cancer stock ziop a lot of buying into the weekend. >> gap stores going into earnings they're buying the at the money calls. the 18 calls keep an eye on this thing. >> have fun at the fair. >> state fair, baby. "the exchange" begins right now. >> thanks, melissa here's what's ahead. the inversion is back. markets are once again worrying about the fed's next moves after two members say a rate cut may not be needed. is this panic warranted? we'll ask. plus, call me maybe. the president praising apple's tim cook for calling him directly to deal with tariffs and other matters. why isn't every ceo doing this we'll discuss. and hiding in plain sight. a cnbc investigation into just how easy it is to hack your phone, your computer monitor and even your desk fan we begin with the market gyrations. >> they've been gyrating but generally speaking they haven't been massive percentage moves. still, though, a mixed market

with the dow outperforming up 0.2% at the highs today, the dow up 186 points or thereabout at the lows, down about 104 points you can see filtering right in that range there the s&p 500 still below 3,000. 2946 or thereabouts is a key level of possible slowing down in the market. we'll watch that the nasdaq off by 0.5% the yield curve, interest rates still a big focus. the ones now currently the two-year to ten-year spread. the difference between those rates. and as you can see, we're just around flat for right now. at one point today we did briefly go inverted. that is to say negative again. so watching bank stocks, the entire interest rate complex on that and the stock of the day, it is gaining right now, up 4% dick's sporting goods. better sales better profits better same-ste sales. increased forecast that includes the anticipated effect of tariffs in september and december all of that being said, the

stock was up 11% at one point. up about 4% now. still from the highs that we saw a few years back, we are still down about 45 or so percent on that stock so it's still got issues but a good day for dick's sporting goods so far we'll see if that momentum can continue near to medium term >> dom, thanks very much welcome to "the exchange." i'm kelly evans. some mixed news on the macro front today with weaker manufacturing data offset by a stronger read on the labor market weekly jobless claims dropped to just 209,000 last week and mortgage rates have dropped to the lowest level since november of 2016 the 30-year fixed rate now averaging 3.55%. and then, of course, there's been some major fed speak. let's get down to bob pisani at the nyse for the market's reaction to all of this. >> and a lot to digest stocks are mixed but mostly weaker midday as the markets are reacting to weaker economic data and more hawkish fed comments. stocks continue to generally move in the direction of bond

yields down earlier in the day. now off of our lows as yields have recovered a little bit. kansas city fed president esther george who is a voter in the fomc and the philadelphia fed president harker who is not both pushed back against the need for more rate cuts the markets then weakened shortly after the pmi report it is showing that not only manufacturing activity was weak in august it was below 50. look at that 49.9 that's the lowest read in ten years. but also that the services sector surprisingly was weaker than expected. iha's market, which is doing this statement released a statement saying the most concerning aspect of the data is a sharp loss of momentum across the services sector. bottom line is this, kelly tomorrow we want to hear what mr. powell says, the fed chair it's likely he is not going to be signaling the start to any aggressive rate cycle. rate cutting cycle when he speaks the market is expecting at least one other 25 basis point cut

next muct next month a lot of debate about the direction powell is going to go in tomorrow. let's get into the fed's annual meeting in jackson hole steve liesman is there live and has been talking to several fed presidents today it seems what we heard this morning, not quite as dovish as the market wanted. why? >> well, i think it's because of the economy, kelly and you're right fed officials gathering here now at the annual summit they have every year in jackson with, you know, a normal set of very interesting issues all eyes are focused on jay powell and his speech tomorrow and, really, he faces a set of challenges that are pretty unique to the time we have right now. let's tick them off one by one the u.s. growing a trend 2%. that's why we don't have everybody on board with the rate cut. global economies are weak. the consumer is relatively strong bob pisani telling you about that manufacturing data which is

slowing. the fomc not united on the need for a cut. we talked earlier with patrick harker, the federal reserve president and he explained why he thinks the fed ought to stay right where it is now. >> i didn't think the cut was appropriate necessarily, but i went along with it to go aloget back to neutral. my forecast is to hold where we are. i think we run the risk of creating too much leverage in the economy. >> esther george, the kansas city federal reserve president, the host for this meeting. she agreed with harker that she doesn't see a need for a cut she also talked about this issue of how come the u.s. rates are so much lower than other -- so much higher than other countries? and does the u.s. need to come down to the other countries' lower interest rates here's what she said >> i think each central bank is responding to their domestic mandate. in the case of the federal reserve, our mand site to focus

on employment and inflation. and i think as long as we keep our eye on that, that's probably where we can best influence those outcomes >> now kelly, we've had a very subtle but perhaps meaningful change in the outlook for the fed funds today with this speak. there's more speech to come, including by the chairman tomorrow so we'll see how it goes but there was about a 1% or 2% chance of a 50-basis point cut this morning before the speech and last week there was a chance of a 40% chance. now there's a 1.3% chance of a rate hold. that's a new aspect to it. it's a very small percentage the bulk of the market is priced for a rate cut but right now there's a small chance that they remain on hold. we'll have to see what happens with the additional fed speech we have coming up. nester and bullard tomorrow along with the chairman's speech and then mark carney in the afternoon from the bank of england. we'll see how that goes.

a lot of fed talk yet to come. two today, kelly, and they were more on the hawkish side >> there was speculation and discussion yesterday about whether powell had kind of lost some -- the power to harness the committee and the direction he wants it so when we saw the meeting minutes come out from last time around, people said, who are the people who wanted a half point cut? is it possible the vice chair, maybe the chair himself wanted to go in a direction the rest of the committee did not, and they were outvoted, steve what's your sense of the internal dynamic at the fed right now? >> you know, kelly, i've been doing this for a very long time. i want to say that 90% of the time what the fed should do is obvious to almost all the committee members and obvious to the markets at the same time i would just point out that what one should do is not entirely obvious at this moment you have the economy running at

2% consumer data has been strong. you've seen the retail sales data and how the stock market has reacted. on the other hand you have that global economic weakness we talked about the manufacturing slowdown what i hear from the committee members who do not want to join in this idea of a rate cut is, let me see it in the data first. and i think if the data rolls over, and i don't think today's pmi data is sddecisive in that regard if it shows up in overall retail sales or growth forecast, then i think it will be obvious to everyone i don't think it's because the case of which way to go is not entirely obvious >> well said steve, thanks. appreciate it. steve liesman is in jackson hole for us so how will markets react if the fed were to stay on hold next month let's bring in brad mcmillan from the commonwealth financial network. and andres garcia maya is ceo of zoe financial. welcome to both. andres, it's a small chance they could be on hold next month, but

this afternoon, that 2s/10s curve did invert again what happens if they don't deliver another cut? >> just listening to earlier comments it's interesting that you're hearing such different voices within the committee that often tells you the data is not conclusive and they aren't conclusive within the committee. >> isn't tt the most obvious takeaway to say, let's wait and see until it is. if it's not obvious then is the risk of action instead of inaction >> that's right. there's been academic research looking at the data. both short-term rates and long-term rates tend to follow economic growth rather than the other way around there's a reason that they often say we're data dependent because historically, they make a move once the data is clear once the fog clears enough for them to make a move. we're seeing it's not and that's where we're seeing this divisive

commentary >> one of the refrains we hear is that the fed is behind the curve and the whole meaning of that is to say financial markets are telling us what's going to happen to the real economy the fed needs to get ahead of this now to make sure this down turn doesn't materialize would you agree with that? >> i don't think the fed needs to get ahead of it the last cut was actually an attempt to do just that. you heard harker say, for example, he wasn't convinced the cut was necessary, but he went along with it to normalize policy i think the last cut was misinterpreted i think that is intended to be, okay, now we're going to be level and now we are going to be data dependent i think that's the path that powell has to tread to talk the markets off the ledge expecting rate cuts back to data dependency >> the fact they've priced in another cut or two or beyond means that the markets are wrong on this one? you don't think the fed is there? if so, doesn't powell need

tomorrow to set the record straight on that >> i don't think he does i think powell has certainly yielded to the markets to give the cut but at the same time, he's been very clear that at the time, that was something that was an insurance not an indicator of policy >> but insurance cuts, andres, that one, the initial reaction was actually that the market tightened. financial conditions tightened because it was a sense it was just a midcycle adjustment and a one and done it's all been muddied by the tariff announcement the following day. how does the fed now make sure that it's not inadvertently tightening policy instead of loosening it >> the key word tomorrow is this midcycle adjustment. there's any -- if there's any wording changing around that, it will be interesting if it goes that wfar. >> do you think he'll say it again? >> i think that speech may be rewritten right now for tomorrow but i do think that there is kind of this loop going on which is like, if the trade wars

actually start to be de-escalated, maybe they hold tight. if the market doesn't have another 10% correction, maybe they hold tight. the markets have become an input into the equation. >> based on what we heard from harker and george today, there's a chance that powell tomorrow is going to be hawkish? >> yeah. >> or that's what the market is guessing >> i would find it hard to believe that they would be this kind of clear on the where they stand without having a discussion as a committee if that discussion didn't happen, maybe we have bigger issues. it will be interesting this definitely changes the equation for tomorrow, if they were this adamant to say that status quo is the way to go. >> brad, last question on this you can respond to that and translate it into the fundamental question what are investors supposed to do with all of this going on >> i think investors sit tight and the reason i say that is, if the fed cuts rates, that's fine. the markets will like it in the short term, markets may not like it but it means the

economy is fundamentally healthy and that should help support markets over time. >> what time is it tomorrow? in the morning powell talking? we'll find out we'll be all over it that and the rest of the fed speak still out of jackson hole. appreciate it. a here's what's still ahead on "the exchange. >> coming up -- the president's next target? ford why he's attacking the automaker. and why they're not backing down plus, while he's attacking ford, trump is praising tim cook what's he doing right that's getting praise, and what other ceos can learn and, your computer screen, your phone and even your desk fan are easier to hack than you might think. this is "the exchange" on bccn

welcome back to "the exchange." tesla is back in the news today. a german publication reporting that volkswagen ceo herbert diest interested in acquiring a stake in tesla volkswagen has denied it but the industry is facing challenges from falling sales, excess capacity and the shift to electric cars. phil lebeau joins me with more i wonder what this report is really telling us. >> it's not surprising from the standpoint that we are going to see more investors or automakers

investing in other companies or looking at an investment possibly in tesla. but there's a lot of caveats to consider here, kelly when you look at somebody like tesla and why it may be appealing for somebody like tesla, like herbert diest to take an investment in. autonomous technology is what the automakers are targeting right now. ev battery technology and ride share firms. two of those three, tesla is among those who are considered leaders. certainly with ev batteries, autonomous technology, maybe not the leader but they certainly have some interesting possibilities there. and then when you look at tesla versus v versus volkswagen over the last five years yes, tlaesla has come back the investment in tesla outpe d outperformed the investment in volkswagen and they're looking for something, anything that can juice that investment or that appeal to investors. and that's certainly one aspect of investing in tesla that they

are interested in. >> volkswagen and ford had announced a tie-up just last month. >> yep >> kind of a co-production, you know, technology sharing type of thing. >> yeah. >> you have that on the one hand and the fact at volkswagen itself i think today unveiled an electric car for europe. this is not exactly a company that's behind the curve when it comes to electric cars why would tesla -- what would tesla bring it given all of that >> well, tesla is considered a leader when it comes to electric vehicle batteries. no doubt about that. they're not the only one but they're considered among the leaders. if you're an automaker, that's appealing. that's interesting we should point out again, volkswagen said this is ridiculous this is speculation. we are not interested in investing in tesla but you can see the appeal here. not just for volkswagen but other automakers if they had a chance to tap into that expertise that is within tesla >> yeah, and again, with car sales down in pretty much every major market, too.

in germany it's been a major problem. it's just interesting if they find this growth strategy. i want to ask you about one other story and we're going to talk later about the president and how he's praised him took for being available and giving him a call and they seem to be on quite good terms. what is going on between the presidenand ford over these new emissions standards? >> it all has to do with the fact that we are going to see new emission standards being proposed by the trump administration likely this fall. california has a waiver. that's been in place since the '70s so it can set its own fuel economy standards. we know how the president feels about california he's blasting ford because ford and other automakers said we're in agreement with the standards being put forth by california. so the president comes out yesterday. we're not going to read all of his tweets but we're going to read this one. henry ford would be very disappointed if he saw his modern day descendants wanting to build a much more expensive car that is far less safe and

doesn't work as well because execs don't want to fight the california regulators. ford out with a response saying, look, we believe that we are making safe vehicles that we are making vehicles for the future and, as a result, we are going with the standards that have been proposed in california. we have consistently supported one 50-state solution regulating economy fuel standards and it provides regulatory stability while reducing co2 more than if you went complying with two different standards. they're saying, i don't want to build one for california and then have different standards for the rest of the country because the trump administration when you look at fuel economy standards, they have made it clear they are not in favor of the target for 2025 of 54.5 miles per gallon they want to bring that down dramatically they believe it will make the vehicles less expensive. but the bottom line is this. automakers are already moving down towards more fuel economy they do not want to hit the brakes and then say all the work we did into changing the

vehicles and pushing fuel economy, forget about it that's why they are in line with california >> that's a tricky one i see his point on affordabil y affordability, but you're right. they want to go to the future, not the past >> the rest of the world is going that way the rest of the world is going that way if you are an automaker, you're a global automaker >> phil lebeau joining us to talk cars. the fico score determines the loan you get for things like cars there's a new player in the market and how it impacts you. plus a cnbc investigation into some of the devices many of us use daily that are hackable not just electronics we're talking about everyday appliances you don't want to miss that coming up.

welcome back on to "the exchange." here are some of the movers this hour boeing is leading the dow after a report the company is planning to resume production of its 737 max in february. at a higher production rate than before this, of course, after it gets regulatory approval to fly that plane again. shares up 4.5% shares of l brands are headed the other way down 6% on's revenue miss. sales came in weaker than expected with victoria's secret continuing to be a drag. and bj's is surging today. they reported lighter than expected revenue numbers but the warehouse retailer finished the quarter with strong momentum and is confident it will deliver on its prior full-year forecast that's good for a 16% gain

now to sue herera for a cnbc update >> thanks so much, kelly here's what's happening at this hour british opposition leader jeremy corbyn says he will do everything he can to prevent the uk from leaving the eu without a deal he spoke during a visit to a hill farm. >> we'll be having a serious discussion next week in order to prevent this country crashing out on the 31st of october with all the damage that will do to farming community, to industry, to jobs and the uncertainty that's there on medicine supplies, as well as on the food processing industry. >> some good news for motorists in the u.s according to aaa, significant savings are on the way at the gas pump after labor day among the reasons? less expensive crude oil prices, as well as lower demand and the change to winter blend gasoline. and take a look at this. the winners, rookie argentine couple won the tango world championship in the stage

category in buenos aires last night. they beat 19 other couples from around the world the stage tango involves glam b flamboyant movements and the elegance of the outfits is also under the judges' evaluation ole! that's the news update this hour >> i'm about to tango with tyler mathisen >> shall we? look at you two in your red dresses. both of you come on over >> we pick the same color, the same dress something in the air >> we're going to talk a little bit on power lunch about retail. it has been a kind of rocky good, bad ugly reporting season. sometimes the numbers have been good and the stocks haven't performed. sometimes the numbers haven't been all that good but the stock has performed. >> right >> nordstrom see nordstrom, comma target lowe's a good story here we await gap's earnings later today. on the badside, companies like tapestry and macy's that have

really suffered. who is doing well and why? who is not and why we'll take a look at that and hear from a guest who is very high on lululemon and nike >> but what does it tell us that you're in denim today? >> i just wanted to be comfortable. cabinets arrived for the matheson kitchen >> he's going to be giddy. >> things are looking up >> consumer spending is -- >> at our hour, it's doing just fine see you in a half hour here's what's coming up on "the exchange. >> ahead -- high-end delivers in the retail world what ceos can learn from tim cook about dealing with the administration want to see a popular movie? it will cost you more. at least in one theater chain. and the new apple credit card requires a lot of special care at ahe o"rapid fire." it's part of being human. sonoma county declared a homeless emergency in 2018.

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welcome back let's catch you up on a few storiesthat should be on your radar today. time for "rapid fire." contessa brewer, bill griffeth and courtney reagan. court, we're starting with you again, talking some nordstrom. they're up about 15%, 16% today.

better than expected earnings but missed on revenue. it's on pace for the best week in nearly ten years. but again, context is key here >> i think actually what's very key is that there's 27% short interest in this stock >> wow >> macy's short interest is only 13% by comparison. >> short covering rally? >> i do. because, yes, they beat on earnings but it was what we call that poor quality beat they had expense management and some of these benefits their net sales were down 5.1% which was the lowest they've reported since the great recession. >> it's actually accelerating to the down side. >> honestly, it wasn't a good report the shares, they popped immediately. and there's no way i talked to several analysts and there's not a lot of great things here. they're expecting nordstrom, the inflection in the second half of the year the new york city flagship is going to open on october 24th. but a lot of analyst community is skeptical that they can turn

this around. >> so the trend we've seen the last week from these retail earnings still holds then. big box good department store not so good is that the idea >> pretty much >> bj's, that was -- that one looked pretty good, right? >> that looked pretty good but that's a wholesale club and a lot of value association with a wholesale club so i sort of put that in the same category. >> and maybe they need to consider the consumers who are now looking at the secondhand markets and used to having coupons. so nordstrom is, as a luxury retailer, maybe needs to think about that they lowered the -- >> the journal did an article about reselling clothes. how huge a market that's become. >> i do it >> it opened my eyes >> now i get it and wonder when we talk about a lot of these luxury things that used to go

through the nordstrom channels how much that's peeling people off. >> you do that >> yes do people know it's courtney reagan selling that? what a premium that would bring? >> yeah. >> all right moving on, president trump told reporters yesterday that apple's ceo tim cook is a great executive, quote, because he calls me and others don't. the two appear to share a warm relationship cook was at dinner in bedminster with trump just last week in new jersey the interesting thing to me about what the president said was he didn't just say that he appreciates tim calls me why doesn't everybody else do this, too? >> don't you think this is making companies who invest in as the president put it the very expensive consultants rethink their strategy, if they know that the chosen one will pick up the phone? i mean, if -- that's his words >> to give him a call? and i understand there's pushback, especially silicon valley companies, big tech, employees hate trump but for apple, it's not like tim cook has gotten a bunch of

blowback on this >> tim cook has said, i've heard him say this, he can call donald trump because donald trump answers the phone. he has tried to call president xi in china, but he doesn't answer the phone so it works both ways. you know, there might be ceos who would figure the president of the united states is not going to pick up the phone and want to talk to an individual ceo. but, in fact, he does. this is a president who keeps his own counsel and is a good listener we know his opinions are based on the most recent person that told him something >> if we didn't know before he was available, and i take your point. who would have thought, no, he'll definitely answer the call every other company, they have the lobbyists call me. i think, what a waste of a call. >> for this president, yes >> that being said, regardless of the president, and we know especially right now, this president can be quite controversial. and i do think that there is probably some calculus companies need or want to do when they are considering following tim cook's lead should i be calling the president? yes, it may help my company, if

i have a closer relationship with him so that i can explain to him how his policy decisions are impacting my business. but how will my consumers feel about that >> do we think apple would be the perfect example of a company whose employees might revolt or customers right revolt there's been no evidence of that >> that's a good point >> if it keeps the tariffs down, no revolt. >> well, saves us $100 on the iphone, i don't know up next, amc, the movie theater chain that's testing dynamic pricing. it will charge a premium for movies of the high of the appeal and cheaper tickets for films in lower demand rolling this out in boston, columbus, indianapolis and san diego thinking it will put more butts in seats. >> i have already rolled this out. i think gas stations should do this now i think grocery stores should do this now how about your local cleaners. you know, the rule in restaurants is you're not a success unless you can put butts in a seat on monday night. what do you do dynamic pricing. >> if gasoline station is a dynamic pricing, then there

would be a revolt. >> no, it's -- >> essentially surge pricing it works for uber. >> it did so well they had to rename it and call it something else and swear they'd stop doing it >> you fill up more often when you need it not when the price goes down. so, for example, in the outer banks where we'd vacation every year, suddenly the price would go up just before the weekend when everybody is leaving town or arriving and it's the lowest price on monday. why not do it on a regular basis as well. >> how do they decide the demand in advance how do you know that >> for the movie theater >> maybe rotten tomatoes is an indicator. >> this is going to be more popular? >> can you imagine the production companies going, whoa, whoa, whoa, you can't determine that in advance. >> if you are disney and you go, okay, amc is going to charge you more to see "the lion king," down side is you may lose a few people y the up side is we're talking

about an increased ticket. >> and they're also talking about whether you wait a few weekends and lower the prices. can you imagine putting up "the avengers" against "the book club" and the choice that you're going to have? maybe all of a sudden you'll get a lot of teens going to see the book club. >> i think the book club would lose anyway no matter what the pricing was. >> i'd love to see this. i might go if i knew it was going to be super cheap. >> i don't even know what the book club is >> i saw the previews. this might be the first credit card to come with a user manual. speaking of apple. this new titanium card literally comes with guidelines on how to care and clean it. for example, apple saying, wipe down the card with a soft, damp microfiber cloth sanitize only with -- isopropyl alcohol and avoid putting the card too close to denim or leather to prevent discoloration. >> don't put it near your other credit cards >> this is ridiculous. this is not jay leno taking care of his rare cars

this is a credit card, everybody. you know, it's ridiculous -- >> which you're not really going to use it's really in your digital wallet >> if there's a problem with the credit card, they should have fixed it ahead of time >> it's not a problem. they're telling you, this is so special. you are so lucky it's like taking care of a pair of your first thousand dollar shoes which i might -- >> how well did you take care of your first thousand-dollar shoes? >> well, they were a thousand dollar shoes, not a credit card. >> that's what they -- they want this to feel elite, luxurious, superior this card is going to make you feel like you're better than all your friends >> we're already at peak apple card >> and it hasn't even launched yet. >> and it hasn't launched. when you get one, i want to know how you care for it. >> i had to play devil's advocate >> i fully believe that. >> i believed everything you said >> you don't think that's what

they're trying to do >> also, i'd like to be with them and say i'm out if you saw the state of my wallet, you'd understand why >> it's like the george costanza wallet it's deactivation right away with this. >> i'm surprised you can get in the building if that's true. thank you all very much for "rapid fire. it's not just your hard drive or that apple card that can be hacked. it's your phone, monitor and printer to name a few. cnbc investigates the hacking risks hidden in plain sight, next cident. usaa took care of her car rental, and getting her car towed. all i had to take care of was making sure that my daughter was ok. if i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. we're the gomez family... we're the rivera family... we're the kirby family, and we are usaa members for life. get your auto insurance quote today.

welcome back from that phone in your office to the industrial fan system in the lab, many devices contain tiny computers that can be hacked and used to gain sensitive business data or even cause damage to networks cybersecurity pros say more needs to be done to keep these devices cure it's getting the attention of manufacturers now. andrea day has a cnbc investigation "hiding in plain

sight. >> no demo is complete until we've tried to physically destroy the device >> reporter: when you interview this ceo, you may wind up evacuating >> all right let's get out of here. >> he founded the cybersecurity firm red balloon here in new york city. this is where the magic happens? and here the goal is to make embedded devices more secure that means breaking in, taking them apart and exposing flaws. >> yes >> 100% of these devices can be compromised in some way. >> 100%? >> 100%. like mini computers in almost everything you can power up from smart home devices to medical gear and cars. at every financial exchange, power plant, air traffic control and almost every company in the world. >> this is probably the most important cybersecurity threat that we have today because these computers control every single

aspect of our kricritical infrastructure we depend on. >> according to a report by radiant insights, the global embedded system market is projected to be worth $214 billion by next year we got a rare glimpse inside red balloon as they compromised an office phone, computer monitor and more >> how close do you have to be to that device to pull off this kind of attack >> you can do this remotely from anywhere on the planet >> reporter: this is a small version of an air filtration system it's in a lab the team is working with right now that houses dangerous viruses >> you don't want the dirty air to come out ever and this computer will allow that to happen >> reporter: they hack devices inside the fan's controller. not only forcing the dirty air in the wrong direction but ultimately shutting it down. >> into a useless piece of plastic and metal. >> reporter: and it goes up in smoke. >> that's awesome. >> reporter: you might not think a desktop monitor can be

compromised. >> in reality, there is at least three different computers inside the monitor itself that we can hack >> reporter: here the team takes over the screen. changing the pixels and making a green light turn red >> the operator will think there's something wrong. >> reporter: this is a typical office or ip phone that places calls over a network like the internet but now it's listening in to our conversation >> there is a lag, but the hacker is hearing everything thatwe're saying now and all of the things that we said before. >> reporter: the brands used here are just examples but he says the issue goes way beyond these demos the team recently uncovered a major vulnerability in more than 100 devices made by cisco. the largest manufacturer of network equipment. according to red balloon, we're talking about a potential attack that could sell for millions they let cisco know what they had found, and the company published this critical

advisory cisco turned down a request for an on-camera interview, instead releasing a statement saying in part, cisco is committed to transparency and is not aware of any malicious use of the vulnerability that is described in this advisory fixes are available for approximately half of the affected products. we asked cisco if a tool exists right now to know if i device has been hacked. the company telling us in part, an audit tool is not currently available. we recommend customers review the security advisory to assess the best way to protect their network. and as for the phone demo, cisco tells us in part that workarounds and a software patch were made available but he says it's more than just this model or brand >> we've found one in every ip phone we've opened >> reporter: we want to know what other industry leaders are doing and reached out to hp and

huawei both companies were not part of red balloon's findings hp is the largest manufacturer of printers which contain embedded devices andy rhodes is the global head of hp's commercial pc business >> how does hp work to find vulnerabilities? >> hp at the heart, we design with security in mind. >> reporter: rhodes admits printers are a point of attack >> when you look at all the printers in the world, not just hp, how many are not patched >> we estimate about 65% to 80% of all printers in the world aren't patched today, which is a huge amount. >> first, i got control of the printers then i got control of their network. then i got control of their data >> hp's advertising claims to have the world's most secure printer. >> we've put this sort of special code into the printer so that it's always looking for malware and devices. >> huawei did not agree to an

interview or provide comment red balloon's advice complain to all of the makers of these devices. >> if we raise this concern over and over again, we will influence the makers of these things to make more secure products >> and andrea joins me now you're telling me that -- we saw what happened with that fan on somebody's desk. they made it go the other way and went up in smoke >> which is really scary >> who do you complain to? i don't even know where you'd begin to say to make sure you're protected against all of this? >> if you even know it's happening. let's say that's happening in a plant where they're trying to keep all of that air inside and nobody is there. what happens if that goes up in smoke in the middle of the night? obviously, a very dangerous situation. and i think the bottom line here with this entire thing is you have to take action to protect your privacy, to protect all of these things, these embedded devices. >> it seems like you're fighting a losing battle all the time if you tell me something i'm

looking at on the screen if i worked at a utility or power company and my screen could change from like green to red and back and i'm telling my boss it was one thing and i flipped a switch and they say, no, it's not i never saw it change. >> it's frightening. and i said the same thing to red balloon. they said everyone has to start calling up some of these companies who make embedded devices and say, how are you protecting this device how are you making it secure because right now, based on what they're saying, they are able to hack and into 100% of these devs they're all over the place >> i'm afraid to ask what's in the box here that you've brought. >> red balloon has a very cool way of hiring people i've never seen anything like this. you're the first ones to see this on your show. so open it up. >> this is a box i get if i'm trying to get a job there? >> if you're trying to get a job there, they send you this box. it's going to spill a little bit. >> very low tech so far. >> very low tech so far. so inside you'll notice some instructions a lot of things redacted

that's just for fun. and you'll see lots of candy they are very into candy and nerds. if you go through there, there's also just different cords. and something to hack. looks like a hard drive in there, embedded devices. so you have seven days it's like a james bond film. you have seven days to hack that device eat thecandy, if you want. hack the device. and then show up to work because when you hack the device, you will get the gps coordinates for red balloon. >> if you do it successfully >> if you do it successfully 1% of the people they send it to do it successfully >> wow these guys have to be pretty darn good. >> oh, it's so much fun to go there and watch them build all these things and then hack into them it's so important. >> i'll work on this during the commercial break >> i'm sure. >> see how far i can get thank you so much. really important stuff, andrea day. up next, a look at one group of stocks climbing more than 29%

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welcome back home biuilders are nearing thei highs for 2019 as mortgage rates continue to fall look at the one of the etfs of the builders it's sticking slightly higher. the group outperforming the s&p this year. up 29% better than expected housing data is helping them fuel the rally. kdh is up nearly 50% now lenar up more than 30% now a fico score is often considered the goal gold standard to determine a person's credit worthiness, but that could be changing. we'll tell you why, next the change back in two family, please stand. the world in which we live equally distributes talent, but it doesn't equally distribute opportunity, and paths are not always the same. - i'm so proud of you dad. - [man] i will tell you this, southern new hampshire university can change the whole trajectory of your life.

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moving in the mortgage industry, the white house is reportedly set fannie and fr freddie. ownership. government backed lenders will have to consider alternatives to fie ko scores when determining who can get a mortgage now

it's great to have you here. what is a vantage score? >> we believe we have the most ab rat scoring model more access to maintaining credit >> you have some pretty powerful backings, which is one of the criticisms of your new way of doing business here. equifax, experian and trans union. explain their role >> they give a strategic direction. we have access to large amounts of data. we're going to be around for a long time. however, we're careful and i trust issues they cannot tell what you say to do every day and we're independently managed so we do our own decisions and model development. >> a lot of people might not know when those credit bureaus have to deal with the fico score, they're deal iing with a

fair isaac company they're stock is up like 500% in just the past five years are you trying to end fico's monopoly on my credit score and why, what impact will this have on people trying to get a mortgage >> so, the first question about a monopoly, we want to compete one of the republicans we started was to compete with fico, but the market is large enough for both of us and other score developers and so we believe the competition we come up with more products, more features and benefits and have the competition follow us. >> you said you can open up mortgage lend iing to how many more american sns. >> we score about 40 million more people than the other commercially variable models about 10 million of those, 620 and above. i picked the 620 pretty much the minimum for an fha loan >> you're saying that you can expand access and some are at

the cut off. >> 620 of those 10 million, about 2.4 million are african-americans and latinos that can't otherwise get a score. so not all those ten million will be house ready or want to buy a house, but we're talk iin about millions more that could qualify. >> the way you do this is by needing about four weeks of ak tift where fico needs about six months to establish a credit score. >> as a former lender, you say how can you trade a score on a one month usage. we tested that with vast amounts of day the the new score will score, they're probably the fault which is what a score does measure probablity and default is about the same as long-term borrowers. it's incredibly accurate >> why do they flip-flop looks like fha were going to make people not use the vantage score. >> the new director is following the law. we're very grateful r for that

the former director was not following the law. >> we'll see what impact it has. i know it could take a couple of years. thanks for joining me. ceo of vantage score solutions, which you'll be hear iing a lot more about that does it for the change. i'll join tyler and melissa now for "power lunch" which starts right now. >> kelly, thank you very much and we will see you in a moment. welcome, everybody here's what's new at 2:00. on "power lunch. fed fever. wall street hanging on every word at the summit in jackson hole steve liesman's annual favorite trip we'll talk b about rates we'll bring you the latest details and more plus the great retail divide a clear landscape of winners versus losers in the consumer space, but which names have more room to run and work hard, play hard one analyst says black is about the soar he'll be here to tell us why he thinks the stock could jump another 30%. "power lunch" begins now