sticking with them >> it's at the high of the day up more than 7%. >> have a bad number tomorrow, that means bonds yields goes down >> good stuff. thank you guys for watching the exchange. begins now hi, everybody. bad data is met with bullish remarks. recouping losses for now, but how much longer will investors buy the happy talk on trade as the economy continues to worsen? weask. plus the u.s. slapping billions of tariffs on the eu aircraft, food and whisky among the targets, but delta says the tariffs will quotenflict serious harm on u.s. travelers and the broken world stocks. sla down about 6% despite the market's rebound today down more than pau% this year while netflix has also gone negative year to date.

can they get their mojo back we'll ask, but we begin today's markets and seema has the numbers for us >> staging a big intraday reversal, here's where we stand at 1:00 p.m. eastern dow up 67 points after being down 335 points at around 10:00 a.m. eastern following that weak ism services number which did come in aeker than expegted. stocks then recovered as the probability of a rate cut increased. remember the fed is scheduled to meet at the end of this month. the turn around really being led by consumer staple stocks. names like campbell's soup, costco and hershey all higher today. costco higher today ahead of its earnings report this afternoon, but hasn't been positive for all sectors. that is putting a lid on a number of financials some of the big banks like goldman sachs, morgan stanley. sun trust, wells fargo, still sitting on losses. even with today's broader market

comeback, all 11 sectors are negative on the week kelly, back to wryou. >> welcome to the exchange, everyone here are your headlines now. the president saying he has lots of options and tremendous power when it comes to making a deal with china this as odds for a fed rate cut this month have jumped to 93% from just 77% yesterday. all of this after the ism services report this morning more with bob pisani at the new york stock exchange. bob, we've seen quite a turn around and there's a lot of talk about what's the reason for that >> we've seen all year really, so after dropping more than 30 point on a disappointing september services number, the s&p reversed ten minutes later and rallied back to 28.81. eraseded almost all the losses then went positive i think there are two issues one, we had dramatically

oversold cditions then we had as seema mentioned, hopes for more rate cuts so remember something. the dow was down 1,000 points and many were convinced somehow the weakness in man fufacturing but they mother nature pushed this too far at least for the moment the second factor, hopes for more rate cuts while yields also reversed within ten minutes of the report and the market odds of a rate cut at the october meeting rose to about 98% and 50% for december now what's important here is growth sectors like technology have dramatically outperformed the value sectors today. value? mostly banks retail stocks. materials and a smattering of industrials. finally, we've had huge volume today in the big etfs. the ones i watch carefully spid r, core s&p 500 and russell 2000 etfs. people moving money up and down

the markets. >> appreciate it so weak data sends us lower and in hopes for a fed rescue and trade deal brought us back let's talk about how reliant the market is now on china, the fed on the president let's bring in craig callahan, president of icon advisers ceo of zoe financial art hogan of national securities and steve leaiesman is here as well an address, let me begin with you and this turn around what would you attribute it to is it as simple as the data was terrible and then the president came out and had some positive commentary on china and that was all people needed to hear? >> i could almost make the case that the drop earlier was maybe a little bit fied. if you look at the fixed income market, it wasn't budging. so if anything, this could have been just the readjustment to actually things are bad, but fed is cutting rates and so is the

rest of the world. >> the ten-year hit about 1.5% ch we saw it drop there. went up to b about 1.9%. >> the equity move is much more aggressive so anything, i was look iing at that saying what justifies that nothing really has changed dramatically >> steve, would you agree? people say ofak man fanturing was contracting. is that material new information or not >> i'm going to be a little stubborn and not take my cue about how to judge the economic data from how the market traded off of f it. the ism service data was weak. and it was weaker than was expected the economist, the collective wisdom of the economics community has an opportunity to tell us what they think it ought to be and by the way, my new fancy chart there, the ism

composite dex. it's around a three year low it's come back nicely. last time, the it was down in these levels it had not the time before that, '07 and '08. if i had to guess on this, i would say there was black box trading dialed in for weaker than expegted number, which made a lot of changes i think probably the market was set to come back today after two big downdraft days the rebound is sort nonexistent in the sense we're still trading within a 1% standard deviation i'm not going to take a lot from the bounce back. item going the take a lot from the idea services is weak and i've got to worry about weaker yet on the economy >> so we get the big jobs report tomorrow morning or what do you think is the chain of events? the president seems to be watching this closely and to be kind of intentionally, i mean listen, just kagoing to call it like i see it. to be coming out with a positive

headline ef time it slides the way it did if it's terrible, should we expect further reports about trade breakthrough with china? >> i think you hit it on head here for almost of 2019, ignored most of the economic data in the sense we paid more attention to the comings and goings of the u.s. china trade war n. may, the market blew up and the economy was fine in august, we had a back and forth and saw the seesaw action of the markets and that was the comings and goings around trade. right now, going into this on october 10th, the tone is better wechlt pushed off tariffs. at no point in this trade war have both sides needed to get more >> we were down 300 and now we're positive >> if you wrote an al gor rhythm, it's going to be something positive on u.s. china

trade. it just seems to work every time >> tell us how you read the developments this morning and how much you think the markets are still undervalued if you do? >> we measure the value today to be b about 20% below what we saw this week is a pattern. we've seen during this whole ten-year bull market, investors overreact to disappointing news. that's what the last couple of days were. >> the performance, we have utilities and semiconductors leading the way. odd bedfellows and even for you, you've said how you like the defensive nature some of the more cyclical sectors. where would you be now >> we would expect the ultimate leadership to be cyclical. >> all right, we're going to talk more about the industrials later on an address, does that square with you

that the 20% undervalued in a market that's near the all time highs? >> i would definitely, i don't know which metrics of how you get to that. you hook at cape which look at d pe rash yes. you're inching towards 28, 30. they're cheap, but we're not at the frothy level to bring it back >> is it not a private market. >> a good point. >> craig, i don't think you're a cape guy what is your metric? sxwl pretty much intrinsic value. we take earn x, discount to their present value. >> okay. >> very fundamental. >> as we sort of look then to the next move, next way we're set up, people seem to be bracing for more downside risk

does that take the risk actually out of the equation here >> yeah, if you look at the survey that aai did, it hasn't been this low in three years the low 'seen in the entirety of the cycle. sentiment is a backstop and if you look at position, utilities shouldn't be the number one sector in any given year too invested in defensive and too bearish. >> what's the expectation for the number tomorrow morning? >> 145 >> what do you think the whisper is probably 125 >> i play ed in a rock and roll band, it's hard to hear the whispers >> that's just my guess. thank you, even. >> i think the risk to the downside >> people are definitely, my point is the bar is probably lower for an upside surprise >> according to the tale of the tape today that all you have to do is you get a weak number. the possibility of a fed rate hike, rate cut goes up and then

the market rebounds. >> an indicator. that's what odds are the job numbers -- >> surveys, but look ahead to some of the earliest data we get on the month and that's why. you are right in the sense we have to see it confirm nd the hard data. >> fair enough thank you all. appreciate it. craig, andreas and steve liesman. coming up, first it was nafta then china now europe, the u.s. fighting at least three major trade disputes we'll look at what happens to the economy if things continue to escalate. plus, bracing for impact the industrials have fared the worst. we are going to speak with an analyst on which companies are best and worst positioned and where do you think the economy is headed next into a recession, a slowdown or steady as she goes head on over to the exchange and we'll be right back.

welcome back u.s. trade spat with the eu is escalating the wgo siding with the u.s. in a 15-year-old complaint for airbus and america responding with teariffs on goods from whisky and cheese. for more, i'm joined by joel

trackman and dan professor, i'll begin with you you're saying no one's hands are clean here so this might not be the end of the story in terms of the tear i haves back and forth back and forth, right this terror fight has been going on for yores this particular case started in 2004 there's a mirror image case against the united states for united states subsidies to boeing and that's going to result in an authorization for retaliation by the european union against the united states in relation to that. in a few months. >> so dan, where is this all going? $7.5 billion is not a huge amount, but it's 10% on aircraft enough for delta and some other airlines to say wait, this is going to hit us in response. are these dollar amounts likely to escalate and what's the

biggest take away from that? >> the european union is our largest trading partner so we've picked a trade fight with a very big entity they're almost certain to retaliate next year. despite what the administration says, this is not a big or reward for the united states these duties are a fine that's going to be paid by people on both sides of the atlantic b obviously european producers are going to be hurt it's going to be highers for american consumers, for clothing, for food for machine tools and higher prices for imported airbus airliners, which are used by a lot of u.s. airlines it's going to raise costs for u.s. air carriers and their passengers not sure where it ends as you pointed out, no one's hands are clean when it comes to subsidizing production >> but joel, if you want to

penalize bad actors or a wrong sort of f state support without doing tariffs that hurt u.s. consumers, what are the other options here how else do you hold people account babable or say hey, this what you get for the billions you get on subsidizing this aircraft >> well, you know, you could change the rules to have cash fines on the perpetrator you get to retaliate by putting tariff on $7.5 billion of goods. 10% on aircraft and 25% on a bunch of f other goods including the things dan mentioned so you could have something that's not as disruptive to trade, but you'd need to change the treaty this is as authorized by this treaty it benefits us and the europeans when we violate it >> sounds like we should change it and have fines on these

perpetrators same question to you what's a better method of recourse if you don't believe tariffs are the way to go? >> i think fines are an option we have them now, but they're very indes krim nat and go after the wrong people i think a gauche yanegotiated s. the european union approached the united states over the summer the administration didn't respond to that. there's enough business to go around certainly both boeing and airbus have a backlog of 1,000 planes and of course the russians, the chinese and brazilians are all trying to get into the aircraft industry market globally with some success so i think we need to negotiate, but really there's enough business to go around. boeing has a lot bigger problems than airbus sub ssidiesubsidies. they have to get their own house in order. >> do you think tariffs on german cars would be next? >> i hope not. that will unleash a huge trade war that might even dwarf or

rival the trade war with china we know how that's ending up we're no more closer to an agreement. u.s. businesses and consumers are paying a price for that. so no, i hope wetay away from teariffs on cars quickly, joel, last word >> well i would just add that the cars are quite different that's on a purported kind of false national security rationalerrationa rationale. this is a good faith truly legal right that the united states has pursuant to this litigation. >> right, so it would be yet another departure. we'll see. no sense speculating yet but as we've seen, we can be surprised a lot with these tariff announcements. thank you both coming up, industrials saw their worst drop since august after tuesday's woeful manufacturing report is there more rapain to come or could this be a good buying opportunity? we'll ask. plus, the president says the u.s. china trade talks will

continue in washington next week we speak with a top economist who says now is the time the get tough with china larry lindsey joins me on that ahead.

welcome back the dollar and treasury yields moving lower today with a two year falling to its lowest in two years and ten-year sinking to 1.5% before rebounding.

rick santelli is here along with jim from the cme i hope you guys agree. if you get into a boxing match there otherwise. but rick, what do you think is most significant about the price action today in response to the data, the higher odds now of a fed cut then the president's comments on china? >> two things. the difference between yields on ten year and ten year boons is now 212. the smallest differential in 20 months second thing is tens minus twos is at 15 the steepest in two months why should that matter because i think we finally caught gloenl global infection if you lock ok at the growth spread less than a year ago, it was at 280. now at 212 the market not only the short end pricing, it's the long end price iing in less growth and te spreads narrowing because we're using our seed core, our bullets.

the fed is going to ease europe really doesn't have that luxury and their market isn't keep iing the distance the same because they're really up against the wall and their policy is going to have to change we have a little policy runway left even though i don't think cutting rates is going to be the true absolutely. zpl jim, they always say when the u.s. sees is the rest of the world catches a cold now it sounds like they've done more than sneeze i guess and we're catching it. >> no, and i do agree with rick that it's starting to seep in here but what was amazing about today is that right after we saw the number, it was f a bad number because it came in nonmanufacturing we pounded the stock market. but what happened was amazing. when we saw a price in another half to ease, the market all of a sudden was like yeah, the fed's got our back now if this world laze is happening and we're catching it, the biggest of the big three banks is going to throw more money at it and we're just going to lock better compared to the rest of the world. i'm still okay with u.s. risk asset, the stock market.

down or higher lower at year end? >> dollar will be higher by year end. i will be shocked if it isn't closer to 100. after everything we've seen, the dollar is down still less than two-thirds of a cent below its highest close >> measured against the euro and yen. who's going to throw out the dollar >> good stuff. appreciate i it. now to sue for a b cnbc news update, sue. >> thanks, kelly here's what's happening at this hour, everyone a scottish official says boris johnson's latest brexit proposal is unacceptable to scotland, claiming it is designed to fail. johnson defended the proposal. >> the people of scotland voted to remain in the u.k. and market the best way if he wishes to avoid, reflect suggestion the best way to avoid that would be

to vote for a deal >> students at the chinese university of hong kong marched through the campus to demand police accountability. this after a teenager was shot by police gunfire this week. hong kong's police chief has defended the officer's use of force as reasonable and lawful and police say thieves have stolen some of gandhi's ashes on what would have been his 150th birthday being held at a memorial in independent kai. they also printed the word, traitor, across photographs of the independent leader that's the news update >> terrible. >> back to you >> thanks very much. still ahead, tesla's tumble. a make or break quarter for netflix and two beverage giants poinlting to a strong consumer is is it strong enough we'll tackle all of that next. the biggest challenge of...

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welcome back major averages well off their

lows the dow is up 50 points. we were down 300 at the rows of the session. nasdaq is up .863 points we are tracking a bunch of stories that should be on your radar today. julia has the latest on netflix and a big drop in snap shares. frank holland covering pepsi and consolation earnings phil lebeau has more and julia, let's start you and before we get to netflix, we have to talk about some big and to me, surprising news out of facebook that it seems copying yet another snap chat's main features >> that's right. facebook announcing a new app. it's called threatened by instagram and this new app is designed to have, make it easier for people to message their close friends. from instagram to share photos, videos, et cetera. it's really camera first similar to snap. the idea you look at snap's success is the idea that people have their close friends there

and they communicate frequently on a dale by basis not with a bunch of their friends, but really with their close network of friends so remember that instagram has about half a billion daily active users,ing so we've seen snap shares fall dramatically. facebook shares are up about 2.5% on this news. of course the question is whether or not this will eat into snap's numbers. >> and especially for them to do this at a time they're under such scrutiny is fascinating. i want to ask you about netflix, which jim cramer this morning, he was kicking out a fang. he said it's going to be g fang. the stock is down 30%. the past few months and everyone is saying this is a make or break quarter they have coming up >> today, there were two analysts notes out today moving netflix shares, down 2.5% today. right now, shares are down about .8%, so bank of america, merrill lynch, which has a buy

rating on the stock issued a note saying heading into q3 earnings, this will be a make or break quarter for the company. of course this is in the wake of a 25% plus sell off since disappointing subscrer editions last quarter in q2. laura martin with a hold on the stock, she issued a note saying netflix must lower its entry price because of competition with disney and apple's lower priced options she predicts netflix's u.s. subscribers are at risk. she recommends the company introduce a new a month service subsidized with ads. she said that's necessary because netflix's balance can't with stand larger cash losses. of course the big date to watch for netflix is october 1th that's when they report their next quarter >> $6 a month with ads that dvr is looking better and better thanks very much, julia. talks of pepsi, shall we

those shares are rising on a big week for their third quarter the cfo saying he's bull iish. we have shares of constellation brands and those are thinking even though they had an earnings beat because of their exposure to cannabis. a $400 million loss on their position weighing on minds today. frank is here with more. first of all on the strong consumer, an important message given the market today >> both companies had a strong message b about consumer spending however, we're seeing different performances when it comes to their stocks beer sales were up for the 38th quarter. overall, sales up 5.3% that sales growth led to a 12 cents earnings beat. they expect beer sales to grow by high single digits for years to come. the company raised earnings guidance on the bottom and top end of the range but investors are apparently concerned about those canopy losses that reduce eps by 20 cents this quarter shares falling right around 5%

pepsi on pace for its best day since july of 2018 strong consumer demand sales beat estimates by almost a percent. gatorade and the introduction of gatorade zero, a big factor there. the question ceo today saying the consumer is doing just fine. here's why he said so in north america, pepsi, frito lay all reporting growth europe, africa, the middle east and asia reporting 5% growth or more >> now i know will say it's lagging. by the time it catches up with pep pepsi, it's too late but it's so important to check in on the consumer and if they're seeing any sign of a deterioration, people trading down to alternatives the traditional signs of distress sounds like we're not seeing that >> especially when it comes to pepsi. gatorade zero, it came out last year if people feel their money's tighter, they generally don't go to new products and also thas

outside of their core business that's their big seller. so you see people try new products aoticing that growth, it's a sign at least for now that consumer spending is strong >> appreciate it thank you, sir next up, tesla share, we had the whole market rebound today, but not tesla. they posted record numbers, but fell short of estimates op deliveries phil lebeau is in chicago with more and as i mentioned, stock down about 6% and kind of sitting around those levels right now. >> right an the stock's under pressure because people are wobderring is there a demand problem when people look at the model in termses of deliveries we saw in the third quarter. overall deliveries, yeah, they fell shy of expectations coming in at 97,000 the street was expecting 99,000. so it wasn't a huge miss this is why we're showing you the chart. that gray area at the end, haas 105,000 vehicles that's what tesla needs to deliver in the fourth quarter to hit the bare minimum in terms of

delivery guidance. we have seen a number of analysts who have trend their delivery estimates for the fourth quarter particularly for the model 3 they're concerned that perhaps we will not see the level of demand that people originally thought and what's going to be happening in china jnp securities out with a note today, they downgraded shares of tesla and raised this entire question kelly about whether or not could they have delivered more vehicles if there was greater demand they point out there's nothing that was obvious no indication they were having delivery issues. therefore, they had the vehicles they should have been able to make deliveries if there was demand that's the theory for somebody looking at tesla share, saying hmm, not sure i'd buy. >> it's been a battleground this year obviously the stock's been around under pressure with the big fourth quarter ahead of them appreciate it. finally with the trade tensions, weak data and bankruptcies all

weighing on the retail sector, department stores have taken a beat iing. macy's down 50% and new holiday p projections today what are they saying about the holiday season is there a sign these concerns these are catch up >> it's hard for people to gauge because they have fairly positive expeck tase, but they're also saying the it's the most uncertain environment they've ever been in so even though you know you had the cfo of pepsi saying the consumer is still strong, well what's tomorrow when every day news is breaking you don't know when that's going to flip. >> and the there's still this uncertainty about the timing of tear i haves on october 15ened and december 15th. are we seeing shifts in terms of people pulling inventory forward and trying to ensure they'll have stuff at the right price point? because raising prices on the consumer as macy said this year is dpoipg to be really difficult. >> exactly

so from a supply chain you're seeing companies repair for a while. but if you're a department store, macy's and that came out, we tried, we raised price us and the consumer didn't want them. that's a really big problem. big department stores are investing in e commerce. they have slowing store sales. they can't risk their margin anymore and it looks like the consumer isn't going to be the one to beat the price. >> right although it probably says more about this consumer. lululemon, they're not going to have trouble selling a $99 item for 10 >> so the weaker will get weaker and stronger will get stronger >> appreciate it after f a strong year so far, weak manufacturing and services numbers hitting the industrials this week. sectors down 5% and a top analysist urging investor so sit on the sidelines she joins me, next woman: my reputation was trashed online.

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industrial stocks were doing well until a sizable chunk was taken out. they're now facing rising inventories, but there are some bright spots let's bring in ann managing director at jpmorgan. seema is here as well. real quickly, have we seen pretty much the whole sector thrown out this week >> yes, for the week, the industrial sector is down nearly 5% it's the large cap names like 3m and caterpillar and even those that have f high exposure to the farm and agriculture industry. there's been new channel checks from ubs that show farmers are becoming more cautious on how much they want to spend on big machinery and they're becoming more concerned about what type of aid they'll receive from the u.s. government in 2020 and are pulling back on how much they're going to spend on these big goods that a lot of these big companies from caterpillar to

deere which cut production at two plants really rely on. >> deere is only one of your underweights what do you need to see in order for deere's outlook to brighten here >> well, first of all, we have to resolve the trade issues with china as you can imagine u.s. soybean exports came to a standstill and the longer those tear i haves remain in place, the more likely it is u.s. farmers face structural challenges and weather been saying that for b about a year now and i think we're beginning to see it show up in farmer's he has tanty s toy spend. i think the other issue for u.s. agriculture is the strong dollar corn is not impacted by the tariffs. but corn exports are down 66% year over year so corn has been negatively impacted by the strong dollar so we have a number of different issues facing u.s. farmers that

could be structural >> for caterpillar, you are overwigt but why do you think caterpillar is a belter position >> we like caterpillar, just not at any u.s. exposure it's more a global mining play and in our view, as long as global gdp is growing, albeit slower, then demand for xh commodities continues to grow and spending kobts to grow in terms of f capx by mining companies. so slow growth, yes. multiple of gdp. we prefer caterpillar. >> are you spooked by what you've seen in manufacturing surveys or do you think it's pre d? >> i think it's priced in and we are seeing and hear all the markets you just mentioned up front, the truck industry. we got r orders last night down 71%

talked about construction piquing and maybe rolling over we've seen u.s. oil rigs slowing. we're seeing broad-based slowdown it's going to be difficult to pick winners and losers and hence we think this is an order you want to wait and sit on the sidelines. >> you have an overwiwidget on n and oshkosh, b but only a couple there. also just given ann's comments about how bad it sounds out there for agriculture, how does this play into next year we're talking about distressed farm economy that had been a bastion of support for the president and his tariff >> such a great point. especially states that are politically important to the trump administration that have heavy exposure to manufacturing and industrial production. we're talking about illinois and

wisconsin. got to watch the unemployment levels there that could be pertinent to the discussion especially as we head to 2020. >> i didn't realize when you talk about these numbe down that much year on year, it's only, we have we haven't even wrapped our heads around it. the true damage it's done. thank you both today and joining us there appreciate it very much. markets did turn around on some positive china talk. we're at session highs right now. but this was after slumping last weekend. a report that the white house was considering limiting u.s. portfolio flows into china that was later shot down by the treasury, but up next, larry pptsraindo os me with now he suor cckg wnn chinese firms. the change will be right back. - when i see adversity, i find a way.

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welcome back the president trying to calm marks thisorning and we're now up more than 100 points after being down as much 300 he announced the chinese delegation is coming to the u.s. next week for another round of trade will he be able to alleviate

some market uncertainty caused by the trade war joining me now is larry lind say. presidesy president and ceo of lindsey group. larry, great to see you begin and you actually like the idea that the u.s. would clamp down on investment flows into china, right? why? >> well let's be specific here it's not china specifically, although they're the most agree jous case. what i think is that the standards that are applied for listing an american company on the new york stock exchange or some other exchange should be applied to everyone who lists on the nyse right now, there's a lot of chinese companies. who don't comply with financial transparency rules >> yeah. >> and it doesn't seem fair to me that they should not follow the same rules as everybody else >> this is also about vulnerability though and i am

curious who your perceive as being more vulnerable this this trade war now. let me read a tweet from the global times editor. he says larry the u.s. economy brags with no huge untapped potential, no major science and tech innovation in years, it still launched a trade war more terrible consequences will come is this how the chinese to perceive us to be in the weakened position right now? >> they're in weakened position too. shanghai or what have you, even hong kong. that did not comply with the

same financial transparency rules but applied to american companies. this is a matter of consumer protection i would say the same thing is true of russian companies and iranian companies and french companies. they are generally complaint wi should we be handle that as investors and let these funds invest anywhere just because they are overseas. >> i think you believe the tariffs have done damage to the economy and the president should reconsider going down this path. are you proposing this investment block as a different option that could still hurt the chinese without hurting our economy further? >> i think it's because their situation is to egregious, i'm

sure the chinese economy will be hurt by this i think it backed a lot of the tariffs that are been suggested aren't going to take effect. i think even the president has recognized it's not cost effective to push the tariff anymore. if he wants to continue pressure on china, which i think he probably does, i think this would be a good path to tpursue let me ask you about the federal reserve's role in this now a lot of debate about pieces earlier this year suggested the fed should not cut rates in response to economic weakness inflected by the president in

order to make him bear the consequences of those actions. do you agree with that is the fed playing a political role without meaning to and what happens if they continue to cut rates further? does that help or hurt many the long run the u.s. economy? >> the fed should decide what it wants to do based on all the information it has and if i were chairman powell and the president were to tweeted, i'd say mr. president i value everything you say i also value everything i'm told by the senate banking economy and the house banking economy and ceos and labor union members and all the data that comes in we take in information from a lot of people. that's what we're going to base our decision on.

>> does it warrant rate cuts >> i'm a believer that the actual hard data is more important at the sentiment data. as i remember the market manufacturing index came at the same day as ism and marketing had manufacturing up half a percent. it's going to be a negative number because of the gm strike, i believe. the sentiment may be awful

i do not think another rate cut is needed at this time we do have reasonably solid inflation. the labor inflation part is already at 2%. we also got 2.6% productivity and costs went up for labor. we're close to that 2% target. we have a very, very l unemployment rate. i think we will tomorrow as well >> okay. great to see you again

thanks so much for your time >> great to be back. the airlines have been hit hard this week delta lowering its quarters. it will hit the u.s. airlines bus we have growing concerns about the economy. let's talk more about all of this now with senior airline analyst. thanks for joining me. delta is one of your top picks and they are the one in the middle of everything this week what do you make of the news flow are investors right to be selling off the shares as much as they have been? >> thanks so much for having me. with respect to delta, they have been the leader within the group. they will be the first to report next week. i think if you really look at what they have been saying, number one, they narrowed their guidance for the quarter it really is right in line i do think going forward, i think what really concerned investors was their cost outlook

which was a little higher for next quarter it's a high quality problem. some profit sharing is always a good thing but it's hard to predict. still consider delta certainly one of its names. >> a 10% tariff on air bus jets, they have 170 of them, how much is that going to hurt delta and how much might they pass along the travelers? >> i think that's a great question we are still waiting for the w.t.o. to rule on boeing

we do think it will get negotiated. i do think you're looking at healthy demands. the airlines will be the one at risk >> is it that big of a cost? i'm not trying to diminish the tariff but they are supposed to element to $7.5 million, right >> a billion >> that's quite a lot. it's a big deal.

i think the u.s. is really pushing things along we'll continue to monitor everything it's not clear i think they've got two. it's really not clear what exactly is going to hit. we do expect it to push off and we think investigators need to focus on the names that are quality fundamentals let's look at the costs. you're only talking 2.5% for the year it's not like you're looking at costs over 5%. modest delta because its high class there's not a lot of forgiveness because they are considered such quality name >> down 10% this week.

thanks very much we appreciate it we asked where do you think the economy is headed? in recession or not. 43% think we headed into a recession. only 23% think the economy will keep chugging along. power lunch will pick it up now. here is what's new at 2:00 stocks staging major comeback after bad economic data. for now in positive territory the wall street bets fed will rescue this market we'll explain. lart, tesla is failing top analysts explain why he thinks there could be a demand problem. power lunch starts