Market but bond market and this inversion of the yield curve. We can talk about what youre seeing, what people are telling you. The bottom line, if history is a judge this could mean recession is on the way. Reporter makes people so anxious, connell. Yields on two year treasurys rising above the yield on a 10year. First time since 2007. That date alone spook as lot of investors. The yield curve on shorter end, now as people call it inverted. The reason it makes so many people anxious, that means investors have less confident in the near term economy versus the long term economy. Normally if you loan money in this case to the government for a short period of time, you expect your principle plus a small payment, youre not loaning money for that long. If you lend money longer you expect a bigger pay back. That is the normal logic of the bond market. You get paid more for lending longer. When this pattern reverses like now, it signals a shift in the pattern, signals a problem for a lot of people. That is where we are today. In the stock market banks are getting hit hard. For lending part of their business it basically would be hurt if these conditions stayed as they were. As we mentioned in 2007, that makes investors nervous, that happens before the credit crisis. One thing worth noting connell, you alluded to it, a lot of strategists down here, traders specifically telling me, dont worry, this is just one day. If there is one Silver Lining, that is the takeaway, only one day. More of a pattern that makes people anxious. If you look at financials they are weakest part of the markets. Money center banks moving lower. If these banks are in fact borrowing at longer term lending, short term, their margins get squeezed. Big red flag, connell. Yield on 30 year, super, super, safe. Lowest ever. As we know there is an inverse relationship between price and yield. It means investors are buying 30 year bonds like crazy of the they consider that a safe haven, one of the safest places to be. Connell . Connell in germany rates have gone negative. It is Something Else to see 30 year treasury bond at 2 . It all means, as deirdre is explaining. Growing fears of at least a slowdown, maybe a recession. David dietze here in the studio with us, to start off the discussion well have with a lot of people next couple hours. Good to see you david. Whether this signals mean as recession is coming. What do you think . We dont know but this time could be different. Inversion of the yield curve indicates recession is coming, but question where is that recession . Were seeing germany, china, other continental countries are very close to recessionary conditions. Interest rates are so low. Money coming to the United States, pushing down our yields. Maybe people are not rushing into sovereign debt but getting out of recession overseas. It droves our Interest Rates now. As president was tweeting, more pressure for Federal Reserve to cut Interest Rates. Does that be the right move if overseas you have essentially negative Interest Rates, it is not necessarily helping there. You make a great point. There is one key thing why youre not sure recession is coming is reaction of policymakers both in this country and overseas it puts on increased pressure to uninvert the yield curve. Federal reserve has another bite at apple. 100 chance they cut by quarter point. Connell right. This may mean 50 point cut. This puts tremendous pressure on policy makers in europe to create fiscal stimulus. Connell this brings up a question. Were down 650, abouts on the dow. Current next second in the market. Brings up question what things look like two years out from now. If youre cutting Interest Rates like everybody else is, that we have to catch up with the rest of the world. Maybe we avert the worst. Market comes back in hypothetical. We dont go into recession, then what . At some point we do have recession . You cant avoid it forever. Then what . You will only have debt and deficits worse than they are. You will not have any bullet left in the gun if youre the Federal Reserve. Then what . Thats a great point. Eventually a stopped clock is right twice a day. Eventually well have recession. Connell were not setting ourselves up for is my. Or are we . Couple things to keep in mind. Well lose ability to cut Interest Rates further if we use all the cuts now. But inflation could go lower and lower into deflation. There is more room to cut. Were seeing negative rates already in europe. Of course other key argument by warding off recession now, or postponeing it maybe we build up economic strength to postpone the ultimate eventual recession. Connell i get it. Sounds funny to say we allow a recession to happen. The alternative argument, maybe it is too late to worry about this, maybe we got things cleaned up now, so when it does were in a better position on fiscal side too, not just talking about Interest Rates. Absolutely. A little repair now can prevent rebuilding the whole Foundation Later on down the road. Connell go to hong kong in a second. What do you think what is happening over there . Not in context of what protesters want to see happen, how china respond to that. What that means for this Global Economic conversation were having, visavis trade deal with u. S. And china. What is your view on china and hong kong and how important it is . That is a great question. What is chinas response going to be. From americas perspective the biggest deal with china is the tariff negotiation. To the extent china allows another Tianamen Square thing to happen where they look untrustworthy and brutal on world stage, although we hate to see that happen that could play into the administrations hand negotiating tariff relief. Connell david, good to see you as always. Love to hong kong and protests and that is spreading to the outskirts of city. Susan li in hong kong, joins from us the airport with the latest from there. Susan what is going on now . Susan were at the airport and state department issued a travel advisory for those looking to make their way to hong kong. State department is urging increased caution if you have to make your way to hong kong at this point. As you see here at hong kong airport is back up and running. The 8th busiest in the world. After the Airport Authority received a Court Injunction, banning anybody that doesnt have a press pass or dont have an official ticket to be here. Still we have a few dozen protesters camped out here. They still have the messages put on the floor, with their, with placards and also some of the, some of the posters that they have now actually, i would say, almost permanently stuck to the ground here. Now as for the actual airport, as of yesterdays scuffles and violence we saw, looks like china now said that five individuals have been arrested today for what theyre calling illegal assembly. The Court Injunction requires you to be here either with a press pass or a legitimate ticket. Five people have been arrested. But the fight has been taken to the streets here in hong kong as well. Live pictures as we show you throughout the morning. This is more in district of kowloon. This is more of a suburban area in the city. Hundreds of protesters showed up there. Police went in. Live rounds of tear gas being fired once again. Looks like the altercations have now sim herred down a bit. Each and every day, it seems to be moving in different locations across the city but well be watching this. This is the latest here. Obviously a different story here at hong kong airport than is was 24 hours ago. Connell let me focus on that for one more moment as we see live pictures from streets of hong kong as susan was talking about. This travel advisory you mentioned, this is a very important airport for the International BusinessCommunity Coming in and out. So you arrived there yourself, at midnight i believe in hong kong, but a short time ago, a matter of hours. What was it like at the actual airport as you arrived just as a traveler . Susan it was busy. Usually busy here in hong kong because they had hundreds of backed up flight to attend too. It is interesting on the way here, my flight out of new york, i was talking to flight attendants. That is usually packed flight. Half full, 50 capacity, people have been altering their plans to travel to hong kong. That is a big deal for the local economy here. As you mentioned, one of two main transit hubs across the asiapacific is hong kong and singapore. If hong kong is losing business, imagine what that means for the local economy. Imagine what that means for jobs, the seven million that live in this city. Connell its a huge part of the story. Well continue to follow. Susan thanks. Susan li live from the hong kong airport. All the major averages as susan is speaking there, continue the decline. Were down 2 1 2 across the board. Dow, s p, nasdaq worst of the bunch is nearly a 3 decliner. There they are on the screen. All major tech stocks, almost 180 points. So the nasdaq, the dow, the s p 500, all down by large margins today. There it is. Nasdaq composite index, nearly 3 . All right, staying on the story here overseas, that susan is reporting on, looking at chinas side of it. That is the big question, what does china do next what is the response to the crisis in hong kong . Weve been wondering about that for the last few days. It feels to some were building up to some sort of Chinese Military response. Not at that point yet. Former Navy Seal Team six commander david sears is our guest. I wonder, dave, what the calculus is in beijing . They know even if there is a bigtime spin on it in the stayed media in mainland china, though know these pictures are shown around the world, they have to decide what to do next. What do you think they will do . What do i think they will do . They will watch as long as they can. They have prestaged, some reports im saying, the Peoples Armed police, not Peoples Liberation army staged across the river in shenzhen. That is a little bit different. It still falls under 2018, the Peoples Armed police fall under xi xinping as well. Theyre not part of the army. Their riot control, antiterrorism, internal security. Theyre staging them. They are getting them ready. They will watch this, if it gets too out of control, theyre absolutely prepared to intervene. Connell then what . What does that mean . We talked in the context of trade negotiations. That will be something obviously to watch longer term, but what is the response of the World Community if we see actual military intervention in hong kong . I think you will have condemnation from the World Community. I think chinas calculus, it could lead to, is hong kong as the hub Financial Center as well as attached to beijing too big to fail . Does the world really forget about it . It wasnt that long ago Tianamen Square. That is largely forgotten by the majority of the people, certainly wiped from the minds of the chinese. Connell what is the play for the president if any . Pressure is building internally. Many allies of the president to be more aggressive protecting the protesters. Is he trying to thread the needle with on going negotiation with shy xi xinping he has not come out in support of this protest movement. Is that a mystic or what would you like to see from the president . No, i think he is doing the right thing. He should guard his words. We should point toward the humanitarian support. You cant allow this to get out of control. China, you have to treat people in humanitarian manner but you shine the light on it. You dont condemn, you dont intervene. The problem is, the challenge, the protesters have gone into a violent mode as well. When you start throwing gas bombs, everything else, imagine what we would do in portland, upcoming protest this is weekend. You have protesters there, they throw gas bombs, theyre willing to come in arrest them. Would we feel comfortable if china started to park a ship off our coast and giving aid to people in portland . You have to be very careful. You let china show whatever its truce colors are. Let the world see that. The best thing the president can do, shine a light on it, here is what is occurring f there is a humanitarian disaster or violation of peoples rights, you shine a light on that, let the World Community know, this is the china youre dealing with when you do business. I think that is a win for us. Connell it is interesting. The question about the Strategic Moves protesters have made, about whether it is beneficial to them . In other words, im talking specifically about moving to the airport, as they did about a week ago. Now as susan li reported there, theyre on the outskirts of the city of hong kong, moving out from the airport into different neighborhoods and the like. When they moved from downtown which when i was in hong kong in june in the early part of this protest movement, they were isolated in and around the legislature and government buildings in hong kong whereas if you were coming in as a International Business person, going to another area, maybe your hotel wasnt near there, whatever the case would be you wouldnt be disrupted by it or noticed it that much. I wonder whether moving in this direction helps the protest movement because it adds more attention, certainly gets a lot more International Media attention or has the potential of backfiring because now the people in hong kong who might ordinarily likely to support the goals of the protesters are questioning the methods . What do you think will happen there . I think it is backfiring a little bit on them. It has the potential to continue to backfire. I talk to people, theyre concerned about going out on the streets. Theyre concerned for their safety. Theyre watching how do they dress. Do you wear a white shirt or black shirt . You have to be careful you dont get on either side. Theyre fearful of china coming in. As they expand it out. Protesters allow china main land beijing to expand its narrative into the domestic terror piece, saying this is National Security threat. Under special administrative region. Hong kong and macau are special administrative regions that turn back over to the maine main land. They have defense responsibilities for that. If they can frame the narrative, this is internal defense thing, a terrorist act, then the protesters wandered into territory they dont want to be into. Connell couple things from u. S. Government side. We mentioned the state Department Travel advisories that state department eschewed and accompanying statement from the state department that the u. S. Is deeply concerned about the report of chinese Paramilitary Movement along the hong kong border. That came from a state Department Spokesman as the u. S. Strongly urges beijing to adhere to its commitment allowing hong kong a high degree of autonomy. That is the u. S. Government response. Dave, to your point, you think for now, that as a final point, that is the right response in this moment, nothing more . I do. Connell yeah. We have to remember, china is a sovereign nation, whether we agree with their system or not, hong kong is part of china. So we can behind people that we want to call Freedom Fighters or revolutionaries but there is always a cost to that. So they have to be cautious and say we are part of china. The people that do business in hong kong also do business in beijing. They know the system and how it works. So, it is still a part of china. Connell dave, thanks. Good analysis. Always nice to get your point of view. We appreciate you coming on. Thanks, connell, david sears. Back to the market weve been covering especially news out of the bond market, stock market has been selling down throughout the day. Were off the lows of session. Amidst all of this, Peter Navarro, white house trade advisor was on fox business, saying the markets should have more certainty given what the president did on tariff delays yesterday. Here is navarros point. What the markets now have is total certainty how the scenario is going to unfold over the next three to six months. What we have here, tariffs are moving forward, number one. Number two, we are continuing to negotiate with the chinese and there will be another phone call within two weeks. All of the businesses affected by the tariffs now know how they will be affected. Connell the question do we really have total certainty . Consumer Technology Association president and ceo, gary shapiro is our guest now. Boy from people in your association, and your analysis, do you think were living in a world Peter Navarro. Peter navarro is definitely unique view. His views alone how tariffs are beneficial and there is no trade war. President listened. He realized he was wrong about the fact that tariffs are actually taxes on consumers. He acknowledged that it will affect the holiday season. If, this is not a great big gift for anybody. This is sewing seeds of consumer confusion. This will create uncertainty. It will, there is great concern in our industry and other industries where this is heading. It is not Getting Better every day. Obviously the stock market is responding to reality rather than the press releases. Reality there is a lot of tariffs. Some are going into effect. 1 3 of those on Consumer Technology industry almost immediately, rest of them 2 3 to into effect in december. Those are still tariffs, theyre taxes, theyre ha