good tuesday morning welcome to "squawk alley" miami carl quintanilla with morgan brennan and jon fortt at post 9 of the new york stock exchange stocks have been surging today as the white house announces a delay on tariffs of certain products into december, sending stocks like apple higher and the dow up 400 points. although earlier the session high was about 520 let's get to josh lipton with more on the move in tech stocks

today. hey, josh. >> carl, check out apple here. ripping higher off these headlines. investors clearly cheering this decision by the trump administration to delay tariffs on certain items, include cell phones, until december 15th. and that could havecertainly placed apple in a tough spot, because remember, so many of its products are assembled in china. and millions of chinese working to put together different parts of iphones and ipads so tariffs could have required tim cook and of course, many other american executives to make a tough decision, absorb the tariffs and impact his bottom line. in fact, just this morning, you saw wedbush saying, if apple fully absorbed the tariffs, they think it could reduce 2020 epps by as much as 55 cents or cook alternatively could try to pass along prices to consumers, but that could possibly dent demand for the products wedbush saying it could mean a hit to iphone demand by roughly 8 million iphones in the u.s.

alone. remember, analysts did also say that cook had other levers he could try to pull here too, like applying to remove his products from the proposed list altogether, shifting assembly work from china to other countries like vietnam and india, and asking suppliers to make price concessions regardless, these are all challenging choices causing uncertainty for investors. and they're now bidding up apple this morning clearly relieved by this latest headline apple suppliers moving higher here, too. >> josh, thanks. we'll watch that closely joining us on today's rally today, charles schwab chief global investment strategist, jeffrey linetop and barry bannister. appreciate the time. barry, does anything today change, anything meaningfully? and what does it mean that we found some resistance at the 50-day >> yeah, when you think about it, the trade policy we've been seeing is erratic, bordering on

impish it's hard to put a multiple on that so it pays for the street to be a little bit reserved. we haven't really seen a change in the economic data we expect third quarter to be weak s&p earnings to be down on a year over year basis nominal growth of about 4 -- last quarter 4 dropping to 3.3 and real growth under 2. so it's going to be a soft third quarter. the question is, if that's the bottom, how soon do we get interested in a more cyclical bias but the s&p looks to us about fairly valued around 2900 or 26,000 dow >> and jeffrey, your view on that same question >> carl, you called it an eventful day there have been a lot of eventful days lately if you look back to when trump initially announced these tariffs two weeks ago, the s&p 500 has only recovered, even with today's gains, half of that loss back. and that's the same thing that's true around the world, if you look at where japanese stocks or

european stocks. it's a very difficult market to place big bets given that a trade, a tweet, any kind of headline can really swing the market quite dramatically the background is one och still broad economic slowdown and that doesn't change >> yeah, barry, i mean, has fundamentally anything changed it looks to me that the trump administration is negotiating with itself. it threatens to put these tariffs on, and then it says it's going to delay them there's nothing really solid from the chinese side here so what's an investor to do? aren't you just betting on what signal the trump administration is going to send next? >> yeah, it's partly trade i mean, i understand the negotiating strategy of keeping the other side off balance it's particularly effective against totalitarian regimes abroad that are inflexible, even brittle to recession so they're off balance but the other thing to consider is that futures are still pricing in 60 basis points of the fed easing and the rest of this year. and i don't know -- i doubt that's going to happen

so when they make the adjustment to that, they possibly have the ten-year yield back up and if that happens, theeconom will be seen as slowing down on the rate-sensitive, yield-sensitive side so, again, i agree with my compatriot there, that there's a lot of uncertainty and it's -- it argues for this range-bound market to continue >> yeah, jeffrey, to that point about the fed easing, i mean, the market really seems to have priced in this surety that we're going to see some sort of cut come september but you had that cpi reading today and i realize that's not the fed's preferred measure. but nonetheless, thyou have thi reading on inflation, and the fact you have this pushback on 10% tariffs and some of the imported goods from china. does that change the course for the fed, potentially, next month? >> for all of those things you just mentioned, it does. if the fed is still looking at these moves as insurance measurers against weaker inflation or a broader downturn related to trade policy, well, there's less reason for them to

take those actions if, instead, the economic data continues to be on the weaker side, then maybe this is more than just insurance rate cuts. maybe this is really the start of an easing cycle, in which case they're still in the game i think the stock market thinks these are insurance cuts, the bond market seems to be viewing these as the part of a longer-term easing cycle and the cusp of another global recession in 2020. >> hey, barry, we had you on earlier in the year, and you were, i would say, had a contrarian point of view, that the market was overestimating earnings for the year, that the fed was too tight, and now that that thesis has come your way, i just wonder what you make now, and specifically of the curve inversion and whether we're paying too much attention, getting sort of fixated on that too much >> yeah, i agree with the previous statement that the bond and the stock market have come to disagree here i actually would put a little

more stock in the stock market i think that third quarter will be weak. i think people will be surprised. i mean, we were at minus 5 on s&p-defined operating earnings in the third quarter the street is about 0 or plus 1. on growth year over year that could put in your typical third quarter low. sell in may, go away, come back after labor day. and some time towards october, we might get a take off. but i question the strength of that take off, because we're so dependent on cheap rates, cheap money, low yields, that it limits any backup potential. plus, we're just talking about inflation bottoming and not really takinging o inoff here >> so, jeffrey, if you look around the globe and all of the geopolitical risks that are out there, some of the other currency dynamics that are happening, argentina, for example, just yesterday. the economic growth outlook for other regions of the world, is

the u.s. still the best house on the block, or would you be putting your money into other markets right now? >> that's a great question i think the globe is very tightly sinked up here and i think if we are on the cusp of the next great recession, i think all markets are headed lower, including the u.s. but i would say this europe might offer a little bit of shelter from the trade storm. i pointed out a couple of things one, they're not directly affected by the u.s./china trade tariffs, whether they're on or off. germany about tomorrow, to get their second quarter gdp number could be slightly negative that suggests fiscal stimulus from germany in the form of tax cuts or other things, that they have the budget to do. and that could spread throughout the euro zone. something not priced into the markets right now and very low valuations there there could be some upside surprises here, as markets begin to take a look at other ways that economies could face some stimulus in the coming year, not just from the fed or central banks. >> all right, guys

we'll see. so far, it's been a heck of a tuesday. jeffrey, and barry, we'll see you soon thanks >> thanks. well, getting some breaking data on boeing's july orders and deliveries phil lebeau has those numbers from chicago hey, phil. >> take a look at shares from boeing not a whole lot of reaction and no surprises in these numbers. we can tell you that boeing had zero new orders for 737 max in the month of july. that means it's five straight months going all the way back to march when the plane was grounded that they have logged no new orders for the 737 max they did have 33 commercial orders in the order of july. no max cancellation orders in july, though the backlog still remains at about 4,600 planes boeing delivered 19 commercial airplanes in july. for a point of comparison, july of last year, the company delivered 39 guys, back to you. >> phil lebeau, thank you. shares of boeing are slightly higher right now let's bring in jeffrey's boeing analyst. i guess i should say, aerospace

and defense analyst, shia kylu who's here with us at post 9 >> thanks, morgan. >> thanks for joining us here. anything surprising to you in the boeing order numbers this morning? >> no surprises. numbers were lite, as expected no new orders, but no cancellations for the max. >> do you think the max will come back online before the end of the year? >> i think that's what we're waiting for. i don't know, early q4 seems tight given the certification package that will be submitted to the faa in early september. it seems like a tight timeline to do that >> i know the markets more broadly are rallying on the fact that some of these potential 10% tariffs on certain goods being imported from china are being pushed back. but in general, when you look at the trade tensions between the two countries right now, we've had a number of folks who have come on our air recently and said, this could really get serious if you see a country like china start canceling boeing aircraft orders is that a really threat? and if so, how big of a threat >> i think the difference for aerospace, the rest of these short-cycle cyclicals are going to see declines in organic growth for the second half for boeing, you're not going to

see that stepping away from the max for a second, china is really important for wide-body orders and we haven't seen one for quite some time. it's about 10% of boeing's wide body deliveries. >> how important is the defense business for boeing? we don't always talk about it as much, right? but certainly when you see the bank account from all the commercial -- you know, the commercial piece of boeing's business and what's going on with max right now, it's about half of revenue in this last quarter. is that really something that is keeping boeing going or should we look at it from the flip side? the fact that the commercial side of the business so far has been the thing that has kept defense going? >> sure, i think defense is actually pretty stable and we heard last week that the three major competitions that boeing won in 2018 are going pretty well txmq-25 and a helicopter program, they're all in first flight or engineering phases at the moment and they're growing quite well boeing recently bowed out of a competition, a $60 billion defense program with northrop as the only bidder at the moment. >> on the max, mullenberg has

raised the prospect of having production cut, right? where's the calculus on that right now? if orders keep up this pace? >> so i think with a potential -- you could see a potential shutdown if this drags on longer? but what we've heard from suppliers, even a two-week complete shutdown would have a two-month potential impact on their numbers, given you might have to have layoffs in the workforce, et cetera, and there's 600 suppliers to keep in mind >> is that seen as more likely or not >> i don't think a full shutdown is likely, i think you'll keep at that 42 per month and we'll see what happens in 2020, whether you step up to 72 or 57 a month defense rate >> you like boeing you have a buy on it but how do you articulate the worst-case scenario here and what percentage likelihood are you putting on that? >> you say the max will be grounded for another year or so. but what i'm thinking right now is at 350 or so, it's reflecting

a 9% free cash flow yield, assuming like the max comes back in january 2020. so i still like it, because i think there's upside to that i think the max will get off the ground what i'm looking for right now is wide-body orders over the next 12 to 18 months to keep the 7 787 and 777 lines going that's important as well >> we talk about these stocks as exposed to trade and the broader global economic slowdown we've been seeing, but defense names, within the sector are seen largely as defensive are there names that you like right now? and there reason to think that those names will continue to rally? >> i actually think defense is quite appealing, relative to the market they're trading at a 20% discount according to their history. my favorite names in the group are ellie jackson, management's capital deployment policy i'm a fan of, and i like the raytheon/utx deal. raytheon is under some pressure given a big competition called the patriot. so we're getting into details

there, but the stock has come under pressure, but i think big picture win like the raytheon/utx merger. >> and of course, they're cutting its stake in that company and we had reports from our own leslie picker that pershing square, another major shareholder in united tech exited it so seems like less hurdles to that potential merger happening. shelia, thank you. >> thanks, morgan. got some more news to get to out of washington. we're going to go back to eamon javers once again. >> a source familiar is now confirming the treasury secretary steven mnuchin did participate in a call with the chinese delegation today and that is the first u.s. confirmation that we've gotten of the chinese ministry of commerce announcement a short time ago, in which they said that the call did take place earlier today between mnuchin, lighthizer and chinese negotiators. that's an important aspect as we try to build a picture here of what exactly took place between the united states and canada the market really rallying on those joint statements or separate statements that came out very close to each other in time today look at the president's tweet

from just about an hour ago. we're not getting ing ting a who transparency from administration officials we're talking to but the president saying, as usual, china said they were going to be buying big from our great american farmers so far, they have not done what they said. maybe this will be different this is part of the difficulty of communication by tweet. we don't have a lot of context here from what the president is talking about. we don't know what he means by saying, maybe this will be different. is the "this he's talking about some sort of agreement between the u.s. and chinese side? is there an agricultural component to this? we simply don't know at this point. we've been reaching out to administration officials to get some more clarity as to what the president is referring to there. but clearly, there is a dialogue going on a source familiar now confirming that secretary mnuchin did participate in the call that the chinese mentioned many their statement. so more to come as we get more information from u.s. officials about whether there's been any agreement struck behind the scenes here and what the schedule is of meetings and conversations now going forward for the market to expect, carl

>> i will take it, eamon the market certainly reacting to all of that news out of washington this morning. and now let's get a check on casino stocks amid the unrest in hong kong and the trade update contessa brewer has that contessa >> that trade news provides a silver lining for these casinos with exposure in macau, because, of course, the people who are frequenting those casinos can depend on growth in the chinese economy. wynn resorts, up more than 3%. so is mgm resorts. and las vegas sands up 4% on the day. that's a reversal from what we've seen in these stocks have been pressured by these ongoing protests in hong kong and certainly by the complete shutdown at the airport. hong kong's a major point of entry for macau. and those macau gaming revenues were surprisingly suppressed in july they were down about 3.5%. so this will come as good news

and sort of something to hope for for the casinos that they could see a traurnd here today, guys >> and now the dow surging over 500 points at its high veteran trader art cashin joins us next with his take on the rally. s&p also up better than 1.5% nasdaq up nearly 2 we'll be rig bk.htac from fidelity.our daid a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity. i felt completely helpless. trashed online. my entire career and business were in jeopardy. i called reputation defender. they were able to restore my good name. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair,

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obviously a big rally this morning. stocks surging as the u.s. says they will delay some planned tariffs on china until september. and it's outright removing some items from the list of new tariffs. joining us, ubs director, art cashin session high up 529. about 200 points off of that how much resistance is there at these levels >> well, it's some resistance, but you've got to keep your eye on the headlines and that's what's going on there are reports that the police have moved in around the airport and that is what's leading to this partial pullback the idea that they were going to delay the tariffs gave people hope that the christmas season buying could get started, that people could not be overly rushed you could see the big winners today are things like footwear and retail and whatever. so they're all participating but you're one tweet or one headline away from a reversal, so it's a little bit tough

>> yeah, art the apple rally kind of surprises me in a way. because if you get the tariffs in place in mid-december, that's still the beginning of the ramp of the iphone, right apple, you almost think they would have to assume they've got to price things and plan as if the tariffs are in place, because it's a long cycle. it's not as if they can just prepare up until mid-december and then see what happens, right? how should investors factor that kind of cycle issue in >> i think part of what you're seeing in apple is the feeling that this buys them more time to move some operations to vietnam, to move some operations to india or wherever. they're not going to be able to get it all completed, but it buys them more time. it's a kind of sigh of relief bounce that you're getting there. >> what's so amazing to me is it seems like, again, sort of speaking to some of the same sentiment around the move we're seeing in apple right now, you've got caterpillar, dow, 3m, among the leaders in the dow

right now, nothing's really changed for those names, but they have become proxies in terms of stock moves for the broader trade situation. is there something i'm missing here or is it really just -- >> no, i think it's the fact that you're buying more time and the other thing is, it looks like the talks were dead, the president was hinting that the chinese might want to wait until after the election and see where things go. president xi is tuck betwestuck rock and a hard place. he's got hong kong, they're having the senior meeting in china right now. so he's got hong kong on one side if he made concessions in a trade deal, it would weaken his image further, which he can't handle so the pressure is either get things settled in hong kong or go from there. now, there's a feeling that things will settle down in september when the children return to school and the crowds of demonstrators will probably be cut in half but i don't know if xi feels that he has that much time

they were at the point where they were accusing u.s. of fomenting some of the insurrection and trying to destabilize mainland china >> by the way, those pictures we were just looking at were live pictures as reuters has a headline saying that riot police have been addressing some protesters at the airport, one of the busiest airports in the world. i think sue herrera has a fuller update on what we're looking at right now. >> yes, i do, carl basically, the hong kong airport authority is saying that these protests that are in their third day, their time, are seriously disrupting operations there. we do know that flights have been canceled, both in and out of hong kong yesterday and today. also, carrie lam, who is the chief executive appointed by mainland china, i should mention, came out this morning and once again defended police, talked about the protocols that police have put in place

and we have seen those clashes accelerate just in the last couple of minutes. now we hear that outside of the airport terminal -- this is inside the airport terminal -- but just outside that the protesters are starting to block vehicles at the international airport. there are some scuffles reported outside. you can see the buses, though, are still moving so that's interesting. that goes in contrast to the headlines that we're getting from reuters and dow jones but we are seeing the conflict accelerate a little bit inside the terminal we're monitoring the situation through reuters and also aptn. that's where we're getting these feeds out of hong kong there is also a report that police have started to use pepper spray against protesters inside the airport we have not seen that personally and we're not sure whether that is inside the airport or just outside the terminal, but that is a reuters report that we're trying to confirm. so obviously, a very fluid and ongoing situation. this is at least the second day running and if you go by hong

kong time, they're going into the third day of this. it has disrupted operations at one of the world's busiest airports also, there are a lot of reports in other publications today that companies that are doing business in hong kong are starting to make contingency plans, because the city is so disrupted by these protests. but carrie lam, the chief executive appointed by mainland china to rule over that part of china, hong kong in particular, is standing very firm against the protesters not necessarily condemning them this morning, but just repeating that she is siding with police and that they are using appropriate protocol so this is certainly a situation that we are going to continue to monitor throughout the day carl, i'll send it back to you >> sue, thank you for that, as we continue to look at some of these live pictures. and to sue's point, carrie lam, art, has used the words "panic" and "chaos" and has said the

city risks sliding into an abyss. how does it affect the u.s.'s approach to a trade deal if we start to see real crackdowns on these pro-democracy protesters >> i think you'll get calls for the u.s. maybe not to intervene but maybe threaten sanctions or something else to quiet that down what you've got to remember is that the chinese are pulled two ways hong kong is a major financial outlet and you have major financial companies. if it looks like hong kongis becoming destabilized andthey decide to relocate or whatever, it will limit the access that china has to the international financial markets. it might limit the access they have to financial outlets elsewhere. so they're kind of am bbivalent

i think itf this situation deteriorated much more, we may give up this rally that we've got going. >> it also puts people even more on a global context, doesn't it? because we would expect to hear from some of the other western nations having some reaction to what's going on in hong kong, perhaps in the uk, and it's not just a u.s./china trade issue then, it becomes broader what's the potential impact on markets there? >> well, it would depend on how severe it is obviously, the first place you would think as you just said would be great britain reacting. it was formally -- hong kong was formally a colony. they made an agreement with the chinese as to how to handle things so, we need to see if there's a more direct response from great -- not military or anything like that, but threats of sanctions or a move to take something perhaps to the u.n. and go from there. >> is that -- in terms of what markets and investors will be looking at as they watch this,

and you can see it potentially put pressure on the rally going back to the point you just made, is it if you see the pla get involved is that the moment is that the tipping point that the market would fear the most >> i think if the pla moved in from senchen, there are a couple in there already, but if a larger group moved in, i think the market would react that would be a big move by xi he would be risking a movement like tiananmen square. meantime, european markets are closing in just a few moments. seema mody joins us with a breakdown of today's action there. >> as we watch the latest out of hong kong, let's take a look at the european stock 600, staging a notable intraday reversal. it is those trade-sensitive sectors like tech and autos that are seeing a nice lift after the trump administration said it would delay its planned 10%

tariffs on some goods, including phones but the growth story in europe, that continues to get more concerning here's the latest data a key indicator plunged to its lowest level since december of 2011 ahead of a critical reading on gdp toppmorrow the yield on the joum tgerman ta bond falling to 0.6% that's a fresh intraday low. and we've also seen european banks, one of the worst-performing sectors in europe right now, even with the rebound that we're seeing today, the stock 600 banking index has dropped more than 7% since the start of august. and that compares to a drop of 6% for other sectors like autos and tech among the losers today, rbs, deutsche bank and ing you can see for august all down between 8 and 13%. that doesn't even include the italian banks. uni credit down 11%. ubi, as they face the double punch of lower yields and a

growing political crisis inside italy. guys, sending it back to you >> seema, thank you very much. chip stocks, meantime, some of the big winners of this tariff delay this morning. we'll talk about the ones to own and the ones to leave next in the meantime, dow at session high, up 529 almost 200 points off of that as we look at some of these hong kong pictures. we'll continue to monitor that situation at the airport when "squawk on the street" continues in a moment.

a delay on tariffs on certain goods, sending tech stocks higher this morning semis, among those moving higher quite a bit, with names like micron, intel, nvidia all surging. joining us now on which names investors should be looking to in the sector, nodram miguel so what do you bet on at this point as so much of the u.s./china trade dynamic seems to be fluid to the point where sentiment flips day to day how long does this last? >> what a difference an hour makes, let alone a day i think we have to be somewhat cautious about this, but heading into q2 earnings season, a lot of the investors i spoke to, the

assumption was that there was going to be a de-escalation in the china trade war and that they were going to look past this earnings season with an ultimate kind of trade lu resolution before the 2020 election there's been some volatility in between that, but i think investors will believe there's been some sort of resolution if there is a resolution, these semiconductor stocks will go up 30, 40, 50%. we already see just a whiff of them going up just on a delay of a tariff but actually, business on the ground has slightly improved we're coming out of the q2 earnings season, inventory correction, the industry has been in inventory correction for the last several quarters. we're now getting to kind of inventory levels are hitting a bottom we're starting to see some bookings stabilize coming out of china, from some of the leading semiconductor stocks china automotive, which has been very weak. china industrial has been very weak is now starting to reach a bottom and those are positive signs

that at least on the inventory side, we're not at excess inventory. there could be a rebound if demand synapse back. >> steve, there are so many different narratives running through chips right now. i'm thinking back to qualcomm's call just a week or so ago where they said, because of 5g coming, there's been in big pause in 4g and in oems coming out of with new devices. that's a negative for certain chip players how much of this should really be about trade as far as investors' focus and how much of it should be at the more micro level, different factors affecting different segments of the chip business? >> well, i think the investors will have to start focusing at some point again on the underlying business. and while there's some signs of a bottom, i think there's still reasons to be a bit cautious semis are interesting. over the last 12 months, they're the fourth of five tech sectors in terms of performance. but over the last three months, they're the second they're up 30% year-to-date. and yet, the business has actually gotten a bit worse.

you've seen a number o companies like ti and microchip and others talk about their automotive and industrial exposure being a bit of a negative within semis, it's been the semi-cap equipment companies that have really outperformed. so there is a risk that, you know, maybe this gets settled, maybe it doesn't, but the business doesn't improve the way the stocks seem to be discounting here and you could have a pullback. at the same time, there's some real policies secular relief you've got consolidation helping margins and you've got semi-conductor companies selling not just to tech companies, but now to industrial, automotive, and consumer, which increases their tam longer term. >> i agree there's a lot of uncertainty, but the only thing i would say that inventory levels are now at bottom levels. if you look at microchip, sfrins, their distributor inventory at 32 days so they're on the low end of

their historical distribution inventory level. that means there's not a lot of excess inventory in the channel. so if we do have some sort of snap back in demand, whether it's a trade resolution or another catalyst, 5g, we will see a pretty snap back because people are now carrying around a lot of inventory but as we go into 2020, and these stocks are still trading at pretty big discounts, you know 20, 30% discount from its peak multiples. we like microchip, on, we like micron we're avoiding high valuation names like nvidia that's trading at 30 times earnings there's more risk there in our view >> steve, what about huawei. we have that short-term exemption that's set to expire in the coming days we'll see how all of though plays out. but that's not involved in any of this trade and tariff news that we're hearing today how big of a risk is that still for semiconductor stocks >> still a bit of a risk perhaps the surprise during q2 is that a number of companies began to ship again to huawei.

older product, 28 nanometer. so, in fact, for a number of chip companies, it wasn't as bad as expected, because i think investors thought it would be completely cut off but again, while distributor inventories have improved, particularly for microchip, inventories on balance sheets are still 30 days above normal and intel is indicating that cloud demand probably does start to come back in the second half, but enterprise and government business was down 31% in the quarter. and they and a number of other companies don't see a second half improvement yet so having filed the enterprise space, i'm probably a little more sensitive to that side of things and that i think will take a while to turn around, even if huawei from here doesn't get worse. >> i agree with that internal inventory at the chip companies is still revel high, but they're working down that inventory to hit their targets if we look at huawei, a lot of these companies had good results in the second quarter, because they pulled in a lot of orders, and huawei is gaining a ton of share in the chinese smartphone market

they're gaining a lot of share against samsung and apple. a lot of those orders help most companies that are exposed to the huawei supply chain have taken down any huawei exposure in their third quarter guidance. so they're not forecasting a lot of huawei revenue because of all the volatility regarding the licenses the huawei issue could be derisked because in the guidance, we're not factoring a lot of huawei revenue. kor corvo is factoring in $5 million and huawei used to be $85 million. >> it's been a while since we had a dull moment in chips >> have we ever? >> more on today's rally straight ahead and the latest how f out of hong kong but first, rick santelli, you've got plenty to watch today. what's it going to be? >> well, we had a market-moving data that really didn't move the markets. inflation numbers that were hotter thaexctn peed and that's what i'm going to talk about after the break 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. if you are under attack, i recommend calling reputation defender. vo: there's more negativity online than ever. reputation defender ensures that when people check you out, they'll find more of the truth, not trash. if you have search results that are wrong or unfair, visit reputationdefender.com or call 1-877-866-8555.

dow's up 403 let's get to rick santelli and get the "santelli exchange". hi, rick >> hi, carl. i understand since history, i've been watching the markets since '79, that there are big issues and political issues and global issues that divert the market's attention. but what we've seen these days is much more than that it's almost as if the markets are pawns or held hostage. they've lost their signal in their gps with regard to many of the large central banking

policies and they're very susceptible to moves for a variety of reasons just take today. so, we get our july read on consumer price index, up 0.3 on headline last month was up 0.3 on headline i personally don't think inflation or lack of it should be the major underpinning of policy in the world as it's currently put together but, having said that, when do you think the last time we had back-to-back up 0.3 in consumer price index was? i'll tell you, january and february 2001! we haven't had a back-to-back 0.3 since january and february, 2001 and if you look at year over year core cpi, it was the 17th month it's 2% or higher. and as i said, i don't think this necessarily needs to illicit a response from the fed. i think they should pay attention to much bigger global issues making policy but my point is the markets didn't care at all they could have cared less it was the tweet on trade that

incited the markets. and incited in a way that maybe counterintuitive sometimes you learn the most when you see markets reacting to something that was highly unexpected the curve, 10s to 2s, will be a big conversation topic, as well it should be although the reason why the long end is doing what it is just seems to be glaring. they should put a global billboard, distortion. now, having said that. when tweet came out on trade, what happened? 10s to 2s actually flattened more, because the short end yields led the market to higher rates. think about that so not only did the curve flatten more, fed fund futures sold off, pushing percentages of easing down. so counterintuitive. now, as for today's headlines, as we just described, let's move to the u.s. versus the global economy. we're a consumption economy. at the end of the day, we're doing average while all the multinationals and the global issues are going on. most likely, what it really

demonstrates is the underpinnings of our consumption are good that doesn't mean we can't get hurt by global recession or downtu downturn, but we always seem to lose sight of this because of the disconnect and very quickly, central trade, hong kong and china. everyone is looking at this from a political standpoint what we can so 'do is just looking at something from a perception if china gets chest thumping when it comes to hong kong and their global stage much bigger due to trade issues, how's that going to look to the rest of the world? i think that line of thinking deserves some concentration. jon fortt, back to you >> rick santelli, i'll take it thank you. we've got much more ahead on today's rally as major averages continue to surge. the dow is up 419 points, reclaiming all of yesterday's losses the s&p and nasdaq are both up 1.5% or more right now as well we're ckn montba ia me devices are like doorways

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xfi advanced security. if it's connected, it's protected. call, click, or visit a store today. let's get back to sue herrera now for an update on what's happening at the hong kong airport sue? >> jon, you can see as we look at this live picture that the protesters are staying put they've disrupted one of the world's busiest airports for the second straight day. they are quoted on various news wires as saying they will continue to do so until carrie lam, the ceo of hong kong withdraws the extradition bill this is ten weeks of protest about this bill, which basically

was put in place by mainland china, which would allow people who are convicted of a crime to be tried and taken back to mainland china that's what these protesters want to see withdrawn. it has been suspended, but carrie lam was asked point-blank by a reporter at a news conference earlier today whether or not she had the autonomy from beijing to withdraw the bill completely she evaded the question and then she was heckled and once again, she was asked, does she have autonomy from beijing to withdraw this extradition bill and she did not answer it, so it remains suspended. but these protesters want it withdrawn and they feel as if their democratic rights are being eroded by beijing. these protests are now in their tenth week and we have seen clashes with police outside the terminal and inside the terminal we saw pepper spray and some tear gas the pepper spray inside, tear

gas outside. as you can see, it is very fluid situation that does not seem to be dissipating in any way, shape, or form late yesterday evening, canada's prime minister, justin trudeau issued a statement warning china to be, quote, very careful in ts there are about 300,000 canadians in china, and he says, quote, we need to use care and respect towards the protesters also, we have seen the uk, we've seen britain over the past ten weeks, issue several strong statements saying to respect the protesters and their right to ira their views and protest against the government, but as you can see right now, carrie lam came out this morning and issued a very strong support of police basically repeating the protocols that she has put in place for the police, but the protesters are staying put it's an escalating situation at the hong kong airport. departing flights have been suspended once again today, and

apparently there are also difficulties with some arriving flights. we're working to confirm that, but needless to say it is one of the busiest airports in the world, and it has basically been shut down at this point by all those protesters guys, i'll send it back to you >> sue herera putting today's events in context for us thank you, and there is an economic story behind this as well with tensions escalating. a new report says hong kong is set to suffer a dramatic drop in visitors seema mody has that from hq. seema? >> reporter: jon, that's right tourists are cancelling their plans to visit hong kong because of the ongoing protests. forward keys which analyzes 17 million flights a day say there's been a 22.2% drop from mid-june to early august to hong kong and a decline in long haul bookings from the u.s. and europe tourism is important to hong kong's economy

it the makes up about 5% of the city's gdp with china being its key market the major hotel operators, hilton, marriott, hyatt all mentioning the negative impact of the hong kong protests on their earnings calls hilton discussing the softening in chinese leisure travel demand further pressured by the ongoing pressures. marriott, the largest hotel operator, says it expects in the asia-pacific region a low growth in the second half reflecting caution corporate growth in china and continued political demonstrations in hong being could. now, hyatt executives expect the third quarter to reflect the okay pansies which they say have dropped by 300 basis points in the june and july period as compared to last year, so a lot to digest there. analysts of suntrust say the earnings impact is limited the bigger concern is if this results in fewer chinese traveling abroad it's also worth noting, jon, that outside the airport the northern tip of hong kong island, that's a major business shopping and tourist area, and

that's where many of the luxury hotel operators are located, and it seems as though the protests have blockaded some of the major areas there. that's another area we're watching very closely. very important to business morgan, back to you. >> seema mody, thank you. a big rally under way as the administration changes tone delaying the additional china tariffs to december 15th joining us is the founder and chief executive officer kyle bass at hayman capital investment we can focus on the trade war and rights risks of a trade war, but when you look at the protests that are continuing to accelerate and close down the hong kong airport, the response from the ceo of hong kong and mainland china right now, is that the biggest risk, the biggest threats to china and to the markets as well? >> yeah. i mean, as far -- as far as the markets are concerned, you know, i -- i'm not sure, but as far as

the risk to china, you know, clearly xi is taking china -- the hong kong protests as an existential risk to, you know, the communist party rule in china, and i think that, you know, one of the dates that i think everyone should start focusing on is october 1st you know, that's the day in which it will be the 70th anniversary of the communist party. my guess is you're going to see xi move in and brutalize these protesters at some point in time the protesters are actually very, very smart they are very well-organized and very technologically advanced, and so they -- they decided to move into the airport which is, a, air conditioned, b, a place where they can't lob tear gas in and kill -- absolutely kill tourism but at some point in time before october 1st you'll see the protest verse a real bloody battle with the chinese, and the chinese are going to move there, either military police or their military, and that will be the end of hong kong's autonomy.

>> if we were to see that bloody battle take place, kyle, how does that play out i would imagine you're going to see -- we've seen some u.s. lawmakers come out as well as democratic presidential candidates, but in general the u.s. or the administration hasn't said very much or very strongly yet on these protests and the dynamic. would you expect that to change, and how would you expect that to affect the relationship between the two countries? >> yeah. i mean, if you've noticed this morning, you know, presidential candidate elizabeth warren tweeting about the plight of the hong kong protesters and the people that are fighting for their democracy and their freedom that was promised to them and actually signed in an agreement in great britain in 1984 and then again in the u.s. in 1992. those freedoms were promised until 2047 it seems like china continues to go back on just about every agreement it signs, but you have -- you have presidential candidate elizabeth warren tweeting out this morning. you have nancy pelosi, speaker

pelosi, tweeting out this morning backing the hong kong protesters and their fight for democracy and freedom. president trump is conspicuously quiet. he hasn't said anything about it, and the free world would expect him to show some decency here, and i know that's difficult for some people to believe, but at some point in time the president will have to do something about this. >> kyle, what do you make not only of that but of the trump administration's move to delay some of those expected tariffs some people are saying that they are blinked, that they are negotiating with themselves. what's your take >> if you look at the list, so they haven't given us the itemized list, but this -- this set of tariffs was, as you know, $300 billion it was 122 pages what they just delayed were 22 of the 122 pages, and if you look at what they are delaying, it's all consumer goods, and so the capital goods and intermediate supplies are already being tariff/added, so

the way that i read this it does look like president trump has blinked. it looks like he doesn't want the price of iphones going up going into christmas, and the chinese are going to read this as a key weakness, the president that has stood up to them, but every time it makes the stock market go down a few hundred points or it might have consumer groups pushing on him saying they don't need prize -- they don't want prices going up going into christmas, you know, he backs away so it seems to me like it's fairly easily read when you look at the is 22 pages. >> kyle, as you're talking, the president making comments on that exact topic at the bed minister airport. >> our stock market continues to do very well we have very, very strong numbers. we have a lot of artificial numbers from other countries because they are all devaluing their currencies they are really doing things that aren't very good for their countries, in my opinion, but

short term it's very good for their countries. long term probably not we're not following suit right now we have to follow, just keep following. we have a very powerful country, a very strong and economic country. never been any better. the stock market is way up today for various reasons, including tariffs. i just see where we collected $59 billion in tariffs so far, and in my opinion the consumer has not paid for it because of the devaluation by china they devalued and they pumped a lot of money into their system so it's really been an amazing -- it's been an amazing period of time [ inaudible question ] >> only to help i think a lot of different people, and we had a

very good talk yesterday with china, very, very productive call i think they want to do something. i think they would like to do something dramatic i was not sure whether or not they wanted to wait until a democrat has a chance to get in. hopefully that's not going to happen because the economy would go to hell in a hand basket very fast, but they really would like to make a deal i called it very productive. i'm not sure if it was the tariffs or the call, but call was very productive. again, they said this many times. they said they are going to buy farm products. so far they have disappointed me with the truth they haven't been truthful or let's say they certainly delayed the decision, but their intention to buy a lot of farm products, and we did we had a very good call with china. i mean, they would really hike to do it you know they have a problem in hong kong, but they would very

much like to do something. >> could you consider moving the tariffs and delaying it even further? >> we're doing this for christmas season just in case some of the tariffs would have an impact on u.s. customers but so far they have had really none the only impact is that we've collected almost $60 billion from china, compliments of china, but just in case they might have an impact on people, what we've done is we've delayed it so they won't be relevant to the christmas shopping season. [ inaudible question ] >> yeah. he's a very highly respected conservative pundit. he's a big trump fan that was a re-tweet. that wasn't from me. that was from him. he's a man with half a million followers, a lot of followers, and he's respected as you know, bill barr wants to do a