>> gdx is breaking out, silver as well. >> and modn, bought it during the show >> and again x, i buy more >> cme, ice, exchanges >> good stuff. thanks for watching. "the exchange" starts right now. hi, everybody. here is what is ahead before the yield curve invert and the market turns over again. how much importance to to place on the developments. and we also have a two year bond auction to update you on and also together again, more than a decade after a big split, al treetria and philip morris cd be on the verge of aeal merger and could america's focus on opoids as the new enemy keep regulators at bay. and turns out a social score could be happening here as well. but we begin with the markets.

and dom chu with the numbers >> the score is negative it did start off in the green. but at the highs of the session, the zn was actually s&p was up about 20 points. and right now we're at that level. and nasdaq off by three quarters of 1%. and we're also watching an important development still developing in the credit and treasury markets if you take a look at the banks overall, some of the banks are huge to the down side and a lot of that has to do with what is happening with the yield curve different between long term rates, short term rates, has gone negative by the biggest amount since may of 2007 still off by about 4 1/2 basis points, that difference there, that move again puts it all the way back to may of 2007.

and a big earnings miss, smuckers missed on revenue and cut guidance as well still though an 8.5% to the down side meaning that from the peak to trough over the course of the past year, you are talking about a 20% drop in smuckers shares. watching that stock closely. >> and we'll have more on that in a bit and welcome to "the exchange." i'm kelly evans. and another pretty strong read on the consumer today. august consumer confidence beat expectations with only a slight dip from the prior month amid tariff concerns. and the 20 city s&p case shiller home price index rose 2.1% in june and that was the closest year on year pace of gains since august of 2012 also in china, industrial profits rose 2.5% in july, that is signature because it was the first increase in almost a year since last may bob pisani, once again we're following trade developments and

bond yields. >> unfortunately, bond yields are still not losing their grip on stocks. i was hoping that maybe in the early morning it was huh-uh as yields have dropped in the middle of the day, the banks have weakened. the story all month long stocks opened up today despite the lower bond yields. i was hoping that this would be the break of that trend, but the trend quickly reasserted itself. you see bond yields and stock market moving in lock step here. this is futures and of course bond yields here, yields dropping midday causing the drop in the markets and bund yields are again bumping loong the lows and new high list, it is littered with all of the defensive reits and utility names. equity residential, essex property, reits all at new highs. and we are seeing weakness in equally defensive consumer staple names today general mills, kroger, kraft

i do think that dom is on to something, smuckers on poor earnings and guidance, i think that is impacting the group overall because remember smuckers talked about deflationary pressure in coffee and pea about nut butter that would influence many of the other brands >> that would certainly explain it let's talk about the moves in the bob markets and the ongoing trade dispute. both putting pressure on the federal reserve to cut interest rates. bill dudley is asking the fed to take a stand, he writes donald trump's trade war with china keeps yu7bd mining the confidence of businesses and consumers worsening the economic o outlook. he says this presents the federal reserve with a dilemma, thoo is mitigate the damage by providing offsetting stimulus or refuse to play along dudley says if the ultimate going is a healthy economy, the fed should seriously consider the latter approach meaning not playing along. for more, let me bring in

portfolio manager at gradient developments, and the fred kempe. just before we get into this discussion, rick santelli has the latest results of the two year bond auction that just went off. let's get that >> we had 40 billion two year notes up for auction the yield at the dutch auction, 1.516. pretty much where the market was trading. it really widened out at the end which was kind of surprising i gave the auction a c plus. let's go through it. 2.60 bid to cover, a bit above average 47.1 in-directed a little below average. and if you look at directs, 20.4 a little bit above average dealers take 32.5% of the auction. i give that an extra, that is where the plus comes from in c-plus tomorrow we go with 41 billion five followed by 32 billion 7s

one would expect the two year to go well. who would surf the sufcurve and purchase anything further down >> all right, rick, thank you. so craig, let me start with you. it is extraordinary to hear a former fed official basically saying to the fed by not playing politics should play politics frankly. they are in a very tough position, the central bank >> that is a very slippery slope. i think the way the fed asserts its independence is to go where the data takes them and the data since the last meeting, whether that is the bond market, commodity market, inflation expectations, 80% of the world central banks which are cutting cyclical equities are all saying you are too tight, you need to cut to steepen the curve that is the way they assert its

independence >> and in fairness, it looks like most people in the market thinks that that is the direction they will go but you have this afternoon a market that is selling off, bond yields that are sliding. and some people are going wait a minute, should we not be assuming that another rate cut or two are necessarily coming. >> well, i think that that would be a tone deaf move. obviously we can debate the efficacy of the tariffs. that is a different policy question but the bigger issue is the central bank has to go wi wheree data is sending it and markets need that curve to resteepen, it is important for lending and i think mr. dudley is off the mark while we all agree that the tariffs are misguided from a public policy perspective, it is just not the role of the fed >> fred, let me bring you in on that we also heard from i call them

the unofficial spokesman who has tweeted in the past hour or so that the chinese are stimulating their own economy, that the u.s. is not going to be able to hurt them as much as it thinks. is that true, and what does it mean for the president's trade war that, you know, mr. dudley thinks is doing such harm to the u.s. economy >> well, thanks so much for quoting him. i read him very closely because he comes closest to what i can find as a reliable report of government thinking, chinese government thinking. for example, as president trump has been saying, there had been phone calls from the chinese to restart the trade talks, he says that hasn't happened at all. i think that the dudley message is an important one because you have to assume that it reflects pretty clely what j lclosely wh is thinking and his three reasons why one should be worried about this is that if you actually called the president out, first of all, you'd regain the independence of the fed and right now there is a

real plolitical fight between te fed president and the president of the united states even if the fed president doesn't want to say that the last quarter of a percent cut wouldn't have been necessary if it had not been for the president's trade policies second part, you want to deescalate the trade war and he feels that another half point cut would props enable the president to escalate the trade war. and then the third part of this, if we go into a deeper economic slowdown, you need all the interest rate ammunition that you can get. you need to keep your powder dry. and if you look at 2008, 200200 we had a lot more room on interest rate policy than we have now >> although that didn't necessarily help us then bond yields would have suggested a much healthier economy

we were down here in 2016 for almost doubling yields and falling by half again. >> well, first of all, the 150 just compare so is favorably to other ten year interest rates around the globe and when you consider the fact that you've got 16 trillion in negative interest rates, which means people are going to get a cut in their purchasing power at the end of their investment, this is still the best place to invest so we're going to continue to get overseas investors coming to the u.s. and trying to drive down the interest rates. you abobut the fed is data drivd we see that the consumer spending which is such a large part of our economy was up 4.3% last quarter, we see manufacturing, orders are flat which isn't a bad thing. we're probably on track for about a 2% growth which is not a

recession. it is not 3%, but certainly not a recession. and i think it is time for congress to accept in and work with the president and get some fiscal policy and then the fed can respond to all of that but i don't think that they have to step in front of what may or may not happen with a tariff trade war and they just respond and right now we have good armor for a good economy for the rest of the year. >> excellent points. so tankt tictically where shoul investors be >> well, a couple things but i think that short term is the way to play interest rates secondarily, gold, silver. it is very favor only for stia e right now. and we put our clients in to a structured note etf.

and we're looking out to next august so we get a lot of up side potential and down side protection >> and craig, last word to you where do you think -- how should we be positioned >> i think we're a little too bearish here you could be neutrally positioned here. we have a lot of follow tilt in the fall but the bonds and bond proxy defensive equities are so expensive. so i think you looking at the cyclical parts of the market because those would benefit from the curve steepening >> so you are assuming that the fed cuts a you think it should based on what the markets are telling them >> yes, i do i think the real economy is fine, but it is important that the fed responds to these inversions and steepens the curve. >> great stuff, thank you all. appreciate it. still ahead -- >> coming up, more than a decade after breaking up, altria and

phillip morris are considering getting back together. why now? and what is the real motivation behind the potential tie-up? plus starbucks ceo says that he doesn't see any signs of a looming recession. we'll tell you why he is so optimistic and can a ceo serving on more than one board be harmful to his company? black rock says yes. through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

major story in corporate america today, philip morris international getting back together with altria potentially. this more than a decade after the two companies split up what is driving this move and how are regulators likely to react? i'm joined by jennifer maloney and stephanie miller great to have you both here. stephanie, it struck me your comment that you think this proposed merger is like light fluid on an already raging political fire why is that? >> so democrats have long been trying to figure out a way to fight back against big tobacco and they figured out a way to do that in the late '80s and early '90s, they made it about kids

and they wrote a piece of legislation that gave the fda the authority to regulate tobacco. and so now democrats are saying again we have a youth epidemic around ecigarettes and i think that this merger is going to really cause a bunch of them to roll their eyes and wonder are what is going on. >> jennifer, how likely is this merger and is vaping at the heart of it? >> it is not certain yet, but it could come together in the next few weeks. >> so sounds like we're pretty far down the path. what role is vaping playing in philip morris wanting to acquire altria >> it is a big part of the discussions. there are two products at the crux of this deal. one is juul, the market leading ecigarette brand in the u.s. which poses a big risk to philip

morris as it pushes aggressively overseas that could also be a big opportunity for growth for philip morris if it combines with altria. and the other product is an alternative to cigarettes that they have been working on together philip morris sells it in japan and uk and altria will launch it in the u.s. in september so this is a from duct that they could then commercialize more efficiently if they were one company.duct that they could then commercialize more efficiently if they were one company. >> and this at a time when there is falling sales of traditional cigarettes but that is the concern from last decade. so in front of us is this concern that has lawmakers apoplectic to use your words which is kids vaping and with the fda having the authority to regulate tobacco, what recourse might lawmakers take and would that include block being the deal >> there is very little in my opinion that congress can do to block the deal and little fda

can do the real question, can they come together, would they create an unfair market and they don't compete. so i don't think that is likely. but i do think that congress, we should all be watching from comments from folks like dick durbin and others, will they say that it is just abysmal for these companies to be making money on death and disease that is caused by cigarettes. and where ecigarettes a lot of people thought could serve as an alternative to cigarettes and folks -- there is a huge group that still believes these are less harmful products that the government should be promoting, it is clear that congress is not unified in that. we saw that in the juul hearings about a month ago. congress members were grilling juul for hooking teens on nicotine and there is really no interest in moving adults away from cigarettes to these so i'm looking for members of congress to say if the fda isn't going to do anything and the doj

won't stop them there coming together, we should start regulating the products again. so i think that congress could be looking to do things to made market by limiting the types of products that can be sold in the united states. >> and among the concerns, usually they decline because of concerns about pricing and that sort of thing. but in this case people are also asking what exactly the benefit is of philip morris getting altria with everything that stephanie described going on what do you think it is after? >> well, there was some confusion when the companies announced this morning that they were in talks because they described it as a merger of equals but as more details have emerged, we've learned that philip morris would control around 59% of the company. so that may explain some of that stock fall this morning. but there are concerns around the u.s. tobacco market. juul represents a risk in terms of litigation and a regulatory risk lawmakers and regulators have

threatened that if use among teens, underage vaping, continues to rise, that they could ban juul's products all together >> wow you know when the companies split up, the ceos at the time said we'll be glad to not deal with the lawyers anymore and it is pretty clear now that they will be dealing with the lawyers for some time. thank you both, jennifer, stephanie. really appreciate it coming up, why a costco in china was forced to close early. we have the story behind those crazy pictures plus, could china's social credit system be coming to the u.s. news flash, it already exists here but not in the way that you might think.

welcome back to the exchange here are some of the movers. papa john's shares higher on news that bob lynch will serve at its ceo he was previously at arby's. shares of activision are top performer on the s&p 500 after the gaming company rereleased its classic war of world craft game at no additional cost and let's get a check on shares of johnson & johnson it had jumped nearly 5% after hours after the company was ordered to pay only half a billion dollars to the state of oklahoma that was far less than wall street expected.

the optimism faded at the open, the stock up now just 1.5% and now to sue herera for an update here is what is happening. alleged victims of accused sex trafficker jeffrey epstein shared their stori today in a manhattan courtroom, this just weeks after epstein killed himself in his jail cell one of the accusers spoke to the media. >> it was so powerful in therehearing all the other victims and very similar stories that i have endured. i wanted to thank the judge for letting us speak having some closure. >> are alaska airlines announcing that 5200 unionized employees have ratified a pair of new five year agreements including wage increases, work security and retirement enhancements it includes clerical, office, passenger services employees as well >> and former new england

patriots star rob gronkowski announcing his involvement in a cbd company. the all-pro tight end who retired in march said that he would advocate for the use of the cannabis extract to help athletes in the nfl and other professional sports leagues. he said it gave him a lot of help with the pain from playing that sport so you are up-to-date. that is the news update this hour >> he was quite emotional when he talked about leaving the nfl as well. just after the afternoon drndrek announceme announcement >> and interesting to see what path he takes. he did also say in that news conference that he was contemplating going back to the game in some way shape or form, but we'll wait to see. >> sue, thanks very much ahead, consumer giant smumers is hasmumer smuckers is having pricing

problems and costco seeing big demand in china. and blackrock says it is time for board member limits. and they may help with safety, but drivers are getting fed up with drivingles. art that is coming up in rapid fire.

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>> welcome back. a news alert for you out of silicon valley >> department of justice has confirmed that it is bringing a criminal indictment against the engineer that was at the center of the uber waymo lawsuit. he is accused of taking secrets to uber. a press conference is kicking off and we'll bring you more news as we get it. >> deeidre, thank you. it is time for rapid fire. we'll talk some schmuckers the company cut full year profit guidance, reported weak first quarter sales. they cited deflationary pricing in peanut butter and coffee and pet food has major hurdles

here are the q1 sales numbers consumer foods down 17%. >> and so it could be competitive pressures there. so we talk about the idea that people are spending more are on their pets so many people are entering that market now that there is more competitive market for food. so if you want a premium pet food, you may not use natural balance over at smuckers, you might use science diet or you might use something from mars. so that adds to the idea but this stock is now down around 20% since its peak just a few months back. >> i don't think kate is buying any of those pet food brands >> oh, no, we're on something much more expensive and prescription only for my dog he can't digest and we don't have enough time to get into it. the coffee number down nearly

5% starbucks and dunkin had strong same store sales and they are pushing into cpg with all the pods and so that could maybe have an impact on this >> smuckers makes the dunkin packaged coffee. and they do have strong brands, but not a ton of them. and yes, it is a lens into the economy right now especially the profit margin pressures, about you also tells you got to keep this stuff relevance >> absolutely. it is as c s classic rule of merchandising. keep putting more stuff on the shelf to keep people coming in you keep the same thing on the shelf all the time, you're not going to do it on pet food, my experience is that people tend not to change pet food brands too much because let's face it, your dog play not eat the new stuff, right, or it may not sit well with them so i'm thinking that it is price

competition, but just having it on go to a new store to buy your stuff is going to be a reach >> and it is not just that to your other point, kelly, remember we talked about kraft heinz and billions of dollars they took on certain core brands that had become more stagnant. and you wonder if you were a cpg, consumer products company, if you are doing that kind of environment, how much do you have to innovate to make sure that the new product keeps coming out there it is something that the good consumer products companies wil do, 24e8 refresh their existing product lines. >> but there is too much of stuff. down the soft drink aisle -- >> it is tough to stand out, it is true. >> unbelievable. takes up a whole aisle just for all the different varieties. >> i think people are eating out more and i know we'll talk about

that but these coffee companies having strong quarters i think more and more people are going in their traffic numbers improving. >> you really can't wait to talk about starbucks. >> and kevin johnson says that business is great despite the u.s. trade war with china. in fact he told criminal cramer last night he didn't see a recession on the horizon >> we have not seen signs of -- in the u.s. of anything related to a slowdown. but we do know these things go in st cycles right now consumers seem to be doing well >> and starbucks sharies are up and it has not been a great market lately. >> starbucks had the 7% comp in the u.s. a 6% comp in china while everybody is talking about the trade war, they are basically saying what trade war, we're not feeling it here or there but it is not just starbucks it is chipotle, shake shack, mcdonald's, dunkin, all reporting strong earnings.

restaurant sales $863 billion this year, that is a new all-time high. and even if we go into a recession, it will be a long time before you see restaurant spending slow down because the unemployment rate is so low. so it will take a while before people change their spending habits >> and it is hard to make generalizations about american consumption, but one thing you know, folks will cut back on dining out last when it comes to economic impact. they will find a way to kind of enjoy that dinner out. it just are depends on price point. you can go capital grill when times are good or mcdonald's for the value meal when times are bad. but that is the one place americans typically do spend is on daining out. >> and last thing you give up when you are dining out is your starbucks. you might get a cheaper blend, but you still will use that cup for the coffee >> a visual. >> we would have a nation of angry people if we didn't. >> i'm sort of the counter trend

because i've been doing more costco than chipotle lately. and on that note, so many people showed up to the grand opening of their first store in china that it had to shut down early state run media reported thousands of customers showed up to the shanghai store clogging the aisles, traffic was so bad there was a three hour wait just to park. a nearby school even alerted parents of a late dgs miss al to let the roads clear out. cheaper prices through them to the store and costco shares hit an all-time high >> and new zealand apples, as well look, china wants a consumer based economy, they got one. it depends what you put before them, you know costco apparently they are very price conscience over there too. >> and here is a fascinating question for you you are costco, you go clearly we can open about 100 of these tomorrow and do great business this china do they change plans, hold off, or have any reaction to the turn

in -- >> so one of the first things i thought of when i saw all the photos from the global times and news outlets covering the massive crowds in china, was whether or not -- the case has been made does china really need the u.s. to come in therewith their companies. and here is your answer. this is what i would say there is a novelty to this store in shanghai. shanghai is also not like other places in china. it is like the new york city of china. you are not going to go to interi interior china and find the same demand there >> but if the formula for it working is the low prices, then that will work everywhere. >> and not just that at the end of the day, consumers like value and they like to be able to know what they are going to get and the picture that i thought was the most hilarious to me was the people waiting in line with that box of costco pizza because they bought the box of pizza so they could wait there for an hour in line to go check out

>> and one of the men interviewed for one of the stories that we got about this, was that he drove more than an hour to get there. well, put another costco so i think they will need more >> this is the entire market, everything hangs on this question of what will be the future of u.s. companies doing business in china. will starbucks be boycotted. so to me watching this to see if any keep plowing ahead tells you what you need to know. >> i think if there was going to be a boycott, there would be one by now >> wait until president trump tweets about it though >> there is always that. >> a double-edged stword and finally, a new study found drivers are turning offer the safety systems in their cars because they are too annoying. worst offender, lane keeping technology 23% say they are annoying.

two-thirds of drivers say they have turned it off completely. it pushes you back in the lane >> i hate it >> may i make a suggestion with all due respect -- >> stay in my lane >> yeah, if you do that, it won't go back. >> i have road rage and this is helpful to me. but my favorite thing to do is change lanes without using my blinkers but also yelling at other drivers for doing the same thing. so this is helpful to me now i use my blinker and i don't find to be annoying. it has been helpful. and i like the braking notice. >> that one is very popular. >> yeah, it controls my road rage aren't you happy >> a lot of them are -- we could say this, 90% of this stuff is the greatest thing that ever happened because making the roads safer, it is a second pair

of eyes about much but you with some of them, and the ones that point toward more of how it will be when you are doing autonomous driving, that is where there is a little bit more resistance >> so this is -- reason why it is so hard and controversial right now is because it is in that middle ground i would have no problem surrendering control of a vehicle if i knew that it was going to be safe but put me behind the wheel having any control and need to know that that control is mine i do not want that car shifting back in to the lane. and i never use it >> not happening i'm not getting in one of those cars that is driving itself. >> would you get in the car with me >> she's going to help -- >> we'd get there very quickly >> kate's uber service coming your way >> don't forget to rate and tip. >> thank you all

if you think china's social credit system which ranks people on everything from social media posts to whether they keep the outside of their house or storefront clean can't happen here in the u.s., think again. compiearaladans e rey keeping tabs on you. we'll talk about that next one to five? it's more like five million. there's everything from happy to extremely happy. there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this. - stand up if you are first generat(crowd cheering)ent. stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand. the world in which we live equally distributes talent, but it doesn't equally distribute opportunity,

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welcome back a new piece is comparing the chinese social credit system with the individual ratings generated by tech companies. some of these companies like ub, lyft and airbnb allows users to rate their counterparts. is it the start of a new social scoring economy and is there anything that you can do to opt out of it? i'm joined by ed lee from the "new york times. and todd hazelton. welcome, guys. ed, i'll begin with you. especially when it regards insurance company, people need to know that they can be

trolling your social media post to figure out if you are a smoker or not. >> whether you are a smoke, whether you like to live dangerously. and we see that all the time there is all kinds of viral videos of people doing crazy or stupid things or dangerous things i don't know how much they are going to drill down when it comes to the insurance companies to, you know, jon smith is applying for life insurance, so let's take a look at his social media feed that might happen to a degree, but i think insurance companies are dealing with millions of customers at a time. they base things on actuarial tables and they are helpful for them i think the real issue is going to be if and when they start using the social media scores or data to feed into the larger actuarial table, that might affect the rest of us who aren't living dangerously or living their lives on instagram so that is where the fallout could be >> todd, where else do you see this crop up, who is watching our behavior

>> you already named lyft, uber, airbnb and i think that those are a little worrisome because they are kind of saying hey, this is a good ride or this is a bad host or this person wasn't very clean when they stayed in my house. so you start to think what if a new service launches and there is a company that can pull all this data and say we're not going to offer to that person because that you were past wasn't very good >> so you are excluded from using itle al all together >> or what if there is a company called neighbors, in your neighborhood, and maybe you leave out your trash can too often every day and a neighbor starts saying this is a bad neighbor what if people could start to rate you on that now, i have no evidence that neighbors is going to add this kind of -- >> you could see where there would be this kind of demand for it >> yeah, a rocky foundation. the puzzle pieces are in place but yet no company that has everything all together yet. >> and importantly the

government is not doing it is it any better if it comes from profit-seeking companies trying to optimize what they know about you it is interesting that there was some app called clout that was acquired and shut down, it used to give you a clout coscore bas on your followers, your friends. >> i remember that, yes. and i looked at my clout score pretty consistently. it was more of a gimmick at the time, but hey, if you have a high enough clout score, you can get into this party, that kind of thing i think the bigger issue, whether facebook or instagram or google, airbnb and lyft, trying to it make their service better to you using the data that they collect, that is the aim i don't think that there is anything wrong with that.bigger issue though is we're sort of living in the united states of the internet, right, which is to say that these companies have so much control over your life and if they sort of ban you from

uber or ban you from facebook without any sort of appeals process, the way that there is in the u.s. court system, all of a sudden you are sort of cut out of a huge part of everyday life. so i think that is the issue and i think that you could make -- there is a legal argument to be made that they are infringing upon your civil rights if enough sort of anger comes out of that, you could see congress stepping in or -- >> i wonder about that too credit scores regulations. finally, anything that users can do to know more about who is looking at this information? >> the best thing to do, open uber for example, you can clip settings tab, there is a profile and it shows your rating you can go to your profile in airbnb, shows your rating. lyft, you have to ask them there are companies that track how often you make returns so you can no longer return products if you do it too often. but you have to email them

so a lot of ways to find out, but usually it involves asking on the other hand, do you really want there to be a score where you don't have to ask too? >> i don't even know who to ask because i don't know who else is tracking this stuff. >> maybe we don't want to know >> i want it both ways like everything in life guys, thank you all. a news alert on papa john's. kate rogers has that >> and we just got in a statement from the founder and former ceo and chairman of papa john's on rob lynch being appointed as ceo of that cove today, senate t saying in part that i'm hopeful he can be successful at papa john's the company was run very poorly the past two years while i still have many reservations about the actions of the board of directors and their ability to fix this business, the decision to determine steve ritchey is a step in the right direction.

we'll have more coming you up on "power lunch." >> kate, thank you president trump refraining from slapping tariffs on autos both from japan and the european union. we'll have those details and drastic step that china could take to boost its auto industry, next

china has unveiled new measures to boost consumption, including a possible removal of restrictions on auto sales a lot of auto news around the world to contend with. phil lebeau is here with the headlines. >> let's start with china. the federal government there put out a statement early this morning basically saying, you know what, we're going to be raising the incentives in order to boost auto sales. what does that mean in china we still don't have a lot of details but what we understand, they want to boost sales especially for electric vehicles by easing restrictions for buyers there are various restrictions in various cities, various regions of the country, so they plan on doing that here's the reason why. china's auto industry has been on rapid growth over

years, but if you look before the dotted line, you see the tick down? that's the last 13 months where we have seen sales go down the dotted line is the expectation if demand improves that's cleary what the government is hoping to do tesla is one stock to watch in this regard. tesla is opening a plant in china later this year. why? because china's the number one market for electric vehicles they'll get away from the tariffs in a u.s.-built vehicle over there, and when you look at the japanese automakers, they're also noticing that the president has said for now there are no tariffs on vehicles built in japan and then imported here to the united states. >> okay, phil, thank you phil lebeau following that for us >> meanwhile, from drunk riving to racist tweets, one start-up is offering companies protection from public celebrity scandals with so-called disgrace insurance. we'll speak to the ceo behind this initiative next

welcome back celebrities are major investments in the entertainment business if stars are caught in compromising situations, the consequences can be expensive for them as well as for the network, music label, or brand that hired them. and social media has made the risk of such exposure greater than ever. hence a new kind of insurance product. it's called disgrace insurance janet is a ceo and founder of spotted. she joins me now to explain more janet, who needs disgrace insurance? >> so any company that hires famous people is at risk and so our disgrace insurance product provides financial protection to companies who hire

these famous individuals in the case they're involved of a scandal. >> what do the terms look like what does it take for somebody to qualify as disgraceful behavior and what's my compensation for that? >> yeah, so our company, spotted risk, we onalize 224 types of disgraceful behavior everything from ageism to xenophobia and everything in between. it's not just protection for more of the well known incidents involving sexual assault and bullying online. so it's a wide spectrum of behavior, and the types of companies who are most interested in this are film and tv fninanciers, production companies, film studios and brands and sports teams and leagues. we were talking about this earlier in the program, this social score or index. i mean, china has it on a much more orwellian level do people have any chance to know what scores you might be

assigning to them or contend with them in some way? >> we do have to be careful about that from a legal liability perspective. we do not release to the public any of our rating factors or rating systems so that is confidential information that is provided to the employer who is looking to take the policy out. and then we have another metric that we use in order to trigger a payout or a claim on the policy and it's called the public outcry index so if the public outcry related to an individual, a famous person's behavior, is significant enough, it will pay the client who took the policy out up to $10 million. >> and you think there are policies like lloyd's that have existed prior, but your policies will be better they won't have such exclusions. >> yeah, so we actually have partnered with lloyd's they're a close partner of ours. we work with a number of their carrier partners and they actually helped us co-develop the product over the last year

but they did have an existing product that was available for the last 35 to 40 years. but the problem was it did exclude any behavior that the celebrity or the entertainer had exhibited in the past. the limits were lower, et cetera >> and now that's exactly where you guys are coming init fascing thank you for explaining it, telling us about it. >> thanks for having me. >> that does it for ex ex. over to "power lunch." >> see you in a moment i'm melissa lee. here's what's new at 2:00 on "power lunch." stocks well off the highs of the day, off the lows as well as wall street worries about a possible recession jpmorgan is taking on the bears. we're telling you why they say to buy stocks now. plus, energy stocks up in flames the only negative sector this year, down a whopping 11% this month alone. is there more pain to come >> and strong u.s. consumers sending these stocks to new heights. top analysts will tell us which names are about to heat up we want to take a check of where we stand with the markets. stoc