president for tweeting to xi jinping to resolve the hong kong issue humanely. don't send troops in. don't break your promises to the people of hong kong. respect their freedom. dagen: thank you so much. incredible morning. right now, it is "varney & company." stuart, take it away. stuart: good morning, dagen. good morning, everyone. fast-moving situation here involving china trade, hong kong and interest rates. i will start with trade. early this morning, we heard that china would take quote, necessary countermeasures for the tariffs that will take effect september 1st. that meant retaliation and stocks went down. then came a report that china would like to meet america halfway in the trade talks. stocks went up. let's deal with hong kong. that's related. which the president has linked to trade talks. he suggested china settle the hong kong chaos humanely and then deal with the trade situation. well, this morning the authorities in hong kong tried to placate the demonstrators

with money, tax cuts, lower fees for business, one month free represe rent for most public housing tenants and a social security boost. that's a financial buy-out. don't know if it will calm the streets, however. let's look at futures, all over the place this morning. 400-point swings after yesterday's 800-point selloff. as of now, the dow is going to open up about 150, nice gain for the nasdaq, nice gain for the s&p. caution, please. this is a volatile market in the extreme. we may not close like that. now look at this. no inversion. rates down across the board, but the two-year treasury now yields less than the ten-year. that's the way it ought to be. does that mean the threat of recession has receded? depends who you ask. we will ask. one more rate report. here's proof that the world's money is flowing here. all-time low for the yield on the 30-year treasury bond, it actually dropped below 2% but

then on solid economic data released a few minutes ago, it moved back above 2%. by the way, we expect a sharply lower mortgage rate when it's reported at 10:00 this morning right here. one more reason for the stock rally. walmart, big earnings win, and they think it will continue. people are shopping walmart. the stock is way up and since it is a dow stock, it's helping the dow a lot as well. overall, retail sales were very very strong. that surely helps as well. you want to hang on to your money? stay right there. "varney & company" is about to begin. ♪ and the rocket's red glare the bombs bursting in air gave proof through the night that our flag was still there ♪

stuart: did i get a shock? did you get a shock when you saw that? hong kong protesters singing our national anthem. to me, that says a lot about what they are trying to accomplish over there. we will have a lot more on that coming straight up. futures, as in stock market, rattled. first thing, china threatened retaliation for the tariffs that will be imposed next month. then came news they want to come to the table and maybe meet us halfway. david lefkowwitz is with us. welcome to the show. >> thanks, stuart. stuart: first of all, let's deal with the threat of recession because of this inversion. do you think we are going to get a recession at any time in the next 18 months? >> that's not in our baseline forecast. we're not looking for a recession. but -- stuart: is that a no? >> that's a no. stuart: you are saying no? >> we are saying no recession. correct. however, the trade situation is a big variable.

if we continue to escalate in terms of the tariffs then the u.s. and china, the risks are definitely rising. the clear answer, there is no recession but clear deceleration in economic growth over the next quarters. stuart: what about today's economic numbers? retail sales very very strong. walmart sales, very very strong. that's a pretty good indicator that this economy is doing very well at the moment. >> correct. right now, the retail side, the consumer side of the economy is doing fine. you see jobless claims are also healthy. all that stuff is good news. the concern is that interest rates lead with a lag or there's a lag between interest rates and how they affect the economy. this inversion in the curve means that maybe there is more turbulent times coming ahead. again, not our -- stuart: well, now whether it inverts again later, i don't know, but it's not inverted as

we speak. does that mean anything at all to you? >> it does. it does. i mean, if we do see a significant re-steepening and then we can probably ignore the inversion for now. but the bond market's telling us something and i think it's important investors pay attention to it. now, there are some things that are a little bit different. it's always scary when you say things are different this time. part of the reason we are getting the inversion is because rates are so low overseas. we have the highest rates in the world, in the developed world, by far, and it's attracting investors' attention from overseas and that's what's driving, part of what's driving down our interest rates. so it may not give us a good signal about the health of the u.s. economy as it typically does. stuart: i take it you do not see a v-shaped recovery for the stock market, down 800 and rapid rise back up again? you don't see that, do you? >> i think what happens next on the trade front is going to be crucial. if we do continue to escalate with china, that i think is going to be an overhang. but if the president reverses

himself and we reach some accommodation, that could certainly be a positive catalyst. i think it's going to be really dependent on what happens on trade. stuart: are you encouraged by the meeting halfway announcement from china's foreign minister this morning? we are being headline driven, aren't we? >> that's encouraging. i also think the big picture here is the administration doesn't want to do anything that's going to jeopardize the economy as we go into 2020. so i think there's a little bit of room to get more aggressive in the trade dispute, but it's limited. i don't think the administration wants to tip us into a more dangerous point, and especially because of that election coming up. look, if we do see some more escalation, that could be a very good buying opportunity because of this kind of circuit breaker where i think the administration's going to want to find a way to deescalate as we go into 2020. stuart: david, thanks for holding our hands and calming us all down. thank you very much, sir. appreciate it. again, look at futures.

we are going to be up about 150 points for the dow industrials but please remember, we were down 800 yesterday. how about cisco? it is a dow component. revenue fell short in their latest earnings report, taking it on the chin, down 5.5% at $47 a share. but then you've got walmart which is also a dow component, reporting strong profits and it gave a very strong guidance for the future as well. walmart, huge company, up 6%. again, it's a dow stock so it is helping the dow. hong kong's government announced a $2 billion stimulus program, basically they are giving money to the people of hong kong. i think it's to placate them. tax cuts, business tax cuts, free rent. will that buy them off? susan li is in hong kong. question, susan, will this placate the demonstrators? susan: i think it's a way to win the hearts and minds of the local hong kong population as

well. we are looking at virtually no growth this year according to the financial secretary this afternoon, says they are giving $2.4 billion away, as you said, low rate income taxes, free month rent if you are one of the lower income folks, extra payment for social security and subsidies for students as well. now, we are looking at a turn in the economy, a contraction in the second quarter, in fact, and this stems from the disruptions that have been caused by these protests. you can sense in the general population and what you see on local media that if this financial and economic contraction and this pain continues to be felt because of these protests, this sentiment turns and we could even see a churn in the support they are getting from most local hong kongers. stuart: it's a little early for demonstrations but we will see how that develops later. you will be with us later on as well. thank you, susan. here's something that caught my eye in our hong kong coverage yesterday. protesters waving american flags. as you heard, at the top of the show, those protesters, some of

them, they were singing america's national anthem. joining us is marion smith with the victims of communism memorial foundation. the waving of flags, the singing of our anthem, what does that tell you? >> well, i think the hong kong protesters are drawing a distinction that is really at the core of this crisis. that is, there are two systems here that are contradictory. one is the totalitarian system, the peoples republic of china, where more than a billion people are under the thumb of the chinese communist party, and where there is no freedom, and where if you were to wave an american flag and sing our national anthem, you would be detained or worse. on the other hand, it's the united states and our flag and the freedom it represents and hong kong people have enjoyed that freedom for generations and have never been ruled by the communist party, and they are saying they don't want to be ruled by the communist party now. that's the essence of the crisis here. stuart: what they want, what the

demonstrators want, is the resignation of carrie lam, hong kong's chief executive, and her replacement to be freely elected, with candidates not chosen by beijing. that's what they want. that's why they are flying the american flag. i mean, what are the odds they actually get that? >> well, they have a list of five or six demands. one is the resignation of the chief executive, carrie lam. the other is the withdrawal of the extradition bill which really was the catalyst for this protest movement this year, in which some 20% of the population of hong kong has taken to the streets. that is no insignificant fringe group that is protesting. that really does represent a significant portion, if not the majority of the hong kong people. support for the protesters is even higher than 20%, of course. but they are also calling for the release of the political

prisoners as they are calling them now, who have been arrested as part of this protest movement, which overwhelmingly has been peaceful on the protesters' part but we have seen beatings by the police, we have seen the blinding of at least one person due to short-range shooting of rubber bullets and bean bags -- stuart: sorry, i've got to go. i'm really short on time. let's see what develops today as the hong kong authorities try to buy the demonstrators off. marion smith, thank you for joining us. check futures, please. we veryiare going up more, a ga 170 points for the dow industrials. remember we were down 800 yesterday. we have big names on the show today to cover all the action. bob doll, the trillion dollar man, i think he still manages a trillion dollars. he's later this hour. and then in the 11:00 hour, tom lee, the man who predicted $25,000 for bitcoin. now, is that a flight to safety in this stock market?

we'll certainly ask him. very important piece of economic data coming, top of the hour. mortgage rates. this could be a big one. how low will they go? later, we get reaction from jerry howard, top guy at the national association of home builders. question on trade. could president trump's hard line on china end up hurting him in the 2020 election? we are asking the rnc chair, next. from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.

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stuart: there was a nice report from walmart, profit up and they say the american consumer is doing just fine, and they are going to do well in the future as well. retail watcher burt flickinger with us now. we got the retail sales numbers this morning, about 45 minutes ago. very strong. walmart, very strong. the consumer's doing just fine. >> consumer is doing fine and the retailers with the best leadership like walmart are doing even better. stuart: what does that tell you about the state of the economy? >> says the economy is full speed ahead and for the

foreseeable future. stuart: walmart up 6% this morning premarket. is walmart now the standout retailer? >> standout retailer worldwide and what they're doing is they're using solar and sustainable energy to use those savings and the money they're making there to raise workers' wages who shop more in the stores -- stuart: wait, wait. wait. they're using solar power? renewable energy? and that's allowing them to save money and pay workers more? >> more, and cut prices to give the shoppers more spending power. so amazon is 100% solar. walmart and target are getting there. if you look at the retailers who are winning, they are doing solar, cut their energy costs, number two operating cost they have -- stuart: i didn't know that. >> well, you have 30 nuclear plants being decommissioned with almost as many coal plants, ten million kilowatts of power being displaced. walmart knows this. the other retailers who are reporting horrible numbers don't pay attention. so walmart is locking in their

energy costs for the next 20 years at 2019 rates and sharing the savings with workers and shoppers. and record market share growth and strong profitability and record sales growth. stuart: okay. it's a standout. got it. i don't know about solar power. who knew these things. thank you very much indeed. >> thank you. stuart: look at futures, you got to keep in touch with where this market is as we go forward. we open in, what, 13 minutes and we are going to be up. okay. we're not going to erase yesterday's loss but we're up at the opening bell. yesterday, i spoke to peter navarro. he said the biggest problem for our economy is the fed's interest rate policy. i want to know where bob doll stands on this. he is, after all, the trillion dollar man. he's next. hmm. exactly.

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stuart: all right. futures now show a gain of about 120 points. let me get more on trade here, specifically china trade. i want to bring in rnc chair ronna romney mcdaniel of which she is the chair, right? >> of the rnc. yes. stuart: okay, look, do you think president trump is hurting his chances in 2020 by pursuing a hard line on trade with china which may hurt our economy? >> i think the president's doing exactly the right thing.

he's being the leader he ran as. he said we're not going to let china take advantage of us, we are going to enter into fair trade deals. that's all he's asking for. and americans across this country recognize that china's been taking advantage of us for far too long and they love seeing this president -- stuart: you don't think he -- >> i don't. i don't. he does not bluff. stuart: the news this morning is the chinese foreign ministry says in any trade talks, we would like to see the two sides meet halfway. i'm generalizing but that's essentially what they said. did president trump just say -- ashley: in a radio interview this morning, the president said the u.s./china trade deal has to be a deal on our terms. stuart: okay. so you're right, looks like the hard line remains. >> yeah. we have to do it when our economy is strong. we added six million jobs. the dow is up 50% since he was elected -- stuart: in the bask hck of his , back of the president's mind, if this economy really slows and heaven forbid goes into recession next year, that will hurt. >> i think the president

recognizes if we don't deal with this now, if we kick this can down the road we are never going to fix it and we will have this imbalance with china forever. if we do it from a weak economy we won't have leverage. this is what we're doing to protect our farmers, protect our intellectual property -- stuart: so you are telling me the president is prepared to sacrifice his political gain probably in 2020, would sacrifice that for the national interest with respect to china? >> i think the president has been clear on this from the beginning. i'm going to stand up to china. they have been not a good actor. we need fair trade and he's going to stick with this to the very end. stuart: i'm going to paraphrase the situation with hong kong. the president says, xi jinping, china's leader, deal humanely with hong kong and then we can do a trade deal. this morning, the hong kong authorities buy off the people of hong kong with money, tax cuts, rent free, et cetera, et cetera. what do you make of that? >> i think china is listening to

the president. i think they recognize they need a good trade partner with the united states of america and this president is not bluffing. thank goodness for that because this is going to help our country long term. the president is in it for the long haul. he's looking farther down the line and he recognizes that too many of our presidents have failed in the past. stuart: so the president is trying to play peacemaker in hong kong to some degree. i mean, he did say -- >> humanely. yeah. stuart: want a meeting face-to-face with xi jinping, know anything about that? >> i don't know anything, no. if i did, i wouldn't tell you. that's not my job. no. that's for the president to share. stuart: you have got to be doing internal polling. what is it telling you about people's reaction to the president and his style and his tone? >> our polling is really good. we do voter scores, it's more analytics. it's very strong in battleground states. people feel like he's delivered. they also feel it in their lives. wages are up, they think i can

graduate college and go get a job. there's a lot of opportunity out there for me and my family. it's resonating. and then they see the left which every answer is more government, every answer is higher taxes, every answer is we are going to take away your freedom and autonomy. i think a lot of people are looking at these two paths and recognize the president means prosperity and the left means socialism and poverty. stuart: the left has been pretty much left out of the news cycle for the past week. >> yes. stuart: the president dominates it. he will say something virtually every morning and every afternoon and we in the news business spend our time -- >> we love it. stuart: and what's he said now and what's the reaction to it. the presidential candidates are really struggling to get any time whatsoever. >> can you imagine one of them on the debate stage with this president? he will eclipse them. they will have no chance. he is so good. and you know what, he can run on a record now. all they are about is division, divisiveness, how to tear this country down, how do we tear people apart, we hate this president so much, it's almost

manic. the president is keeping his eye on the american people and how do i make your lives better and that's going to be the winning message. stuart: the tv ratings for that debate will be astronomical. >> i will be there. it will be great. popcorn, front row. stuart: thank you very much indeed. thanks a lot. now, white house trade policy director, peter navarro, top guy in the trade negotiations, he was on this show yesterday and he took a big shot at the federal reserve. roll tape. >> the biggest problem we're fighting right now at the white house is the federal reserve's interest rate policy. we lost almost a point of growth in q2 simply because the fed had raised interest rates too far too fast. the good news here is i think the kind of volatility you see today, the inversion of the yield curve, is sending yet another signal that the fed needs to lower interest rates by 50 basis points as quickly as possible. stuart: okay. no question about it, peter navarro blames the fed. bob doll, nuveen, with us on the

phone. what is the big problem, bob? is it the federal reserve and interest rates or is it china trade? >> yes. meaning all of the above. it's not so simple as just one issue, as you well know, stuart. the slowing economy, especially overseas, both related to trade and otherwise, the trade issue, the uncertainty that comes from it, and yes, the interest rates moving down so much, the inverted yield curve made so much of yesterday, i don't want to minimize it, that was for a couple of hours. it's back to modestly positive but it's been flat for some time and that generally signals an economy that's weakening which brings the fed back into the equation. look, if the fed had to do it over again, i don't think they would have raised rates in the fourth quarter. they have lowered them 25 so we are kind of even to where they want to be. the curve's moved below them. the pressure's on them to do some more. 25 basis points for the next meeting, if the market's right and there's more bad news, they

could do something interim. stuart: you think we will, i mean in the interim, that's what most people are interested in because there is enormous pressure on the fed to catch up, catch up with what the european central bank is doing and japan's central bank. do you think, now, let's suppose, let's suppose the fed jumped in with a big rate cut in the immediate future, doing what the president wants them to do, will that rally the market? >> it would definitely rally the market, stuart, at least in the short run. the fed does not have a pill for whatever ails us. market participants got on that band wagon a little bit too much and maybe still are. what has to happen is the economy of the globe has to stop going down. doesn't have to go back up, just stabilize and that will give breathing room to business folks through central banks. the problem is we have had some

significant slowdown. germany's numbers have been horrible, as you know. china is clearly slowing. that affects the rest of the emerging market. it's almost the u.s. consumer's doing fine and everything else is questionable, including u.s. manufacturing, u.s. trade and most of the rest of the globe is questionable. that has to stabilize. stuart: okay. series of problems. bob doll, thank you very much indeed. good to see you again, sir. >> all the best. stuart: the market opens in 45 seconds. we will be opening a little higher. it does not look like, however, we are going to have a real serious rebound after yesterday's 800-point loss. maybe up 80 for the dow. maybe up 23 for the nasdaq. there's some positive news in the background. china trade, for a start. china's foreign minister says maybe we will meet halfway with america in trade talks. there's some positive news on interest rates. we no longer have inversion. the two-year treasury now rates

below the ten-year treasury. that's the way it ought to be. and we got strong numbers from consumers. retail sales, strong and walmart, very strong indeed. here they go. they are ringing the bell. tense up, everybody. trading has just begun. it is 9:30 on a thursday morning. let's see where we go. please bear in mind we were down 800 on the dow yesterday. in the first few seconds, all we've got is a 38 point, 50 point gain. that is a very modest, modest in the extreme, rebound from yesterday. one quarter of 1% to the upside. okay. as the dow starts to move higher, let's check the s&p. that is up a quarter percent, seven points. that's it. 2847. how about the nasdaq? big drop yesterday. up .22% this morning. i've got to characterize this as hardly a robust rebound. here's this inversion story. yes, the yield on the two-year

treasury is below the yield on the ten-year, 1.56% versus 1.58%. no longer inverted. is that a positive? yes. but let's see how much of a positive it is. the 30-year bond now yields 2.004%. earlier this morning, it had sunk way below the 2% level to historic lows. that shows you how much foreign money is pouring in here. a modest retreat for the price of gold. big gains recently. down three bucks this morning. walmart could be the stock of the day. certainly the retailer of the day. it's up 6% after reporting strong profits and a very solid outlook for the future. walmart's a dow stock. cisco going the other way. that's a 7% loss. we will get into that in a moment. the big banks, they took it on the chin with the downside move yesterday but again, it's an extremely modest rebound. goldman, jpmorgan, morgan stanley, citigroup, wells, all of them up but only just.

i've got the latest news on china. president trump says a trade deal has to be quote, on our terms. that's after china's foreign minister reportedly said he wants a mutually acceptable solution to the whole trade deal. all right. we are up 94, up 27 on the nasdaq. need help. michelle mckinnon and joel shulman is with us along with jackie deangelis and ashley. first of all, are we going to get a recession? >> no. obviously we will get a recession eventually because that's normal, right? however, i don't see a recession any time soon. when it comes to obviously this inversion, i know it sounds like a fancy cocktail drink, i want an inversion, but in terms of an inversion, that isn't necessarily always a definite sign. in 1996 we had a false positive and when we think about back to the late 1990s, you had an inversion in 1995, inversion in

1998, and inversion in 2000 and then we didn't really get a recession until 2001. i'm not really that concerned. stuart: so not a recession before 2020 election. yes? >> yes. stuart: okay. good. joel shulman, are we going to get a recession? >> i would agree, i don't think we will see anything any time soon. again, as she mentioned, inversion often precedes recession by one to two years. with retail numbers, we will talk about today, looking positive and the u.s. market generally being very strong, i think we are looking at least a year away. stuart: now, china has made some moves in hong kong maybe to try to placate the demonstrators. that affects our market. they have announced a $2 billion stimulus package and said the local economy will take a hit from the protests. i think it's an attempt to buy off the protesters. ashley: i don't think it's going to work. i think they are fighting for freedom. i don't think they are fighting for money. however, the general population in hong kong will welcome this and there are those that are

upset these protests have interfered with their business. that's a big issue. as for the protesters, this is not about money. this is about human rights and freedom. stuart: but it might win the hearts and minds of ordinary people in hong kong and reduce support for the radicals? >> we are looking at the protests the last few days, in fact, the biggest impact the last couple of days, it's not really affecting the capital market. china is off 78%. china and india, the worst hit markets in the last month or so. when it looks like our china/u.s. trade talks with falling off, china is the worst hit of all the markets in the world. when talks improve, they benefit. they need to address the larger issues. stuart: it's still too early to say whether the protesters have been bought off by this stimulus package. it's only 9:30 at night there on thursday. the protests really start to roll by 10:00 or 11:00 at night. we will keep you in touch with that one. okay. we're in business now for four and a half minutes. the dow is up 117 points.

25,500. again, let me tell you, we were down 800 yesterday. bitcoin, some see it as a flight to safety. not today. it's below $10,000 a coin. oil, big drop recently because of the strength of the dollar. down again this morning, $54 a barrel. big drop for boeing yesterday for all kinds of reasons. modest rebound today. it's up just two bucks. look at the level there. boeing is at $322. how about apple? holding above $200 a share. yes, up a couple of bucks this morning but again, not a huge rebound after yesterday's drop. $204 on apple. big retail names, deal with them. macy's down again, target, down again, tj maxx, tjx, i should say. kohl's, all of them down except for target which is up 2%. let's deal with walmart. they are up today, 5.5%. they say they made a lot of money and that the american consumer is doing just fine. is that an economic indicator?

>> well, there's a lot of interesting news on walmart. first, we are looking at a 6.2% increase actually from amazon in this space and 5.2% something for walmart. walmart's had very strong growth in the food services business. that's up 53%. margins for walmart are about 24% relative to about 43% for amazon. very strong product. the interesting thing about them, a lot of talk has been about the job, you know, the rates for the employees. they have actually dropped employees. they have 2.2 million employees. they actually dropped about 100,000 to 130,000 employees when you back out the m & a for the last year. amazon is growing employees by about 500,000 the last five years. we will hear more about this story next year when people are looking at job growth and walmart which has got a lot of good news, and they are going very well online, you know, when we think about -- >> 37% growth in e-commerce. >> the big story is going to be about the employees and job growth. they don't have it. stuart: okay. is walmart, i think of it as an economic indicator. by the way, the stock is a dow

stock and it's adding 47 points to the dow. 40, 47 points. much of the dow's gain is accounted for by walmart. i'm thinking, look, if the consumer is so strong and a retailer like this is very strong, doesn't that counter any talk of recession? >> i totally agree, stuart. i really think back to what was it, 2015 and 2016, where we did have that slump in manufacturing and what pulled us through, it was the consumer and i think you will see that again. >> one other thing. when you think about the dow, walmart is number 19 in the dow, they have about 2.2% weight. boeing is about three times as big, the number one, 7.5% to 8%. that's really dominating today's dow. but i agree, walmart is a good indicator. ashley: look at the july retail sales. they were terrific. double what was expected. online sales were up 2.8%. stuart: why do we have this overhang of recession fears? >> it's august, stuart. of course you will always have recession fears. stuart: i will tell you why.

the left and their media followers -- ashley: i agree. stuart: -- they want a recession. they know it would be real bad for president trump in 2020. they are talking the economy and they are talking the market down. i don't want to get political. i can't resist. >> i'm not going to get political but we have to remember of the big rate changes this year, we have had about ten big rate changes, 2% plus, almost half of them were in may, then we had one of the greatest june-july rallies we have had and now the other half are in august. we saw may off, june, july came back, august a little off. we will see what will happen the fourth quarter. ashley: people want it to be, they will keep talking it down, talking it down, then all of a sudden people start selling stocks and it all kind of feeds on itself. when the fundamental data is still very strong. >> yeah, but here's the thing. when i look at it, you have the ten year treasury at 1.5. stocks are yielding 2%. to me as a long-term investor, you got to be in stocks. not only do you have growth potential but a better dividend.

>> to ashley's point, when you think about the fundamentals, you look at the forward pes, they are pretty much where they have been the last couple years and lower than last year. so forward pes are actually looking pretty good. stuart: as we stand right now with the dow up 25 points, that entire gain for the dow is accounted for by walmart. walmart is actually giving 40 points to the dow and it's only up 31 points. in other words, without walmart, no modest rebound, no rebound at all from yesterday's sharp decline. walmart is still up about 5%, $111 per share. can we show everybody the big techs, please? some of the stocks that are really moving this morning? i want to know how are they doing after yesterday's big decline? all right. big tech. apple is up, not much. amazon up, about half a percent. facebook, $180 a share. google up only just, one third of 1%. microsoft is actually down three

quarters of 1%. full dollar lower at $133. some google employees are demanding that the company not work with the border enforcement agencies like i.c.e. this isn't the first time they have got political. >> no. it's not the first time. as a matter of fact, what they are basically saying is that if google signs this cloud contract with the u.s. customs and border protection, that quote, the winning cloud provider would be streamlining cbp's infrastructure, facilitating its human rights abuses. there was a petition that a lot of google employees signed and they are really going forward with this, you know, idea and saying history is clear, the time to say no is now. stuart: all right. look at this. the dow has now turned. ashley: all of them have. jackie: did i just turn the dow? stuart: i think it's china trade. ashley: yeah. stuart: first thing this morning we heard the chinese would retaliate. then we heard china's foreign minister said okay, we would like to meet you halfway. we thought that was positive.

then president trump comes out and says any trade deal will be on our terms. that's not a positive. down goes the dow. so you were down 800 points yesterday, down another 27 points in the first ten minutes of business here on this thursday morning. down 31 now. 24 points lower for the nasdaq. most of the big tech companies are down. capital one, okay, the stock is actually up a buck this morning. the data breach was much worse than previously thought. tell me more. ashley: they think about at least 30 more companies from this individual who, you know, has been arrested last month by the fbi after they believe over 100 million capital one credit applications were taken. there's no indication any of this data was used or sold, but now they believe as they have gone through this individual, her name is stephanie -- i believe they went through more of her computers, they found at least the information from 30

plus companies. they don't name the companies. but certainly the hack and breach was perhaps a lot larger than even they thought it was. stuart: back to the big board, please. we were down about 30. now we are down about six. you can expect a little volatility and that's what we've got. michelle, aren't you just a little worried? >> no. stuart: in a situation like this? >> no. stuart: you have been recommending to your clients stay in it for the long haul. >> absolutely. those are buying opportunities. stuart: buying opportunities? really? >> yes. stuart: you've got a strong stomach. >> i do. stuart: joel? >> not quite as strong as michelle's stomach. i think it's a hold. i think you buy opportunistically. for the next year we're in good shape. at least the next year. stuart: i shouldn't sell any of my microsoft even though the thing is down a buck? >> maybe buy the dip. stuart: that would be a really strong stomach. okay. news on huawei. the giant chinese technology company, they've got a tech strong hold big-time in africa.

they are reportedly using their tech to help despots spy on political opponents in africa. brendan mulvaney with us briefly. china aerospace studies guy. if huawei is doing that in africa, surely they will be doing it over here with us and with europe and everybody else, right? they are in the spying business. >> they are absolutely. i think that's what you have seen both the u.s. government and governments in europe really concerned about how closely huawei has ties with the chinese party and the chinese government. we see their actions in africa mirroring what they will do around the world. stuart: doesn't that complicate the china/u.s. trade talks? because huawei is china's biggest and probably most leading technology company. if we freeze them out of world markets, that's not going to go down well. it's a thorn in the china trade talks' side, isn't it? >> it absolutely is one of the major problems that we are looking at for the trade talks

specifically but of course, it has security implications as well. we saw when president trump shortly blacklisted zte for a little while, the uproar that caused in the markets and the technology. if we did it with huawei, we can expect an even bigger response, i think. stuart: i want to show you the tweet from president trump on hong kong. i'm going to quote it now. i know president xi of china very well. he's a great leader who very much has the respect of his people. he is also a good man in a tough business. i have zero doubt that if president xi wants to quickly and humanely solve the hong kong problem, he can do it. personal meeting, question mark. all right. well, we have got a response to that from hong kong this morning, brendan. they are going to put a lot of money into hong kong in an attempt, i think, to placate the demonstrators and the people of hong kong. do you think it will work, placating the people? >> well, i don't know that it's going to placate the demonstrators but it is

certainly beijing's attempt to drive a wedge between the greater population of hong kong and the protesters. if they can split them off and eventually weaken the protesters and the movement there, i think that's their end game. i don't think xi jinping wants to use force. i think he absolutely will, if push comes to shove, but i don't think he's there quite yet. this is one of the moves they are trying to do, to split the protesters from their base. stuart: most people now think that any trade deal with china won't be coming in the immediate future. in fact, we will probably have to wait for a very long time. do you agree with that? >> if i were a betting man, that's where i would put my money as well. this is going to be a little bit longer and drawn out than i think the markets and a lot of experts had thought. president trump likes to engage personally so you can never discount a one-on-one meeting with some great breakthrough but barring that i think it will be long and drawn out because china has pretty clear objectives that are in contrast to our own. stuart: just for a few seconds there, michelle mckinnon was stranded on camera during that

interview. you were smiling. were you saying no, no trade deal for a long time to come? >> i mean, yeah, there's definitely a chance that we don't see a trade deal but as i said last week, i think companies are smart, that they are already moving their supply chains away from china and at the end of the day i don't think it's going to be that big of a deal because companies are already making that transition. stuart: all right. thanks very much, michelle. thank you, brendan mulvaney. we appreciate you being here. i've got breaking news here. gibraltar, where the u.s. wants to prevent the release of an iranian oil tanker. what happened? ashley: this tanker was seized by gibraltar. they say it was carrying a lot of oil to syria which is a violation of the sanctions we have on syria right now. let's not forget the iranians have also taken in a british-flagged tanker as well, they are holding that and their crew. maybe there could be an exchange. you let that ship go, we will

let this ship go. it's just another example of the strains going on in the region. this is the strait of hormuz. nevertheless, europeans and the brits especially are trying to placate the iran nuclear deal, try to keep that alive by not upsetting tehran too much. you have the u.s. over here that already pulled out of that agreement and says you should, this is a violation of the sanctions. this is a ship that was trying to take oil to syria. whereas the eu, a little weaker, trying to keep that agreement alive. bottom line is the u.s. is trying to step in here saying no, we will take control of this tanker, thank you very much. stuart: got it. check the big board. we are up 25 points. i keep saying it, hardly a rebound from yesterday. here are the big techs. got to check them. they are moving all over the place. apple up, alphabet up, amazon up, facebook's up. microsoft, though, is on the downside. got to check the banks. big losses yesterday.

with interest rates tumbling, very hard to make a profit at a bank. the banks this morning drown, well, goldman is down a bit more. morgan, morgan stanley, citigroup, wells fargo, up a tiny fraction. the dow industrials are up 38 points. while i have you on the set, you've got to be a little disappointed at this. only 50 points up after 800 down yesterday? >> no. i mean, these markets are volatile. again, we are looking may and august as being volatile months. there tends to be lighter trading in the summertime. i'm not bothered at all. let's see what happens september and the fourth quarter. i think we will end up strong. ashley: we talk about algorithms. these trades have been made in the fraction of a second, to gain a fraction of a penny, times millions of times over, faster than humans, relying on certain levels, as soon as they are reached it triggers another. that plays a huge part in the

volatility. stuart: it's a headline-driven market. ashley: yes. >> especially with traders being on vacation. these plays will absolutely move the market. stuart: if i'm running a couple billion dollars for a mutual fund, i don't go on vacation and get away from my computer. >> the hamptons are pretty nice. you should check it out. jackie: and pretty crowded. ashley: for the elites, right? stuart: meanwhile, on wall street, the dow industrials are now, well, up 68, 69 points. can you show me the rates again? because we are no longer inverted. that was the big problem yesterday. the threat of recession because the two-year treasury yielded more than the ten-year treasury. it's not supposed to be that way. well, this morning we have reverted to the normal relationship, where the ten-year treasury is, in fact, yielding more than the two-year treasury. hope you're not getting fed up or consumed with this.

but the recession alarmists, they hung their hat, they hung their hat on this inversion. that was yesterday. today, we don't have the inversion but we have still got talk of a recession. it's all over the media. that's where it is. i think that's affecting the market still. >> you need an inversion. you need the yield curve to stay inverted for people to really be worried about it. even where we were yesterday, you were basically pretty much just flat. by the end of the day the inversion had stopped. you know, there's a lot of panic. the global yield curve is not inverted. we are a global economy and the global yield curves are not inverted. stuart: right now, here's the inversion story. the two-year yields, 1.569%. the ten-year yields, 1.581%. no inversion. the ten-year yields more than the two. i'm getting tongue-tied.

not funny. let's get to this. protests in london. okay. what's that about? ashley: believe it or not, it's about kashmir, the region in the himalayas that's been much disputed. thousands of people waving, as you can see in the pictures there, waving pakistani, kashmiri flags, upset india decided to revoke special status for portions of kashmir along with the communications blackout, also curbs on movement. we have seen apparently tear gas being deployed. stuart: in london? ashley: this is outside the indian high commission office in london. protesters carrying banners saying kashmir is burning, free kashmir. one saying modi, the indian prime minister, make tea, not war. stuart: i don't think that has any impact on our market. ashley: not at all. it's a big issue in london. stuart: they used tear gas in london? on the streets of london, they used tear gas? ashley: i have seen that before. g20 protests for one. stuart: i have not been there in

30 odd years. ashley: that's not unusual. stuart: that's a revelation to me. reminds me of hong kong yesterday. no impact on the financial markets whatever. we will keep an eye on this because it is happening. we are a live action news program. remember yesterday for most of the show, we were showing you the live action in hong kong and on the right-hand side of the screen, we had the stock market and there was a relationship between the two. i hasten to add there's no relationship between a protest in london over kashmir and our financial markets here. we'll check them for you. dow industrials now up 55. nasdaq up eight, nine, i'm sorry. s&p up eight. all right. i've got to say, i'm pounding the desk. you've got to be a little disappointed. you've got to be. would you expect at least a 200 point rebound? >> you don't know, we could get it. not with headlines coming out this morning. that confuses people further. people are stepping back and saying let's pause and see what happens, how this plays out today. stuart: those headlines were

first we thought china was going to retaliate for the tariffs, then we heard china was okay with meeting us halfway, then we heard president trump says hey, any trade deal on our terms. >> been a busy morning. >> i'm delighted to see the market's responding to earnings reports. the dominant news, walmart came out with strong earnings, strong revenues and walmart stock is going up irrespective of inversion, yield curves or anything else. at the end of the day, if companies go up based on earnings, at the end of the day, if china/u.s. does a deal or whatever type of deal, that's what's going to drive the markets. right now, we are so focused on tiny fractions of a basis point for a ten-year and two-year and i just don't think that's an appropriate way to spend our time. in terms of collectively. i think the market ought to focus on earnings from companies, trends in different sectors and at the end of the day, let's see how our markets perform. stuart: maybe there's something in the translation here about

china's statement. some people have interpreted, literally it was obviously written out in chinese style, some people have interpreted the translation as we'll meet halfway. we would like to meet halfway. others interpret it as we want to work towards a mutually beneficial deal. i don't want to get too picky in the details here. this is truly weedy stuff. but maybe the difference in translation accounts for the different response of the markets. if you don't meet halfway, both sides are going to get something. if it's a mutually beneficial deal, maybe it's not as strong as that. maybe that's why the dow is up only 45 points after dropping all that much yesterday. okay. we have dan mcclury with us on the phone, market watcher. i put it to you, dan, it's too late for a china deal that would satisfy wall street. what do you say? >> absolute rubbish.

every day, whatever is announced, whatever is discussed, causes a fluctuation in one direction or the other. this is going to get addressed certainly before the election. you know, there's the three key numbers everybody's watching, right. so one, the 1.2 trillion in treasuries that china holds, okay. they're not dumping those any time soon based on what happened yesterday. number two, the $3 trillion in forex reserves they have. that's such a large psychological barrier they won't do anything that will cause capital flight. finally, number seven which we all know about, the rmb to the dollar. again, all those numbers, you could say, are somewhat meaningless but they have a lot of impact on the market. so we are going to get to a deal and it's going to happen before the election but watch the numbers. stuart: what kind of deal do you think it's going to be? not an all-encompassing deal where they restructure their economy and change their laws. >> absolutely not. stuart: it's got to be a modest

deal, isn't it? >> yes. absolutely not. we have seen with president trump that there has been give and take. we have seen he takes large seemingly outrageous positions only to come off of those positions in the interest of the greater good so it will definitely be along the lines of a comp mieromise but he will ke his foot on the pedal as long as he can, get the best deal possible. certainly he will address intellectual property theft and forced technology transfer. that's really what's behind this made in china 2025. he will not overnight create any meaningful change to that whole regime. however, you are going to see the chinese acquiescing to a number of his points. stuart: perfect timing there. thank you for joining us, sir. i don't think you moved the market but it was a nice try. minutes from now we will get the latest read on mortgage rates. very important number. this one could move the market, certainly shift the housing market. you are going to see it moments from now. plus, it's not just the

u.s./china trade fight that's causing this financial mess. central bankers around the world deserve some of the blame, too. my take on that is next. usaa took care of her car rental, and getting her car towed. all i had to take care of was making sure that my daughter was ok. if i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. we're the gomez family... we're the rivera family... we're the kirby family, and we are usaa members for life. get your auto insurance quote today. 2,000 fence posts. 900 acres. 48 bales. all before lunch, which we caught last saturday. we earn our scars. we wear our work ethic. we work until the work's done. and when it is, a few hours of shuteye to rest up for tomorrow,

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it is exactly to our care, big focus is interest rates and we gotta latest reads on interest rates. 3.6%, that's on a 30 year fixed rate mortgage. no change at all from last week. i was expecting a significant drop, didn't get it. maybe next week when the treasury comes on. i'm pretty sure it comes down from here. also, the latest read on the housing market from the national association of homebuilders, sentiment level. up in august compared to july. we talked to the head of the homebuilders of association in

the next hour. right now, consider this. part of a global financial mess is the result of the u.s. china trade fight. part of the mess. a much bigger part has to be the central bankers worldwide. our federal reserve included. europe involved some of the biggest money operations the world has ever seen. you might be fed up with hearing this but i have to say it again. they turned the world upside down. over there, you lend money and the borrower pays you. no interest and doesn't give all your money back. it's crazy stuff. in all of human history, this has never happened before. the federal reserve raised interest in december. it's now considered a huge stick.

it leaves him flat-footed and at the bottom. he is clueless. a big rate cut and he's now almost inevitable as our central banks struggle to catch up. free money has not helped the countries that tried it. germany is an example, its economy is now shrinking just as german interest rates hit all-time lows. could it be that trillions of dollars of euros actually has no consequences? we discovered a way to pay for all our social spending without any pain at all. there's a school of thought that says just that. i don't believe it. i think this eventually ends in tears. right now, i'm going to the ba bank. let's bring in gary, i say the

fed is going to be stampeded into a bigger rate cut. what say you? >> there like the ninth horse in an eight horse race. they are so far behind right now. the markets know it and that's part of what you're saying, i've been saying in this market, if we get one, they will cut a half point be not a quarter. they won't be able to wait until the end of september but that's going to be catching up, it will not affect the economy. rates are already down but it could affect the market because financials have been getting killed. that could help in the near term but there along the globe and it may take more time. i. >> the big problem that is not so much the federal reserve in interest rates, it's china

trade. is that it? >> it's a combination of both. you said the word consequences before of without banks have done, it's enabled $2,150,000,000,000,000 of government debt around the globe and if that is not, then i don't know what is. as far as china trade, i think we've had some errors from the president when he went back on the 10% tariffs. why? he's the president of the u.s. every word you second move you make, the markets are just hanging on. i think there's a loss of confidence knowing that he keeps changing his stance. i hope we get somewhere just from definition, from clarity if it's going to be 10%, behind but don't change again. i think it's going to be very fluent in the markets will be crazy until something actually gets done. i'm not sure it will actually get done soon. >> walmart today reported strong

sales and expecting strong sales in the future. retail sales figures came out at 830 eastern time, very unexpectedly strong. doesn't that negate all the talk about recession? >> not once have i thought we are going to possession but i think europe is. germany is in recession, i think a bunch of asia is, i think we are still okay. as far as walmart, i don't think it's the big indicator. i wouldn't use that because number one, the earnings. down 2%. the revenues were only up to percent but they did beat the number. i do think we are in the gdp and the rest of the world falls off

a cliff. i think we will follow suit. we are not immune to what goes around the world. >> thank you for joining us. the dow is up only 70 points in fact follows yesterday's 800-point loss. this could move the markets. foxbusiness. trump tweets, it would show great weakness if israel allowed omar and representative to visit. they hate israel and all jewish people and there's nothing that can be said or done to change their minds. minnesota and michigan will have a hard time putting them back in office. they are a disgrace. charles was hear from opening editor, i'm just now seeing that. you've seen it, what you make of it? >> i think it's fair to say he's not a big fan of them but i do think he does get in on the more important point which is that as much as those two congresswomen

upset conservatives and people have every right to find a lot of their statements disgraceful, the important thing are the people who elected them. that's who can do something about them, not the rest of us. i think it will be interesting to watch the races to see. >> the back-and-forth. >> i find a lot of complaining about politicians but the one thing i do have to say in their defense, they do represent people, especially house members, they are the closest representation we have to the people and i think there should be great regard for that. >> i want to talk about this talk about recession. if you were around yesterday, you would know but the majors seem to pick up on it. they dumped on all of this talk. do we have a montage of what they are saying?

there plugging the idea, talking down the economy. >> warning signs about recession are flashing everywhere. >> we think we have this great economy, this is a huge issue i have with larry, he's lying to the american people every time he comes on air and says they're crushing it. >> how worried should the americans be about recession? >> americans should be worried because our president is a fraud and failure when it comes to business and managing our economy. >> i was going to talk to you about what the media was saying yesterday but it just came at me. bear with me. this is a tweet from the president about hong kong. if he would meet directly and personally with the protesters,

it would be a happy and enlightening ending. i have no doubt. >> that's an interesting suggestion. >> he underscores his tactics, he does believe, and i think this is one of the more appealing things about him, he believes he can negotiate with anybody. he can convince anybody, bring anybody to his.of view. he has taken a soft hand with the hong kong protest because he's focused on the larger deal he wants to make with him and give him a pat on the back in hopes that that will improve his position for the negotiation over tariffs. >> is a peacemaker. >> s. >> if you followed my advice, maybe it will turn out all

right. >> is shocking to see that sort of anger but i don't know, things haven't worked out so well the other way so why don't we try the other way? >> susan lee is in hong kong as we speak. she's heard and seen the president street. your reaction. >> they had given five demands and this includes the withdrawal of the extradition bill, they don't want these protests to be characterized as a riot and also, they want independent commission an inquiry into increase police brutality, universal suffrage which is a term to say we want democracy and the ability to elect a leader of the city. the hong kong people vote on the handful of choices and they want

amnesty for the 11 weeks of protest. the protesters have one rule, they want one or not. >> it seems to me that the hong kong protesters would buy them off, months sherry -- i think it's more about winning the hearts and minds of the general population. i think they support these protests. we are looking at a contraction in the hong kong economy. people are buying off low income individuals, paying them one month's frequent, lower income tax, i think there might be a

turn in that sentiment if we continue to see hardship on the hong kong economy. people start losing their jobs, unable to seek their families and when the government is making its handouts, that might change the general government here. >> thank you. we welcome back to you almost immediately. thank you. charles with me. in that tweet few seconds ago, he's offering himself as advice, he's kind of asking for a reduction. >> absolutely but i don't think even that is something that bothers him. we've seen this with his attempted negotiations with north korea. he's going to mix it up in the way he sort of treats conjunction as kind of a wayward family member almost, trying to coerce him into some sort of agreement, it could be a game

changer. >> when you've set the president thinks he could establish a good relationship with any foreign leader, that's his baseline, isn't it? >> you even see it with his nemesis as that he creates on twitter and gets into big fights with nancy pelosi but the next day, he'll come back and offer an olive branch and say, let's negotiate. as rough and tumble and nasty as he can be, none of that precludes him in his mind from negotiating if you can find common ground on something. i know this is so shocking to people with this, i think it's a breath of fresh air. i like that he's willing to try different levers, i don't mind.

>> everything else we tried didn't work. >> exactly. what is the definition of insanity? doing the same thing and expecting different results. we are trying something different. >> and new approach. that's a fact. no reaction on the stock market for this latest tweet offering advice. this long experience of hong kong, you know the place very well, i want to ask you what you think of president trump getting into this almost on a personal level, bring advice, offering himself as a peacemaker, suggesting ways to get out of the hong kong mess. what you make of it? >> i don't think it will work with china. they're waiting for next actions

and then they will take the next government that comes in. i'm not optimistic that this will work. i will write about the negative impacts. the chinese will slam down on the protesters. it's going to get very ugly. >> they've already set the hong kong authorities have said we don't expect almost any economic growth in hong kong in the next year. it's actually 0% growth for the economy. that's what you're talking about. that would be a significant impact worldwide. we've been running video of this, at the top of our show this morning, we showed chinese protesters in hong kong together, the american anthem sung together. we saw two protesters walked on

the streets of hong kong, raising hi the american flag. what you make of that? >> i'm not surprised. these people have been brought up as british subjects. their western, they are as western as western is. even though hong kong is part of china, it is still a western society. they want the same freedoms and ideas we do here in america. they want the freedoms we have, freedom of expression and doing whatever they want to do. that left the chinese, even though the economy is stagnant, they care more about their freedoms. i think it's going to be an ugly battle. >> they're not going to get the freedoms they want. are they? in the short end. >> the chinese government, they

will not lose face. this is why they worry about the impact on the economy. >> thank you for joining us. this is a jampacked news day. got charles with me for 30 seconds. we ran that videotape of the left, reacting to this session talk, almost knocking it down. i was surprised that there is one who called him of fire. >> there's so much hysteria in the media about how trump needs to be replaced and i think there's a genuine fear among a lot of the people that because of the economy, that's going to get him reelected and they are terrified of that. if you look at their policies, there's no doubt they want to destroy the american economy. they want the green new deal,

any one of those things would completely tank in the american economy. it's a mystery they want the economy to crash before or after trump. >> thank you for being here. new details on the iranian tank. a little background here. negotiating the irradiance to give it back. it was seized, it's a violation of the sanctions on syria. now we understand the supreme court has indeed released tanker. according to local, there was no u.s. applications before that on holding it or wanting, the u.s. wanting to take back tanker. the authorities have lifted the tensions and it's free to go. >> europe and the brits wanted the tanker to go back to iran.

>> america wanted it and said no, you don't get that. now the authorities released the tanker. >> we don't know why they did it. the british flag tanker will also be released. >> checked the big board, we are up 40 points. that's all we've got. forty points after an 800-point drop yesterday. they run videogame tournaments, partnering now with a big chinese tech company. interesting timing, we will talk to the ceo next. we will follow that market. there's a company that's talked to even more real people

than me: jd power. 448,134 to be exact. they answered 410 questions in 8 categories about vehicle quality. and when they were done, chevy earned more j.d. power quality awards across cars, trucks and suvs than any other brand over the last four years. so on behalf of chevrolet, i want to say "thank you, real people." you're welcome. we're gonna need a bigger room.

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not much of a rebound. we are just up 40 points. cute chinese gaming company, they will bring a big new game to the u.s. ceo and frequent guest on this program and your partnering with the chinese company in the middle of a nasty trade dispute. why? >> is that really what you are thinking about here? the largest game publisher in the world and pub g is one of the largest with about 400 million downloads, 50 million daily active users. >> what is it, pub g? >> there you go again, surprising me with this secret gaming knowledge you have. we are building leagues and we

are bringing gaming out of the home and into the real world and bringing leaks and teams around the world to make it positive and reclusive. people can walk into our venues or plan our experiences with the use of their phone. >> amateur sports tournaments around the country, that's what your company does. you are bringing this game to america, the house hoping it's another fortnight. are you the only game in town to bring people in town who will have this pub g game? >> pub g mobile already is a very popular mobile game across the u.s. so what we will do is wrap our structures around it so that wonderful community can come together. the other exciting news is that we've been not only expanding our title library but we are

celebrating around all different kinds of genres and also different ages but on top of it, we recently announced the acquisition, a digital channel, we announced this channel. we have a mine craft form. these channels are highly complementary to these physical markets we are in. we are in about 35 markets today and when you look at these audiences we are bringing together, we are now becoming a network for all things. we had our first order call yesterday and the investors were excited about our news. we have grown this digital network from nothing at the start of the year into one that's projecting about 100 million views for the full year of 2019. you have that growth on the digital side, it starts to tell the market that it gives the media company into the rare play

on nasdaq right now. >> there you go again, telling me things about what i didn't know about the gaming world. >> we are on a journey here. you have the jersey i gave you last time. before you know it, you will play pub g. >> we'll see about that. always a pleasure. a modest rebound from the big drop yesterday. it shows 73 points. robust revenue growth today, the stock is up 3%. i do own some of it. maybe they will not go ahead with that listing in hong kong. we'll talk about it in a moment. ?

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that's not much of a rebound, is that correct down 800 yesterday, up 20 today. 25500. will follow that story today. walmart, they made money and have rosie forecast and the stocks up 4%. my skin. one of our retail watchers. michael, you've been hot on walmart for a very long time. you've been boosting it constantly. what are they doing that's so good? >> they're looking for the future. one thing i haven't been hot on, we can see a clear difference, walmart is doing right in the department store is wrong. they are investing heavily in the future of e-commerce, digital, sustainability in terms of maybe 100% solar by 2025.

>> by 2020, all the juice that goes to walmart stores will be from solar and therefore, virtually free. remarkable. >> another remarkable thing, have to brands on the side. the brands are cheering for moment to succeed. they need a strong counterbalance. to have a love them, hate them, can't live without them attitude, that shifted to amazon. a lot of brands engaging walmart online and walmart is a new retail company. all the headshake when i say that but walmart, i put them up there with ali baba and target and reinventing. it's not just e-commerce, walmart is doing a good job of fully integrating online, off-line technology entertainment.

>> this morning, we got retail salesman for everybody, very strong performance. retail sales are up significantly. is that an economic indicator? i asked because all this talk about recession because of this rate in version. what you make of this? >> a put me in a great mood and validates what i talked about before, we are in a retail renaissance. this is not a retail apocalypse. yes, stores are closing but there are more ways, workplaces and venues in which consumer can buy and they are doing it. we haven't seen macroeconomics or politics affect it at all at this time. >> is at department stores are not in good shape. you saw what happened to macy's, junk big time. is it the end for the department

store? >> 's sentiments echoed mine, the department stores a dead concept. we are just seeing that come to life. it's not about smart people or not, it's just not a model that works anymore. it's not a model for the new retail. they need to reinvent with the physical spaces mean in this environment. >> online selling has just taken over. it's gigantic. even people like me. i'm not tech savvy. i go to amazon. why not? >> in the same way, 700 million chinese consumers shop at ali baba. look at their results today. 32% year on year growth, 134% growth in new retail activities.

we saw them beat earnings this week so now you have walmart, ali baba, what are they in common? a new retail purveyor. >> ali baba was supposed to be an idea of some sort in hong kong, now they are rethinking it because of the trouble in hong kong. if they didn't, isn't that a big blow to china? >> it would be a big blow to the hong kong market there for sure. it would also be a blow to china's ambitions to bring some of these more prominent existing home so we will see how that develops but on a larger note, the situation in hong kong will have a big impact as hong kong is a financial commercial center going forward. >> i got a segue to a story about ali baba into the binder. this person will buy the

brooklyn nets. >> it would be of record price, $2.35 billion, there's a 51%. it's these big shots buying in, now ali baba. >> you prep the money, it works out pretty well. i don't know about that. the franchise can still go up. that happens all the time. michael is still with me, retail groups that president trump did not save christmas by delaying the tariffs until december 15. some will be subject to ties on the first but a lot will not.

some people the president saved christmas for the retailers. your response? >> what would happen if the new tariff went into effect ahead of the holiday season? we would have seen higher prices on almost everything everyday. thinkers and iphones and electronics by holding back the tariffs. it keeps the status quo. right now it's higher costs have not been passed on to consumers cap. some of the higher costs have largely been ignored by corporations and makers. we haven't seen the pendulum consumers. by keeping the status quo, i don't know if it's saving christmas so much as not moving it. [laughter] >> thank you very much. we'll keep falling walmart. the big financial story today is the big picture story, rebound after yesterday's huge loss.

a great inversion is no longer inverted. there are some individual stocks making news. google, workers are demanding the company not work with the customs enforcement people. ice won't work with them. >> the employees are questioning how their contributions are actually going to be used. google provides cloud services and they don't want google to bid on a contract with the u.s. customs and border protection. immigration are perpetrating a system of abuse and neglect. but that the border so that's their perspective but the tech world has seen a string of things like this, this is the latest one. employees are standing their ground based on their political beliefs. >> what what they do if they do take this contract with ice? walk off the job or something?

i hate to see politics on employees intruding into that policy. that's plain wrong to me. if you don't like it, leave. what's wrong with that? have a nice day. but going was a flight to safety, now it's not. it's down to $9900 for a coin. it had been around 12,000 a couple of days ago. big.is going to $25000, he will join us in our next hour. our next guest is ron paul, known that critic. he must've been loving this. will be back.

russia finding a deal with venezuela. so their warships can visit each other ports. there you go, they are talking each other. a low form. it solidifies the relationship. are we ready to report the news on this? we will get it for you momentarily. it is important, we'll get it. industrial up nine points. i keep saying it but that is not a recovery from yesterday's plunge. it's not. rates, interest rates are plunging all around the world. we have a special guest to address this. ron paul. this is my opinion, around the world are creating this

financial mess because their printing nonstop. >> that is true, i think it includes everybody. it's a system that's unworkable. money doesn't work very well and you end up with problems like we are facing today. they won't go away until they address it in a much more fundamental way. >> you got negative interest rates in europe and japan. when does this and? how does it end? doesn't really end in tears? >> the fed has a lot of control and interest rates which i complained about because i don't think anybody should do that but to look at the inverted curve say, they should have done this or that, i'm not the expert but i think that is market driven. i don't thank you can tinker with a few reserve policy and change that.

i look at low interest rate is a price. if you go down to 1%, you're paying a lot of money for the crisis, you're not going to earn anything for, you lose money for it. this is where the inflation has been going. that is the problem we have in the country facilitated by the system. get a free ride in a lot of ways because we have reserve and that's why we are doing a bit better than other countries but it's something that's not curable by tinkering. i think when trump wants to do something with interest rates to move faster and say get rid of the inverted curve and you have policy, let's not go so fast, they are tinkering on the edge of not dealing with the fundamental problem of currency and central banking which facilitates big government and its unmanageable and ends badly.

it's not a good scenario and i think we are just seeing the crooks in this system but it will get worse. >> there's a new school of thought that says, we found a way to pay these programs all around the world and it's painless. we just print money and nothing happens. we keep on printing and paying and doing this well for system and something happens. just keep on printing. what you say to that? >> they call that modern. old-fashioned. we are involved to radiate and they will do it. there's no political appetite for doing what you have to do. if we move in my direction, you have to cut that spending and cut it from a welfare system. all of these things would be cut back. it's not going to happen. we are addicted to this system so that won't happen. i think that people who are think more, more, more, they

probably have their way because there's no resistance. they are doing a good job of cooperating with spending and that's why the budget deals get past. policies don't differ that much because if you talk about around the world, welfare supports that, the budgets hit that, we get the republicans end. she didn't do a whole lot better than the democrats. there are too many people too much stuff for free. it's not brand-new, there are just a few bold shoulders think it's a good deal. he talked about when this will end, they'll bring the end a lot sooner. >> a lot of people are buying gold because they are being a problem down the road. would you consider buying but going to? >> i would consider it but i don't own for client and our

foundation takes donations in decline. i have a strong opinion about bitcoin competing currency. my answer wasn't to lock the door in one day, that would grow chaos, i want complete competition. if you can find one, you have to take the taxes off. there's no sales tax and have competition. the currencies fit into that category, the big thing is, who will be monitoring if there's broad or not? if it's fraud free, i want them to exist and have an option because i think that will help facilitate the transition because we are not going to have a transition with politicians wisely passing legislation and shrinking government. it welcome up with a crash and you will have to pick up the

pieces and decide what we will do to put it back together. >> thank you. breaking news on israel, a visit by congresswoman. >> news just breaking according to the deputy foreign minister who was questioned on a radio interview, it's been made and the decision is not to allow them to enter. >> they've been critical of israel. they are in favor of this banning, borrowing, disinvest. >> divest from the new business. >> they are in favor of that and they are now barred from the trip they have planned. yesterday the resident was tweeting about this program, one of the tweets was this, the feds have to do something. mark, correct.

the federal reserve acted far too quickly and now it's very late. too bad, so much to gain on the upside. check with us today, at 11:00. this afternoon, edward lawrence will interview james, the st. louis fed present. 3:00 eastern time on business. more after this. ♪

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points. look at capital one, massive data pack. parking may have hit a loss more companies. how did you get to that? >> the privileges she acquired and access she had from her job at amazon. she accessed this data in the cloud and was able to do that by using the privileges she had at amazon. >> inside job? liability? >> yes, potential liability on the part of amazon. 100 million files hacked. she appears to be a lunatic.

because of her background of threatening physical harm to people. she's in jail without bail. she hasn't even been indicted yet. just arrested. this is a massive breach the fbi doesn't even have their hands on yet. >> we don't know which other countries, companies were breached. >> cracked. we don't know what she did with it or if she was planning on anything, there may be no harm or catastrophic harm. the fbi doesn't know the answers to that yet. they chose to keep her in jail until they get the answers. >> epstein reports that there was a bone broken in his neck. >> this particular broken bone, right here, is more consistent with murder and suicide.

statistically, but again, this is a partial snippet of an autopsy which is a complex autopsy. the autopsy has not been released yet. tissues and organs have to be tested in which order they failed. i don't think anybody should come to any conclusion on the basis of snippets of information. we have to wait for the entire autopsy to come up. they have the best medical examiner in the history. he was hired by epstein's lawyers. we do not know whether it was incompetence that allowed the suicide or whatever. or whether there was corruption in the system. we don't know the answer but we do know ordinarily when cards

falsify records, it's an administrative regulation but when somebody dies because cards falsify records from the guards get prosecuted. will you see prosecutions for falsifying records for the guards who claimed they observed him every 30 minutes even though it was a three hour cap in fact when he died. no real rebound from yesterday's 800-point job. now, up 48. yesterday we told you, we took you live to hong kong yesterday. they flew our flag and later they sing our national anthem. these are huge statements. that's my opinion. what the protesters want is freedom. my take on that is next.

stuart: nothing provokes a communist government like an american flag flown in the territory they thought they controlled. that's exactly what happened in hong kong. you saw it live on this program. two protesters marched down the street with american flags held high. now, it is a provocation, because our constitutional republic is the exact opposite of a communist dictatorship. whatever the left may tell you, america is still and always will be the land of freedom and liberty. the flag flying was also a statement. this is what the protesters want, freedom from the dead hand of communism. in short, they want free elections which is what they thought was guarantee whennd wh british left. the authorities took action which they hope will placate the protesters. the government just announced tax cuts for individuals, lower fees for individuals, one month

free rent for husbapublic housi markets. it's not a political buyout. there has been no concession whatever to the political demands of the protesters. so how long can beijing remain a controlled authoritarian society? don't expect a change any time soon. the communists survived tiananmen square and likely will survive hong kong but the american flags were a marker. a marker that says the dream of political freedom lives on even in the face of brutal recession. by the way, president trump had tweeted about this just in the last hour. here it is. if president xi would meet directly and personally with the protesters, there would be a happy and enlightened ending to the hong kong problem, i have no doubt. the author of "heaven on earth" is with us. this man does not like socialism. on the other side of the screen, there is mark grant, the man himself, who is pointing out the faults of our central bankers.

first, to you, joshua. the president suggests that a personal meeting between xi jinping and the hong kong protesters would work. what do you say? >> well, i think he's enormously underestimating the underlying issue here which is that the protest that is in hong kong, this is not some kind of misunderstanding that we can just sit down together and iron out. this is people who want freedom. and when hong kong was given up by the british 20 odd years ago and given back to the sovereignty of china, the deal was one country, two systems, and hong kong was supposed to keep its freedom. over these 20 years, china has piece by piece undermined and quashed that freedom and the people of hong kong don't want any part of it. they don't want to live under

beijing's rule. stuart: maybe they can be bought off. you heard what i had to say there about the hong kong authorities with this big stimulus program. tax cuts for individuals, tax cuts for businesses, free rent in public housing, there's a long list of kind of giveaways. that i think is an attempt to buy off the local people there. do you think that works? >> i don't think it's going to get anywhere. i think these protests are led by young people. they're not thinking of their pocketbooks. they're thinking about what kind of lives they're going to have, whether they can think what they want, say what they want. you look at mainland china under beijing's rule, it's getting constantly more repressive with the regime perfecting more and more technical means to spy on all the population. stuart: you can't hear it, maybe, but our viewers can. left-hand side of the screen, the protesters yesterday, some of them grouped together with

the american flag and singing america's national anthem. joshua, i was really surprised. to put it mildly, i was surprised when i saw that. delighted but surprised. what was your reaction? >> well, i was delighted. i was a little less surprised, because even we americans tend to take our freedom for granted and are filled with criticisms of our own country, especially our politicians. around the world, people still look at the united states as the symbol of freedom. in 1989, the students in tiananmen square made a giant effigy of the statue of liberty. if you look on the front page of "the washington post" this morning, there's a drawing of the statue of liberty done by a prisoner in syria, because for the rest of the world, they understand the big issue which is that people want freedom and

america is the symbol of that freedom. stuart: i wanted to make that point vigorously. joshua, thank you very much, sir. we will see you again soon. all right. moments ago, we introduced mark grant, b. reilly fbr bond guy, the man leading the charge about cheap money, free money, give-aways, the end of the financial world as we know it. welcome back to the program. now, money, what do you make of this, why is it such a bad thing that interest rates in america are tumbling? why is that bad? >> stuart, it's not necessarily bad but one thing that i do want to explain that you raised earlier, you were talking about the central banks and you were saying it's the central banks that are doing this and that. i don't think that statement looks far enough. if we take the european union, the ecb has no independence, zero. it is not like the fed in the

way it's set up. the ecb is nothing but a front for the governments in europe. consequently, i think most people don't understand this, consequently, it's the governments, germany, the netherlands, france, who are -- can't pay for their social programs, who can't pay for their budgets, they are directing the ecb, it's just a front to print money, buy their bonds and maybe at the next ecb meeting, buy equities, but it's the governments of europe that are putting the pressure on the fed and on interest rates. stuart: well, they think they found a new way to pay for all this cradle-to-grave social security thing that they offer throughout europe. they think they invented a way to pay for it painlessly. just print the money. and there are no consequences. that's what they think. what do you think the consequences are? >> so in the history of the world, we have never seen negative interest rates like this, not for thousands of

years. today, we surpassed $16 trillion in negative interest rates. the consequences eventually are going to be you are going to reach a point where the currency of the european union, the euro, is going to get slammed as people understand just what's going on and that they are creating money from nothing but a keystroke on the computer and turning around and buying assets with it and paying for the budgets of europe. stuart: does that mean eventually inflation? after all, if the currency virtually collapses, you pay more for everything. so the traditional end game is inflation. you think it's going to be end game inflation this time? >> no. i think as a matter of fact, it's going to be the opposite. when you have negative yielding bonds, it can be end game deflation as the currency plummets against say, the dollar. stuart: is that also truly bad news? deflationary environment?

>> well, what we learned looking at greece and italy is the issues with governments take years to play out. what's happening now, though, is these very low interest rates are pressuring the fed, and the fed by the federal reserve act of 1913, is the central bank of the united states, the fed is going to have to respond, forget the politics of it. the economics of it are going to force the fed to respond by lowering rates and lowering them again. stuart: so you think that's -- look, i don't -- i think the president has every right to weigh in on the federal reserve. every right in the world to make his opinion known. do you think he's right? do you think he's right to call for a very quick sharp drop in interest rates by the federal reserve? >> one, i totally agree with you 100%. the president, the congressmen, the senator, the fed was created as i said by the federal reserve act of 1913.

it isn't an offshore institution. it's one of our elected leaders thinks they are making a mistake, they should stand up and say it. they have an obligation to stand up and say it. i think the president is correct in what he's saying. america needs lower interest rates so we can compete against the rest of the world, japan, the swiss, the european union, and help our own companies. we're not the central bank of the world. we're the central bank of the united states is what the fed is. stuart: well said. mark grant, great pleasure to have you back on the show again. don't be a stranger in the future. see you soon. >> my pleasure. thank you. stuart: as you can see, left-hand side of the screen, we have now turned negative. now look at netflix. we turned negative, below, well below $300 a share, down another $9 right now. that's 3%. back to $289 on netflix. not so long ago it was $400 plus. how about beyond meat? that's also going all over the place recently.

today, down big. but look, it's down 10% but still at $146 a share. it would be triple or double or quadruple what it went out at ipo for. it's way up from its ipo, down today. home builders. sentiment from the home builders is up. applications for new home sales jumped 11% last month, thanks to lower rates. coming up, we have jerry howard with us, associate at home builders association ceo. is he seeing any signs of this threatened recession? we will ask him. bitcoin, down below $10,000 a share. tom lee is on the program. he's the guy who said it's going to $25,000. is it a flight to safety, by the way? you put money in bitcoin, you going for safety? are you? we will ask tom lee. back in a moment. ♪ all right brad, once again i have revolutionized the songwriting process. oh, here we go. i know i can't play an instrument,

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stuart: let's talk inversion,

okay. i know you hate it. but i've got to do it. okay. this inverted yield curve, well, it's not inverted any longer because the two-year treasury now yields 1.52%, the ten-year as it should, yields more, 1.54%. is that why the market has turned south because that spread is narrow? ashley: the spread had gone out a little bit and i thought okay, bit of a rebound from yesterday but in the last 15 minutes, it's now contracted a little bit. still not inverted. 1.547 over 1.52 but the markets have turned negative. listen, it's crossed before, it will probably cross again and all the algorithms get triggered and off we go to the races. stuart: i bet you never thought you would see here and see both of us talk about the yield curve inversion. ashley: yes. great point. stuart: lisa booth is here, fox news contributor. welcome back to the program. >> i'm going to leave that to you guys.

stuart: i won't ask you to speculate about the yield curve. >> appreciate that. stuart: but we've got all this talk very prevalent on the left and in the media, oh, we are going to recession and the interest rate inversion tells you we are going toward recession. if you were doing p.r. for the president, how do you counter that? >> i think sadly, we do have people on the left that want a recession because they know that's the easiest way to get president trump out of the white house. we have heard people like bill maher openly say that he wants a recession, because he thinks that, you know, that's the best way to get president trump out of the white house. i will say the way you counter it is look, president trump, the challenge of president trump this go-round is previously, he ran on change, he ran on sort of blowing up the white house or, you know, washington, d.c. swamp. now he's the incumbent so he has to run on his record. part of the way he can do that is he's been raising a ton of money so you go on with paid advertising. you put things in your terms and

television ads as well as on social media, you put your successes in your own terms and you tell your own story because he's certainly not going to get that from the media, who we have seen has covered him at highs of 90% negative coverage, right, so he's certainly not going to get the media to tell any of his successes. stuart: i keep hearing the left, their spokespeople, saying look, to ordinary people, we don't feel prosperity. it's hand-to-mouth existence, paycheck to paycheck existence. we're not living the great prosperous life we are supposed to be living. that is contradicted by rising wages, very low employment, economic growth, you name it, and confidence in the economy. it's hard when you've got the left pounding you about something which really is not frankly true. >> well, exactly. again, it's up to president trump and his campaign to tell that story. to do some voter education and inform people of the benefits they have seen under this administration. but president trump's going to have to do that through paid

advertising. he's also going to have to do that when he goes on the campaign stops and tells the american people this is what's happened under my administration, this is what can continue to happen because the challenge for him is if the economy does go south, people are going to be more open to change at the white house. because if the economy is strong, the message of the democrats saying hey, look, we need to go in a different direction is weakened. if the economy is weak and if the economy goes south, then they are going to be more open to a democratic candidate coming in saying look, we need a change trajectory. stuart: the president has to talk up the economy while the left talks it down. i think that's where we are. lisa, busy news day. sorry to cut it short. thank you for being here. now, let's bring in david nicholas, president of nicholas wealth management. let's talk economics for a second. do you think there is a recession coming? >> stuart, not at all. the yield curve is actually still inverted so the ten-year and two-year is not inverted but if you look at the ten-year and

the three-month which is a better one to look at, ten-year yields are at 1.5. the three-month yield is 1.9 right now. we are still inverted but if you listen to analysts on tv, the fear is well, the yield curve's inverted, we are headed for recession, but you can't just look at the yield curve. at our firm we look at six different indicators. it is the yield curve, the ten-year and three-month, but we are also looking at the price average of the s&p 500, weekly unemployment claims, total payroll numbers, new homes for sale and new homes sold. when you look at all six of those indicators, we are nowhere close to recession. i will make you a promise. if we go into a recession in 2019, i will wear a chicken suit on this program. because i believe so highly, we are not going to see recession in 2019. human nature hasn't changed, nor has the law of economics. what has changed is the media narrative that's pushing a negative narrative on the economy. that's changed but the economy hasn't. stuart: what do you think is the biggest problem for the stock market? is it china trade or is it

inverted yield curve, possible recession? >> the biggest issue for the stock market right now is headline risk. so as individuals, we have to sometimes separate the economy and what the s&p 500 or the dow does. because the s&p 500, the market, that's a global indicator. fortune 500 companies, they have earnings overseas but that's not main street. that's not mom and pop with a business, a small business, that's selling to their local neighbors. so the local economy can be doing great and it is, yet corporate fortune 500 companies may see some slowing due to global growth but the risk here is not the economy. the risk here is that we see a push to lower rates, which i don't think we need a lower rate. i have heard that quite a bit. the u.s. economy is doing just fine. stuart: we will take it at that. thank you for joining us. see you again soon. now this. president trump says he wants to meet with xi jinping about hong kong. will that appease the protesters

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stuart: it's almost 11:30 at night in hong kong, the time when a lot of protests begin. the video you are seeing is from yesterday. let's bring in susan li, who has been there for some time now. susan, it seems a little quieter tonight. is that because the protesters have been bought off by the government's stimulus program? >> no, it's just tonight, maybe they are resting. there are no protests planned. i was just sent the schedule by some of the protesters and we are expecting a large march that's being planned for this sunday, august 18th. don't forget, the last time they had a march, we saw one to two million of hong kong's seven million residents march along with them. we will see how big it is this time around this weekend. now, i want to show you the latest video we have which is a bit concerning, since there have been concerns and the police department has urged caution when it comes to china troop buildup just at the borders. this is china's silicon valley,

just about five miles away from the city of hong kong. take a look at this latest video. i hope it's up and running right now. these are military exercises. we do actually have thousands of chinese military present for this. we also have some tanks, also armored personnel carriers as well. we also have the satellite imagery that was circulating yesterday showing there has been a mass buildup of artillery in a soccer stadium in shenzhen. this is a bit concerning as well. we have been hearing from the uk chinese ambassador talking and warning the protesters not to overstep their boundaries. stu? stuart: that is fascinating video of that troop buildup and that's what it is. that's very threatening. susan li right in the middle of it, thank you very much. see you again soon. thank you. all right. we are looking at flights to safety. bitcoin has been mentioned as a flight to safety. it's down this morning, barely,

at $10,000 per coin. we have tom lee on the program. he's backed off his call for a $25,000 price on bitcoin. but does he think it goes up from here? ten grand. is it a flight to safety? is it useful for that? we will definitely ask him. meanwhile, the markets had headed south but it's basically, we are now dead flat. we are down six points after an 800 point drop yesterday. stay there, please. more on the market and bitcoin after this. how do you gauge the greatness of an suv?

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stuart: new trump tweet just in. the united states is now by far the biggest, strongest and most powerful economy in the world. it is not even close. as others falter, we will only get stronger. consumers are in the best shape ever. plenty of cash. business optimism is at an all-time high. any response to that on the stock market? not really. the dow is moving to the upside but only just. we've got a 27-point gain. i should tell you that some of the economic news that we got early this morning, like on retail sales and productivity, very strong indeed, backing up the president's assertion. thomas lee joins us now. you know tom lee.

look at him. he's the guy who was forecasting a very big gain for bitcoin. welcome back, tom. >> thank you for having me. stuart: i'm not going to go after you because of your suggestion that it would get to $25,000 a coin. not going to do that. my first question is this. is it a flight to safety? is it a genuine safe haven? >> yes. you can see it in markets where there's turmoil. the local bitcoin prices tend to surge and trade at a premium because people are trying to find ways to protect their money, so yes. stuart: can i get in and out easily? can i go somewhere, open an account, give them dollars, watch the bitcoin price and when i don't like it, take the dollars out? can i do that easily? >> yes. for your viewers in the u.s., there's several easy ways. they can sign up with coinbase or one of these exchanges, but if they have a stockbrokerage account, they can buy the gray scale gtbc which is the bitcoin investment trust. stuart: it's an easy thing to do. so why is it at $10,000 a coin,

is it such a safe haven? >> well, in december, it was $3,000. so it's done very well this year. it's really uncorrelated to equities, to bonds, so it's a good diversification hedge, and i think it's just resting. it's had a big move and is consolidating and this is the chance to earn more. stuart: just resting? have you ever seen monty python and the dead parrot? >> yes. stuart: it's interesting. it's not dead, it's just resting. >> this one is still alive. stuart: this one is still alive. what's your projection now? ten grand as of this morning. >> i think it will be much higher by the end of the year and potentially at new all-time highs. i think anyone who wants to have a 2% or 1% allocation to bitcoin as a hedge against a lot of things that can go wrong, it's a smart bet. stuart: have you caught hell from people like me because you projected $25,000 and it didn't happen? >> every day. but i have been in this business for 25 years and i always catch

grief for everything that doesn't go right. stuart: explain this to me. the dow industrials as of right now are up 42 points. >> yes. stuart: yesterday, we were down 800. >> yes. stuart: why such a weak rebound? >> there was clearly panic yesterday because of the yield curve inversion. stuart: you would use that word panic? >> yes. this is the panic of 2019. because you know, it feels like we're on death watch now. i think people think okay, the curve's inverted, there's a recession that's going to happen and if it takes two years, that's a long time to wait. stuart: do you think it will take that long? are you saying no recession in the next 18 months before the election? >> i cannot predict the future but my confidence that there is none is extremely high. i think there's a much smarter curve today to watch which is the 30-year minus the 10-year. that's the one greenspan used to refer to. that's still very steep and it tells us there's a cyclical upturn coming. look at the data that came out today, the u.s. is still very strong. the philly sentiment, business

sentiment survey jumped. i think there's an upturn coming tend of the year. stuart: cyclical upturn coming by the end of the year. from where we are now. 25,500. >> i think the u.s. will show a lot of resilience to the end of the year. trump's right, you should be betting on the u.s. on this. stuart: i rarely met a financial analyst who said trump's right. are you a trump guy? >> trump's been great for businesses. business confidence. earnings have done well. the markets have done well. i think people have complained too much about what's happening at the white house. stuart: when you get off the set, you think you're still going to go back to a job? >> we'll find out. we're three steps away. we'll find out. stuart: mr. lee, what a pleasure. you are resilient. i will give you that. right or wrong, i don't care. you are resilient, young man, and that's good. market watcher heather zumarraga is with us. same question. heather, welcome back to the show. why such an anemic response on

the market today after the whopping great loss yesterday? >> well, i think right now, investors are still waiting for more news on china and the fed. those are the two biggest risks right now to the marketplace. when you wake up with a dow headline, dow tanks 800 points, you know, i think the buyers are still waiting on the sidelines to see when we put a bottom in. stuart: do you think we go to a recession in the next say 18 months? >> no, i really don't. you just mentioned president trump's tweets. right now saying the u.s. is very strong, the consumer is on good footing, solid footing. we got consumer data today, this past week saying that consumer sales are up over 4% in the month of july, consumer confidence is up, unemployment at 50-year lows, wages rising. there's nothing fundamentally wrong with the u.s. economy right now. what's wrong is the chinese trade war, the fed is still on

pause while global central banks around the world continue to have easy money and that is making it very tough for our markets and our fed to react right now. stuart: if the fed did react now or very quickly, and drop rates a full half percentage point, would the market rally strongly? >> oh, i think so, absolutely. but i mean, i have been advocating for the fed actually not to lower rates only on the basis that the economy is so strong in the u.s. but i get it. we're not in a bubble. central banks around the world are lowering rates, negative rates and what that means to the viewer, i know we keep saying inverted yield curve and i'm thinking if i'm a viewer at home, what does that mean? to simplify things, that means that if you are a bank and you are lending out 1% and you have to borrow short-term at 2%, you're not going to lend anymore. credit dries up, liquidity dries up, and that means that the

consumer doesn't have access, corporations don't have access to capital. that is the fear. that is the only reason the fed, if they do lower rates, should be lowering rates because, a, people are buying our bonds globally around the world and that's a good thing. and b, we have this and i hate to say it but the inverted yield curve and that's bad for the banks. they were obliterated yesterday but coming back today. stuart: last question. today, have you picked up the phone, called any client and said hey, here's a bargain, buy that on the stock market? >> not yet. but of course, i know you own microsoft. i know you love your microsoft. you want to look for high quality but also growth. don't just blindly buy defensive names like utilities and reits. go out there, look around. where are you shopping? mcdonald's. maybe that's just me. dunkin' donuts, where are you going where the store is still packed? maybe target. you have to pick the leaders in each sector because for example,

retail is doing bad overall, but if you look at some that are dominating and really challenging the e-commerce forces like amazon, you look at target or walmart, if they are still busy and consumers are still out there shopping, which the data is showing that, that's where i would look. stuart: takes a strong stomach to buy in an 800 point drop. >> yes, it does. stuart: maybe you've got it. thanks very much for joining us, as always, heather zumarraga. take a look at general electric. it's on track for its biggest one-day percentage loss in more than a decade. man, it's been through the ringer in the recent past. a big name fraud examiner working for a hedge fund did some digging on ge and he says he thinks ge is quote, a bankruptcy waiting to happen. ashley: yeah. he was calling for the exposure of bernie madoff long before he was finally exposed. he's put out a 175-page report, it's being reported on one of our competitors, but it claims

ge was basically issuing false financial statements that tied the true problems it was in, hiding the debts, if you like. he points out the alleged accounting issues with its oil and gas unit in particular. he says they have spent seven months looking into ge accounting and that they believe there's a $38 billion in fraud and he says it's just the tip of the iceberg. stuart: ouch. no wonder the stock is down. ashley: ten-year low. stuart: $8 per share. ouch. that was your dad and granddad's stock. not now. all right. news on housing. i've got to say it's a disappointment to me. mortgage rates, the 30-year fixed holding, holding unchanged at 3.6%. i was expecting to go way down. sentiment from home builders, though, that is up and applications for new home sales jumped 11% last month. add it all up, how about the

recession? we are going to get one? we talk to jerry howard shortly. he's from the home builders association. by the way, he is next. i don't know what's going on. i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ dexperience thrillingn operformance.o now at the lexus golden opportunity sales event. get 0.9% apr for 60 months on all 2019 models. experience amazing at your lexus dealer.

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and rates to fit your needs. oh, and happy birthday... or retirement... in advance. stuart: now, we are going to show you this video again, left-hand side of the screen. those are chinese military vehicles right at the border in a place called shenzhen just across the border from hong kong. that is a chinese military buildup. surely adds to pressure as to whether or not china will intervene in hong kong to settle the disturbances. that is kind of ominous video. we are bringing it to you because it's out there and we want you to be fully informed about what may happen. repeat, may happen, in hong kong. tense situation. big board shows no significant rebound still from yesterday's big loss. we are up just 36 points. 25,500 is where we are.

lot of that gain for the dow, though, is walmart. that's a dow stock and it is way up this morning. that accounts for much of the dow's gain. got you. jerry howard is with us, favorite guest of ours, national association of home builders ceo. jerry, i've got to say, i was really disappointed this morning when i saw 30-year fixed rate mortgages come in at 3.6%. you're not happy with that, surely. >> we thought they would come down a little bit, too. obviously if you want to stimulate housing and stimulate the economy, bring down mortgage rates and stimulate production, i think you could forestall any slowdown that might be on the horizon. stuart: what's all this talk about recession and slowdown? we are getting some very good economic numbers. retail sales, very strong. productivity, way up there. all kinds of indicators that we are doing really well, nowhere near recession. bring it to us from your perspective. >> we don't see a recession coming. i have talked with our economics team. potentially, little bit of a slowdown in housing because of some of the factors we talked

about in the past but we do not see a full-blown recession for the next 18 to 24 months. stuart: what's the key indicator for you? is it mortgage rates or is it consumer confidence? >> consumer confidence drives new home starts a lot, but what's really the key for us is we watch permits. if the builders are taking out permits to build, because that takes a little bit of time, it generally means that you've got a good long time before any kind of -- stuart: tell me about permits. >> permits are holding steady right now. stuart: where abouts are they? are they strong in a particular area, weak in others? tell me. >> yes. obviously they are strong in the pro-growth areas, the south. i was talking to a builder in south carolina last night, greenville, south carolina, one of the growing cities in the country. south carolina, north carolina, texas is still strong. they're very slow in just as you would expect, california, new york, connecticut, new jersey, massachusetts. stuart: do any home builders

build on spec? i ask because i'm familiar with some of the real estate companies which are buying existing homes and flipping them, doing them up and flipping them. obviously that's nothing to do with you. but i'm wondering do some home builders go out there, build something which they think is attractive without a buyer in mind? >> that was very very common before the recession. during the recession, it didn't happen at all. it's coming back to some extent but it hasn't gotten the same level of interest of our members as before the recession. remember, we have only come back 66%. we're not at full capacity. we haven't been since the recession. in order to do something speculative, you have to have both demand and supply sort of in sync. right now, it's not that completely there. stuart: are you building homes which take advantage of solar power, for example, or some kind of wind power? renewable energy? is that a demand on the part of the consumer? >> it's gotten to be more of a

demand than it was prior to the recession, believe it or not. i think that's partially because of the generational shift in home buyers. the baby boomers weren't as attentive to it as some of the millenials and generation xers are so it is a factor, but with housing affordability being what it is now, any of these bells and whistles, any of these extra energy efficiency things have to repay the home buyer very very quickly. some of them don't have a payout for 18 to 20 years. most americans don't own their homes that long. stuart: what are you saying about affordability? how do i express this, statistical analysis. affordability, up or down? >> affordability is down. generally speaking, historically in america, the average american can afford 80% of the homes on the market. now it's down to about 50%. so it's very low, it's something that policy makers could really look to to help forestall any slowdown or recession, because housing affordability is low,

home sales are lower than they should be. stuart: how do you affect affordability? regulations? >> regulations are something. right now there's no incentive for first time home buyers at the federal level in the tax code. maybe something that incentivizes people to come into the housing market for the first time. ashley: is there a lack of homes on the market that's driving prices higher? >> oh, yes, absolutely. there's a huge supply problem. stuart: you've got a regulatory problem. sorry, following on your point, you have a regulatory problem. you can't build a new house that easily. you have been on this program countless times. >> we have been talking about it for months, you and i. yes, regulations are an issue. labor is an issue. cost of construction is an issue. all of these can be addressed, though, in ways that can forestall any downturn. we really hope that the policy makers at the local level and at the federal level are listening. stuart: wouldn't that be nice. red tape drives me up the wall. >> don't ever get into home building, then. stuart: i won't.

or home renovation. or a mortgage. sorry. i'm out of your market. jerry, thanks for joining us. >> good to see you guys. stuart: now, just in case you missed it, i pressed white house trade adviser peter navarro on the china trade talks yesterday. china didn't give the u.s. anything in exchange for that delay on the tariffs that we are going to impose until december 15th. we got nothing out of that delay. what does that mean for farmers? a lot, in my opinion. we will deal with it next. what . i wish i could shake your hand. granted. only pay for what you need. ♪ liberty. liberty. liberty. liberty. ♪

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stuart: let's talk farmers. no, no, no. hold on a second. what you're looking at is the demise, the end of this rate inversion. okay? it was all the rage yesterday because the yield on the two-year treasury was above the yield on the ten-year treasury. that's called an inversion. supposed to be a signal of recession. look at it now. the ten-year is way out front of the two-year and the spread is widening. does that end talk of recession? ashley: apparently not, for this hour. stuart: thank you very much. we've still got the dow industrials up just 15 points after a whopping great decline

yesterday. so the end of the inversion doesn't mean that the market's taking off. in fact, it's actually losing a little ground as we speak. 25,498 is where we are. now let's talk farmers and farm products, shall we? tom keogh is with us, agricultural department trade adviser. you know what was said between myself and peter navarro yesterday. >> it was stunning. stuart: okay. there was no quid pro quo. we delayed the tariffs, some tariffs until december 15th. we got nothing back. we were expecting -- >> stuart -- stuart: hold on. we were expecting that china would buy a lot of agricultural products. >> and they didn't. and they didn't. stuart: will they? >> we don't know that. and something happened between the g20 and the meeting in shanghai about a week ago. but you have to give the president his due on this, and whether you support him or not, no president in our lifetime has gone after china. nobody. that's why i think we have bipartisan support. chuck schumer has come out and said it. some liberal columnists for

other networks have come out and said it. so this is an organic thing. it's happening. look, we were laughing here at the commercial break, there's no bad news from hong kong right now but stay tuned, maybe something's going to happen, there's 12 hours' difference. stuart: lots of moving parts. >> absolutely. stuart: hong kong is tied into the trade talks just like a lot of other factors. >> nobody thought in the beginning they were but you cannot remove hong kong from the trade talks, no. stuart: have you got the backing of the farmers? >> my sources say they are still supporting the president. the iowa farmers are still very much in support of the president. they are taking a hit, although from my sources are telling me that the money that the government is paying to the farmers to supplement what they're losing is pretty much making them even. so they're not really feeling a lot of pain right now. stuart: china is deliberately tweaking -- >> absolutely. stuart: -- the farm belt. >> they know 2020 the election is coming. but look, god bless the president. he's got the courage to go after china when no one has done it.

they have gamed the system for years. and look, peter navarro was on your show yesterday. i think it was a stunning interview. i think you did a great job interviewing him. he was -- but, you know, he's an academic and he's taking a stance, and look, if we could get all that it would make a level playing field. the world knows that china has gamed the system. this is nothing new. but everyone's kind of doing see no evil, hear no evil, speak no evil, let's get back to life as normal. we want good yields, a go-go market, good return on our money so they game the system but life isn't that way. stuart: i don't think the president will cave, i use the word cave, that's wrong. because this president doesn't cave. will he back off? >> i think, look, i said this before in other interviews. no president in our lifetime has had the business background that this man has in white house. so he's operating differently. he doesn't owe the party politic anything and he's dealing how he

built his personal family empire. i think he's negotiating very differently and god bless him for doing it. i give him a lot of credit. stuart: he's different, that's for sure. >> absolutely. stuart: you are a straight shooter. we appreciate that. thank you very much, sir. >> thank you. stuart: okay. back to the hong kong situation. i'm going to split the screen. left-hand side, that is a buildup of chinese military vehicles on the border in hong kong. poised to go into hong kong, we don't know, but it sure looks like it, does it not. right-hand side of your screen, a live look at that iranian tanker, released in gibraltar. it's on the move. that's a diplomatic incident for you. we have our eyes on both situations. more "varney" after this.

the market was all about short-term rates being above long term rates yesterday. that has been reversed.

long-term rates are back where they should be, above short-term rates. does that mean no recession complex. >> who knows but watch this program, this network this afternoon, edward lawrence interviews the president, that could affect the market. my time is up. >> welcome, everybody. trying to make sense of this crazy world in the next couple of hours. i'm filling in so first of all, it may be on pause but walmart had a strong report this morning reminding us of the consumer's but then china counters that optimism with this latest response in the trade work. then hong kong and what's happening there. any progress made with china. a live report from hong kong as