perpetual low interest rates mean that owners are going to take equity out and do renovations. >> snap one of the best performers this year pete had it for his unusual today. >> medtronic >> i'll see you tonight at 5:00. "the exchange" begins right now. thanks hi, everybody. here's what's ahead. retail comes raring back target and lowe's are soaring today on strong consumer spending are investors and economists merely talking themselves into believing a recession is coming? we'll discuss that plus, the great rate debate. president trump tweeting that germany shouldn't be able to borrow more cheaply than the u.s. this as we learn our federal budget will likely cross the trillion dollar mark next year and that's before any stimulus the president may be considering. what will the fed make of all of this and netflix is already losing market shares in the u.s. 401(k) millionaires are at a new high and will hasbro and marketing

headaches simply create a new one? we'll begin with today's rally dom chu has the number >> we are near session highs right now. green across the board the s&p 500 nearly there up almost a percent and a similar move here in the nasdaq composite near session highs all in the green. it's almost like that big drop in the stock market last wednesday never happened if you just fell asleep since then, you can rest easy. take a look at what's happening right now with the s&p 500 because like i said, we've gotten back almost everything that we lost during that big drop here. however, this could be an area of near-term resistance or a potential stalling out of the market you want to watch 2946 in the s&p 500. that represents the 50-day average price for the overall index. it's a technical level that some traders are looking at with regard to kind of maybe a little bit of a stalling out period then as you mentioned the stock of the day when's the last time you saw a

big cap big box retail do this up 19% in a day. it was already up 41% going into today's trade from the lows that we saw back in december up another 19% there, a massive move higher for target so retailers have been focused all week target probably i'm not going to say probably, it is the stand-out. big star here because that is a new record high for target back over to you welcome to "the exchange," everyone i'm kelly evans. the ceo releasing new projections. cbo's forecasting will slow to just 1.8% after this year. and hong kong protests are ramping up again today protesters were barricading the inside of metro stations and setting off fire extinguishers we'll bring you any further updates. but first, mike, specifically the relationship lately between

bonds and stocks >> yeah, kelly and it has been an incredibly right relationship recently in one direction. when yields have gone down, stocks have basically been weaker you see today the treasury up 10-year yield. here's over the current month actually in august what you'll see is those yields kind of bottoming out middle of last week that was basically the low in the s&p 500 as well. and you see some effort at stocks trying to create some separation between these yields. well, that's because those yields have stopped making new lows why is this? this relationship kind of changes over time depending on conditions when the 10-year cracked below 2% and started accelerate lower, it crystallized fears about recession and about whether the federal reserve could support the market with just a modest easing i do think for now anyway, yields probably have to stabilize before stocks can make too much headway but you don't have to think far back really to say when the

10-year was above 2.5% when yields went higher it started to be a restraint so this is not a fixed relationship, but it's been one right now that's been very strong >> you have your finger on it. >> i should also point out that low yields are kind of exhibit a in the bull stocks they make stocks look relatively more attractive. >> absolutely. >> so it's not necessarily just a one-way dynamic. >> if people were assured there was no slowdown coming half of the s&p yields more than the 10-year right now. >> that's right. it's about 2% dividend yield >> michael, thanks great to see you president trump speaking on the white house north lawn a short while ago railing against the fed again and saying the u.s. will probably make a trade deal with china. eamon javers has all the details. >> reporter: what a reversal from the president yesterday when he talked about considering all sorts of different tax incentives to boost the economy. today i asked the president on the rope line as he was heading

to marine one are you considering any new tax cuts and the president said no. he believes that the economy is strong and therefore we don't need any additional tax cuts and on the issue of indexing capital gains to the inflation rate, the president had this to say about why he's not considering it >> i'm not looking to do indexing i've studied indexing for a long time i think it will be perceived if i do it as somewhat elitist. i don't want to do that. i want taxes for the middle class, the workers, the people that work so hard. if i wanted to do it, i believe i could, but i'd need a letter from the attorney general. >> so no one indexing, no one payroll tax cut. because the president says the economy is good. that streamlines his messaging because earlier he had been saying the economy is great, but we need all this tax stimulus. now he's saying the economy is great and so we don't need tax stimulus we'll wait and see whether the president changes his mind again though tomorrow. this has been a wild week at the

white house of denying things, the president affirming them and now the presidenchanng his mind >> but when he says he wants to help the masses, is there any sign that there is something in the works like that? >> it doesn't seem to be now it looks like the president's standing pat but stay tuned. >> eamon javers. let's talk about these recent moves in the bond market which are fueling a big debate over whether or not a u.s. recession is looming mary daly said, quote, one thing i am looking closely at is whether the move gets so out of sync with the data that the fear of recession becomes a self-fulfilling prophecy let's bring in jeff and lindsay. great to have you both here. and, jeff, are you hearing this from clients >> in terms of will this become a self-fulfilling prophecy i think is what you're asking. and to some extent, yes.

i think the psychology is what's been pushing things around as you know, kelly, we have continued to be positive and do think that things are moderating but this isn't collapse. this isn't recession and our message has been be careful what you wish for because my experience is that hot steamy robust is just as bad for the financial markets as is recession. and what we see is a steady as she goes kind of pace, not perfect steady as she goes combo, but pretty nice combination of positive but moderating earnings growth and that's a good cocktail for equity >> i guess my question is when you say this to clients and explain the landscape as you see it, do you get a pushback? are people out there themselves feeling like they need to hunker down they see these headlines about the yield curve. i feel like the cycle's going on too long i want to get more defensive or are they receptive to your saying and is there some optimism still about this cycle?

>> by and large they are receptive. and certainly we have had dialogue with them about the things that we look for, for recessionary signals so they become comfortable with that now you always get a small sub segment that really do get concerned. and then you need to talk\you know, potential adjustments that they should make just to sleep well at night. but by and large, people are pretty much comfortable that the data is solid and that the risks are that you get whiplash, you move away from equities at the wrong time, and then you miss the rally recoveries >> and, lindsay, there is some specific parts of the data that are setting off alarm bells. namely, you can look at freight volumes, you know, the cass freight indexes are out there saying a slowdown is here, it's happening. the manufacturing numbers haven't been that strong even some of the wonkier stuff, like you had jp morgan last week saying the noose is tightening around labor markets is there a worrisome trend here

for profits and for business investment we need to keep our eye on >> i think when you look out to 2020, you see 11% earnings growth that's still pretty robust considering we have this tariff issue as a cloud over the economy and the markets. so i do think those numbers need to come down over the next few quarters but, yes, of course, there are pockets of weakness in the domestic economy but i am more worried about the global economy, the pmis we are going to get tomorrow. are they going to continue to stabilize or are they going to continue to contract so that's really going to be the most important thing to watch. >> for the markets in general it's a bigger problem than it is for the u.s. economy what's the s&p exposure to earnings overseas? probably something like 25, 30% whereas the u.s. economy is more like 13% so even when corporate america sees that slowing, is it something that, quote, unquote, the rest of us need to worry about? >> i think the media might be making a bigger deal of it because we are not an island in the u.s., but it does take some

time for the slowdown you're seeing around the rest of the world to get here because we are not this big manufacturing economy that we once used to be. that's more in europe and asia and that's why you are seeing the weakness more so over there than here. we are seeing this uptick in the market today on fundamentals out of target, out of lowe's, new home sales were better than expected retail sales very strong last week the last two weeks i've been encouraged by the fundamental data >> and, jeff, in terms of getting tactical for the market here, you like consumer discretionary, you liked best buy, target and mcdonald's and i think you liked target before the pop today, technology mike micron and splunk. you like fedex and cvs and pepsi. so pick a couple of those out. why are those attractive to you here >> well, we've got balance you've got things like mcdonald's that would be more defensive than pepsi

but we also see on those days when the market has a risk on attitude that you get a best buy, a target today certainly that's ripping on good fundamentals and a fedex that also rallies hard as does micron so they have that cyclical exposure where you see good valuation and actually good fundamentals that are unappreciated when folks expect recession. but you have to respect risk and the psychology swings that you're seeing and having a mcdonalds in that portfolio and a pepsi on those days when it's not working for you, it's nice to have those as well. so that's why we have a balance between these two. >> thank you both. i appreciate it, guys. jeff and lindsay talking through these markets. the yield curve did invert briefly last week when 10-year lows slid below 2-year treasury yields bank of america's ceo brian monahan said an inversion does not have to indicate a recession. and my next guest says he thinks

are misleading he's a financial strategist. and, dick, it's good to see you again. so welcome what bothers you most about the claims going around right now? >> well, just about everything because i think they're based upon a failure to look at the facts. in 1953 we created the 10-year treasury in the 66 years from 1953 to the present, the yield curve was inverted on 22 quarters. we find out that 17 of the 22 inversions occurred between 1966 and 1981 and there were only five inversions in the other 51 years, you know, in this total period so the question then becomes what happened in '66 to '81 to create those inversions. and there were a bunch of things the vietnam war was picked up. the great society program was put in place by president johnson. the nation committed itself to building 26 million housing

units over a ten-year period a barrel of oil which was $3 in 1966 was -- the bulk of the situation developed in '80 and '81 when he closed the economy down but the point is that it was an aberrational period. and therefore to draw conclusions from that period and apply them to today is a stretch. >> and there are plenty of people to just look back and say the last time we had an inversion, so i'm just looking to this recent example as you sort of answer that, explain why, and this is really where it matters most. you think the banks can make plenty of money in this kind of environment, even if the yield curve happens, it happens persistently and does it matter which kind of banks? >> basically, facts have to matter at some point and the period in which you have

the 17-yield inversions from 1966 to 1981, bank earnings went up every year. they went up 16 years in a row they went up through the 1973, '75 recession. they went up in the beginning of the vulca push they went up in every year so when someone gets up and says that an inversion in the yield curve suggests that there's either going to be a recession or that there's going to be a problem with bank earnings, that's theory. it has nothing to do with fact that's the biggest problem in looking at bank stocks >> what happens -- let me just cut to the chase of what the yield curve is worrying people about. i would assume that in a down turn, then you're talking about a real threat to bank earnings to bank stock prices and so forth. is the basic case that you're also making that you don't see that kind of slowdown coming >> there's no likelihood that the inversion of the yield curve that's occurring in this period, a, is similar to the ones that

occurred in the prior period or, b, that it will lead to a recession. what is happening in this yield curve inversion is that you're getting a flow of money coming into the long end of the curve pushing the long end down while a short end is held up by the fed. what happened in every one of the other yield curve inversions going back, as i say, to 1953, is the short end of the curve went up because of either inflation or because of a stronger economy so whereas there was a shortage of funds, it caused the inversions prior to this one, in this case there's a surfit of funds. it means that this yield curve of inversion is due to the fact that money is flowing into the u.s. economy, and that's not going to create a recession. >> all right >> other factors may do it, but this yield curve inversion is not going to do it and the statement that banks can't make money in an inverted yield curve goes against every fact that we have about banking earnings and about yield curves.

>> dick, thank you so much appreciate it today. >> okie doke here's what's still ahead today on the exchange. >> coming up, the world's biggest retailer sues tesla as its solar panels catch fire. what it could mean for the automaker. a lot has changed. and, yet not much has changed. a look at how the economy and the market has shifted since the last fed rate cut. and is this as good as it gets for netflix this is "the exchange" on cnbc ♪

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welcome back to "the exchange." a head-turning story between two major companies today. walmart suing tesla after some of its solar panels caught fire at seven walmart stores. walmart is saying that widespread negligence has led to those fires and is now demanding that tesla remove the panels and pay millions in damages. let me bring in arie list really shining a light on their solar city acquisition a couple years ago, tesla's, that is how much of a blow could this be potentially to their reputation? >> it would could be a really big blow the solar business itself is not particularly big it's only about 5% of revenue. this is a car company. what they do is make cars, and

they have plenty of challenges in that business solar is the sort of tangential market that elon musk had this vision of. he was the chairman and principal shareholder of solar city when this deal went down in 2016 he had this vision of a company that could do everything in the energy sector and sort of control its own destiny. that solar business has been in decline since the acquisition. this really just muddies the waters and makes things that much more complicated. >> what do you mean by that business being in decline? i'd have to say as a consumer having done some research at home, you know, it's still very expensive. i don't know if that had something to do with this announcement on sunday from elon musk that they're now going to let you rent rooftop solar systems without a contract instead of kind of having to deal with the current structure of buying them what is the market like for solar panels right now >> the market for solar panels is okay. it's just that there are a lot of players and it's not a particularly good market for the companies that

are doing the installation so it was never a very lucrative market for solar city. they were losing tons of money, and they were billions of dollars in debt. tesla acquired that business, and they said they would be investing in it, but if you look at the number of installations, the amount of installations they've been doing, they have just been in decline over the years. there are other companies that are doing more of it it is still not a very profitable business for everyone the latest announcement by tesla to do rentals, you know, it perhaps puts them on the map in this market in a different way it >> gives them another way to compete. but you don't see anyone saying that this is going to be a game changer for them >> it's 114-page lawsuit that was filed on tuesday walmart says the issues that caused the ground fault alerts which contributed to the fire in the fall of 2018 at one of their yuba city locations result in tesla's utter incompetence,

callousness or both. that's a lot coming from walmart. >> and they went directly at the business model and the broader ethos around tesla and elon musk in this sort of grow at all cost, you know, in silicon valley, growth is more important than anything else and really what they were left with was shoddy craftsmanship at all of these locations according to the allegations it's 240 locations that walmart now where their solar panels and walmart no longer wants them and wants tesla to be liable for them >> this is getting a lot of attention. ari, thanks very much. still ahead, a bank in denmark will let you pay back less than you borrow on your mortgage those details and the economic impact are coming up later we'll get the impact on a looming decision in oklahoma versus johnson and it could mean a major stock

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welcome back to "the exchange." here are some of the movers this hour urban outfitters is climbing higher despite a wide miss on revenues and a comp for anthopologie sales for mall merchandise has been strong across all brands. different for children's place the company issuing weaker guidance citing lower profit

margins and the impact of the latest round of tariffs. and aflac. according to the report an update to its data systems caused customers to be temporarily uninsured or doubl charged for policies it'll take until october for the system to be fixed aflac says it's reviewing the situation. shares are down 4% now over to susan herera for a cnbc news update >> hello, everyone here's what's happening at this hour the federal budget deficit growing faster than expected according to the congressional budget office. the deficit will reach and 1 trillion the year after. rising deficit projections are the result of sluggish growth in federal revenue after the president's 2017 tax cuts went into effect. the danish prime minister was surprised learn that president trump was cancelling his visit to denmark next month. this after she rejected suggestions of selling greenland

to the u.s >> it is with regret and surprise that i received the news that president trump has canceled his state visit to denmark on the 2nd and 3rd of september. i have been looking forward to the visit. our preparations were well underway >> and according to the cdc, many diabetics have been cutting back on their medication because of cost. it said more than 13% did not take their medication as prescribed in 2017 the annual cost was nearly $5,000 you are up to date that's the news update this hour >> sue, thank you very much. here's what's still ahead on "the exchange. >> ahead, target hits the bull's eye on its latest report what spider-man is telling us about the battle for content are netflix's glory days behind it and hasbro tries to say good-bye to plastic

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where big tech meets the street >> investors clearly want a piece of the action. >> are some tech growth stocks coming back into vogue >> "squawk alley" is live. >> morgan brennan, "squawk alley" 11:00 a.m. eastern on cnbc welcome back let's catch you up on a couple stories. it is time for "rapid fire." here to break down the headlines

are dominic chu, kate rogers wait, what was her name again? you know, the spider-man, the girl >> mary jane >> we'll explain in a moment and bill griffeth. welcome, everybody first topic let's talk about shares of target and lowe's today which are absolutely soaring after both reported blowout earnings this morning. target hitting an all-time high with a 19% gain today. it's over 101 bucks a share. lowe's having its best day in 11 years and home depot at an all-time high. >> you know who should be here to talk about this >> courtney reagan perfect timing how much better -- i mean, target was already up how much this year? and it is up 20% today >> this was pretty astonishing it's that winners keep winning we knew that walmart was strong. we had suspected once we saw walmart's numbers that target would be the same largely because while there are different retailers, they are employing similar strategies >> what are they doing >> so what they're doing is they

are really kind of leaning into the stores to be honest. walmart did close some stores, but they didn't go through this big store closure program like many others did. in fact, target said, hey, we are going to remodel stores, we are going to add a bunch of smaller ones and we are going to use them as fulfillment hubs i think a lot of investors and analysts were wondering if it was going to work. 40% of their comp sales growth from this quarter came from the same-day options that are fulfilled through the stores >> now. >> i'm interested in the lowe's story. it also did very well and had actually better sales growth than home depot. >> in the u.s. >> but here's my question. rvin ellis spent four years at j.c. penney. he was unable to turn that around and already little over a year at lowe's, and we're starting to see green. >> but he's got secular tail winds from the consumer on the home improvement side of things. one of the things that lowe's said was a strength with

contractor services, which means the pros who go in there to buy the stuff and then remodel people's bathrooms and everything else. so that's the key there for a lot of those guys. >> that's been an area where lowe's frankly has underperformed so it's an area where they could grab some share and they are doing a better job of it and i understand what you're saying about ellison but before j.c. penney he came from home depot. and most people had pointed to his strength as sort of an operator he can go in, look at sort of the retail fundamentals. let's fix this >> so what would happen if we sent him to macy's [ laughter ] >> but also macy's is a department store, and that's a group that is troubled right now, frankly most people think that a retailer like a macy's or a nordstrom have leaders that are doing the right thing as much as they can but it's still a department store. >> by the way, i would add this. the one person you want to kind of give a slight shoutout to here is brian cornell over at target who in the second half of

last year was on cnbc saying this is the quote, unquote, best retail environment he's seen in his career he said that and so he's kind of called this american consumer strength way back before we talked about the recession. >> and if you told me it was going to pan out just like you said in the 10-year, whatever ridiculously level at, that's the amazing bifurcation we are seeing here. >> are really working for me and they have these clothing lines that they've invested in that are cheaper but a little bit nicer than things that were in stores. i'm one of those people that goes into target to spend 20 bucks and $100 later here we are. >> i was in that quarter i will just say contributing courtney, thank you very much. we know you're super busy. topic to spider-man. that's why we are talking about mary jane from earlier spider-man, i'm sorry, they're out of the marvel universe after today. why? sony and disney failed to come to financial terms for future movies disney wanted half of the

profits in exchange for half producing the cost of the movies but sony reportedly balked at the terms. so after five movies together, this is what's so interesting about this apparently no disney marvel film now can so much as mention his existence. >> tone it up. >> i don't think it's a done deal yet i think we've only seen the opening salvos from both sides here but i think sony has the most to lose in this particular case not having spider-man included in the marvel cinematic universe, although disney, you know, they are playing with fire here because spider-man has been the central figure in all of the marvel super hero movies >> and the movie agreement was that disney would only take 5% >> to this point they've put up all the production money through marvel they get 5% of the gross

then sony gets everything else that sounds the alittle lopsided so they just went 50/50 and sony says no way disney says to be saying we're going to make all of this great tv content and double down on that channel and we're just not going to worry reading between the lines about these future movies which the last couple didn't even do so well >> there is no doubt that spider-man was seen as the future of the mcu, the marvel cinematic universe >> please don't use that [ laughter ] >> i am only explaining it because when people see mcu, they're like what the heck is that over the last maybe few years, there has been this active effort to integrate spider-man which is a sony side property but still part of marvel into the disney marvel avengers franchise. he made an appearance in captain america civil war. they were trying to integrate

them so the idea was in the future after they, spoiler alert, you know, by now if you haven't seen avengers end game, you know that tony stark dies. [ laughter ] >> i didn't see it, dom! >> and spider-man is supposed to be the one that's going to carry that mantel forward. so this is a big step back and if you're wondering just how big, check out ryan reynolds' instagram or twitter feed because he's deadpool, right in, this whole process which is another fox marvel cinematic universe this whole thing is very - >> you almost have us on board with this. but the key takeaway it seems is that disney plus is the most important thing in town right now to disney, right >> they have more titles and arguably the bigger blockbusters, but spider-man was seen as the future >> now the reason i say that is because we should talk netflix which apparently is losing market share already in the u.s. we are talking about a drop of 90% to 87% this is hardly catastrophic but this is happening even before

disney plus's launch which i think was early november >> which seems to make sense if you look at hulu, also amazon prime really stepping up their original program i'm someone who was a die hard netflix viewer apple tv trailer, that thing got me i was like do i need to add another subscription >> the morning show? >> the morning show, i will follow reese witherspoon, jennifer aniston anywhere they go >> but not tony stark? >> we'll discuss later but that trailer, it had all of the programming. you don't even know what the shows are about. but the production quality was so high, like, maybe i'll spend a little extra money every month and sign up for this >> if you own the market there's only one way to go, unfortunately. that may be why they were leaning on price >> netflix, the library is key they are going to lose a lot of those disney titles. i logged onto netflix this

weekend. you can still see avengers infinity war, and thor ragnarok. >> finally worth mentioning today, hasbro which makes toys like transformers and my little pony they also make the disney star wars and marvel lines. and next year they announced they are going to phase out plastic in their packaging so that includes everything from those bags to shrink-wrap to blister packs. >> which you can never open? >> i hate those things >> just not having to use an exacto knife >> you get the iron jaws that thing is going to out of business now if they don't package these things what i think is cool is they also have this program, maybe you already know about this where you take in your old plastic toys they are recycled and repurposed into making open playspaces for kids they make flower pots. they make other things as well there's a real commitment on the

part of this company to do something about the environment. and i applaud that very much >> when i saw this and i said to jackson on your show, this is millennial parents this is about in my opinion obviously being environmentally friendly but also younger people care more and more about this they care about companies doing the right things they are now having kids so you are going to need decisions about bringing in those kids >> i wasn't planning on seeing it but i guess i don't have to anymore. thank you, guys. appreciate it. we are going to take a look at what's different from the next fed decision and whether powell is getting ready for another rate cut and its summit begins at jackson hole tomorrow. robert kaplan and much, much more throughout the day. hexcng ibasst. "t ehae"s ck in two. that.

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welcome back the congressional budget office raising its forecast budget deficits and lowering interest rate projections over the next decade that. doesn't seem to make any sense thcbo director saying the nation's out list is fiscally challenging. this is just one of the many changes since july we're also watching that rise in market volatility and session fears. david wessel is here david, i know that's a lot to mention, but let's just start with the cbo numbers today what do you think we learned from this update >> well, mostly cbo was just catching up with reality congress has decided to spend more money over the next couple of years than the previously law would allowed. and they increased their forecast for spending as a result you suggested that on one hand they say the deficit's going to be bigger because congress wants to spend more money. but on the other hand they moved

down their forecast for interest rates quite a bit. they say over the next decade on average, short-term rates will be 50 basis points lower and long-term rates 80% points lower than they had forecast just in january. so it's kind of amazing the deficit gets bigger, but the interest rate outlook gets lower. >> and now you have people in reportedly even the u.s. considering issuing maybe 50 and 100-year debt. >> and the germans sold 30-year bonds at a negative interest rate yet, they are still determined not to spend money on infrastructure, go figure. >> do you think that we should be taking the market signals seriously in terms of markets are telling us you should be borrowing right now? i mean, everybody seems to have recognized fiscal discipline for its own sake in a period like this seems to have no meaning or impact >> well, i think there is more than one thing going on here if you have a public investment that you think will have a positive return, surely this is the time to do it even if you have to borrow

even in the united states interest rates are still positive but they're essentially just an inflation close to zero. so this would seem a good time to borrow for worthwhile public investments. on the other hand, as cbo points out, spending is growing faster than revenues. deficits will widen. they will be very wide compared to historical average. debt is a percentage of gdp, goes up inex-bly we know that can't continue. so at the same time you think about borrowing money from public investment. this would seem a time when not immediately, but for the long term you might want to think about how are we going to restrain this spending or raise taxes to close the gap >> right but those choices are so difficult that no one will make them until they have to. so where does this leave the fed? they have the minutes coming out. jackson hole, the big con fab, lots to discuss there in terms of the global outlook. if we are going to be now running a larger budget deficit,

maybe the president is going to come up with some fiscal measures that add to that. what's the central bank expected to do? >> first of all, i think the fed probably knew everything it was going to be in the cbo report in advance. secondly, the president's already changed his mind about fiscal stimulus. he said today that he's not thinking about a tax cut i think he got caught in his own contradiction. it's hard to argue that the economy is really strong but we need to cut taxes to rescue it i think the fed is on course to lower interest rates in september. and i'd say 50/50 once more at the end of this year why? because the global outlook is so weak manufacturing has been weak. and even though that i don't think the markets are the primary cause, but you can't ignore what the markets are saying if that makes sense >> i take your point but what happens with e dollar if we even say that the dollar is too strong right now, does anybody know how to really get it down? >> you can't have the world's strongest economy and have a

falling dollar the dollar is strong because the u.s. economy is strong if you really want to tank the u.s. dollar, you have to tank the u.s. economy. >> and i don't think anybody wants that so that's just a byproduct of where we are relative to the other rest of the world. europe is a mess germany, u.k., italy, china slowing down i don't understand how the president's logic works here he wants a weaker but a stronger economy? they don't go together >> a lot of things don't go together this afternoon. coming up, a looming opioid litigation decision could have a big ripple effect on the health care industry. we've got the mes naand the latest to watch. somos muy difer. muy diferentes. (vo) verizon knows everyone in your family is different. there are so many of us doing so many different things. (vo) that's why verizon lets everyone mix and match different unlimited plans. sebastian's the gamer. sebastian. this is my office. (vo) and now with more plans, everyone gets what they need without paying for things they don't. new plans start at just $35.

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welcome back shares of johnson & johnson falling more than 5% since the start of its landmark trial against the state of oklahoma, which is blaming the drug maker if the opioid epidemic it's just one case of thousands that some expect could lead to one of the biggest corporate settlements in history it will have a big impact on all companies facing the opioid epidemic >> the latest is that we know

that a decision is coming in the oklahoma case on monday afternoon at 3:00 p.m. central, 4:00 p.m. eastern, so keep an eye on that. as a reminder j & j is the sole defendant left in this case. we have the amount of those settlements to show you, teva se settled for 85 million perdue settled for 275 million going to oklahoma. folks say the outcome if the judge rules in favor of j & j. if he rules against them that could be pretty bad, and depending on the size of the decision it could be extremely bad. already these companies that are in the cross hairs of opioid litigation have lost billions of dollars in market value. teva has lost $19 billion in the last year. there are other factors that's contributed to that. b there are multiple tracks of litigation going on. there are state cases which you can see in yellow. those are ones who had trial dates set. oklahoma is next week, also many

other cases where we will start to see this coming up in 2020. 2,300 municipalities, cities and states are going after these companies as well, and they have been consolidated into a multidistrict litigation in ohio department of justice is also going after these companies. there's multiple tracks of litigation, and a lot of companies are talking about trying to have one global settlement that's why these numbers are getting so big. >> and is that where this looks likely to be headed? and if so, is it going to be bigger than what we saw with tobacco back in the '90s >> tobacco was about $250 billion some folks are saying this could be $100 billion for the multidistrict litigation, but that's just one part of it this will be long and protracted some folks are saying from the plaintiffs side they're looking at $480 billion as the number that they see to remediate the opioid crisis in the u.s., whether we actually get to a settlement that's that large is another question. >> how much of that is already priced in? some like teva have lost a lot

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welcome back, germany's interest rates are plunging lower ever day while denmark's negative mortgages are drawing more attention now the president's tweeting seemingly in favor of those lower and negative rates could it be a preview of what's to come in the u.s tommy, the main question is are things this wacky in europe because europe is in a wacky situation, or is it a preview of what's to come here? >> i think first of all, kelly, it's worth reminding ourselves what a wacky situation this is what we saw today was investors lending 800 million euros to the german government. they'll get slightly less back in 202550 they won't receive a single interest payment anybody who holds this bond throughout its full life is guaranteed to lose money over a period of 30 years

what this is telling us really is that anybody who thinks this is a good investment is factoring in an extremely bleak economic outlook you're talking about no growth, no inflation for the next three d decades. >> right. >> that's -- that's a pretty poor outlook. >> i also wonder how many people are just buying these to flip them because tommy, the price appreciation in bonds this year has been incredible. you could have made a ton of money just owning bonds and flipping them, maybe flipping them back to the central bank. is the european central bank partly to blame for this they told us last week in september they're going to announce even more. >> absolutely. the european central bank is really at the heart of this at the moment they're not buying bonds at t moment they've wound down their qe program. inflation is so persistently low because growth stubbornly refuses to pick. a new package of easing is on the way in september, and

investors are assuming that means more qe, more bond buying by the central bank. you're absolutely right. if you buy this bond today, yes it might look like a poor investment if you hold onto it for 30 years, but if you can sell it onto the european central bank for a higher price, possibly as soon as next month, then that doesn't look so bad after all. and bear in mind these bonds have returned something like 30% in price terms already this year. >> yeah, they're look -- it's the hottest market in the world. one of the hottest we've seen in the past decade. so another way, obviously, if you're looking for growth and we know germany is really slowing, it sounds like its exposure to china is a big reason there is fiscal stimulus. why are we not hearing more from europe, whether it's germany or other countries about fiscal stimulus >> it makes sense, doesn't it, if you can get paid by investors to borrow, surely you should be borrowing more we are hearing early rumblings that their refusal to

countenance any sort of budget deficit may begin to shift it's early days yet. really, it's something that's hard wired into german politics, that you run a budget surplus. you govern in a fiscally responsible way. that may have to start to change the german economy is really suffering. you're talking about an economy that is geared to world tried, where exports are an extremely important part of the economy, and you know, when there's a global trade war going on, an economy like that is going to be first in the firing line. >> and brexit looming. you had a great piece saying some investors are deciding whether the u.k. should be classified as an emerging market how can you even have a ten-year mortgage product in europe and anybody afford a home? tommy, we're out of time come back and we'll do that next time. >> thanks very much, tommy stubbington with the financial times. i will go join tyler and melissa for "power lunch" and

those fed mninutes it starts right now. thank you, kelly we begin this hour with minutes of the latest fed meeting when the fed cut rates a quarter point. ylan mui is in washington, d.c. with all the details take it away >> melissa, the minutes give us a pretty detailed look at the internal deliberations within the fed over that decision to cut rates last month it outlines three broad reasons that fed officials decided to move forward, first the slowdown in growth, particularly in business investment, and manufacturing likely related to the ongoing trade war. second, it says risk management, that uncertainty remains elevated and other central banks have a lot less ammunition to support global growth, the third reason that is given is inflation, which of course is still running below the fed's 2% goal the minutes also show that a couple of participants wanted to cut rates by