50%. >> that stuck in there for a second >> no. i thought there was more to the question [ laughter ] exposure to the consumer and the defensive characterists of all the media. >> weiss >> so tough to follow that xpi. >> all right the biotechs great weekend, everybody "the exchange" starts now. thank you, scott hi, everybody. here's what's ahead. one for the record books this week saw the 30-year bond yield hit record lows and a key part of the yield curve invert that was despite a super strong retail sales report. we're going to look at the dueling data between the markets and the economy and where that leads the investor plus, could overseas weakness be the lynchpin that causes a ression here at home? markets are up today after germany says it's ready to ditch a balanced budget if it needs to we'll see how much relief that could ultimately bring and shares of ge are bouncing back after yesterday's big fraud allegations with lots of big-time investors coming to

the company's defense. we'll look at what's next. we begin with today's market rebound and dom chu has more at the nyse dom? >> so, kelly, the dow industrial's up 282 points the s&p up 41, and the nasdaq composite pacing advancers up about over 1.5%. just to give you a frame of reference, at the highs of the day the dow was up just about 335 points for those who like to look at the s&p 500, we were up about 43 so not far above the best levels of the day one place to keep a close eye on we spoke of the yield curve at length over the course of the past few months here the two-ten spread is actually six basis points wide. that's wider than it has been and certainly not inverted but this has been a steep down trend over the course of the past few weeks here. we'll continue to watch that by the way the financials the outperformers when the yield

curve gets steeper and general electric you noted some of the big-time investors coming to talk about the defensive ge it's also other shortsellers out there alleging fraud over at general electric so those shares up by 9% today of course ceo among other insiders adding to their positions inside yesterday's dip. we'll watch ge's shares for their movement today >> thank you so much welcome to "the exchange," everyone i'm kelly evans, and what a wild week it has been in the bond market just to give you a recap, the yield on the 30-year bond dropped from 2.29% to a one-handle in a new record low the 10-year fell nearly 30 basis points at one point even yielding less than the 2-year note that's the inversion everyone talks by the all this as u.s. economic data remains relatively strong so what do we make of these crosscurrents? let's bring in kate and our own steve liesman with mr. liesman a

walkthrough with some of these crosscurrents, if you will >> let's go through the first one here weak global growth we just looked at a bunch of countries, and most of them are either down in terms of their growth rate or some are even negative like the uk and germany. u.s. we just did our rapid update yesterday, 2.1% right about what most economists consider to be a trend let's go on to another crosscurrent here. kelly just talked about that recession signal from bonds. but the u.s. data, strong consumers. that's kind of unlikely at least at this point. then we get to the other split in the u.s. economy and essentially the global economy walmart earnings yesterday, manufacturing though contracting globally the growth rate down month to month over several months in the united states. kelly, even when we talk about a single piece of data, there is conflict we had the housing starts today. housing starts were terrible, permits up 8%.

consumer confidence the expectations down big, current conditions not so bad, just down 3 points so it's conflicts everywhere, and it seems like that's behind the volatility because what we have is every day the bulls have the football or the next day the bears do >> steve, we even brought kenny into the phrase. kate, i'll begin with you, and with what's happened in bond yields and the mixed messages on the economy, what's your advice for investors? >> well, i think investors really need to stay invested because of all those crosscurrents that steve just mentioned. the underlying fundamentals of economic growth despite the variation in those indicators are still positive we're still seeing economic growth slower but positive, and that's true globally despite the fact that some of the countries actually have moved into recession. manufacturing is weak, but services is strong consumers are still doing fine >> right >> and job growth is strong. so i'd say investors need to

stay invested and make sure that they're owning equities in this environment. >> one thing that makes me a little nervous here, kate, is that i read that you think people should look at international equities emerging market equities. you know, yes, valuations are attractive, but sometimes they're value traps. >> yes they can be. but when you look at the merging markets' benchmark, it's 33% in china. so if we continue to see china provide stimulus and try to stabilize economic growth and make sure that their economy's not slowing faster than what they want, then we're likely to see all of those stocks rebound on confidence that what we're going to see is better growth going forward as well as those attractive valuations. if trade picks up, it's a catalyst for global growth it's a catalyst for better growth in europe as well that's why we're saying own international. >> and obviously if trade picks up, then all of our problems are solved kenny, would you say this is

what it all comes down to? >> i think so. and certainly this nervousness of late is all that talk about the negative china, but i think a lot of that gets blown out of proportion listen, it's like anything you just can't go out and buy a broad swath. you need to do your homework you need to understand where you want to invest and what specific stocks within those countries you want to invest unless you buy, you know, the etf, the emerging market etf which is more of a broad swath. >> what do you make of the fact that the president called the heads of three major banks this weekend and talked to them about the economy and the yield curve? >> listen, i think a lot of that drama that got started on monday and the way that the market sold off, i think it demanded that somebody at least say something. i think he's trying to go out and, you know, play that common voice. but he's the one at the front of the chaos. so it's interesting that he creates chaos and then he calls them all up to say, listen, everything's great, don't worry about it >> if they all said -- and you've done a lot of reporting

on it, is it the economy, is it trade, a lot of the moves are down to trade and tariff concerns we saw this in the consumer sentiment data this morning. >> it was trade and it was the fed. those got most of the blame. do you think the president is open to hearing this feedback and coming up with other ways to be tough on china? >> one of his advisers told me for about a half an hour a day he's open to that explanation. [ laughter ] i do not want to be involved in the process of figuring out what animates the president of the united states. it's very plain that he passed an excellent tax cut that should've underpinned investment and consumer confidence. in addition, there was a big fiscal stimulus. the efficacy of which we can debate but he is not reaping the rewards of those previous efforts. the stock market has been flat for two years. if you factor in an average 7% gain in the stock market over those two years and you

attribute the fact that we haven't had that over two years to trade, then trade has cost us $3.4 trillion. okay and that is against an intellectual property problem that kudlow himself said over eight years has been worth perhaps 600 billion. so the idea that we've traded one for the other in addition to the idea that we won't necessarily reap future productivity or capital investment gains to the economy in the future -- >> but you know what's interesting? >> the problem is entirely out of proportion. >> and well described. but, kenny, there are plenty of ceos who have been behind this president in terms of cracking down on china. why? because they can't do it themselves they can't be the ones to lose the business they always capitulate, at least they need the white house to try to stand up and change behavior. >> and i'm not necessarily saying that what he's doing is wrong. quite honestly i think it's right that he's challenging china on trade and that trade

agreements that were written 10, 15, 20 years ago need to be modernized because the world is a different place. so i support the issue about challenging china on trade but it's certainly as we've seen over the last 18 months -- >> kenny, let me push back the market puts zero value on this on solving the ip problem in that any time the only thing the market cares about is an agreement -- >> that's correct. >> that doesn't mean that -- right. that doesn't mean that that's the right thing to do. >> but let me point out another thing, which i think is maybe a little bit radical i don't think the president cares about the ip problem i'll tell you why. solving the ip problem will mean only that more businesses will move over to china >> he cares about the trade balance for sure >> solving the ip problem is not going to put a 10 billion or $50 billion dent in a $300 billion trade deficit it's just not going to happen. i don't think he cares about the ip problem the ip problem is a problem.

it needs to be put in context of the broader u.s., china and global economies >> kate, i'll ask you this too, but if it needs some kind of agreement, hey, more purchases, something he thinks will solve the deficit, bring jobs back home, so to speak, whatever you will, if he's willing to take a win that's not as difficult as something like solving ip, i mean, tell us how likely you think it is that the trade war is effectively over or not >> oh, i'm sorry i don't think it's over. i think that the president really does care about trying to make sure that we reduce the trade deficit. but of course it's broadened out because of ip and because of opening markets. and if he's able to open markets, i think that's really positive i think the rest of it is something the market is now expecting investors are expecting this to take a lot longer than we previously thought because of all these issues but i think if we do get some

kind of agreement, even if it's a partial one, it's a huge catalyst that's positive both for u.s. stocks as well as for stocks in the rest of the world. and we think that's what's positive it. >> would you be able to sleep at night telling anyone to own bonds at these levels? >> i think people need to own bonds because most investors really worry about the value of their portfolio. so even at these levels, own bonds, but not because of the great returns, it's actually because of the fact that investors need to stay invested when stocks move around and bonds help them do that just like we saw this week. >> all right thank you all very much appreciate it. kate, kenny, and steve liesman to close out the week. here's what else is coming up still on "the exchange. >> ahead, achtung, will poor economic weakness drag the u.s. into a recession plus, deere blames trade uncertainty for weak earnings. but are investors betting that a deal will get done and the investment community weighing in on ge fraud

allegations. a look at who is coming to their defense. and what could be next this is "the exchange" on cnbc e, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

welcome back to "the exchange." many of the major moves in bond markets lately trace back to germany whose 10 year yield hit

negative today global bond yields are rebounding this afternoon after german news magazine der spiegel said germany ready to deficit spend in recession james is world trade editor with the financial times. and stephen is chief u.s. economist. and it's great to have you all here james, i'll just begin with you. how bad is it in germany for the economy? >> well, i mean, we saw the figures from the second quarter which saw the german economy actually contracting by minus 0.1% and this is an economy that's heavily driven by exports, and it's seeing lower sales in china and other parts of the world, so the global slowdown is really starting to bite in germany and they are looking, as you said, at a potential sort of

countermeasure so they're really suffering. >> stephen, why does this matter so much to global bond yields? why is it that the yerman 10-year pulls everybody's bond yields around so much? >> well, you have to understand just like japan, europe and germany in particular are heading towards a deflationary spiral if they go into this downturn given the fact that they haven't corrected their banking industry problem after ten years of growth just like japan didn't in the 1990s, they are going to fall into that deflationary spiral as well and deflation just pulls down bond yields. there is a global arbitrage. people are grabbing our yields because they are getting negative yields overseas >> so in other words japan, germany, they're kind of first down this timeline in worries that the u.s. might follow suit. >> the 100% correct. there is a fear that we could go down the same worm hole that both japan and europe appear to be going down. it appears europe is going down

it as well and really the problem is a function of the balance sheet. they haven't repaired the banking industry balance sheet after ten years. we, on the other hand, luckily, we repaired our balance sheet problem. therefore even if we go into a negative yield environment, we still have some cushion to keep us from getting into that deflationary track record. but as yields continue to grind lower because the federal reserve falls behind the curve in terms of what it needs to do in terms of targeting inflation rather than targeting interest rates, you get into an environment where deflation psychology can begin to build here as it is in japan and has started to get established in europe >> and, kath lynn, let's talk about this why this deficit spending thing was a big deal. and the u.s./china trade war germany, as you pointed out, is a 50% export economy that is a huge number. what recourse do they have here? >> well, so the economists here are saying a number things

they point exactly to that squeeze that you just pointed out between china and the united states because if you think of the lead industries in germany, they're machine-building, they're the automotive sector. you know, that drives, that is really the motor of the economy. but interestingly here the economists are maybe not entirely optimistic. they're warning and they're getting a bit screechy but they are also saying a lot of what we can do now, we can do nestically domestically steve pointed that out with respect to the bonds but there are also strul reforms that could rap right here at home i think the news that we got just a few hours ago that the german government is willing to do that indicate that it takes it seriously and it knows there is plenty of homework it needs to do right here, which is to say infrastructure spending which is, you know, investment in the digital environment in this country kind of beginning to really look at diversification and/or buffeting

that sort of export heavy component of its economy by thinking through other measures. because right now, frankly, they feel like they're being squeezed from the outside in german we call it something that really drives from the outside that makes -- that's a dictat from the outside. >> fremt bum -- i want to get that right when we talk about germany, we are effectively talking about europe's economy it's the biggest part of it. it's often the engine. it's often the leading tell for where everybody else is going. this week just yesterday the bigger news was that the european central bank had a board member basically saying we are ready to come out with a big b bazooka. what's going on come out of this if stephen's right about what monetary policy has or hasn't achieved >> well, i mean, this is going to be, you know, draggi's last

shot and we know that central banks around the world including the cb have limited cools left so i think he is going to go ahead with more bond buying, and there might be kind of further cuts into negative territory but, you know, i think even the policymakers at the ecb would say it's time for a fiscal policy to sort of step up because the central bankers are running out of ways to handle the situation. >> and, cathryn, even on the fiscal side, there are many different flavors this could take is that really or more big gleaming airports and fast highways going to solve the problem? why not tax cuts or incentives for business well, you know, i think the question is always comparative so when we think about

infrastructure we don't just think about roads, but we think about railways germany is not the efficiency champion it once was again, if you look to asian countries, they're really giving germany in terms of the efficiency idea when it comes to things like infrastructure a run for its money. but i think the government really needs to consider what this package would look like and angela merkel said herself we are going to look at measures when the time comes. but again here economists they're sort of adding a stabilizing voice to it. consumer behavior is still relatively stable, spending is still relatively stable. again, compared to '08, '09 when we saw a dip negative 6% we are nowhere close to that since right now they are feeling the squeeze from the outside, i think all options are on the table particularly for this government you know, angela merkel's last government so she needs to make sure that she leaves germany in good hands. so she is going to be exceptionally focused on this. and she's got the energies

behind her >> as long as you tell me the trains still run on time i don't know how bad it's gotten over there >> oh, they're pretty bad. >> guys, thank you all really appreciate it taking a closer look at what's happening there. catherine, james, and stephen. still ahead the ceo of a small boxing apparel company hit hard by the chinese tariffs whether they are getting any relief macy's and coach parent tapestry sinking sharply while walmart continues its climb this year we'll look at how that's 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

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welcome back to "the exchange." here are some of the movers this hour shares of invidia are up 6% after stronger than expected second quarter earnings. the company saying demand for a high-end video game chips helped boost their results. southwest is getting a boost and climbing nearly 4% on an upgrade to outperform from wolf research today. that firm hiking its rating based on valuation and setting their price target at $57 a share. southwest airlines just below $50 this afternoon and shares of dillards are falling 4.5% after that retailer reported a wider than expected loss and missed on revenue their comp store sales also fell by 5%. and over to susan herera for a cnbc news update hi, sue. >> hello, everyone here's what's happening at this hour police have released a

photograph of a man who was recorded on security cameras placing a pair of rice cookers in a new york city subway station. that prompted an evacuation, and it disrupted the morning commute. a third cooker of the same type was later discovered two miles away on a sidewalk federal investigators examining the wreckage of a plane crash involving dale earnhardt jr.'s family the plane rolled off the end of the runway in tennessee after landing and it caught fire miraculously, no one was seriously injured. senate majority leader mitch mcconnell underwent successful surgery to repair a shoulder injury a spokesman says the surgery was performed without incident and the fcc has announced that it would like to designate 988 as the national suicide prevention hotline's new number. it says it will be easier for people remember compared to the current ten-digit number you are up to date

that's the news update this hour, kelly, back to you here's what's still ahead on "the exchange. >> coming up, trouble on the farm for deere disney's billion-dollar dominance at the box office. and a closer look at what jay leno calls his best investment ater th's ahead in "rapid fire. or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now. lease the gla 250 suv for just $329 a month with credit toward your first month's payment at the mercedes-benz summer event. mercedes-benz. the best or nothing.

welcome back let's catch you up on a couple stories that should be on your radar. it is time for "rapid fire." and here to break down the headlines with lots of energy are leslie picker, contessa brewer, and courtney reagan. let's talk some deere, shall we? those shares are higher today even though the company missed estimates for the second quarter, it's about 13% below its recent highs how about caterpillar also rebounding today, but 27% off its high which goes all the way back to october 2018 both companies talking about uncertainty with the trade war with china contessa, main question. is all of this price action now telling us that the bad news is now largely priced in? >> i do think a lot of the bad news is priced in. the problem is that there's really no resolution in sight.

weather is never a controllable factor in farming for especially the soy bean farmers that had already gotten hit by the tariffs. there was a 50% drop in overall exports to china from 2017 the and when you look at soy beans in particular, then they got stuck because of flooding trying to get those shipments down to the port of louisiana. how do you overcome that >> so all that said, the fact that deere's only 13% off the highs. they've been in a pretty tough environment. >> listen, year-to-date it's only down 1% despite the environment. let's not forget they have forestry products as well that sort of supplement their bottom line so it's not all bad news >> what's the deal with ag we got the headlines that china was going to suspend its purchases. you've been in the middle of this, you know, time and again >> the good news is that the soy bean harvest does not come in until they've got about another month before they start

harvesting soy beans and the same thing with the rice farm the rice will get harvested at the end of sechtd, beginning of october. they are hoping there is a real thaw in the relationship their sense is that their customers in china are not going to desert them that they want to come back and buy from u.s. farmers, but the deal has to get done for that to happen. >> it's a big if though. it's a big hurdle to overcome. so we'll see they've got some time. let's talk about the u.s. consumer different part of the economy, much bigger part a lot of mixed signals there too. check out some of the stocks this week. kohl's down 6%, macy's down 16%. tapestry down 26%. the retail etf on pace for its third straight negative week, court. and yet and yet and yet the retail report sales strong for the month. walmart, target doing just fine this year. we hear from a slough of them including target and kohl's next week >> obviously you have to do your homework with retailers.

even though we know that the consumer is still the strongest part of the economy. you talked about that retail sales number yesterday was very strong and, in fact, we've seen the strongest five-month growth rate since 2005-2006 when you look at that now one thing that i always like to be careful of is the retail sales number is month to month and then the earnings reports are year over year so, for instance, department store sales month to month in the retail sales were up but year over year we're down 5% you look at a company like macy's and people are saying jeff is doing what he can. but it's still in the mall and people aren't going to the mall. >> how do you have a fashion miss when you have all these people who are dedicated to knowing consumer trends to figuring out what we want? >> i am still amazed they can ever get it right. because it beats me what people want [ laughter ] >> when you're a company at this level, you can't afford a fashion miss is that what you're seeing with coach as well or kate spade, i

know coach is doing better, but kate spade had a big miss as well >> and kate spade has been weak for some time. basically pretty much since tapestry bought them and moved from coach to the name tapestry and became this multi-brand retailer so i think that's part of the big problem and pressure on the stock is people are wondering if kate spade can be turned around. in the beginning they said give us some time and i think there was belief it would happen and now that belief is almost gone the hand bag market in north america is relatively soft, too. so they're not playing into a really strong hand there but the trends at kate spade are not what consumers want. the online numbers are actually still pretty decent. >> kohl's always seems like it's the better performer relative to someone like macy's. they keep trading down in tandem kohl's is in strip malls, it's easier to park they have those great partnerships with malls. are they stumbling >> you're right, kelly they have been doing better, although the first quarter was

pretty messy for kohl's. i think the comps were down like 3% so that sort of surprised a lot of folks and until we hear from them again, there just may be concern that even they can't figure this out right now. and i think again we just have to come back to the fact that consumers strong, but we also have more choices than we have ever had before. and we have the financial flexibility to be picky. so, you know, we're buying, doing that high-low thing still where we have some luxury product, but then still going to target because we all love a bargain. >> no matter how much money you have >> that's helpful. we'll see what next week brings. you are going to need your beauty sleep for that anyone anyway, disney's box office domination is in full display this year. it is the first studio ever to have five movies gross more than a billion dollars. and frozen 2 and star wars rise of skywalker still to come disney is also working on ways to crack down on password

sharing as it gets ready to launch disney plus all of this content is the perfect setup for the launch of that streaming service in a couple of months >> absolutely. for those who didn't see them in the theater, and for those who did surpass that $1 billion mark, these are either remakes, toy story, aladdin, the lion king so it will get people in the door because maybe they're nostalgic and also of course kind of superhero. i wouldn't necessarily call star wars a superhero movie but a skif yi action oriented. >> if none of it is rated-r, pg-13 is as bad as it gets so what does that tell you about where the trend is going just when you think the movie theater is dead, you've got all these movies surpassing the billion dollaring about mark >> ironically, the movie theaters aren't doing as well. i don't know if anybody here is using the amc subscription service. >> we're trying it out, testing

it out because of the movies that we talked about that we were interested in seeing the lion king and seeing aladdin >> but you don't have kids yet [ laughter ] you and your husband are going to see the lion king >> on our own and put toy story 4 on repeat which is the value of streaming for all these disney movies i think. but i think that's a good point too with regards to the password sharing. i was talking with a friend the other day and they said that they are using a password for i think it was showtime. they don't know what the password is. it's for someone they haven't spoken to in eight years >> but they're still logged in >> i'm a grown adult i am using my brother's netflix account. >> on national television. >> i got to come clean i need this off my conscious i feel very guilty about it. finally today more than $400 million of luxury cars is headed to california jay leno recently told us that investing in a mclaren f-1 was

one of the best financial decisions he ever made >> i bought my mclaren in 1991 for $800,000 and the last off i got was $17,000,500. and one just told for $22 million. >> robert frank is out at those -- at this event and happens to be standing in front of another mclaren f-1 up for auction this week. how many of these cars are there, robert? >> reporter: well, they only made 100, and there's only 60 on the road we are at monterey where thousands of the wealthiest collectors and the most expensive cars come here this car is the star of the week it's the mclaren f-1 from 1994 and this retailed for $800,000 when it was launched this car is 25 years old but let me show you the coolest part i want you to look inside here look at where the seat and the steering wheel is. it's right in the middle just like a true formula one car. and then look at the sound system it's got a cd changer, guys, so

you can put your -- [ laughter ] >> pearl jam, your nirvana in there. and this car's cd changer is going to go for probably 23 or maybe even more, $23 million so this is regarded as the first super car of which many have followed but 25 years old, look at it, it's amazing >> we saw you earlier talking about the millennials who are out there at the show and what they're interested in, which is fascinating. the question everyone was asking is where do all of these millennials have their money from is this a lot of tech and startup? >> it's a lot of tech, guys. it's a lot of marijuana money, a lot of sort of pot entrepreneurs here and a lot of millennials, you know, we're in a strong jobs economy, they're in good paying management and executive jobs now. they have been saving. so a lot of the people who are

here are millennials, they're buying $30,000, $40,000, $50,000 cars not a lot of money, but they just have good jobs. and in this economy the consumer is holding up really well as courtney well knows, and even at the top especially at the top the consumer is holding up well. so lots of strong bidding so far here at pebble beach they had a good auction last night. we'll see what this sells for tonight. >> a lot of marijuana money? >> i know. i just got to say if you're driving that car, you better not be playing pearl jam or smoking marijuana you better be playing the aladdin soundtrack >> i realized it wasn't my brother's netflix account. >> it was my husband's sister's netflix account just to set the recordstraight leslie, contessa, courtney, have a great weekend. thank you very, very much. shares of general electric are rebounding larry buys an additional $5 million worth of shares we'll talk about what's xtne for the company. and should you be a buyer next

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welcome back shares of ge are bouncing back sharply today after plummeting yesterday when bernie made off whistle-blower accused the company of orchestrating a bigger fraud than enron. ge forcefully responded. ceo saying ge will always take any allegation of financial misconduct seriously but this is market manipulation pure and simple. so what's next for this battleground stock let me bring in herb greenberg and tom. and it's great to have you both here herb, let me just start with you. what was your initial reaction to this report, which has been as criticized as it has been read because of all of the factors including that is working with a shortseller, that he didn't contact the company during this. we've had a number of people coming out to ge's defense

today. but you've seen a number of these issues with accounting frauds so what are your thoughts as you read through this? >> well, i was looking at it from a different perspective because i was interested in specifically what he was saying about subsidiaries of the company. but, you know, this has become kind of interesting because now you've got short versus short. you've got spy versus spy. it reminds me a tremendous amount about herbal life because i was on one side of that with the reporting we were doing when i was at cnbc. and it was just interesting watching different people just get different opinions in the end what i looked at was this look, he disclosed the shortseller position the report was certainly well over the line in what a lot of people want to see and what people will say. his rep patation is tremendously on the line with this. but in the end the real question is is he right or is he wrong, and he says we'll know in three to six months. >> tom, what is your point of view on this >> okay. so, look, the counting of general electric, which m

mr. mercopolis is questioning. and this is nothing new. this has been going on for years now, people have been attacking the accounting and in my opinion justify finally so there's been a lot of calls to replace kpmg and get a new accounting firm in to look at their work there are shareholder lawsuits already on file in the southern district new york where the shareholders are suing saying that the accounting is faulty and phony and being manipulated by the accounting firm and by general electric so mr. markopolos is just another hammer >> there have historically been accounting problems. it's another thing to say that general electric is bankrupt >> yeah. >> well, i mean, golly it depends how you defend bankruptcy i mean, look, they're over $100 billion in debt, and their market cap is a lot less than that so on some definitions they might be bankrupt. and he's also saying he's also

added that there are some additional accounting maneuvers and tricks that haven't been exposed yet. so he's bringing up some new ones too and, herb, when we talk about markopolos says i have mouths to feed, yes, i'm working with this hedge fund, of course the hedge fund has not been disclosed. do we need more transparency about the profit structure of this, for example? you know, is he required to be -- in other words, was the difference between insider trading where their hedge fund could've already made a position before this was made public to everybody versus what happens now and further share declines and whether he participates in those declines what questions do you think regulators, if any, need to be asking >> well, i think when they get to the issue of manipulation, i think manipulation would be determined if he intentionally put out this information and the -- or the fund that he was involved with intentionally put out misleading and wrong

information. i would find that hard to believe. but, again, i just, you know, know what i'm looking at here. but i think that's the line. remember, the bloggers, the shortsellers, they've been out there for years and the difference in this one is that it's ge. it's not some little podon company here that people have never heard of because this is going on all the time this is just different i think because of the size and the claims that he has put forth >> and, again, tom, we've seen people come out from many corners to say, you know, while they're flagging accounting issues, that's not the same -- the severity of what he's claiming goes beyond what he's been able to demonstrate if you are somebody who's worried about the ge shares you own going to zero about the pension you have which, again, at least has a backstop, what questions should those people be asking >> well, those people might want to look at the lawsuits that are already on file. there are so many claims of

accounting gimmicks and maneuvers. you can put ge and kpmg into google right now, and you can read about various unions and other groups have come in and said, look, there's a lot of accounting fraud mr. markopolos is like the 125th person to raise accounting problems with general electric if i had money in general electric personally i would probably be out of it. i think you ought to be very cautious it's dangerous >> that said, final word >> i just want to say one thing. we've done a lot of work on a company called lab tech. that was a tiny part of general electric transportation. what we're intrigued with when we did the work and tried to untangle it and my partner who is one of the great forensics out there, they were pulling their hair out because when they were looking at general electric transportation, it was like a black box. they were having trouble figuring it out. and we found inconsistencies in numbers that we couldn't get lab tech to answer as it related to general electric transportation.

so there's so much there that, you know, we all know he's on to something, you don't know what it is. it's a great one to follow >> it's a black box that's not going to end up well in my opinion. >> thank you, tom, herb, appreciate it talking ge today and the shares are rebounding slightly u.s. homebuilding meantime fell for the third straight month as multi-family housing plummeted 16% in july. t erwe abuthe re couple of key bright spots we'll have that for you next

new home construction dropped in july, but there were some bright spots beneath the surface. diana? >> the headline housing number was lower because of multifamily. so i want to focus on single family because it's key in this falling rate environment those starts were up 1% for the month and 2% anually singing starts in the first half of the year were down compare wd the first half of last year so any gains we're seei inin iningd especially given how low the supply is for homes now. is this a builder reaction to lower mortgage rates well if you look at the last time rates really fell a lot in

2012, you see falling rates did correlate with rising housing starts for single family but if you look now, that has not been the case. starts fell as rates fell. only in the past few months did they pick up lower rates weren't enough to counter high price, but now builder prices are moderating and builders are saying they're starting to see demand pick up so starts are back up. >> all right, diana, thanks. we'll see if the trend can continue wall street breathing a sigh of relief when president trump delayed the next round of chinese tariffs. but some small businesses are already feeling big effects. we'll check back in with a small business owner and see how she's doing coming up

welcome back the white house delayed its 10% tariff on some chinese imports with the president say iing he didn't want to thurt consumer around christmas joining me now for whether this delay is bringing relief to her business is lynn lay, the ceo of society nine great to see you

so does tariff delay help you? >> not really. what you have to understand is that we're dealing with a lot of push and pull with these announcements. so that means that from a short-term and long-term perspective, it makes it almost impossible to plan whether you're a major brand or small to mid sized business like ours >> how much of your sourcing is from china >> i would say about 20 to 30% is from china. but it's a lot of new product. so when you're talking about innovation, product development, all this partnership we've been building overseas with our pa partners then these announcements happen, our relationship gets affected >> could you or would you shift that somewhere else or bring it on shore >> well strategically because we saw there was volatility with these announcements x our team started doing some second source ing in other countries and in doing so, we would research different trade agreements the u.s. had so we could understand the volatility of those relationships as well, but it's

not so easy to just bring manufacturing to the ice you have to talk about infrastructure and the sheer scale that's available overseas. we just don't have it here it wouldn't be impossible, but it would require substantial investment into our own infrastructure t infrastructure from raw materials, mab manufacturing, machines, b labor. it's just not the same so it's not impossible, but it would require substantial investment >> and presumably, would be more expensive. so so if were a customer, what effect would i notice so far less product availability? increased prices >> the tax foundation actually released a very interesting statistic, the average american family of four would be spending at least $350 more to make up in retail cost. in other words, companies big and small are going to have to increase for every dollar tariff that is applied for additional dollars in retail costs are

applied. so the average american family of four will be spending at least $350 more to make up for the fact these tariffs have been hit on so many products. >> so the delay you've just announced, we could see that going into effect in about a third of the $300 billion of remaining imports are still going to be in effect. what's that going to mean for society nine >> our schedule will remain the same it's the fact that the commercial freight world is now in an extreme state of duress. well not duress, but rather great demand what that means is surcharges. not only now are small the to mid sized businesses trying to rush to get their products in before these deadlines, but additionally, the commercial freight world is is seeing the spike in demand and righteously so, they are increasing their rates with surcharging >> great to check in with you.

although i wish the news were better as you guys go through the period thanks so much we hope to check back in with you again. >> thank you so much >> that does it for the exchange today. i'll join tyler for "power lunch" starting now. >> thank you very much and we will see you over here in just a moment's time i'm tyler mathisen here is what's new at 2:00 for "power lunch." a wild week on the street as recession fears grip investors but stocks are rally iing just a bit again so is the selling fury over tlo at least for a while plus, two comebacks. larry culp responding to accusations of fraud with a multi-million dollar purchase of his stock. put iting his money where his mouth is and deere jumping despite another ugly quarter we've got those details. later, a contrarian cord cutting call a top media analyst says the worst could be over in