good morning it is 8:00 a.m oots 11:00 a.m. on wall street and squawk alley is live ♪ good friday morning. welcome to squawk alley. obviously, it's been a wild week for stocks the dow this morning looking for closes this week we were down 380, up 373, down 800, up 100, back in the green this morning we are trying to close for the week above 26,287 which would

get you back to flat the question is a recession ahead? ray dalia was on cnbc this morning with some of his odds. take a listen. >> recessions are always inevitable the only question is when. >> do you see one coming >> yeah, i think that in the next two years, let's say prior to the next election, there's probably a 40% chance of a recession. and i think that you're seeing this around the world. >> you know, big discussion in the last hour, guys, about what is going into some of these recession models, why some of high yield spreads are not confirming them, whether they're based around the yield spread or more >> a lot of companies in tech are starting to catch a cold plant materials which i did cover last night as promised the numbers weren't that bad they weren't far off of what was expected but their memory business is in this memory slump and people seem to get a bit skittish about

that we had cisco talking about how the uncertainty is contributing to their cautious guidance the scary music is starting. we don't know if we're going to get, you know, a slasher scene here for the economy but this is sometimes what proceeds it. >> almost exactly how cisco put it they are the worst dow stock of the week he said they saw a bit of a turn, a bit of a deflection in june or july they don't know whether this is a short-term phenomenon or a longer >> i think this is a question whether buying behavior from customers is really going to change long-term or if this is kind of a shorter term scare and there are some things that investors can perhaps do in times like this base odd what we have seen in the past, but it's still early in the game. >> yeah. i mean, this idea of uncertainty, how it's playing out in stocks, bob pisani has been early in terms of flagging what this means for earnings and earnings expectations coming

down in the second had a of the year but you look at a name like deere that reported earnings this morning it trimmed its guidance and yet the stock is up 4% right now and i think the expectations were very low coming into this name, but it also speaks to this idea that, you know, are things really as bad or could they potentially be really as bad as everybody is suggesting? also, what is the role that interest rates are going to continue to play if interest rates continue to drop, the trade war takes root, you start to see increased signs of recession, that's one thing if they drop and they help stabilize and you're not seeing that and they help stabilize consumer sentiment and housing demand, but, say, demand for things like heavy machinery, that could be very stabilizing, right? >>. >> perhaps and what does all of this mean for tech joining us now is barclay's chairman of global investment

banking, bob peck. good morning >> good morning. thanks for having me again >> i was thinking, and i wanted to ask you again, we're talking about recession fears, slowdown issues based on some of the reports we've seen is it time to isolate some productivity and efficiency plays? say within enterprise tech, names like service now, pager duty, even work day that companies might need to look at if they're pulling back, if they're looking to see where they can save a penny, either because their stocks are going to outperform or because they become buyout targets? >> so great question let me just let set where we are right now. if you just look year-to-date, the s&p is up about 17%. the dow is up 12% or so give or take nasdaq is up 17% a couple of things there you think about the performance right now of the ipos that have come out this year so this year, we've had about 30 tech ipos. now, on average, those ipos are

up about 35% plus. so it's been a great year for ipos, right? secondly, you stripped out ride sharing, ipos are up over 50%. >> we haven't heard that yet >> x ride sharing >> so it's interesting as far as how investors have been doing so far by riding tech particularly when you look at the portfolio managers that are out there that are behind their benchmarks, right, and they are looking at that incremental alpha. you're seeing a robust demand for ipos to address your question, there's a couple of things there. i think you're right i think some of the names you mentioned, if you see a pullback on growth by companies, you'll see those stocks less compacted, right? so they will be more defensive in nature than some of the grove companies. but i think almost every single one of our companies is talking about we're cautiously optimistic that we're not hitting a recession in the near term no one truly really knows. but they're going to operate their business plans cautiously until they see any signs that they need to pull back

in that case, john, your answer would be exactly right >> one of the questions i have heard raised this week, you know, a lot of focus and a lot of criticism about the quality of the numbers there, the ownership structure, etcetera. when you see a company like that now looking to come to market, does it signal a market top? >> it's a grit question. while i can't answer directly on a specific company, what i can say is by far and away over this last year, almost since the ride sharings came out, you're seeing more and more emphasis by investors and boards and management on unit economics i think the key for any of these names is look at the key unit economics. are they making a profit on the core business and, if so, how about the core business? do you actually pullback as you try and prove your economics i think by far and away, these issues that will be coming, you'll see investors look very, very closely at that unit economics. >> what do you think it would take for so-called value

investing to come back and replace large cap? that would away huge sea change. >> it would be if you hit this recession, that's where you see that taking place. you see private valuations as well as public valuations. on the private side, there's been some robust markets there it's easy to get capital fund and go public later as a prominent venture capitalist, you would know well. and he said, you know, it's funny because i'm seeing increased competition and not necessarily the valuations that i used to, that i wanted to. however, having said that, i could have told you the same thing back in 2015 look at all these tremendous gains i would have missed out on so you're seeing more competition for the more coveted names on the private side, but they've been working on the public side, you look at that for a second, multiples are in the range where they've been. so evs to revs is somewhere around where they've been. they haven't gone away from

where we were. >> is this a unit/economics issue that we're going to see here or is it a ride sharing specific issue and i ask that because wework is another one that falls under the same types of questions that we saw from lyft and uber abnb, a little bit different in this model are they going toundergo the same scrutiny? and is uber overdone it's below the ipo price if you liked it before that day, you should love it now >> absolutely. for all these companies coming, i think the unit economics is the critical issue and you take that back to almost every story that has come out recently, whether it's chewy's, the ride sharing guys, what i think is interesting, you're seeing management teams now incorporate more data around that look at cohort analysis. look at ltv to cap ratios. those types of things that can help an investor realize, okay, these losses is incremental investment and not just

incremental spend, if that makes sense. >> does the s1 take that a step too far? people are calling it the unicorn we've seen in a generation of unicorns >> i can't specifically talk about wework but what i can say is for certain scenarios, you want to see what happens if we have a recession scenario what happens to the business model at that point. can you cut back how much are your expenses variable versus fixed and how much could you pull back if you had a prolonged recession. and how much is in contracts is there a big backlog i can think about? things like that to give investors more of a pause that the companies there can with stand. >> what do you think happens to deal making in this sector obviously, we've seen a lot of m&a, we've seen a lot of acquisitions especially by the big tech companies they're under increased ring latory scrutiny. and then on the flip side of that, you've got sifia stepping in and taking a closer look at money coming from places like china. how does all of this play out

now? >> great question. so this year so far, you've had about 2.5 trillion m&a so far, the activity has been very robust, right the issues here on the drivers that you mentioned is basically great access to capital, chief capital, trying to think about expansion to incremental tams to justify bigger valuations going forward. your question, though, morgan, is spot on, right? because you have some of these counter prevailing forces such as not only things like cross border deals that can be done, but if you get through larger tech names, can they make acquisitions and now on a greater regulatory environment, they may not be able to get that done >> but they're still buying smaller stuff. just not big enough names that they draw the eyeballs in wall absolutely right. and particularly now with more

of a focus of trying to buy up competition or potential competition, even if it's smaller. you're not seeing a lot of direct buys where that's a true competition. that's being further scrutinized, as well >> just mentioned cisco. one of their lines on t call was about being locked out of the bidding processes in china could that be the start of something significant? >> all the management teams are looking closely on this. the political environment right now between china and the u.s., the tariffs implications, that's going to have the right for chinese companies, investors and u.s. companies have access to the technology all of those are very big, very real things. you'll see it probably in a faster m&a environment otherwise. >> hope to see you soon. >> thanks. still to come this morning on squawk alley, more privacy issues for facebook. haven't mentioned them in a while. smile direct club finally going public we'll get a look inside that s1 as we are at session highs dow is dn ow325 and we've

revisited 2890 don't go away. 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.

more privacy issues for facebook this morning. a tool that can be used to

access third party absence services, the company alleges it told staff about this, but not the users. facebook investors and elevation partners co-founder roger macamee joins us this morning. happy friday, roger. good to see you. >> thanks, carl. good to see you. >> it's interesting how the broader macro concerns of sort of over-shadowed the microprivacy discussions we've had about facebook what do you think is happening in there as we've been distracted with other things >> well, so, carl, this lawsuit is a deal that i think investors need to pay close attention. if the plaintiffs can demonstrate that facebook did warn its employees and did not warn the users, then the potential award could be huge.

if you think about it, there are tens of millions of affected users. this relates to tokens that give the person who has it the ability to impersonate the user. around the web not just on facebook, but elsewhere. and it's more or less untraceable. so the potential for harm is huge to me, i'm not exactly sure how long a case like this takes to play out, but the judge has already suggested he's very open to allowing the plaintiffs to have deep access to facebook data and, again, that level of transparency is something facebook as well as google and others have worked really hard to prevent if we can start to see inside these companies, the legal complications i think become geometrically more severe. >> roger, it's john. i feel like some people are taking their eye off the ball.

i thought that was a kind of sketchy idea but then this audio recording thing, with people listening at facebook transcribing audio recordings, yes, all of these companies are doing that people should have expected it to me, the core issues are people don't understand the data that facebook has on them. they really don't understand how that data exponentially gains power and obtrusiveness to see there aren't regulations to protect that those are the core issues, the way i see it >> i think you're right. as you say, all of the companies were doing this. apple stopped, everybody stopped. and in my mind, we need to be incredibly skeptical for a long time, we trusted tech

companies with our data. we just assumed that convenience would always translate into benefit. it never occurred to us that convenience might, in fact, be a drug being used to lure us into harm and that's now becoming really evident across essentially all internet platforms and some other tech companies from my perspective, i agree with you relatively the audio transcription issue. i don't know that there's a legal problem here for anybody what i know is it should be a warning sign to people that, hey, don't put alexa in your house. don't put any on of these things that are listening all the time anywhere because eventually there will be trouble. eventually someone will hack these systems. but i do think that the legal case relative to the tokens is a completely different animal. the fact that facebook warned its employees and did not warn its users and that that may have occurred over a period of years, in my mind, that makes the economic liability here something that investors need to

pay attention to because, you know, they didn't care about the ftc case. and it's possible that this case will be one of the things that's protected by the blanket immunity in that case. but if it is not, the math is real and this is a tip of an iceberg. you would expect lots of other cases. because once you start to have discovery, once data starts to come out about facebook's actual behavior, we know that they've been capricious with people's data from the beginning. and it's just not going to look good to read those transcripts out loud in a court. >> roger, i want to get your thoughts it's been about a week since this was really, you know, thrust into the spotlight of the news but i don't know that we've gotten your thought on this yet. does the fact that the fbi is soliciting proposals for outside vendors to contracting to pull vast amounts or vast quantities, i should say, of public data from facebook, twitter, the other social media companies to proactively identify and reactively monitor threats from the united states and its

interests? what do you think about that >> well, i just think it is completely inappropriate at a hundred different levels the federal trade commission just signed off on a $5 billion penalty on facebook for abusing people's privacy and then immediately we get a story about the fbi, part of the same government that wants to do more of the same in my mind, you know, somebody needs to share the hymnal around the entire choir because we're not singing together at the end of the day, i do believe that these sites are just too vulnerable. and i think we're going to see with palentier that there's a lot of abuse being used on behalf of corporations and governments. i think with the fbi, it's really transparent that what they're doing is wrong and at the end of the day, consumers need to step up and

recognize if we do not insist on better behavior, we're going to be an environment where everything we do all the time is being surveilled by somebody and i just don't think humans are designed -- we're not wired for the stress that that's going to create. and i think that that's an inherently bad idea. >> just to follow through on that, roger, do you think palentier is going to fall under more scrutiny? >> absolutely. their entire business model is based on gathering data sets, making connections and providing that to either government authorities or corporations. and for the most part, the people who are affected are innocent and completely unaware of what's going on and have no control. and in my mind, to build a business around that is ethically wrong. and, you know, i just think they have put themselves forward as, you know, speeding up the

process of doing surveillance for government agencies and corporations and that is obviously a good business because the revenues have grown rapidly, but that doesn't make it right. >> we can say that about so many of our conversations regarding some of these companies, roger >> and one hopes, carl, that we improve. >> roger, have a good weekend. thanks >> you, too, friend. smile direct club filing for ipo this morning in what's already been a big year for public debuts. leslie picker has more on that >> smile direct club is part of the whole club toward direct to consumer they sell those teeth straightening aligners for about $2,000 by removing the need for patients to visit doctors offices and integrating the process from marketing to manufacturing. smile direct club says they're passing the cost savings to their customers. in five years, they've attracted

quite a following of a revenue base of $423 million in 2018, up 190% year over year. losses have more than doubled during that time frame to about $75 million. in 2018, the company says it shipped more than 250,000 unique aligner orders smile direct filed with a $100 million place holder, but i'm told they're looking to raise ten times that, close to $1 billion making it among the larger ipos of the year. smile direct club's filing rounds on a busy week for ipo filings, web security company cloud flare filed yesterday and more in the day before that. these s-1 disclosures would allow these three unicorns to kick off their road shows right after labor day. but the week was also a rocky one for recent ipos. the renaissance ipo etf is down about 2.5% for the last week while uber and lyft are down

more than 20% each from their respective ips so with investors under water are if some prominent ipos from the first half of the year, investors could be more hesitant to bind to deals later this year, especially at higher valuations, guys >> something called my eye on smile direct they have a subbusiness. smile pays 65% of their members on this system where they're paying 17% delinquency rate of 10%. that's going to be an interesting play in this market. >> it certainly is and it's something you don't frequently see with these direct to consumer models but they say in their prospectus that they have initiated these financing programs for their consumers in order to make teeth straightening more affordable for them but you're right, it is certainly something you don't expect to see, especially with something and it's more in kind of the health care/consumer space. financing is a unique part of

their model that will be something to pay close attention to >> leslie picker, thank you. stocks in rally mode rebounding out -- rebounding rounding out what has been a wild week. the dow is up 283 points right now. here are the names leading that average. 3m, walgreens and apple. the stocks and sectors to own amid all the volatility, that's next stay with us

welcome back to squawk alley. tess ka brewer joins us now with more overseas. >> europe rebounding today over a wild week of atlantic banks and tech stocks leading the banks today. those sectors have been relative outperformers since monday let's look at some specific country averages we did see a delayed opening on the ftse 100 because of the technical glitch investors rnl not able

investors were not able to buy or sell shares for more than an hour and a half. but the ftse gained ground closing up 1.5% after touching a six-month low yesterday. the real action today is in the bond market. in just the past hour, european bonds are selling off. the yield on the german ten year has jumped to session highs over reports that policymakers would initiate deficit spending stimulus plan if the country were to enter recession. as you can see now, it stands at negative .68%. it comes after data this week showed germany's economy contracted in the second quarter. john >> thanks. let's get to sue herrera for a news update. here is what's happening at this hour. the state department says it will revoke u.s. visas for crew members on an iranian oil tanker that was seized inga bathroom t but released thursday.

south korea's military says north korea fired two projectiles into the sea they are believed to be aimed at pressuring washington to speed up nuclear diplomacy it was pyongyang's sixth round of weapons launches since late july former new jersey governor chris christie who once told a heckler to sit down and shut up is forming a think tank to discuss way toes bring civility back to politics the christie institute of public policy will be based at seton university law school where christie got his law degree. and russian billionaire pokrov has agreed to sell full ownership of barclay's arena to joseph tsai, vice chairman of alibaba. total price, about $3 billion. you're up to date. that's the news update this hour

carl, back downtown to you >> sue, thank you very much. major averages are on pace for their third straight week in the red. but they're narrowing the losses today. we're just off the session highs. dow is up 267. our next guest says now is the meo buy this dip the chief global equity at city sess going to join us next

volatility returns john chu has more on that.

>> so we've been talking about what's happening with the dow and how many points it's lost and gained throughout the week here for those who subscribe more to the s&p 500, they think it's more indicative of the markets let's show you about what happens this week in points for the s&p 500. now, monday we were here down about 35 points and a time of that drive right there was banks cutting some gdp estimates among other things then on tuesday, we saw a nice move higher by about 43 points on this side here after we got tariffs delayed up until, you know, december 15th for some of those. but then, on wednesday, we fell another 86 points on the s&p 500 after the yield curve inverted short-term rates going above long-term rates and the fears of recession that come along with it just yesterday, we kind of managed to give back around 7 points in the s&p 500 after that trade duelling headlines with regard to whether or not we could see a mutual deal happen

in the future. and then, of course, that brings us to today, up near session highs right now for the overall s&p 500. as you can see on the bottom of your screen there. so the wild ride and hundreds of points for the dow translates down into 35 of 43, 86 plus 7 through thursday of this week. that's the roller coaster live when it comes to the broader s&p 500. back over to you >> strap on your seat belts. donald, thank you for breaking that down for us city investment research is out with a new report this morning saying bear market checklist says buy this dip. with us now is the author of that report robert buckland. robert, thanks for joining us. why? why buy this dip >> well, what our bear market checklist is intended to do is to show whether a dip is destined to turn into a proper bear market. we got up to 13.5 red flags back in the 2007 peak we got up to 17 1/2 back in the 2000 peak.

we're still in the upper 3 1/2 now. so i think the market was due a correction we were waiting for a dip to buy into we think this is the one that we would take on right now. >> what would you be buying right now, specifically? >> i think just buy the broad equity asset class i think that there's some value there to be found in, say, some of the more cyclical areas we quite like the energy sector materials and so on. so we like bit of that, but we also keep a core holding in the broad technology sectors across the world right now, as well so buy everything in terms of buying the indices >> robert, what are the flags that it would have taken for you to say don't buy this dip or how many flags would it have taken >> yeah. the ones that are worrying at the moment are the ones that just mentioned the 10 minus 2 yield curve. that's been a good, historic indicator of a recession and

bear market to come somewhere about 18 months out. so it's really important to emphasize, this is not a coincident indicator it doesn't invert and then you get a recession the next day it investors and then you get a recession in 18 months time. that's one that's worrying we're worried about the state of corporate balance sheets, but there are a lot of other things that are much less worrying like mutual fund flows are pretty week that's typically very high at the top of the cycle so we can see some things to worry about, but we can see more things to not worry about. that's what the checklist is supposed to help us deal with. >> robert, back in july, citi published a bear market checklist. about 4 of 18 xoints were flashing sell and that's compared with 17 out of 18 back in 2000. is it still four or has it risen sense then >> it's still 3 1/2 right ow other things don't look so

worrying >> and city is pretty aggressive about their calls for a rate cut. why would you be want to go buy this dip if you thought citi needed to come to the rescue >> that is part of the eye kwagz that we have to throw into this is the move in monetary policy we saw something very similar to this back in '15, '16 where the stock market fell about 15%, but our bear market checklist was telling us to buy into that dip. we think we're seeing something similar now. the market in the short-term could still go down more, but this is the kind of dip that we were waiting for we didn't want to chase the market higher, but this is the kind of dip that we were waiting for to get our clients back in >> it's interesting to talk about that or for you to talk about that comparison to 2015, 2016 we were actually talking about it on this desk in the past hour, as well. what do you see as a similarity? is it the fact that you saw the industrial side of the economy weaken and going into recession

while the rest of the economy, the consumer services side stayed strong? >> yeah. global pmis back then were weak. china was weakening then global gdp slowed down from 3.1 to 3.2% growth down to 2.5 right now, we've doiwngraded it to 2.8 so we're going the same way. we're not there yet, but there is a slowdown going on out there. we think this slowdown will eventually be turned around, as well >> robert buckland, thank you for joining us today ge is a big story today. responses of allegations of fraud giving the stock a bump. rick santelli, plenty to watch today. >> no matter what direction you look at, and the irony is just incredible university of michigan inflation numbers firm up. solid retail sales we're going to talk about how

our economy differs from the picture beinpatebylog ind gbal drops in interest rates, after the break. 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,

visit reputationdefender.com or call 1-877-866-8555.

rick santelli. >> thanks, john. everybody loves a friday edition of anything. and this exchange is definitely one of my favorites. just because of the strangeness of it all.

we see that central banks are doing their best to try to all race each or for a variety of reasons, not the least of which is, of course, involved in foreign exchange currency valuations, especially those with export economies and much to the extra grin of emerging markets who have dollar funding issues and i can go on and on we are very firm in the dollar index, although it looks like a real true test that 98.5 level which would represent a new 27-month high which may not be in the cards today and talk about a good week for data, let's give a quick synopsis back to backs, .3% unseen since 2001 if we look at retail sales, i can talk about all the components that were strong, but i can make it easier the control number used to plug in other numbers down the economic food chain was 1%, super solid. and maybe one of my favorites, and it's not solid enough, but it is moving nicely in the

correct direction. our preliminary look on second quarter productivity was up 2.3% and while all this was going on, leths sh let's show some charts here is a daily chart of bund yields although they've been a reversal maybe they'll have some deficit spending jeremy has surplus budgets, but if you're in the export auto business, that is mostly internal combustion, you may have a problem, houston, down the road and that is aggravated by all the other issues, structural and monetary in europe in general. if you look at the one-week chart of bunds, you can clearly see how it's been deteriorating in year-to-date of bonds maybe the biggest irony of all, our data certainly, absolutely in my opinion is not even in the same zip code as a recession in the nearby future. we know there's a recession out there, debating it is like debating whether you're going to die or not

both are assured to occur. the only issue is when and many have not been very good at predicting the when, whether it be yield curve or not, time issues, and as to that yield curve, the conversion didn't last long. i think the behavior of much of what's going on in the fixed income market particularly in the sovereign debt market with credit markets involved in all this certainly isn't giving us a major assessment of the economy in the u.s the biggest issue is how it proceeds into monetary policy, trying to find a cure for shortcuts taken about 10 years ago when the crisis, of course, confused many. and i guess my final thought would be pay very close attention to the knob spread because if that continues to flatten in an aggressive way, my guess is 136 and ten years the

double bottom isn't long behind. morgan, back to you. >> key points there, rick santelli thank you. general electric is higher this morning after an 11% drop yesterday. its worst single day drop since the financial crisis following an inflammatory report from marry marco polos accusing the company of fraud and a scandal bigger than enron and -- combined >> the numbers are missing they report top line revenues, bottom line prots and nothing in between like expenses, research and development, it's all missing. including cash flows. they don't provide working capital. it's the only company in that industry to provide working capital. ge's working capital is minus 3 billion. their current ratio is .67 they have a company that does that that's accounting 101. >> so ge board member leslie sideman joined me in an

exclusive on closing bell yesterday to respond to this saying the claims were baseless and set a dangerous precedent. >> i think we have to get to the bottom of this i think this report today set a dangerous precedent where somebody can just say things and then potentially benefit monetarily, significantly from the decline in the stock of the company. that is wrong. and i really think that we need to investigate the motives for this and -- because here we have mr. marco polis and whatever this unnamed hedge fund is probably benefiting significantly financially today, yet the holders of ge stock have suffered a loss. and i just think it's wrong and we need to look into this sort of unsubstantiated reporting without him ever contacting the company for comment or for an opportunity to respond to any of the allegations. it's just wrong and i think we need to look into it >> meantime, ge's ceo buying

more than 250,000 shares of the stock yesterday following an additional share purchase earlier in the week. upwards of $5 million this week, doubled his stake in ge and that is helping give lift to those shares today they are currently up 8% right now. looks like a session high in today's trading .and, guys, i think what's been notable about all of this is how many analysts, high profile investors, some hedge funds, have come out and i'm not going to say defended ge, but have come out and said if you cut through the noise in this report, a lot of this was already to a certain extent known through the financial filings that we already had. i think the sentiment from the folks i've spoken to so far has been that, yes, there is a lot of risk for ge they are certainly not out of the woods. there is a growing expectation they're going to have to, you know, put more reserves on hand, take more charges for that

long-term care business. but this idea that the company could go bankrupt. the cash flow, that essentially being called into question here, but, again, we're going to see how all of this continues to play put >> we will wait to see if moody's or fitch have anything to say on this >> and regulators, too >> citron today, the report is the worst that activist short selling has to offer aggressive accounting is not fraud. disingenuous all the way through. so you have fellow short sellers disagreeing with marco polis' information, as well >> basically he's saying all these people missed it and here are some specific things that he's alleging ge did wrong hopefully ge will come out with kind of a point by point breakdown of their argument that there are factual inaccuracies in his report. for those of us who aren't insurance specialists or accountants, i feel like -- and that's mott investors -- they

would benefit from that. a developing story, we will continue to see how it evolves from here and it's worth noting that the s.e.c. and the doj have been and continue to investigate this company over some of its accounting methods in the past, including around that long term care insurance business. so yoveng this is the last -- and the company is going through its annual reserve reviews so i don't think this is the last we're going to hear about this by any means. shares are up 8.5% right now after the break, inside virgin galactic's space port, next

welcome back to "squawk alley. after years of delays virgin galactic has finally moved into its new home in the mexican desert, the world's first purpose-built commercial spaceport, spaceport america virgin galactic is hoping to send paying customers to the tune of $250,000 to the edge of space from this architectural outpost. it's a reality the company hopes to pull off within the next year we got an inside look at the spaceport and mission control before anyone. virgin galactic's ceo george whiteside spoke to me about when he thinks virgin galactic can begin turning a profit >> probably evident in some of

the financial projections we've put out there, we think it's a profitability business once we start commercial operations. obviously this is not something you can go do in many other places, so there are premiums attached to that obviously our number one focus is on safe operation right from the top. >> we also talked about weather hypersonic travel could one day become a reality >> this would be a great place to start that kind of service. ultimately of course we think the advantage of a winked vehicle is that we'll be able to fly into international airports around the planet. while that's a long term goal, we think it's a very exciting one, a huge market opportunity and one that we're excited to tackle eventually. >> just a reminder that virgin galactic is in the process of merging with social capital, so it is poised to go public and start trading here at the new york stock exchange, before this

year is out. guys, didi did ask him for upda on the customers list. he says it's still 600 people on the customer list. since there were flights to the edge of space earlier this year, they've been absolutely deluged. we've gotten a few thousand requests to do this. just a fun little factoid for you, whiteside, who is the ceo of virgin galactic, actually started out as one of those customers. so he himself does have plans to make this trip >> hmm any analysts running numbers out there on what happens to the space business in a slowdown or yea downturns? it seems like in the hierarchy of needs, space travel is not near the top >> that's a great question you're seeing more defense dollars allocated to space travel that to a certain extent i would say, you know, is more secular growth but on the commercial side, i don't know i'm going to dig into that a

little bit, we'll see. >> elon musk said overnight when we have to nuke mars, so there is that. >> drop the mic. >> we're back in a minute. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

can't brain some people for wondering if we've found a short term bottom this week. dow is up 288. names like deere are up. tapestry down today, goldman up today. so we'll see bad news has been taken with a grain of salt. >> absolutely, all major indices are up more than 1% right now. tech is the best performing sector in the s&p thanks to some of those better than expected earnings from applies materials and n individuvidia. >> pagerduty is up 7%, uber is up 5 >> nvidia was leading the s&p on the open on this story about high end video game chips. we know some consoles will get a break regarding tariffs later in the year >> the switch helped them, where is amd was hurt by its video game tie-in. you can't win them all

>> one of my favorites is for the week, walmart is the best dow stock, tapestry one of the worst s&pers next week we'll have jackson hole to kick around, the picture will get more complex. have a good weekend. let's get to the judge over at post 9 all right, guys, thanks so much i'm scott wapner front and center where do investors go from here? our investment committee is on the case it's 12:00 noon. it's "the halftime report. >> announcer: investors going on a wild roller coaster ride the major cross currents in this market that could fuel more volatility southwest getting some love from wall street with a bringing upgrade. it's the call of the day and get ready for a monster week of retail earnings target, home depot, and more your trades ahead of