recession fed funds' target was 0 to 25 basis points, okay i'm hearing 0 all day long on tv and 0 last week from clients so that's why the fed came out and lowered by 25 basis points, we came out the day before and

said, there's a very good chance the market sells off and we received some negative comments about this, saying, you're always bullish. the market's going to go down? >> yeah, because a lot of the fast money momentum wanted more. now you see the impacts of what the fed said and then the saber rattling began and then the market started to unwind i don't think the bond market is telling us anything about stocks the bond market is in control with respect to momentum and that's why from a fundamental perspective, kelly, you have to steer your investments more towards stability, cash flow, earnings, and really be more, in terms of investing from a bottoms up and rely less on etfs and more on stock positions. >> and your picks are apple, chevron, and macy's. at least in macy's case, there's a lot of negative sentiment about these stocks apple may be more caution than elsewhere in tech. but do you agree with brian? what information do you think we're getting from the ten-year here >> i think it's very simple.

the rest of the world has much lower interest rates than we do. and people want our currency they want our bonds, so they can get some yield and a strong dollar also is very attractive and it pushes inflation overseas so i don't seeanything really to upset the apple cart in terms of rates continuing to go down i do not see a recession our macro indicators, we have about 80 of them, half are positive, half are negative. and the big things that we have are inverted yield curves and rising, you know, unemployment claims and one of those is positive, one of those is negative so steady as she goes, maybe slower growth here and it shouldn't have an impact on interest rates. >> i think you're absolutely right that the main thing that everyone in the market and probably everyone at the fed is worried about is the yield curve. and no one wants to hear, hey, this time is different last time around proceeding the big crash, we all know what happened why don't you worry so much about what that particular indicator is telling us?

or is it not telling us? >> it's long-term. it's generally, as we've looked at it, over decades, it's 18 months ahead of time before a recession. so it wouldn't tell us anything about the second half of this year, really it would be into 2020. and just, you know, on the stocks that i mentioned there, they're cheap. and cheap is hated hated, hated, hated right now. the best p\e stocks, i've done 7% the worst p\e stocks have done 34% this year. what?! so you've got this world that makes no sense and let's go to some place just as the other guest said, let's go to some place that makes sense, be rifling, you know, trying to it what you're looking for, not a scattershot approach >> sure. >> brian, i'm just wondering, too, what you think about his point that maybe the yield curve tells us something 18 months out. there's plenty of people who say, even if it's 18 months out, i don't want exposure to that.

that's still too daunting a thought. >> you know what's funny about the 18 months? we react to things in 18 days. or minutes we can have so many cycles in between there. the thing about the yield curve that people don't understand, you need to see an inverted yield curve over several weeks if not months to really work we get all excited about a couple days of inverted and the three-month ten-year has nothing to do with it in a recession we need to see it over several weeks minimum to have a real signal and the biggest thing right now is cheap stocks versus expensive stocks everyone's buying same stocks, right? there's no independent thought and value versus growth is a misnomer apple, which barry was talking about, apple is a value stock. because of the balance sheet and dividends they're paying and people are misinterpreting that. so you buy the most stable, value-oriented stocks, pick what works in terms of how you're looking at value and rely less on the indices and more on the stocks >> you're not a stock guy? >> sure. >> would you be an apple -- apple -- we run seven portfolios for bmo, $2.7 billion in

equities and apple is amongst our largest positions of both our canadian and u.s. portfolios why? because apple is now the new consumer staple stock. >> there you have it guys, thank you both appreciate it. brian belski, barry james. thank you, appreciate it still ahead, the economic impact of the demonstrations in hong kong and what it could mean for your money but first, retailers, speaking of macy's, on deck with earnings this week and taking a hit over the renewed concerns about the tariffs with china we'll get some key numbers to watch for in rapid fire. don't go anywhere. we all feel, we all love, we all cry. it's part of being human. sonoma county declared a homeless emergency in 2018. you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve. dear tech, dear tech, we need to look after everyone in our community.

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for the amazing price on your screen. welcome back to "the exchange." take a look at markets at session lows the dow is down nearly 300 points down about 266 right now that is a 1% drop and the dow is the worst performer today. the s&p down about 25. the nasdaq down 58 that's about three quarters of a percent. shares of roku climbing 7% from a note on needham saying it's a better bet than netflix based on valuation. ne roku at 135 today. nectar therapeutics down another 9% after the company said on its earnings call there had been manufacturing issues in two patches of its experimental cancer drugs that were used in patient trials that stock is down nearly 70% over the past year different story for amgen, which

is climbing higher after winning a patent case against rival, novartis, over its rheumatoid arthritis treatment elm burremb. hello, kelly hello, everyone. here's what's happening at this hour attorney general william barr reacted to the apparent suicide of alleged sex trafficker, jeffrey epstein. he said so while speaking to a group of police in new orleans this morning >> let me assure you that this case will continue on against anyone who was complicit with epstein. any co-conspirators should not rest easy. the victims deserve justice and they will get it >> barr went on to say that he was appalled and angry that epstein was found dead while in federal custody. newark, new jersey, is handing out bottled water to residents after epa tests found high levels of lead in the water

for certain buildings. the agency say they will take action if no steps are taken by the city to fix that issue and take a look at this. yep, those are kangaroos on a lighter note, across the globe, it's winter and a driver took this amazing video of all of those kangaroos frolicking and hopping in the snow. that's a lot of kangaroos. you're up to date. that's the news update this hour kell, back to you. >> you guys find them all. >> we try. >> thanks very much. just about 30 minutes until "power lunch." i'm joined by tyler mathisen >> we're going to talk to one of the hosts of "flip or flop." that r tarek el mousa will be in the house. we'll talk about the industry of house flipping where some of those industries are picking up, in areas like idaho, oklahoma, the carolinas, georgia. and how much profit can be made

there and whether lower interest rates and the trade wars have had any effect on his business >> and he's coming here, right >> he's coming here. >> looking forward to it see you then here's what's straight ahead on "the exchange. >> coming up, market volatility hits ipos. bankruptcy filings on the rise and chick-fil-a makes a rare change to its menu that's ahead in "rapid fire.

welcome back let's catch you up on a couple of stories that should be on your radar today it's time for "rapid fire. here to break down the headlines, courtney reagan and indicate picker. it's not just a one-day story. you've got names like macy's, tapestry coach parent, capri holdings, which is coors i need a cheat sheet to keep this all straight. they're all hitting multi-year lows macy's is 55% off its high now we'll hear from walmart and tapestry, too. tapestry is trading at its lowest since 2009. >> the tapestry movement, i don't think we should tie to tariffs. and if we are tying it to

tariffs, i think it's oversold here and i say that because over half of what tapestry sells in the united states are handbags, but in less than 5% of those handbags are made in china >> so is this a china story at all? >> i don't think it's a china story at all, or it shouldn't be i don't know why people sell it. and i will say -- >> because that one is also 51% off its recent highs >> and we did see in fairness big sell-offs in tapestry on the days that all of retail was being sold off but i don't think that's a thoughtful trade >> is there a common thread between these names. they also include ralph lauren, which is 3% down >> and so ralph lauren, i will say, like a third of their cost of goods sold are made in china. and over half of what they sell is in the u.s., even though they do have some offsetting international sales. that one makes a little bit more sense, to tie it back to the tariffs, but they're also going through a number of different

changes and strategy at the company. and investors haven't loved all of the choices so that one makes more sense to me look at capri holdings, trading at lows not seen since january of 2012, when it was just michael coors. but they reported last week, and ceo john idle says, there's no earnings impact to us, from china. and we're not going to raise prices >> bizarre so maybe it's just a secular -- i don't know >> well, i have to wonder given that block rock news that they're acquiring authentic brands today, is that taking the opposite side of this? is that more of a bullish indicator? at least for one company, this is their private equity vehicle that they just launched. this is their first investment, but authentic brands has a whole cornucopia of these retail names nit like nine west, vince camuto, nautica, juicy couture >> so that company is a little different, because it more owns -- >> entertainment brands. >> and it's the intellectual property, so it's asset lite it's like owning the brand, but not the stuff. >> so you don't have to worry about the tariff risk as much.

>> but brands are very powerful. and that is part of the problem that macy's is having. because macy's sells nike, for example. now with direct-to-smconsumer, o don't have to go to macy's to buy nike so a brand is going to be more powerful than the stuff, which is why that makes more stuff in a bullish standpoint than that type of investment >> and i walk through the mall these days and i think it looks healthier than ever. there's been a lot of turnover, but it's not like we're talking about, it's 2012, that everything is being shuttered. it just seems like the market is picking up >> the winners are really winning. >> it depends on the mall. >> and same with the retailers >> but i'm not really going to the mall these days myself >> i know. i'm just saying, they've got some good play areas anyway, next up, the ipo rush has turned into a tale of woe for many companies that went public this year this is the stat of the day. nearly two-thirds of these recent ipos are trading below their first-day close. so, yeah, they've done amazing out of the gate, but not really

since then >> yep >> if you've bought into it at any other point. >> that's what's really important here who's getting ipo at the ipo price? it's the institutional investors. who's buying on day one? oftentimes those are retail investors. there are those that help propel that stock price higher, but i think this is an important lesson, as we look ahead to the second half of the year, with all of these big-name ipos that are coming down the pike, chances are great, especially given in this current environment that you could be underwater -- >> for a while >> for a while until things start to pick back up, especially as the market does get more volatile and you're starting to see a little bit more red on the screen >> it's some of the names that did really, really well in their ipos that are first below that first-day close. we know all the -- some of the others, i'm not so surprised, but, yeah, you would have thought there would be a better performance by now >> and the real real, also, for example, they were down 23% on

friday on no news. if you're an investor, that's kind of a scary proposition. you know, you don't know, really, what's going to be drive these big swings some of their comparables in the market like revolve were down on some disappointing earnings, but nothing thaet was directly comparable to the real real, and the real real was down a lot more than revolve was. so that can be kind of scary, especially as you're buying these new untested companies >> absolutely. absolutely then there's this, the result of cnbc's latest small business confidence survey. they're in and confidence has dropped to the lowest level since 2017 trade tension's the biggest reason for worry so more of the respondents are citing them as a concern >> our overall confidence number is at 57 it's tied with the lowest level that we've had in the past two and a half years the biggest reason for the decline is those who believe that trade policy going to have a negative impact on their business in the next 12 months, about one third of small business owners said that. about half said they didn't think they would be impacted at all. interesting, though, china, as

well, when you ask them specifically about china, about a quarter of small businesses said that they already had been negatively impacted by u.s. trade policy toward china and of tariffs for september 1stound were announced and before the china labeling as a currency manipulator. so those are two really interesting things one other point, the larger the business was, the more likely they were to be less confident so if they had 50 or more employees, their confidence number dropped even more and we'll see what they say, because i believe their survey is done after the latest round of tariffs were announced. we'll have to wait and see what that says. >> also, i thoht it was interesting in here. despite the headlines, this has to be one group with the highest approval rating for the president of any group out there. trump's net approval rating is holding strong at 57%. >> it is >> that's a pretty high number >> but it was also the most important issue for business owners if you were a democrat, it was to get rid of trump in 2020. if you're a republican, it was to keep him in office.

>> most important business issue was -- >> yes >> to have him stay or have him go, depending on which party you're affiliated with, with obviously, we're in a very charged environment. that does make sense and recession likely hoo ll l and recession likely hoo kelihos split. >> how about some new bankruptcy data shows that bankruptcies are on the rise across america. total filings in the u.s. up 3% year over year in july and this comes as american household debt stands at nearly $14 trillion we are now $1 trillion higher than we were during the 2008 financial crisis and guys, this is a little conflicting. on the one hand, the household debt-to-income ratios aren't that bad, so to speak, by historical standards on the other hand, you're starting to get more and more headlines out there about total car loans outstanding, for example, total student loans outstanding. the numbers don't feel sustainable. >> on an absolute basis, they don't. and you have to wonder, especially in this current

environment where you have very low unemployment, rising wages, to a certain extent, as well as low interest rates if those bankruptcy filings are going up now, can you imagine what's going to happen if and when the market does turn? even when the economy does turn? because that's when people really won't be able to continue paying on time and paying it all. right and that's why some wonder if it's an indicator itself, that there's consumer stress out there starting to show up before it hits the headlines. >> and we started to see wages increase, but for a long period of time, they weren't really increasing, as things that people value like education and health care costs were getting much, much higher. so that kind of makes sense to me that over time, those important debts that you take on really build up, and then you don't have the income to be able to pay it down. >> weren't it be great if it were the other way aren't, incomes were up 300% in a decade and college and health care were up 3%, 2%. >> imagine how sure charged our economy would be

>> seriously and finally, before we go today, probably the biggest news was that chick-fil-a is adding a new menu item to its restaurants starting today, they've added mac and cheese to give you an idea of how big a deal this is, this is the first new side dish since 2016 they're also rolling out a frosted caramel coffee drink for a limited time carl, we have both -- >> come on >> oh, carl saves the day. >> this is the best -- >> i hope you have more than just one bag here. >> carl always saves the dave. so we called the local chick-fil-a and said, do you actually have this item on the menu the woman on the phone had to check, she said, let me check. we believe these were, according to my producers, $4.50 each. and let me just how small these items -- >> people love chick-fil-a, though >> they will pay that. >> oh, my! that's like $1 a macaroni. >> this is about a $1 a bite, basically. so they're still a little warm, guys granted, we got them about 90

minutes. but by all means, dig in if you want to try. >> just from a business standpoint, chick-fil-a, private, family owned, much smaller than mcdonald's and starbucks. it's grown massively over the past few years and had a fair amount of controversy. and people, if you walk through the ones in new york city, they are absolutely jam packed. >> it's the third largest restaurant sales by sales and they are closed on sundays >> and mcdonald's and starbucks have in the 14,000, 15,000 range, they have just a few thousand it's really incredible >> kelly, your show -- >> i said you were going to show job but you're giving the important information. i'm not actually a big mac and cheese person. i think it's okay -- >> i'll take all of those calories every day! >> it's still lunchtime! >> that's pretty good. not a big caramel coffee drink person either. i want to tell you something what this is doing for their margins, if this is really $4.50 for a side item. god bless 'em. thank you guys all very much courtney and leslie.

and carl >> thank you, carl >> markets are under pressure today as those hong kong protests continue. it's the fourth straight day that protesters have been demonstrating at the airport effectively shutting it down oar one ing to talk about th brdeecomic impact of the demonstrations right after this. it never questions the tasks at hand. but this year, there's a more thrilling path to follow. (father) kids... ...change of plans! (vo) defy the laws of human nature... ...at the summer of audi sales event get exceptional offers now!

welcome back to "the exchange." checking on the markets, you can see we've moved a little bit lower in the last few moments. dow down 300 points now. look at that ten-year note, they have been moving in lockstep the ten-year briefly below 1.65%. it's just holding those levels right now, and the 30-year are around session lows. and the most-searched tickers on cnbc.com are that ten-year also the dow, apple, which we spoke about earlier, the s&p and crude oil, which has been in a slump of its own hong kong is grounding all flights as protests cripple operations at hong kong international airports

meanwhile, cafe pacific is threatening to fire employees, supporting these demonstrations. how will standoff between protesters and china end that's the cover story in the economist this week. joining me is the magazine's china editor, james miles. >> it's interesting to see whthy can do the american government is very concerned about the situation, but they don't want to do anything that might have implications for hong kong that might harm hong kong itself. as for the british government, which of course has obligations with respect to its colonial rule that ended in 1997, it really doesn't have any levers to pull, as far as china views

britain. it's now pretty much a bit player in the whole hong kong story. >> does hong kong become a bit player in the whole china story? if it's not, and there's a lot at stake here. the u.s. could revoke its special status we could see a flight of global financial capital out of hong kong and maybe we're seeing that already. >> well, i think we have to look at what's happening right now and consider -- i think we're still away from the worst-case scenario actually unfolding. for sure, there's a lot of jitteriness now in hong kong, including within the business sector about these protests that have been roiling the territory for more than two months now but i think what it would take for the rest of the world really to, well, to take some sort of action, and as you say, remove

hong kong's special and separate status in terms of economic dealings with the rest of the world, i think what would have to happen first is chinese intervention, troops on the streets, and the unraveling of hong kong's separate legal system it still follows the british common law system, and that's absolutely vital for business confidence even though many businesses are now worried about these protests, the impact they're having, particularly on tourism, on property, and of course, as you mentioned just now, the crippling of the airport, as a result of protests, nonetheless, hong kong is still special and it still has a huge amount of attraction to the global business as well as china's. >> and everyone's bracing for what could happen if these protests doe s don't end and th rhetoric from china has sharpened, no doubt. but what if they do end.

what if people go back to class and this is the one moment that might secure a different outcome for what looks like hong kong becoming just another chinese city >> i think we're absolutely at a critical moment here in terms of hong kong's future essentially, china has talked itself into viewing the current crisis in hong kong as an existential threat it talks about this being a color revolution and a conspiracy to not only undermine hong kong, but spread unrest across the rest of china for china's leader, xi jinping, this has become a crucial test of whether he can sustain his

authoritarian system in the face of what china seas as concerted western pressure to undermine it and because of the stakes now having become so high, it's becoming increasingly impossible to see china taking what just a few weeks ago we would have thought been an unimaginable step, and that's sending troops out on to the streets to deal with this. >> and that's what markets are worried about. >> james miles is the china editor for "the economist. well, operation varsity blues rocked the world of higher education as wealthy parents, coaches, and a college admissions consultant were charged in a major scandal that involved cheating on standardized tests and complex bribes we're going to have an in-depth look at tactics and the fallout, next your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events.

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welcome back we have a news alert on boeing phil is live in chicago. >> take a look at shares of boeing and we're showing you this because a few minutes ago the new head of the faa was sworn in at a ceremony in

washington d.c. and this is what he had to say about the boeing 737 max. >> this plane will not fly in commercial service against until i'm completely assured that it is safe to do so the faa is not following any time line for returning the aircraft to service. >> not a huge service that he would say look we want to be 100% certain that the plane would fly before we certify it but what is interesting here is that he has re-emphasized something that we're hearing increasingly from people within the faa. they're not tied to any time frame so while boeing will say look, we expect it to be active service by the end of the year, you don't hear that from people inside the faa it may be back in service but they're saying we're going to take our time making sure that it's safe. >> that time line keeps stretching out phil, thank you. the world of higher education was racked in march of this year after it came to light that

several wealthy families worked with an admission consultant to get their kids into schools like samford and yale american greed takes us inside the scandal. the program produced by scott who joins us with the details, scott. >> kelly, the confessed mastermind of the scam is william rick singer. a failed high school basketball coach that turned to another kind of coaching, coaching kids into college starting 25 years ago in sacramento. all legitimate at first, or so it seemed but we found a former competitor of his in sacramento that said she smelled something fishy early on. >> his main pitch was always i can get you into college x and i was just appalled because no ethical counselor can ever say that. >> in 1996 three years after singer sets up shop, she decides she can do better. she starts her own college consulting business and for a time, she is singer's only competition in town.

almost immediately she hears stories from former clients like a mother that says he filled out her son's application for him. >> it was filled with all of these spectacular lies. >> those lies would get far more spectacular as we now know he has pleaded guilty to four felony counts and he is still cooperating with prosecutors he admits he rigged college admissions for hundreds of kids for parents who could afford the 6 and 7 figures he charged find out how and who on tonight's all new american greed. >> what's the next shoe to drop here >> we'll almost certainly see more charges another parent pled guilty about a month or so ago. singer is still cooperating with the authorities in boston. so might some of the other

people that are pleading guilty and also we'll see more sentencing as soon as next month. >> we'll see if there's others out there. thanks very much we're looking forward to watching this evening. american greed, the college admissions scandal premieres tonight at 10:00 p.m. right here on cnbc. just subscribe to it nike is launching a subscription service named at kids. the details and whether more monthly boxes are in the works is next. woman: my reputation was trashed online. i felt completely helpless. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name.

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welcome back nike is stepping into the subscription business hoping to attract parents with kids as young as 2 years old the adventure club offers 100 different kinds of shoes which is the fastest growing categories they aren't seeing much reaction today. it's up 10% this year lagging behind competitors adidas and underarmor lauren is here to break down the new subscription box $20, $30, or $50 a month depending on whether you want it quarterly, by monthly or monthly. >> so it's either 4 pairs of shoes, 6 pairs of shoes or 12 pairs of shoes a year. so maybe you could gain the system if you had multiple kids. >> that's what i'm trying to figure out. >> nike wants to take advantage

of the market for kids footwear in the u.s. which is valued at $10 billion per sales a year and they're trying to jump into this subscription phase companies left and right now are rolling out subscriptions. american eagle, urban outfitters, express. >> does nike do anything like this already >> no, this makes this a pivotal moment for the company it's the first time they have ever gotten into a subscription business before and when i interviewed the general manager of this platform he said we're already looking at other categories, running might be something that we would get into we were chatting right before this marathon trainers, they're going through shoes like three times a month. >> a running subscription service makes a ton of sense for me often you find the shoe that works for you. i've had the same one for 20 years basically. >> i know. >> and i would be happy to just -- >> the same one show up at your doorstep. >> exactly so i think it will be

interesting, you know, from a business standpoint, this is obviously a new revenue stream for them and if they can get people that are willing to stick with the box, it would be a benefit to nike but i think that's the key thing is that a lot of consumers, mckenzie did a survey and found that about 40% of people once they start a service they end up cancelling it it's hard to get people to stick with it. >> exactly we're all like that about these services whether it's netflix or whatever clothing delivery you get in the box part of the appeal of trying it is knowing that you can quit at any time. >> exactly. >> if they try to lock you in, you might be a little less likely. >> i know, but kids, i know you've got one their feet are growing so when nike was designing this service, that's what they were thinking of those parents, like my mom, i felt like we were at the shoe store when i was growing up every month. >> i'm trying to keep the barefoot stage going as long as i can. it's more cost effective a little easier that way appreciate it. we'll see if they do launch

others. >> it's something we'll be watching from here on out for sure. >> lauren thomas for cnbc.com. that does it for the exchange. we'll join tyler and melissa for power lunch that begins now. >> thank you, we'll see you in a moment here's what is new at 2:00 on power lunch. cracks in the global markets are sending shockwaves around the world and sending u.s. stocks lower. we'll go inside the numbers. plus the bond yield blood bath rages on the ten year is heading to all time lows. we'll tell you how bad it could get and later as mortgage rates keep dropping hgtv's mr. flip or flop is here to tell us what it could meanor the housing market power lunch starts right now >> welcome to power lunch. the gang is all here today melissa, kelly, and yo