Ending lower. We have a lot of time to throw the blame around. Edward lawrence is at the white house. Deirdre, you get to go first with perspective for us. Dierdre 800 points down, we closed as you just said, at session lows. A wipeout day. No other way to say it. If you look at the Dow Jones Industrial average. The financials fell hard, goldman sachs, jpmorgan action. We have been talking about the inverted yield curve. Its showing brass tacks take away. Investors are more optimistic on the near term than the long term. That drove a lot of the selling and activity we saw in the bond market including buying so much into the 30 years that we saw the yields at never before. It showed up in financials, as we just covered on the dow. If you take a look at the other sectors, macys as well. You have been covering this from an earnings angle. This year will be a disappointment to investors. I heard melissa say she is on pace. If you look at some of the other sectors we have been following. Tech has held up this market for two years. You had oil down more than 3 . That data coming from china and the eurozone making investors question how stable asia and europe are as completely economic reasons. Connell here with us, jonas, do you want to take a first step at this . I dont think melissa is right to blame me. The president is blaming the feds. Many are blaming the trade policies of the administration. The rate is down and thats scaring people, that the yield curve is a perfect predictor of the future and its scary because its scary. Thats why the fed had to lower the shortterm rates to get the curve. Thats behind the anxiety and a terror tantrum going on. It was okay to have a trade war when things were great, but now not so great. Connell what does the Federal Reserve do with this . Does it act sooner than some expect in between meetings . Tomorrow. Who knows. Do you expect something soon from the feds . One of the things we talked about before the fed took over currency. Thats going to be a drag on corporate earnings if our currency is very, very strong relative to other countries. I think the fed is looking at a lot of things in the rubiks cube. That was one of the president s tweets with all the money flowing into the United States and that is partially a result of all that. Todd, give us your take on the day. I think yikes is a good word for it. But it isnt a surprise. We are reversing back and forth in you a wide trading range. However, if we are down again tomorrow, i would say we are look at the end of the week. When you look at it, you have got to remember when you have manipulating markets, thats a problem. Melissa joining us on the phone, liz ann, we are talking about the inverted yield curve. But other subjects on our plates, Chinese Industrial production down to a 17year low and german gdp contracting in the second yardr quarter. In the Second Quarter. Its the continuing story of weakening in global growth. Trade is part of the problem. Not just in the case of china, but world trade volumes have come down quite a bit. That affects everybody even if they are not embroiled in the u. S. China trade war. Trade is a component of it, but demographics is the secular reason behind it. We are seen as the elixir to what alls the economies they are learning the hard way that it didnt actually pull the economy out of those deflation air yea head winds and in turn its done incredible damage to the Banking System as well as Insurance Companies and pension companies, and that has further slowed global growth. Its quite a cocktail of reasons why we are in the situation we are in right now. The. Melissa if you add into thats cocktail. This idea we see the market dough down tomorrow. You look at the pattern. Its two negative days in a row. Do you think it Federal Reserve moves quickly . The honest answer is i dont know. I dont think at least from the surface that two big down days in a row is an automatic trigger to consider that. We are not all that far away. As recently as yesterday, things could turn on a dime in the opposite direction. I would be surprised if such a shortterm move in the markets would cause the fed to step in. There is lit the question. I think it calculus will shift. If it shifts 25 or 50 basis points. And the 3month 10 year the fed would have to raise by more than 25 basis points in order to fund that portion of the yield curve. Melissa what is the number one signal you are looking for. There is no number one signal. There just isnt. I look at every variety of technical sentiment earnings indicator. And this not going to be one. One thing that tells you what direction. We are dealing with twit errant other traditional fundamentals that drive markets in the short term. Melissa liz ann sonders, thank you very much. Cisco reporting Fourth Quarter results. Dierdre welcome good news. Is cobeating the bottom line. And if you look at revenue, the company posting 13. 43 billion. Some very positive news for cisco. We are hoping tomorrow it carries over to some of their competitors, hewlett packard, ibm. Is coreports basically three main categories. During the last quarter of the earnings season, the ceo said he didnt expect to take too many hits from the slowdown between us and china. So well just go with the numbers. A clear beat on the top and bottom line. Connell stocks are getting hit 5. 5 after hours. Macys leading the retailers in the red following its earnings and especially its weak outlook. Jackie . Reporter macys underscoring the fears the market has about Retail Stocks. Also not necessarily a positive sign for this basket of stocks. There were companyspecific issues when it came to mails who macys. There is also the rental clothing competition they are dealing with. But pressure the threat of the new tariffs, thats an issue, too. The tariffs came in round because of the types of items it hit. Treasury has delayed implementation on those items until middecember. It still has everyone wondering what is happening with the consumer . Consumer spending accounts for 70 of u. S. Economic activity. There is a concern, if china passes tariffs and they pass it on to consumers, that will compound any recession the u. S. Is facing. But so far the con same are has the consumer has been holding up. Consumer confidence was at its best since november. But still as i said, not just macys today, a basket of stocks taking it to the down side, nike, nordstrom, best buy, its all because there is a question mark about what happens next. Connell on that question to our panel, all the Retail Stocks get hit. And mitch you can take this. I dont know if macys is the one we look at. Walmart tomorrow morning might be an interesting one to look at in terms of how we expect the future to look for the consumer. We know the stories out there holding up so far. The basic consumer is fundamentally strong. The the Sentiment Index was strong. A big buildup in inventory they couldnt move. Thats something thats traderelated. Well look to see if they built up their inventory. Connell you try to plan for all this. Meaning the trade back and forth. If your company at one point you are trying to get ahead of the deadline. So the idea that there is some sort of certainty added seems ludicrous. If anything its more uncertain. I dont know what that means for these Companies Going forward. But their stocks got hit today. The only certainty is the president is going to back drown quickly in the trade war. I dont think Business Owners have to worry hell drive the economy into a depression. His downside limit is pretty low. Whats more disturbing. The stock market kept going down. Ultimately what Business Owners are looking at is the consumer. The retailers and how they shop. This economy is strong. People should be driving the truck up and buying stuff with leverage. Whether its cars, leases, home loans. But one thing to look at. Do people go out and buy a lot of houses and borrow 30year mortgages at these supper slow rates that kicked in. Thats what you are going to see. In a scaredycat you wont see that. You will see refinance and you wont see new debt coming into play. Connell do you think well see that . Im on the other side of that trade. Its hard to get that cheap money. As much as they advertise it. Mortgages are down to x, but they are not where they should be where we are going with the feds. Many people already getting these lower rates. Are you going to refinance for a half percent or quarter percent. Too much square footage. Amazon, walmart will benefit at the end of the day. Dierdre lets go to phil clinton. Is this a cause of what we saw in the stock market or an effect . I think its more of an effect of what we saw in the stock market. We got Inventory Data that showed it increased more than expected. But when you mix it in with the rest of the report. We saw u. S. Energy demand is at an alltime high. What we are sphreeght consumer we are seeing in this report. But its hard to ignore the stock market when its falling down around you. A slowing demand in china because of the data overnight there. The potential is raising those demand fears that havent materialized as much as the headlines would have you believe. We look at the market, we get a lot of data. The new york fed, Industrial Production. If those numbers come out relatively strong, the rebound bid in that market. This activity, a rock n roll market. A lot of people dont like to invest. But these are the types of markets where gold doesnt perform very well. Connell the Federal Reserve is being blamed for the drop we saw in the market. Reporter there has been no progress in the trade talks and that might be fueling the selloff. We know the phone call that happened a few days ago between the two trade delegations. According to peter navarro, the delay in the partr next round of tariffs he said had nothing do with the phone call. He said the delay had everything to do with the Holiday Shopping season. He said he didnt want the tariffs to impact Consumer Prices. The whole premise of what we are trying to do is pain on them, not pain on us. The last remaining part of that 300 billion, if we simply put the tariffs on september 1, that would be more pain on us rather than pain on them. Thats just silly. Reporter the list of delays 21 panels long. It includes cell phones, Laptop Computers and backtoschool items like kid coats and girls suit coats. The head of the retail federation, they says they dont want to see any tariffs delayed or not because it would impact consumers. Some of these costs are being eaten by the retailers. Some of these costs are showing up in the form of lower margins on other products. Some of the costs will be passed on to the suppliers. Its not like they are without cost or impact. Well see 300 billion of chinese imports. Some of that will be delayed until december 15 for that. With the tariffs it will be no inflation pressure we have seen so far. President trump tweeting about the Federal Reserve. He goes on to caught Federal Reserve chairman Jerome Powell clueless. Powell said the fed is moving to be more accommodative. He said they will continue to react as the data is coming in. It seems that today the market is moving a little bit faster than the fed. But the fed said it wrote react as the new data comes in. And this is new data. Melissa the panel is back to sort through all of that. Jonas, the retailers talking about the hits from the tariffs or trade wars. Do you think the president is going to back down . The only way to hit china is if the prices go up and we buy less juk from china for christmas. If we dont buy less stuff they wont fire people on the factory floors in china. Ultimately i think it was hurting the stock market is that i dont think we are taking into consideration the troubles in china related to us starting this trade war. We pay the tariffs, but they are the ones getting the firing. If you are consuming less stuff they will lay off people and it will cause a recession. Then there is the knockon effects. Borrowing money and building factories outside of shanghai. Who are they going to sell the cars to because we wont stop the trade war we started. I think there is a lot of unforeseen potential dominoes scaring investors globally. In some way success in the trade war. Melissa he says its not going to work unless they are feeling the pain in china. They are already feeling the pain if you look at their Industrial Production fall together lowest in 17 years. Its not just china because all the economics are links. We saw germanys gdp slide 1. 7 negative. One of their big buyers is china. If chinas economy is slowing they are buying from germany so germanys production slows down. Its all interconnected. Its not just u. S. Overnight headlines we have to Pay Attention to. Melissa so Many Companies came out and blamed the trade wars it remind me of when gas prices go up. They blame energy costs and they blame the hurricane and they blame the weather. You have a trade deal in place in north america. You have deals getting ready to go in japan. All you have to doyles avoid stuff in china. Is it that bad for American Consumers and is it as bad as companies are trying to use it as their excuse. Its a crock, melissa. They will raise their price if they have to. Those prices will never come down again. They are going to use this to their advantage, so they are preparing us for a bad quarter of rising prices. To me its a whole big nothing. I wish trump wouldnt come back like he did yesterday. I would like to see him put china away. But we have too much other things going on. We are worried about the dollar and worried about the fed. Melissa stick with us. Protesters in hong kong are standing their ground. Police firing tear gas into the crowd today. Satellite images appear to show Chinese Military vehicles mobilizing near the hong kong border. Susan li is live for us in hong kong. We have thanked markets down since the protests began in early june. We had protesters back on the streets after a Court Injunction received by the Airport Authority that pretty much banned protesters from entering the hong kong terminal. Plates were take to land and take off. That pretty important for a Financial Capital like hong dong. The protesters are placed in a rural part of hong kong, and still no relief. Maybe not as dramatic as the scenes in hong kong airport yesterday. But police started firing tear gas after the protesters were aiming directly at the police. Looking at the satellite images. It looks like hong kong and the troops, and tanks and artillery is being amassed near the hong kong borders. We heard that from President Trump. Intelligence sources are telling him it looks like to has been a buildup of chinese troops near the city. But right now since we are close to 5 00 a. M. Here in hong kong, things are relatively calm and less dramatic of a scene today compared to what we saw aired on 24hour news channels around the world. Connell the Vice President of research from the koch institute. Will, you first on this thought and this question about what happens if the Chinese Military does actually move in hong kong . That would be pretty scary. Hopefully both sides can engage in a bit more caution so we dont have a situation that leads to Something Like tienanmen square. That would be a terrible outcome. Caution is in order. I have a great amount of sympathy for the people of hong kong who are trying to protect their special system within china and protect their greater independent earns they have under the basic law. But they dont want to push so hard we get into a situation where we escalate on both sides and get a situation thats terrible for all. Connell people are looking for war we normally call offramps. Then what, what are other possible moves being talked about here . I think martial law that others say is highly unlikely. The other is to let the protests peter out. And you would have to remove cary lamb. And most of people suggest the removal of the chief executive who a lot of people blame for introduction that controversial extradition bill that ignited these protests. She needs to go. And you need to arrest some of the protest leaders like we saw in 20142015 in the umbrella movement. Its been a technical move for these protesters not to have leaderedship, at least publicly. Connell how does this all play into the conversation about global markets. Some argue not too much and others say it might be a very big deal. Whats your take . Its impacted if you have think there is a potential for the chinese economy l economy to collapse. And the trade warrelated . I know it was trigger. Did they to me they have got what they wanted sort of back. I dont understand why this not product in mainland, china where only the hint of those loss of freedoms caused this. To me its liked a World Trade Organization protest of the past. People didnt want to break stuff. It stopped having a basis. There is a concern that china is a super economy that has been growing and driving demand for several years is in trouble and may or may not be because of the tariffs. Shane very when i was in hong kong and china in june, we were asking people, are you concerned about this spreading . I guilt was not a legitimate concern being expressed. Perhaps it has changed. Do you think it might ever . That would be a threat to xi jinping. There is Something Special about hong kong thats different from the mainland. Hong kong has long bern one of the most of free places on the planet when it comes to the economy. They are used to more freedom of. They are pushing ba