but they're buying upside calls so i like that >> weiss. >> i think you should look at western digital. that got destroyed in the quarter. >> you know alfa bet, google set a new high >> see you tomorrow from d.c the exchange starts now. >> thank you very much have a wonderful program tomorrow on lowed ground at arlington. welcome to the exchange and here is what ahead. the r records keep coming. stocks at all time highs as the u.s. china announce they have reached an agreement to remove existing tariffs details are sketchy, whether this is the final piece of the puzzle that will fuel a year end rally and we have a year end rally right now. plus, the spy who tweeted me two former twitter employees are charged with spying for saudi arabia what it tells us about the issue of foreign powers exploit,

penetrating our social media anchts and shares of expedia, trip adviser and holdings, they are sinking, we'll tell you why but we begin with a record breaking rally and dom chu has the numbers. >> we're going to be putting a lot offstars on the board here. the dow industrials right now near their best levels of the day. up by a full percent s&p, over 3,000. nasdaq up by three quarters of a percent. yes, a star here a tstar here and here all record highs so far today. we're checking out what's happening dynamic wise value versus growth. we know growth stocks have been outper foming value for a good part of the last year. a healthy amount of outperformance, but look at the last few days here more activity in what's happening with the value side of things as of late. we'll see if that trend continues then our stock of the

day is ralph lauren. those shares surging, better than expected profit, revenues and sales growth at established store locations. same store sales growth. all pushing ralph lauren higher. it's not the north american consume rer powering these results, it's international consumers and interesting tidbit there. back over to you >> all right thank you and welcome to the exchange i'm tyler mathisen trade is where we start with the u.s. and china apparently agreeing to remove existing t tariffs. kayla is live in washington with the details of what they agreed to and what they dnlt so far as we may know them >> still getting those details ourselves. the phase one deal are expect ing to sign in the coming weeks. it will include a roll back of certain tariffs ar cording to officials in both countries. andy canon b, a former administration official writes he expects that to include a

permanent suspension on the consumer facing tariffs coming in december as well as previously delayed hikes on earlier tariffs to be suspended. he says the secht tariffs could come off if china delivers additional concessions the agreement comes after a highly anticipated sign between president's trump and xi two officials tell me they would prefer the signings sooner rather than later and the white house is still eyeing next week when the apeck summit would have taken place. if it gets pusheded past next week, you could look at a european summit in london, december 3rd through 4th and you could see something bookend that in europe. we'll see. back to you. >> a lot of moving parts thank you. here to dive deeper into these headline, michelle caruso-cabrera and sean, head of public policy research at barclays it looks like there's progress here

maybe these are baby steps >> i think we can get this deal that focusing on agricultural exports. maybe market access into china those things are still remaining and outstanding. >> are they long-term problems that are going to get solved over a period of years, not months this will go well beyond the current administration and i think you're seeing that posture playing out on the defense side here in the u.s. but also internationally as allies are beginning to think about these two different competing side >> it looks like the december tariffs were supposed to kick in on the 15th, now are off it looks like the september tariffs that went into place september 1 may be roll ed back. and the previously delayed r tariffs, i believe some october 15th those are going to be

permanently postponed. these, this is not all tariffs are going away and this is not even that all of the tariffs that f seemingly, we don't know, that all of the tariffs that have gone in place in this phase of trade war are disappearing >> no, that's right. i would say two things directionally though, they're not going up right? they're stopping and or going backward the other point i would make is that the chinese finally seem to back off this idea that all tariffs had to go away from day one. they've now allowed an incremental approach, which is then giving in in some way what we've given in on, maybe the willingness to delay all the other big issues we've discussed. >> a lot go away, but it sounds like what we may come away in this deal is the ability to export into china more agricultural product right? >> yeah, absolutely, but all

that other the stuff goes on for years. >> but as sean says, a lot of the big issue, support for state owned sbr enterprises, they are the road and one bears on something you talked with the head of the fcc about the other day, the role of chinese companies like huawei, zte embedded bembe embedding into american infrastructure >> there are still going to be major security concerns. they spoke with the counsel on foreign relations yesterday to tuck about the issue where he has decided the fcc should not be using any money on any kind of huawei equipment that would be used in the rural areas of the country. a lot like it because it's cheaper. he said we can't do it anymore i said is h it because the other

compani companies, they have fewer back doors that would allow spying, which is the accusation against huawei or that they simply come from a country that follows our rule of law. believes in human rights >> if you look at some of the independent experts ha examine equipment and services, software in particular, that come from these venders, they will find that equipment from huawei and other chinese vendors tends to be more insecure, there are more opportunities to insert malicious lines of code in the lake and secondly, i think the it is the case by any reasonable observers any way, that those countries have r momore of a framework of the rule of law than does china. >> so he said it's a little bit of both. rueful of law and the fact they, you have a thought here and also in my note, a very provocative phrase that i assume originated with you, the idea that there may be a technology iron curtain

descending between the united states and china >> that's something that i think a lot of folks have been b saying in the policy world and defense community, but on huawei, one of the things to keep in mind, while we have the ban and the u.s. has this licensing agreement and we can decide what goes forward, president trump and the administration may have the ability to grant additional licenses this is beijing wants. they want huawei to be removed from the ban and that's extremely important for them, but they're probably not going to get that in this process. one thing to keep in mind if the administration were to remove some of these restrictions, congress wouldn't be able to weigh in very nervous a about the issues of 5gr >> one of the things michelle we were talking about is a development on fentanyl and china has made some moves against fentanyl producers that were very welcome in the white house. >> nine convictions yesterday. the leader of the ring was

sentenced to death he's got a two year commute on the sentence if he's well behaved, apparently that can be commuted and he'll serve life in prison but jim cramer was reporting that president trump was extremely pleased about this that one of the conditions was that the chinese had to do more to help stop the opioid crisis that's happening here in the united states and by reducing the amount of fentanyl coming into the united states >> that couldhave had an effec on the other developments. great to see you fantastic. a news alert in the bond market now 30 year bonds are up for auction. it's been a very busy day and rick santelli has the results. hi, rick >> we had 19 million 30-year bonds completing 84 billion in supply and the one issue market just like yields on the current 30-year bond just kept escalating the last couple of days this auction came in at yield at 2.43

some of the numbers are quite spectacular. i gave the auction an a minus. i'll start with what i think is the most telling primary dealers take the smallest amount i've seen in my database going back to b probably around 2014 at 20.5 unbelievable and if you look at direct bidding, direct bidding at 20.5 sorry, the primary dealers take 20.7, i have no lower. they took the least because investors want ed the most. direct was the best since december of 14 the a minus may be even more estimates that when prices are moving lower and yields are shooting up, investors flock to this issue and the only thing i can think of is that they believe this move might not have legs so no matter how you slice it, we moved 84 million in paper and yields are zooming to the

upside back to you. >> those soars yields are just another positive development for stocks on top of that, you've got a very accommodative fed so are we setting up for a big year end rally? with us now, jamie cox, managing editor of harris group and paul christopher at wells fargo investment institute jamie, let me begin with you are you expecting a big breakout to the upside or today, you had a nice move in the dow 2 200 something points >> i'm not expecting a lot more. i'm happy with where we are year to date. who couldn't be? you have to be happy with what you've seen. so i think what investors should pay attention to now is reallocating their portfolio to things that may have been overlooked like energy left out of the party i think oil may go from worst to best in the next couple of months things like that are probably places where investors should be

looking for the couple of months if it happens, i'll be happy i'll be happy if the market sofrt treads water toward the end of the year. last year, we were talking about recession, yield curve inversions an look are where we are now. the opposite i'm pretty happy with where things are i want them to stay steady >> let's talk about the yield curve paul and the big move in yields today how should investors think about that how do you interpret it? >> first place, they should not forget it's not uncommon to have an inversion then a few months lat later, the curve resteepens. doesn't mean you're in the last third of the cycle and later than that. so where investors should be is staying neutral on duration. we think there might be an opportunity to buy here soon in the treasury market long end of the curve. >> so what about stocks, paul? does this tell, has what we've been seeing in the bond market not to mention in corporate

profits, not to mention what we've been seeing from the fed, does this tell you this is a safe enough time to put incremental match up to work in stocks >> we definitely would be u looking to put money the to work, but you want to make sure you're going to the right spots. i like the last comment that you know know, at this level, there's going to be sectors that are expensive. so we would be looking to take anything neutral anything that's market weight in our guidance like health care or energy we'd be looking to take those up to even weight and the favorables we still have are cyclical so we're primed for more growth but we want you to inject more quality. that's why we want health care neutral. that's why we want information technology at an overweight and consumer discretionary and financials, too. >> let's dive deeper on autos, staples and energy want to give me some names curious about autos many particular >> all right, tyler, so what i'm most concerned about into the future is some of the credit

quality issues a lot of companies have been borrowing money for things like buybacks while interest rates have been super low. in autos, take a pair of daimler chrysler versus ford dividend yields are the same you have a triple d credit there, which is close to not being investment grade where as daimler has a similar yield. if i were a big owner of ford i would be look iing at that sayig if there were would be a downgrade on ford, maybe i should choose a higher eququali credit like daimler. another example is in energy you have a beaten down sector. a lot of highly leveraged companies like valero with dividend yields similar to exxon mobil which has interest coverage many times higher so i believe investors should pay close attention to those companies on the margin of being downgraded to high yield which can cause some trouble later on.

>> thank you so much for your time today appreciate it. here's what else is coming up on the exchange >> ahead espionage at twitter the story of how two former employees became spies for saudi arabia plus, disney set to report results tonight and all eyes will be on any guidance b about its streaming service. we'll break down what to watch and america's corporate debt pile is about to face a massive test iss e chgen bcth ithexan ocn datadog has become the modern monitoring and analytics platform in the cloud age. when we started datadog nine years ago, our mission was to break down silos and bring teams together. nearly 9,000 of the world's most innovative companies rely on our platform daily to run their business and delight their own customers. we see a massive opportunity in the years to come,

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an amazing story here. the justice department bringing charges against two former twitter employees. the criminal complaint details a scheme to spy for saudi arabia's royal family by digging into the witter accounts of kingdom critics to access private sensitive information. joining us now with more is "the washington post" national security reporter, ellen ellen, welcome good to have you with us tell us about this plot, i guess you could call it that who was involved at whose direction were they working? >> one of the key players in the plot is a saudi official nam

namedsakr. he was the head of charitable organization in saudi arabia that was owned by or r started by the crown prince and de facto ruler. mbs as he's called was at the time rising in prominence. wasn't yet crown prince. he was the defense minister and thus in the cab b innocent and he was really starting to come up in the saudi government and family and as he was doing so, it became clear, now we know mbs is someone who is is very concerned about keeping a lid on dissent in the kingdom and there's a lot of concern about the government silencing of voices. most famously, jamal khashoggi, former "washington post" columnist who was brutally killed kill ed >> we focus a lot on outside

hackers. people breaking in from the outside, but these weres inside twitter who were recruited apparently by this head of the charity to do the bidding of msk. >> absolutely. mbs. what this case shows is that the threat is not just from without, but also from within and tech firms like twitter are rich targets for foreign governments that might want to gain access to the information inside so that they can use it to track people they want to like dissidents, journalists, others >> there were three individuals, i believe, who were cited yesterday. one of whom has been arrested, the other two are presumably back in saudi arabia >> that's right. the one who was arrested was in seattle, he had left twitter in 2015 and moved to seattle to work he was arrested on tuesday and he's in custody.

he's going to have a detention hearing friday the other two are still in saudi arabia and the other, he was the other twitter employee, he left in 2015 as well. >> do we know how many individual files or individuals data was comp mied here? we know about a twitter user who was critical of the regime has a million followers. do we have any idea who that person is? >> so the account there is goes under the handle of -- he has probably over 2 million followers and is someone who doesn't have his you know, his identity is not public, but his account is very public and prominent as someone who likes

to reveal the inner workings of the saudi royal family or alleged corruption and as such is a real thorn in the side of the royal family there's another prominent dissident whose account was also a target etargeted he's living in exile in canada and he's someone who was very close to jamal khashoggi >> do we know whether his account was compromised? >> we do not >> final question here was this scheme done, were these individuals doing what they did out of some sense of patriotic duty to the regime or being p d paid >> so we have evidence for sure that the one who was arrested tuesday was paid at least $300,000 by asakr including and given a luxury watch worth more

than $20,000 >> all right ellen, we have to leave it there. thank you for your reporting and your time today. >> thank you coming u, first it was 50 million, then 32 million now a group of senators wants to raise taxes on those making 2 million. we'll take a look at a new plan. plus, america's corporate debt pile we've been talking about it today. is about to face a massive test. that and more ahead on the exchange

back to a record setting day. the markets hitting all time highs today after the u.s. and china say they have agreed to roll back tariffs. energy, communication services, those are leading the way. let's go to bob pisani >> hello, old friend the market cares about tariffs because they're what directly impact earnings in 2020. so intellectual property, great story, but not moving the market tariffs coming offing, being removed. it's a cyclical rally since november 1st banks, new highs materials, new highs industrials, new highs tech, new highs. all cyclical groups. another major cyclical, sub sec r tor of industrials, transpo transports the dow theer riss are going to love it. dow tronz ports confirmed. that confirms a bull market situation. that interest rate sensitive situation really hurting some of

these yule tillties. consumer staple, really started on november 1st, they started flipping around. these were the market leaders and the big move up in bond yields we've seen today not only hurting utility, home builders are having a rough time of it. another group that was market leaders just a couple of months ago. >> thank you very much now to sue herera r for a cnbc news update. hi, sue. >> hello, ty, hello, everyone. here's what's happening at this hour fo john bolton failed to appear for his closed door deposition today. he was invited to testify, but declined t"the washington post" r reporting he is willing to testify in the impeachment inquiry but only if a federal court clears the way in germany, mike pompeo says the u.s. is investigating allegations of war crimes in syria. this at a news conference with the german foreign minister.

>> the united states will continue to monitor the cease fire and hold human rights violators there accountable. we're investigating allegations of war crimes and will continue to deliver on our humanitarian mission there. >> and former soviet leader gorbachev and members of a rock band met together in moscow marking the 30th anniversary of the falling of the berlin wall the scorpian song wind of change became an anthem for german reunify kags. back to you. >> apaizing it's been 30 years i remember the day like it was yesterday. >> i do, too let's tell you what else is ahead on the exchange. >> coming up are investors losing nae ining n roku a bold move by china when it comes to video games plus, the corporate debt pile is about to face a massive test and it looks like a wealth tax eckes getting lower.

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catch you up on a few stories that should be on your rada radar. it is time for rapid fire.

here with us, josh lipton. >> nice to be here >> seema is here you're often here. you've come from about 40 feet and robert, you came from upstairs let's talk first about roku. josh, shares sliding despite post iing a revenue beat and double digit growth across multiple metrics 68% jump in user streaming hours. 79% spike in ad revenue. also boosted full year revenue guidance but a 22 cent per share loss weighing all positive even though the loss was as i understand it, r narrower than what has been forecast >> it was interesting what the ceo told us on "squawk alley" today. he was talking about listen, we are partners with some of the streaming service. we're ekt canning the user to those service ises whether it's disney or apple. so kind of what he was saying is that they win, we win. tha an interest thing for

investors think about. do you think disney's new service is a hit do you think apple tv plus zpoing to be a hit those are some situations you think about because the case on the street in part, it's a big part they're going to be a winner >> subscriber growth, what 80% when is good good enough >> i know. the stock performance is down a lot, but just comb iing through the earnings report, there's a lot of positives user base is up. i think to your point, tyler, roku's unique selling point has been its ability to attract a younger audience that's increasingly cutting the cord. with the onset of disney and apple plus, more people will cut the cord and that will lead them to roku, but i guess that's out there. we have to see if it really happens. >> why don't they come out with a television set >> they're going to. launching a test version in britain. right now, we have a smart tv. and say four streaming services,

six pretty soon. you can go to those directly without roku you just click on the app. what they can do and we're dwoipg see a need is aggregation and search so you want something that brings you back and forth between all these streaming services, suggesting shows for your you, not from netflix. and that's what's missing from this market. i think people will have more streaming services than we think. they're saying now the maximum per household will be about three. >> it will be more than that >> definitely. so if roku can be that cross platform search and aggregator like the online tv guide for all this stuff in one place, it can, but will it. by the way, year to date, stock is still up 300% >> that's good one thing to watch, i think do midwestically, they're okay competing with google as they

move internationally that will be interesting they're not as well-known. >> moving on to the next topic while the attention has been focused on warren's tax plans, another representative is introducing their own plan at a much lower threshold >> well, this plan comes from chris van holland and moves the goal post quite a bit. it would apply to income over $2 million for a married couple or just 1 million for an individual it would cover both wage income and capital gains. it would raise the tax rate on both by ten percentage points so the top rate would go from 37 to 47% and the rate on capital gains would move up from 20 to 30%. two important caveats, the surtax doesn't apply to all assets like warren or sanders' tax. only income and this isn't going anywhere on capitol hill right

now. but it is important tyler for the framing of the debate among democrats over how aggressively to tax the rich. moderates have been skeptical, but progressives believe this could swing key voters >> critical here is the idea that this is an income tax this is not a wealth tax per se. though it would affect obviously wealthy people >> yeah. well i think that the important key here is it didn't just apply to wage income it's trying to get at capital gains and would raise the rate that's been a big complaint amongst democrats that the rates on those two types of income are different and so in that way, it's trying to get at a broader set of wealth than the traditional income tax we know the democrats want to raise the top tax rate >> looks like this would hit about 300 families initially over years because it's not indexed for inflation would hit about a half million families. so still, it's you know, only the, more than 99.7% of the u.s.

population would not feel this but why do you think they're doing this at a time when there are already much bigger plans out there by other democrats what's the point of this do you think? >> they asked that question, actually, why they settled on that 2 milli$2 million threshold they said it was sort after tidy way to sum it all up it was easy to understand. one of the reasons why they're pursuing this is because it rides on the back of the existing tax code so all you have to do is replace some numbers. you don't have to think of f a wholesale overhaul of the code that it could be implemented quickly and easily if democrats could get it passed. >> thank you very much moving on to topic three it's been a rough ride for a pair of online travel companies. shares of expedia and trip adviser, which i just amount ago called tripedia. both missed estimates for the third quarter. the ceo saying the quarter was more difficult than the company expected

whabd here. >> there are a couple of powerful forces. air bnb is becoming a bigger talking point. they have their own home rental platforms and while the opportunity is large, it's becoming crowded which means these players have to spend more advertising dollars to market their brand and differentiate it from other competitor, especially as they move overseas into these new markets for trip adviser, it's a company specific situation as travelers, we have now other tools that we can use to figure out where we want to travel, what restaurants we want to eat at in capri or barcelona. for years, they've enjoyed free traffic from google but now google has moved trip adviser down and put a lot of paid results at the top so now they don't get as much traffic as it used to from google. plus, people are using social media. a lot of mari lynnals make thei plans based on what their friends are doing. >> are they going directly to

the sites of airlines or hotel companies as opposed to the intermediaries >> you're right. that's also been a long er term head wind for these online travel operators the hotels have become very smart and strategic in trying to incentivise the traveler to book directly saying hey, if you book with us, maybe we'll get you the upgrade. >> and best price and if you've got a problem untangle iing it t the hotel or the airline directly is usually easier >> much easier and goggle's just gotten in the space like crazy google flight is really good all the google apps are just terrific includes all the things they know you like as a google user >> say you're at expedia you know google is this big threat out there what is the recourse really like ads on tv, on facebook, on other digital platforms.

>> google. >> they have to. that's why it's this frenemy relationship with google they're feeling that competitive threat they have google flight, google hotels and the platform is convenient for a lot of users. it's diversifying the type of players they're marketing with, but also finding a better way to work with google >> last one, china is hitting the restart butt announcing a host of new restrictions on online gaming to help curb video game addiction the new rules include a ban on gaming by minobetween 10:00 p.md 8:00 a.m. on weekdays. they can only play 90 minutes a day and spending minutes for in game micro transactions. china's digital gaming market estimated to be worth more than 33 billion josh, how in the world, well i guess i know, they're watching >> it's communist regime so you have the fire wall. reportedly, you have tens of

thousands of sensors controlling the internet right? so -- >> in china. not a big leap ta see how they could do it. what's interesting is for the video game publishers, china is an important market today you're going to get reports from act vision and take two. they're called duty franchise. they put out a call of duty, a emotional version. seeing a strong response they need like a lot of video game publishers, they need those regulators to green light those titles >> what parents can't do the communist government can >> to the highest order. >> there are a lot of parents including one who lives in gjere s sy zpl and there's internet gaming disorder so now you can just imagine the whole secondary industry that's going to start up from curing internet gaming disorder eand

rehab centers and places where you send people. >> can't overstate how important some of these games are to some who played them. t not just a game. you mix it up with friends and family a place to hang out. plays a big role >> it must be a really serious problem in china if it has a mental health effect and the health effect itself people in china say iing the yon people there just aren't exercising anymore >> i left three boys in my basement this morning. there's no school in my home district today three boys in my basement today. >> probably still there now. >> lucky they're not in china. >> thank you very much robert, josh, always great to see you. and coming uch, disney on deck with earnings after the bell there are three key things investors are looking r for and we'll tell you what they are, next ♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging.

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disney reports results after the bell this afternoon. the stock at an all time high a few months has fallen nearly 9% since then investors will dig into details on their movie revenue the real event will be five days from now when disney plus, their long anticipated streaming service launches worldwide dan rand julia are with us. tell us what people are expecting from disney today and what you'll be watching? >> disney continues to dominate at the box office and there's no question this is a behemoth when it comes to the movie biusiness but there's still a lot of questions as to what we can expect from this streaming service and any from the bundle of kizzidisney plus and hulu an

plus so i think investors are likely to have a lot of questions about how much its investment in those services will weigh on the bottom line. how fast it expects those subscribers to grow and how this streaming business could impact its bread and butter tv business its media networks division. >> dan, what are the questions you'd like to see answered today? >> everybody's putting out different projections, but i think the big thing here, to do this service well, you have to do it at scale and with qualify. so i don't know if anyone noted friday, some of the problems apple tv plus had when they launch ed in terms of people signing in 20th century fox, with 60 cent, eps per share last quarter, i think they'll get past that. i think that will be fine. i think the real question is how quickly can they roll out the

service at scale internationally and how well do they bundle it with hulu and espn plus! the movie business take us through the numbers. it's been an amazing run for disney >> disney dominates the box office if you look at the success of the avengers franchise, lion king, which have not only been huge here, but all around the world. this is showing disney mining its library and able to turn a an old an mississippi stated movie into this format so what's going to be interesting is how it uses those successes to drive people's subscribe to the streaming service. because these are very sbr interconnected i think we have otherbig movie coming out this year that bob may talk about infrcollud inclu

2 then another star wars movie then there's how the films and service drive people to want to go to the theme parks and buy the products we can talk about the success of the movie division, but it's interconnect at disney they have fly wheels and gears connected and everything sort of spins off of it in amazing ways. dan, wak to the streaming issue. as this shakes out five years from now, who are the reigning players going to be. think of at&t. they're rolling out with a product, but they're a wireless carrier, so ethey can bundle differently. disney can cross promote as julie was saying, cross many different avenues. theme park, toys, cruise ships amazon has a service out they're a commerce company more or less. they have different strategies they're also focusing on different types of content apple is a platform. they're a giving it away for

free i think the idea that consumers are going to have two or three services as you guys were talking about earlier, i don't think that's the case. i think consumers are going to have six or seven services whether they want to or not. they're going to be forced to. >> they're going to cut the cord and pay more right? >> they will but when you cut the cord, that's more live tv. none of these services are doing live tv except hul,u, but that' not bundled in live tv is is very expensive sony just canceled sling tv just added a bunch of subscribers this morning about 200,000, but live tv is very different than streaming video on demand. it's really the on demand viewing that people like z >> got to leave it there julia, great to see you. coming up, it's been two days, two whole days, since the cnbc investigation into how real

items on the real real actually are. how real are they? tw there's an update withhe ceo addressing the issue we'll tell you what she said, next it was sophie's big day.

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shares of the real real, the largest online consignment marketplace dropped about 17% since a cnbc invest sgieigationo the company's authentication process two days ago how copyrights are awe then indica -- authenticating many items. this can lead to fakes a concession from the ceo who said there are no fakes on the site in an e-mail sent to customers of the real real after our story aired, we strive for perfection but we may not be perfect every single time. she went onto defend the process and insisted there's no other resale company doing more to fight counterfeit. coming up, america's corporate debt pile going to recordig hhs how big of a problem that could

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low interest rates and accommodative lending not to mention the thirst for yields have led to massive surge in

corporate debt over the last decade over the past five years over $4 trillion of these bonds will come due it could make the next downturn a lot worse. we're talk about the possibility of these maturing issues over the next five years may come up a little short it's not so much the scale right now. it's what could happen in the economy slows and these company's ability to cover their covenants in debt and interest costs go away. >> what we saw in the previous downturn in recession but also the quality of debt is really deteriorated what we see in the corporate

investment space for corporate bonds about 50% of the lowest rate triple d rated and there's the risk that we have the downturns that the bonds could be downgraded and go into more junk bond area and that could prompt some fore selling by investers and that could become a anefarious cycle. >> whether it's an endowment, a pension fund, a mutual fund, can't hold debt or percentages below a certain level. they have to sell which creates nuclear meltdown reaction. >> it's going to push prices further down yields will spike. you could have some really dislocation in the corporate

bond market especially companies that haven't downgradesed if they are facing highest interest rates when they want to roll over their debt over try to move out and maybe refinance. >> why has so much low rated debt come an stream? has the system become more permissive or is that they are willing to buy it because it comes with highest interest rates, what? >> i think it's a bit of both. it's a little bit of both. >> it's a sbvery interesting cye that could play out. thank you for being here we appreciate it >> my pleasure all right. that will do it for the exchange i am going to move over here in

a few minutes and join melissa for the second half of this two hour block we call it "power lunch " if you're ready, it's over to you. i'm fine i'm melissa. it looks like phase one is a done deal. we'll tell you how you can catch this rally the twitter spy scandal. the social media company under fire as two employees are caught working for the saudis on side we'll talk to the analysts shareholder will be here to explain whites streaming service will unlease the magic for this stock. power lunch starts right now let's take a look. the dow is up more than 200 points th8 to be exact.