Pace for the Third Straight weekly loss, could a friday rally turn it around and great debate, recession or slowdown. Two wall street titans weighing in this morning. And ges ceo wants investors to know he believes in his company as the stock suffers its worst day in over a decade so we do not need to tell you were heading into the final trading day of this volatile market week. The three major indices, each down 2. 4 week to date the s p and the nasdaq still posting double digit gains for the year with the dow not far behind interestingly were almost exactly at levels we were on this date a year ago in both the dow and the s p today were left with the conversation of the moment, is this a walmart, an nvidia market or a deere and a cisco market. And that focuses you on the two big arguments. Is the consumer Strong Enough to carry you through, or is Business Sentiment and Business Cycle deteriorating to a point where you have a problem all right, and we continue to look at yields around the world. We mentioned the german bund, mexico cutting rates, i think it is the 24th maybe central bank to cut rates this year and talk of global recession continues to be a topic all around the world ray dalio talking to one of our affiliates on cnbc listen to that recessions are always inevitable in the next two years, prior to the next election, probably a 40 chance of a recession and i think that youre seeing this around the world. You willsee greater Interest Rate cuts as you start to see the World Economy starting to slow down. And i think youre seeing that being led now by the bonds so we have a situation in which there is a lot of pressure to cut rates. The question is, can you cut your way out of it, you know do you have bullard on the tape this morning saying you have to get worried if you have a longer period of an inversion, tom lee, this morning, arguing for a 75 basis point cut in september thats kind of where we are. And whether it is effective or not is anyones guess. And then the corollary to dalio, of course, david rubenstein, cofounder of carlisle, talking about the fact that negative Interest Rates do not necessarily preclude a recession in various economies around the world here is what he told joe and becky earlier this morning on squawk. I dont know when the recession is going to occur. We have one on average every seven years. Were ten years without a recession, thats very long. U. S. Economies is in pretty good shape. Were not an island, though. No doubt as economies in europe and asia slow down and go into recession, we cant completely avoid that at the moment, i dont see a recession in the imminent future. Joining us this morning, post nine, jim la camp and managing director jonathan galup. You had an interesting journey this year. You were constructive in the first half started to adjust your model midyear. Where are you right now given what rates have been telling us . We put out a 3025 target for the year, which when we did, everybody thought we were insanely bullish we hit that, i dont know, maybe about eight or ten weeks ago and everyone is waiting for me to raise it and i said, im not comfortable with conditions, i think were looking at flat money. It is really important im not saying i think the market is going to fall apart. Were not going into recession do we eventually get a recession . Sure it is not in the near term horizon. But the underlying data is really concerning and falling Interest Rates like this are not a good thing for equities. We had the biggest jump in retail sales in four months, right . Jobless claims, employment continue to be robust. What is wrong . I think scott mentioned this, two markets, you have a consumer that is in surprisingly healthy shape. Unemployment is low. Super confident, hes getting a raise. And then the cyclical data is real probably whether were in a Global Industrial recession or on the cusp of one. In europe, german data contracting, china data contracting, and this is exactly what we had in 2015 where you had an okay economy. And a recessionary industrial economy at the same time. The trade war, though, is the biggest risk card. And nobody knows how thats going to play out, jim. We dont. We have a lot of negative potential catalysts in front of us not that many potential positive catalysts over the next few months remember where we are season seasonally, august and september, our most volatile months now we have a market that has given everybody what it wanted this year. If you look at where bank of america, the goldman sachs, credit suisse, everybody already hit their targets this year and nobody knew what to do from there because the economy is starting to slow down and the trade wars were heating up now we have pmis leading Economic Indicators softening here the consumer is good, but the trade wars will bring uncertainty among Small Businesses and they have been splitting the difference with their chinese counterparts, but if it gets any worse, theyll quit splitting the difference and inflation will creep in, uncertainty will creep in for businesses. I think we have some violent consolidation in front of us the next couple of months, a lot of volatility, maybe we dont go that many points in a direction standpoint, but violent consolidation, setting the stage for a december rally. I want to take the opposite side of this this is not about trump tweeting on trade related issues. We made the point that stocks are flat for a full year and when did they what really happens this year, you had Interest Rates peak around arou5 data in the u. S. Started to weaken in august of last year, why . Because thats when the benefits from all of the stimulus and the tax stuff started to go away and you started to see that come in. So if you took away the trump tweets on tariffs, my view would be 100 the same. The market has not been the same since the day after the fed rate cut at 3 00 in the afternoon when the tweet hit about the september 1st tariffs. Market just purely hasnt been the same since, it left us with all of these new questions it was the fed was cutting rates, the market initially went down, it started to go back up and you got the trade tweet with which left the uncertainty we live with now. You have the language from china they werent going to back down one of the things about china is theyre perfectly willing to let their people suffer, much more so than the American Administration will do so a lot of people see the chinese digging in they dont see any relief on Technology Transfers or intellectual property theft and they think this is going to drag on for a long time in the meantime, the treasury yields are coming down what is deceiving about that is we still have higher yields than almost everybody else in the world. It could be part of the reason that bonds are rallying is because theyre a bargain on a relative scale to 15 trillion in negative yielding debt around the world. So we need to join that party, is that the plan . No, it is not a good it is not working. It is just another number. It hasnt worked anywhere none of the economies have taken off, japan hasnt taken off, negative Interest Rates would be completely deleterious to the banks. No reason at all to do it here. Listen, i agree, i think this belief that lower and lower rates through zero is a good thing. I think it is crazy. The fed has a reason to cut for very different reason. The long end of the curve is steep lly sloped, which means te market doesnt think we have a long term recessionary problem the short end of the curve is severely inverted between fed funds and out to two or three years. That means the fed is basically miscalculated where the short end of the curve should be if they go maybe tom is not going to get a 75, but if you got 25 or 50, even if you have a statement from the fed, we get it an inverted short end of the curve is not what we wanted it to be and well make sure that the conditions are supportive. Thatthem needing to take big action. When you have an inverted yield curve, the financials will suffer what does the russell 2,000 made up of . Mostly financials and energy names. They wont do well with an inverted curve youre not going to get any expansion in this market theyre going to stick with large, listed, blue chip names and it is going to be tougher this market to really shoot for another leg higher so what is the shortterm playbook for you shortterm playbook is the market is basically three buckets. You have a growth bucket, you know, and it is 35 names on the s p that are growth names. You have defensive bondlike stuff which as long as until one of two things happen, the fed either engages the market or the Economic Data turns around, that stuff will continue to do well, regardless of whether there is any growth there. And then you have stuff which is cyclical in nature, stuff scott was talking about before and until one of those two things happen, you want to stay clear away from those kind of industrials and materials. This is a hershey, procter yield, staples the second you get announcement from the fed, you see better data, they get hurt as long as this thing stays sloppy and the fed stays disengaged from this, those names will continue to do really well. Shortterm playbook, be very careful over the next few months, we look back at the president ial election cycles, the market should do better, starting around december dont be surprised if we dont see something very unusual out of the Federal Reserve board like quantitative easing or something unusual out of the treasury like issuing long bonds. We could see 50 year bonds issued or 100 year bonds, they did in austria, they did it in argentina, it could happen here with rates at all time lows. Maybe get something coordinated next week too out of jackson hole thats a wild card as well you dont want to get too negative in advance of what could be a market moving event there. Guys, good to see you. Have a good weekend. After ge shares get slammed on accusations of accounting fraud, the ceo buys more. Well fill you in. Also continued unrest in hong kong, well take you there for a live report. Bounceback friday, the dow with an implied open of 185 s p would open higher by 21. Nasdaq looks to be big winner out of gates, up by 72 were back after this. Squawk on the street live from post nine at the New York Stock Exchange see thats funny, i thought you traded options. Im not really a wall street guy. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade hong kong protesters out in force right now. Brian sullivan is there live on the ground brian, good evening to you reporter good evening. Thank you very much. They are out in enforce. I dont know how many there are, probably couple, 10,000 is my estimate the park is behind that. I guess like the bryant park of manhattan, surrounded by banks, sky scrapers here. The park is full this is the overflow crowd you can see there is a lot of people here, a couple of different people talking the main stage is inside that park we were in there earlier there is so many people, you sort of cant move very peaceful so far a lot of speeches given so far nothing yet has happened still early, though. If youre wondering about all these laser pointers that you see, the Police Issued a ruling that laser pointers are considered a weapon because they can burn at close range. So people are pointing these pointers to kind of rouse the police, if you will, to say, hey, we have our pointers out, giving it them a little bit. Despite the protests here, very peaceful and calm, there has been a lot of unrest so the story that we got on cnbc is how much does this impact the Financial Markets. If youre a ceo of a company here, if youre thinking about going public here, maybe like alibaba in their secondary offering, does this dissuade you from listing your stock or moving people here we spoke with an investment banker earlier today who said, yeah, there is unrest and there has been in the past but when hong kong has Going Forward and always has is that it is a relatively stable Financial Market the one thing that hong kong has going for it is that it has very few failures of major listed Chinese Companies here. Which means that the Due Diligence in hong kong is done with understanding of how china operates where as uk, the u. S. In particular, singapore, even frankfurt is littered with failed chinese ipos. Reporter now, i know the chinese stock bears, theyll tell you maybe because of accounting rules are different for Chinese Companies in the United States versus here, either way, listen, the hong kong markets are hoping that what jeff hill said is what happens, that this does not stop companies from being here, from coming here, and remaining, arguably, the Financial Center of asia and the keyhole between the eastern and western Financial Markets. Brian, a lot of conjecture about whether or in the the protesters could arrange a socalled run on the banks have we seen any evidence of that today reporter no. Thats been going around for a while, carl. I can tell you this much, personally, i took out some coin today, because a lot of people want to be paid in cash for various services around here so far the banks do have money but what youre referring to is some of the protesters have put out these message boards, hey, go out and take out all the money, lets drain the atms if will so far that has not happened if my atm card doesnt work at maybe a separate issue, but ill stay on the story. The intelligence youre bringing us from the ground matters a lot, especially on a week like this Brian Sullivan in hong kong. Ge shares rebounding after the first one day performance in 11 years larry culp bought nearly 2 million in stock after it made off whistleblower accused ge of committing a bigger fraud than enron. He joined us yesterday the numbers are missing top line revenues, bottom line profits, and nothing in between, like expenses, research and development, selling, General Administration costs, research and development. It is all missing. Including cash flows they dont provide working capital. It is the only company in that industry that doesnt provide working capital. In fact, ges working capital is minus 20. 3 billion the Current Ratio,. 67 name a company that does that is accounting 101. Companies loss accelerated. We spoke to one of the Board Members and offered a rebuttal yesterday on closing bell. This report today set a very dangerous precedent, where somebody can just say things and then potentially benefit monetarily, significantly from the decline in the stock of the company. That is wrong. And i really think that we need to investigate the motives for this and because here we have mr. Marcopolis and this hedge fund probably benefiting significantly substantially today and the holders of ge stock have suffered a loss of course, culp just didnt buy stock. He put out a statement calling this market manipulation, pure and simple, saying interested solely in generating downward volatility so he can personally profit. You had a gentleman go on television, go public, and say that one of the most story businesses in the history of this country is a criminal enterprise, essentially. Likening it to enron, three people went to prison, right ken lay, jeff skilling, andy fastow, the cfo, a company that had, you know, phony subsidiaries where they were hiding losses. Equating that to General Electric and this morning on squawk box, you had bill cohen, writing a book about ge, saying this doesnt ring true to him. Sounds hyperbollic likened it to throwing a molotov cocktail, like yelling fire in a crowded theater, a Company Already under investigation for accou accounting issues. Lets just say that, right there, being investigated for various accounting issues. Their fundamentals are in question, in some corners of the market, right . And you have this happen. It does the broader stories that in this was the Largest Company in the world market cap of almost 600 billion, down 80 plus percent since then amazing story in terms of capital loss. No idea who the firm is that marcopolis is working with who knows if they covered their short. Yesterday was down so big, did they cover did he get paid . Because he gets a percentage of whatever the trade nets, if anything a lot of questions still remain unanswered. As we count down to the opening bell, lets take another look at the futures on this friday show you how were going to open dow would open higher by 160 s p 500 and nasdaq strong as well out of the gates. I look at futures. Well see if it holds. Futures off the Early Morning highs as we need about 700 points on the dow to get back even for the week. The opening bell is in seven minutes. Roxana our students dont have parttime needs. So they absolutely cannot have parttime solutions. 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