tv Closing Bell CNBC August 23, 2019 3:00pm-5:00pm EDT
president. >> transpacific partnership would have been great. >> it's very simple, ron 25% on our cars. we charge 2.5% on theirs >> we have to leave it there. >> i have to squeeze it in. >> good discussion steve, ron our thanks to you. thank you for watching "power lunch. >> you don't want to miss the next hour. we call it "closing bell." this is going to be big. ♪ welcome to "closing bell." i'm mike santoli in for wilfred frost. the dow down close to 550. reescalation of tensions between the u.s. and china sara, back over to you. >> i'm sara eisen. welcome to the final hour of trade. the dow was down 580 we are down 544. we are -- let's tell you what's driving the action the president lashing out at china and fed chair powell after
china promises a set of tariffs. jay powell declining to signal more easy monetary policy. the yield curve inverting yet again. how will business respond? how will it impact the economy more importantly, what does it mean for the market and investors? and then a news making interview you cannot miss. federal reserve vice chairman richard clarida from jackson hole we are covering the angles with the team of reporters as always. elan, first to you on the china fears which appear to be trumping the fed speak
today. >> nice, sara. we are waiting to see if president trump will make a statement on those latest trade tensions with china and the new $75 billion in retaliatory tariffs that were announced this morning. we know there was a meeting at the white house earlier today with mnuchin, kudlow, navarro and lighthizer and president trump did tweet that he would issue a response this afternoon. he then went on to order american companies to look for alternatives to china including bringing businesses back to the u.s. he called on fed-ex, amazon, u.p.s. and the post office to refuse deliveries of fentanyl of china. back to you. >> ylan, thank you very much turning now to the event we thought would be the main driver today. jay powell's speech in jackson hole steve liesman has the details.
not completely unrelated to the trade story, is it >> reporter: no. i think that's right let me start with the tweets from the president the president saying, quote, as usual, the fed did nothing it is an incredible that they can speak without knowing or asking what i'm doing which will be announced shortly we have a strong dollar and a weak fed i'll work with both and the u.s. will do great. my only question is, who is our bigger enemy -- jay powell or chairman xi? we tried to follow up with the white house and ask whether the president mistook the jackson hole summit happening every year a policy meeting also, no comment from the federal reserve on trump labeling the federal reserve chairman a quote enemy here's what powell did say the main story covering out here in the speech today. perhaps causing the president's reaction he said the fed will act as appropriate to maintain the
expansion. on the trade irks and the sloupd, he said there's been further evidence of a global slowdown cited germany and china. potential of a hard brexit hong kong turmoil. the fall ochtd of the government in italy and trade policy plays a role including weak manufacturing and lower capital spending powell said there's only so much that the federal reserve can do on trade and jay bullard addressed the downside risk from trade. >> there's some downside risk and i think you'd like to take out insurance against that downside risk and i'd like to take out more insurance but the good side is, okay, nothing happens, the u.s. economy continues to grow. we can take the insurance back next year if turns out that this was all going to blow over >> reporter: markets are looking for that downside risk this reaction you're seeing here
in the probabilities of fed rate cut comes after the president's tweets about trade in which he ordered u.s. companies to look for alternatives to china. 100% probability of september cut. inside that, nearly 20% probability of an october cut. these are three separate cuts priced in by the market or 75 basis points of cuts is that too much too aggressive given what the fed chairman said todaysome we'll talk about that with fed vice chairman clarida here on "closing bell. another interview of primary importance given the importance of the brexit, given the importance of global economic weakness, we are talking exclusively to mark carney, the governor of the bank of england having both interviews to headlight on a policy response
to developments on the trade side sara >> yeah. two men facing very difficult tasks right now. thank you. looking forward to the next hour president trump just weighing in here on the selloff tweeting the dow is down 573 points perhaps on news that representative moulton whoever that might be has dropped out of the 2020 presidential race. he was running for president i don't think he qualified for the debates in june or july. seemingly, mike, making light or fun of the selloff that was sparked by his tweet storm we were waiting for a response from the president this afternoon. we are still on high alert so far, this is a you will ll w. >> so that's where we are at this point it seems. >> let's bring in seema mody with a look at the movers here at the new york stock exchange >> sara, multiple factors at play right now
down 2%. stocks moved lower after china unveiled that $75 billion of retaliatory tariffs and then powell stopped short of another rate cut and then president trump's series of tweets sending the markets to session lows. there's also a number of auto stocks that are trading down china did say a 25% tariff will be imposed on u.s. cars and a 5% on auto parts and components and why some of the big autos are lower. energy is also weak on those crude oil tariffs. we started the session on pace to close higher for the week but now we are on pace to close lower. that would be the fourth consecutive week of losses with the dow down 2%. >> thank you very much the nasdaq hit hard today. courtney reagan is tracking the
damage over there. >> hi, mike ft just off the session lows we were down about 2. % for the nasdaq at the low. seema laid it out with retaliatory tariffs first and then new tweets from president trump. we'll watch these chip stocks carefully. continuing forward look at the damage that's been done today the etf that tracks the chip stocks down 4% here. this is a group that's hit hard when trade tensions flare up and looking at some of the components, the big chip names that are hit hard, look at names like nvidia, lam research and amd, down 6% here. apple, another name we talk a lot about in the trade war even though tim cook has a good relationship from what we understand with president trump it is in the middle of the tug of war responsible for 36 points to the downside right now on the nasdaq 100
hasbro's the biggest loser here in the nasdaq 100. not directly related to the trade war but announcing $4 billion to buy entertainment 1 after the close yesterday, and so that's a little bit of pressure back over to you guys. >> thank you. joining us for the entire hour, nancy tangler. so you have powell and then the series of tweets now you have every sector in the s&p lower. what do you do as an investor on a day like today >> short term i think this -- in the long term, i think this is an opportunity to add to holdings if you need to be long stocks i also think the president needs to understand that it's real simple if ceos are not confident and cap x slows we have seen that in the gdp numbers. unit labor costs rise and corporate margins are squished
if he think he is the first president since second world war to gain re-election in a recession i say mazel tov. we have to get serious. >> you are in recession camp >> i'm actually not. if you look at the numbers, the pmis while decelerating are not at recessionary levels despite the market yesterday and i think there's explanations for that. but the leis were great and i do think that we're seeing decent strength and heard that from the fed governors today split down the middle we don't need to cut because we think that the economy's stronger so i think if we can behave and leave the hyperbole at the desk then we can move forward and see some growth. this is troubling on a friday afternoon with no liquidity in the markets. that's why i think it's an opportunity to pick off some great names. >> no doubt. certainly seeing an air pocket
type action. let's bring in dave goldenberg you have on a recession watch for a while. we had this general impression that the world is slowing sharply. the bond market is flashing yellow at least in terms of a deeper slowdown and the usda that held up okay. where do you think this is all headed with regard to the u.s. growth picture and whether the fed can do anything to support it at this point >> there's a lot of questions there. i think that we are having a spreading recession globally i think it's started in the uk and germany and hong kong. china's cooled off although the u.s. is largely closed economy it is not totally closed and not an island of prosperity to its own so there's lagged effects from the rest of
the world on exports manufacturing production in the united states down at 2% annual rate so far this year. we saw the negative cap x print on the second quarter and housing is really -- new home sales today and housing is not going anywhere when's keeping the glue together is the u.s. consumer the u.s. consumer has shown up and will continue to show up and one statistic is when's happening with real average weekly everyonings year over year down to almost stagnation on real work based incomes and the question will be will the consumer adjust to that when the other components are already starting to contract nothing here in the past couple of weeks or months changed my view that we are either on track to a classic defined recession or something very close to that that's going to widen the output gap, cause pressures to come into the system and either way
no matter whether the fed does 25 or 50 in the next meeting the path to 0 over the next 12 months. >> on the earnings side, nancy, you mentioned this is all margin -- could compress margins, looking at the pain today is widespread but technology down 3%, hardest hit group. i mean, which groups get downgraded the most for earnings expectations as the trade situation is worse >> i mean, david brings up a good point about the consumer but i think they're in great shape and discretionary stocks may actually be one of the places where you can hide. though you have to be selective. in this environment, i worry about the chip stocks, transportation stocks. and overall industrials because if the slowdown gets worse and impacts the u.s. more then those are the companys that are going to be most exposed to earnings -- >> classic china trade play book. >> it is. >> dave, the message of powell today to get more specific about
it and how the fed is treating the things saying act as appropriate. in the last several hours maybe more action seems more appropriate. where are we with regard to market expectations and how the fed might meet them or not >> look. i think powell could be considered to be a dove as far as i'm concerned but at the same time he's only got one vote on the fmoc he might have the most important vote but we know that we have a very divided fed with or without what happened today we know that the trade war -- anybody who thought the trade war to end soon, i saw a guest on "squawk box" expecting a trade truce. i think that's fallacious. i think people thought it is not easy in terms of a trade deal. you have people on the fed that are very hawkish people on the fed that actually
have this view that unemployment is low consumer is great. the u.s. is a -- of prosperity you have people on the fed that don't want to cut rates. not just a couple. a lot. the fmoc minutes is clear of the most divided fed i have seen in the 30-plus years of the financial business powell's hands are tied. they'll cut interest rates an and going to be slow mo. but they'll continue to cut interest rates and only something -- if you start printing negative payrolls or start seeing negative prints on u.s. consumer spending then they get more aggressive but i think that the bar is high right now considering how divided the fed is to move aggressively over the next couple of months. >> now we have the yield curve inversion again and happened multiple times over the last
week or so, david. i have to say more people come on cnbc and say it's distorted foreign investors are searching for yield and u.s. is the only place that they can get it it's the ecb, the boj. so many factors that make it different this time. >> well, i think that for people out there that manage money for a living you have to know when everybody's focused on the shape of the yield curve it is not important. okay it's not about the shape of the yield curve. you do not need an inverted yield curve for a recession. okay i think this obsession is total totally misplaced. people should focus on the meltdown in the yield curve. the structure of interest rates melted in the past nine months and valuable information in that meltdown and interest rates. people say, well, who wants to
buy bonds at these levels? that's not the story there's a powerful message if you manage assets. the meltdown is telling you we had a collapse in global investment to a point where investment fallen below the level of global savings. so interest rates have moved low tore a e qi lib ri yate this short fall and economists in particular aren't coming on to talk about why are interest rates so low and why have they fallen from already egregiously low levels it's about this dramatic move down and it's a very powerful message, that move down not the shape of the yield curve, especially in real interest rates is an ominous message for economic growth over the next year, ignore the yield curve and focus on the whole maturity structure is telling you. >> they're pretty much at their
recent lows. 202 and some change right now. and the 10-year at 152 or so. david, we'll leave it there. thank you. >> thank you. the dollar index also taking a leg lower today following the president's tweets sara has a look at what's behind the move. >> this is a sharp move and not just stocks. big moves in currencies. the currency market is now on high alert this afternoon for potential intervention check this out this is what happened to the dollar today earlier in the morning, 10:00 a.m., an indecisive reaction to powell the fed could keep cutting interest rates that was sort of what the market did want to hear but then it really started taking a leg lower after this the president's tweet. as usual, he says, the fed did nothing. it is incredible that they can speak without knowing or asking what i'm doing which will be announced shortly. we have a very strong dollar and
a very weak fed. i will work brill i can't wantly with both and the u.s. will do great. what did he mean and then following up with about the strong dollar. he has this fixation and had it for weeks now with the strong dollar and the betts building up to weaken the dollar the dollar did weaken in an tigs pags of a move and extraordinary for so many reasons. for one, not happened since the '90s it did in 2011 with the u.s. and other g7 partners intervening to weaken the yen and the reason it doesn't happen because it generally does not work unilaterally. remember the bank of england black wednesday. if the market views the fundamentals point to a stronger dollar, guys, usually the market wins the treasury does have a fund for this 21 billion extra 50 billion in imf
currency in foreign exchange, that trades every single day so we'reon alert we would likely see a statement from the treasury they direct the new york fed to step boo the market very interventionist majorly frowned on tonight president trump goes to g7 where countries for years saying we won't intervene. we'll let the currencies float freely. >> that's been the standard line for everyone for a long time sara, it is interesting to try to divine what's behind the move beyond just the fed maybe dovishness and also this idea about intervention and normally with the escalating trade tensions you see a dollar rally. >> that's the intervention. >> currents that are going on. >> the gut take is you don't want to be on the other side if the fed steps in even if it doesn't ultimately work that's a risk you don't want out
there. i think it's a tricky decision for the administration because they just accused china of being a manipulator. it's a currency that's weaker than the dollar today on this idea that more tariffs hurt china and that's really why its currency is weakening. >> i wonder given the dollar is rallying whether it's a general, look, speculators are long stuff today and reversing the trades in general i don't know how to interpret all of it. the idea has - >> you could argue it kind of worked today the tweet got people to do - >> jawboning. >> yeah. >> certainly. >> short term. >> how strong is your sense of the dollar right now relating to the damage it's doing on earnings and the economy. >> you know, we are not hearing it or i should say we didn't hear it on the earnings calls and companies made the
adjustment they're expecting the currency to weaken some in the second half of the year and may not get that i don't think it's debilitating. multinational companies have not performed as well as domestically focused companies but that's a near term issue and we have to look more than one tweet out on a friday afternoon. >> well, the dow now trading lower by 562 points. we have about 38 minutes left to the close. for more on the picture, let's bring in mohamed el-erian. frame the conversation for us. we had markets that were on alert for a deeper slowdown in global growth wondering if central banks had the ap in addition and the will to counter act the affects and now a ramping of more of the trade frictions. where does that bring you? >> absolutely right.
we have had this balance for the last year. on the one hand, weakness fundamentals in europe and asia. on the other hand, confidence that apple and predictable central bank liquidity can insulate markets from the effects of that plus technicals on the whole have been positive. what you are seeing today is both sides of the equation going against investors. there is a further weakening of fundamentals and the escalation of trade wars and heard me say this over and over again we could have more escalation. that's what they tell you. the escalation increases the probability of a currency war. fundamentals worsen today and chairman powell admit whad a lot of people already knew and good to hear it from the fed. that he can't counter this trade uncertainty so the market looked at both sides of the equation turning against it and sold off
in a very broad fashion. >> if you add it up, it equals slower global growth which we know is a problem. right? trickier question is what does it mean for u.s. growth? >> yeah. and even trickier question is, there was a difference between what it means for u.s. growth and u.s. markets so it is a head wind for the u.s. i don't think it's a strong enough head wind to tip us into recession. for the reasons that you have heard earlier. which is a non tradeable sector. service sector is still quite large and consumers and the labor market's in a good place it shows us that's no doubt about that and doesn't tip us in recession but markets are much more exposed to what happens to the rest of the world. you get a decoupling of markets and what we have to think about is the feedback mechanism. self fulfilling expectations that is where the danger is for
the economy. >> are you particularly worried about that 5.7% from the all-time highs on the s&p. >> markets could go lower, undoubtedly. you have to think in terms of three strategies than buying the dip. one is look for areas of the particular dislocation and there's more of them outside the u.s. than the u.s. secondly, look for where there is an interruption of the supply chain because that's happening thirdly, look for names that haven't been the sweet heart of recent rallies but have this characteristic of being protected because they serve mainly domestic audience that is a strategy, very selective. and then wait before you increase the general exposure to the market. >> you say you are seeing examples of dislocation in the credit markets right now
is that here globally where? >> yeah. look at turkey banks have stopped lepding and if you construct private credit with collateral where paid if the assets are held abroad you have the same dynamics high yield companies in the u.s. finding access to markets harder you want to pick your spot and focus on the dislocations and different from the strategy that's worked so well for a few years which is buy every dip with the confidence in unpredictable li unpredictable liquidity. >> great to talk to you, especially on a day like today appreciate you calling in. >> thank you. >> thank you. >> voice of reason. well, bank of england governor making comments in jackson hole moments ago let's get back to steve liesman
with details. >> reporter: mark carney, hope's sara's sitting down, calling for the creation of a virtual currency to ease the reliance of the world on the u.s. dollar he says creates some problems we have today i can explain more in a second he says the uk outlook hinges critically on brexit sara, for example, half of all international trade is priced in dollars. but five times greater than the u.s. contribution to world output along with two thirds of world securities priced in dollars saying the problem there is that u.s. interest rate policy, u.s. exchange rate policy becomes exported to other parts of the world and he says that is not the optimal way to run things, he acknowledges a long way off but a radical proposal from a guy -- >> kicked out of jackson hole?
>> no. i think what he is dealing with is this idea of why are we having so many problems related to the u.s. being strong but the rest of the world being weak he says so much of the world is priced in dollars so the theory of flexible exchange rates resolving the imbalances is not working. you know this is not the first time this idea is talked about there's a special jarring rights of the imf all these questions that you may have and i have still we're going to get a chance to talk to mark carney about the issue and others including the outlook for the uk, potential spillovers to the u.s. as well as the rest of the world and emerging markets talking to him at 5:30 today and just before that we'll get a chance to maybe ask vice chairman of the fed about this. >> yes it seems very confusing. ad as if they didn't have enough
issues on their plate now dealing with a digit at currency >> reporter: well, yeah. i think what he might be getting at here is this idea that the u.s. is affecting the world beyond the amount which the world should be affected and that's why i know former traders in russia that sit there and watch the u.s. employment report for how russian stocks will trade and the question i think carney's asking is that right? should there be a different weighting of the importance of the u.s. economy on the rest of the world? >> thank you. half hour until the close. and we have got a big market selloff on our hands let's take a look at the companies with heavy exposure to china getting particularly hard hit today. we have a look at the names. >> you can really see that selloff reflected.
look at china trade index. tracks companies with the most exposure it's down 3% falling sharply. start with apple with 20% exposure to china. down 4%. now reports have suggested that ap sl trying to figure out how to move the production out of china and into india the ceo tim cook said they made no significant changes to the supply chain and apple's problems are best buy's problems because roughly 20% of best buy's total sales are apple products the stock plunged after the president's comments down more than 3%. they report next week and expect to hear more about this then there's heavy equipment maker john deere also down on the news down almost 5% so after all of this where can investors find safety? we have a list of companies with
no revenue exposure in china and actually generate 100% of the sales in the u.s. and there are a number of consumer staples, utility stocks and retailers like dollar general and some health care names including cvs and anthem anthem especially holding up relatively well today. right now up fractionally less than 1%. >> thank you dow down 600 is that the strategy and investors should be taking look for domestic exposure only versus apple which is down 4.4%? still up, what almost 30% for the year. >> take a balanced approach. we are looking at the exposure the companies have internationally and doesn't keep us from owning them if the valuation's there. i think valuation ultimately trumps source of revenue so if you look at the consumer staples and the utilities they're trading at lofty multiples.
we look and say, hey, where are there other places to find attractive valuations that have all the right elements great management, growth, globally or not. and still yet even though we have high exposure we have companies focused on u.s. revenues source of revenues. >> is apple in your portfolio? >> we own apple. we sold some little higher than now and not as high as recently. i don't think you run from that stock here. >> 28 minutes left of trade. mike, over at the telestrator? >> s&p500 with context and how the declines fit in to the longer term picture. we have been in a trading range in august and so this is a two-year chart it's a pretty wide view and captures the long trading. one thing today is back again below that level of january
2018 this right here, if you took a shorter term view, that's the area we are still looking at 1% on the s&p above the lows of last week and not as if you exceeded the damage done on this little move lower. for this week, that tight correlation of the s&p 500 and treasury yields, look at this on a realtime basis the s&p 500 here in white trying to create separation and then today we're right back in that fix where basically the bond market pulls the stock market around, especially today when you got this move down to 151. we are really slicing this really thinly right now talking about basis points and whether the curve is inverted or not when yields go down toward the lows of the move the stock market has a hard time resisting it
s&p around 2820 the lows for august just about there below that, look, we are not back to where we got in the pullback in may. right? it is not as if we're cutting into muscle with the pullback but a couple of false starts in terms of moves back. >> it is perspective feels like days like this painful. >> it does looking at the year to date returns for the marks, it is a good year so far on a year to date basis it's been a lot of effort and volatility to not get very far but that's what the market does. go back to 2000 to 2003. you did nothing for three years and then a nice run and then the big correction >> here's a check on the biggest losers in the dow today. no shortage of them. 29 out of 30 dow stocks lower. apple is hit the hardest goldman sachs and 3m with more points off
mostly china exposed and companies that have global footprints nike, intel, american express, ibm. there's a report out of seattle times that the 737 max moving closer toward approval that's helped boeing yesterday and today. we are down almost 600 we have got about 25 minutes left to go here. here are the major things that are driving the action the president lashing out at china and fed chair jay powell after china promising new tariffs this morning powell did decline of the turmoil of recessions as the yield curve inverts yet again. >> we have just under 25 minutes left to go we have full team coverage of the selloff and president trump's order or american companies to look for alternatives to china.
morgan, let's start with you. >> dow transports down something like 3%. parcel carriers, railroads, truckers, basically these are the companies on the front lines of trade moving people and seen as gauges of economic growth showing an almost 6% drop in shipments saying the index from warning of a potential slowdown to signaling an economic contraction. meantime, today, president trump tweeting he is ordering all carriers to search for and refuse deliveries of fentanyl of china or anywhere else that, too, in focus here with this group u.p.s. and fed-ex responding to they follow the laws and regulations everywhere and working with authorities overall the transports, again,
really on the front lines of trade so the ratcheting up of the tensions seeing that particularly play out in the market with all of these names and certainly, pushing them further into correction territory. the dow transports are now down 13% over 12 months. >> thank you new session lows down 615 on the dow. let's goat courtney reagan for retailers. >> the idea of tariffs been brought up at least 166 times on retail earnings calls since the beginning of this year we know that that's nowhere near the end of the numbers for retail china is important for manufacturing product that ends up in the united states and elsewhere and also as a market to generate revenue. a statement from the national retail federation saying that retailers have been diversifying the sup play chains and finding
alternative sources is a costly and lengthy process that can take years so retailers with a decent amount of chinese manufacturing that are under pressure today include steve madden and g-iii and then you think about the retailers that actually generate revenue in china by selling to chinese consumers. nike produces just about 10% of its goods in china but generates 16% of its total sales there other retailers that count on revenues from china include tiffany, tapestry, walmart, abercrombie and others but those are the names with a higher percentage of revenues from china tariffs can hurt really bad there, as well >> thank you very much we are now at new session lows
dow did get down below 609 200 points or more above the lows from last week but still session lows today that was the low for august last week down about 25 let's get to seema mody for more on the industrials. >> i want to share new commentary of stevens tracking the industrials saying for caterpillar a key bellwether, 5% to 10% of revenues exposed to china on an indirect basis the mining business is heavily exposed. cat generates roughly 25% of rove knew from the resources industry business which is largely mining north noting shares down 12% this month joining a handful of industrial giants that are also down double digits in august and coincides with new data of weak u.s. and european manufacturing
activities but there are pockets of strength within the broader industrial space aero space and defense has held up well in comparison to the construction related names lockheed martin hitting another 52-week high in today's trade. >> seema, thank you very much. nancy, within the industrials how do you play that sector right now? >> so we own some of those stocks, unfortunately. we own some of the stocks that outperformed like boeing and you could argue utx. we reduced the exposure to 3m. as a manager you have to have exposure to the names because you're -- you have to some sector exposure and it's been difficult. we sold out of emerson, not all that long ago. it's a long-term game and it is all about what you weight in the port polio i'm disappointed with fed-ex's
performance. it is a stock we own, a company that's stumbled a few times an ena potential to be dominant u.p.s. has done better this year we own that in a different strategy fed-ex should be the leader in this environment and should be able to weather the storm. in a much more muted fashion it goes down more than the market and goes up less over the last - >> close to the 52-week low. >> terrible. >> one thing the president mentioned outright is perhaps suggesting some kind of a new burden on fed-ex and other shippers to make sure there's no fentanyl in the ordering. >> ordering them. >> it's hard within that news flow to feel like the folks are in - >> they did the right things right? they technologically transformed their logistics of their business and yet there's been no realization of that in the earnings or in the stock price.
>> we have the dow down 613. treasury yields hitting the lows for the day. oil also feeling some pain today after the china tariffs included a 5% levy on american oil. tariffs threatened by china for later this year. joining us is global head of commodity strategy at rbc credit markets. i see you're in jackson hole s. this correct how do you put this move in context with what we have already been seeing with oil on the defensive? >> yeah. i think it's really keeping with the trend we have seen all summer is concerns about demand destruction. crude has been a principle casualty of the trade war so i think the real concern is that we're not going to get out of trade war any time soon and that oil will have a weak demand outlook. in terms of u.s. exports to china those are already falling
off since the trade war had resumed. exports only averaging about 110,000 barrels a day. china can source those barrels from other countries so it's not a really big story for the physical markets i think it's more of what does this mean for demand i don't think oil moves higher as long as we have the trade war fears. >> just e lalaborate on oil becs the chinese target it. how much of an export market is china for u.s. producers how much does it hurt u.s. producers if the tariff rates go up and buyers look elsewhere >> it is not a big u.s. market in terms of where we send exports. the u.s. sends to places like canada south korea. india. the netherlands. back a year ago there had been a sense that this could be a potentially big market it had been a bright spot in the u.s./china trade story we are seeing increased u.s.
shipments to china last year and there was a sense that china was looking to the united states as part of the broader energy security gets less barrels from the middle east and getting more from the united states since the trade war commenced again china is sourcing barrels from other places. sources barrels from saudi arabia, russia, from angola, from brazil. they have also had 0 make up for the lost iranian barrels i would say it was the loss of barrels from iran to china that was a biggest story. >> given all that, i guess i could almost kind of turn it the other way and say is it notable that wti remains where it is above $50? in other words it is not a more dramatic selloff at least in the short term >> i think right now it is reflecting the fact that this isn't a huge market for the
product but i think the question's going to be where we go for the end of the year is a very important opec meeting coming up in a couple week's time we'll have to see how this producer cartel organization responds to this weakened demand picture. do we see opec step up what do they do to target sentiment? >> thank you very much appreciate you checking in as the energy sector in the s&p down more than 3%. >> president trump's story of the day. criticizing the federal reserve in a series of tweets today saying in part that it's incredible that they can speak without knowing or asking what i am doing this after fed chair powell delivered the speech at jackson hole this morning saying the fed would do what is necessary
joining us is larry summers. secretary summers, thanks for phoning in we know you're never shy to criticize the administration on some of these policies what do you make of everything we saw tweeted and how the markets reacted today? >> i don't think the president's being helpful. i don't think he's being helpful with his trade war policies, with china, which are ill suited to achieve his objectives and are almost maximizing of downsides for the u.s. economy and i think he makes the fed's already very, very difficult job more difficult when he attacks the fed and demands that they kowtow to his desires. part of what gives confidence in the dollar, part of what gives
confidence in the u.s. economy and financial system is confidence that the fed's judgments are being made on a basis of logic and economic analysis and data rather than based on the electoral calendar. by removing that confidence, he's taking away a prop under our prosperity he's also making much more complicated the process of -- and difficult, the process of international economic cooperation which some day soon where when we have a recession, maybe in one year or two or three, will be very important and that will to cooperate won't be there from our allies given the various things he's done. >> this job that you mentioned becoming more difficult for the fed in trying to sustain this expansion and meet its mandates, it comes at a time when there's
already been some questioning as to just how much more to expect from central banks in terms of having a stimulus affect on the global economy does that change how do you think fed officials will approach their response to any expected weak frns the trade war or anything else >> i think the fed has to be mindful of the fact it has limited ammunition and that if things -- and what i call the black hole monetary risk, that once you hit that zero bound, once a noninflationary psychology takes hold there's not a lot that's there for them to do so it's a one way trip into a black hole. that's what astronomers teach us and something like that with sbe zero interest rates. we have seen that in japan we essentially have seen that in
europe heading into at least slowdown and maybe recession many germany with a zero interest rate. we're one recession away from that in the united states. >> 11 minutes to go until the close. the dow down 624 we have every sector negative in the s&p 500. talking with larry summers, former u.s. treasury secretary some say that it's going to be messy coming to taking on china and at least this president is doing it and trying to get fairer terms for american companies and the chinese are tough and they're not going to just stand back and let it happen what do you say to that argument >> chinese are tough they're also smart they know that what the
president says about bilateral trade deficits is economically illiterate nonsense. they know that he is very vulnerable to what happens in the u.s. stock market. he has demonstrated that he doesn't carry through we have seen that with north korea, with pulling out of data, we have seen that with u.s./mexico trade agreement, basically the same as the old nafta. so they know that he doesn't -- he doesn't mean what he says they know that his capacity to absorb pain is pretty limited. they saw that when he backed off of the last trade threat and they know that a lot of
what's happening makes them stronger makes them stronger by denying u.s. producers to cheap inputs they can provide, steel tariffs are basically sabotaging american manufacturing for the sake of a sector that's about a quarter of the size of a massage sector in the u.s. economy so the chinese are smart and tough but we don't have a set of well defined priorities of things they can actually do that matter substantially to american national security and american families we should be focusing on some of the issues with technology 2that are crucial for our security we should be focusing on some of the biggest abuses but when he is running around talking about
the trade deaf silt, getting china to go on buying programs, he's hurting us. when he is doing things to cause the chinese to try to become self sufficient in the technologies, he is making us poorer when he's alienating every ally we have, he is giving the chinese a strategic gift >> so you do not think this is winnable for the u.s.? is that what you're saying >> i don't thinking about it as winning or losing is productive. i think the united states has legitimate concerns and issues with china that it can get china to move towards us on. but doing that requires defining
an agenda with precision, requires mobilizing rather than alienating allies. being credible that you'll keep the agreements you make, credible to carry out the threats. that you make. and the president projects none of those with anyeffectiveness so this is a stop or i'll shoot myself in the foot strategy with respect to china. >> larry summers, thank you for phoning in former treasury secretary of the united states. >> we did with 6:30 left to gorks we clicked down to a 700-point loss that is the low for the day. the s&p 500 is now at about 2840 so we still continue to kind of
carve out new lows as this friday comes to a close. we are now also preparing for the closing countdown. going to bring in sean cruz, trade and strategy manager at td ameritrade what are you seeing in emergency rooms -- in terms of this action >> if you looked earlier on before we heard from chairman powell, before we had the tweets from president trump, you saw a little bit more of a defensive posture where you had some of the more defensive sectors like utilities and health care outperforming the other more cyclical sectors like energy and consumer discretionary, technology but that slide escalated as the day goes on and a little bit more of a pronounced move of what we saw earlier on after announcing the tariffs this morning. >> what happens when you guys see the tweets
like, what's the -- it feels like powell, highly anticipated speech in jackson hole, the big market mover today the market went up a little on that president trump tweeted he made a biggest enemy than chairman x i and threatened more action i'm wondering how it goes down on a trading floor in the summer. >> if you look at the vix, we talked about this last week, sara the vix down below 18 was a little bit too low and looking at wednesday the vix down into the 15 range i thought that showed the markets were offside and that was the risk here that you get something unexpected like a tweet or another escalation in the trade war and that's what we got. earlier on this morning you got china announcing the tariffs pushing the vix up to 18 powell came out. dovish enough to see the vix
pull back and then president trump's tweet. that skyrocketed us up to 20 the vix showed you where a lot of angst is from investors and 20 seems appropriate for the vix with everything we have heard going into the weekend. >> nancy, you talked earlier about it being a friday afternoon. generally slow activity. does that make you think differently about the degree of the decline today? >> 700 points snts what it used to be as we talk about frequently i do think the tweets are kind of the point when chairman powell takes front and center in the news cycle the president makes sure to get in front of it. i don't like it. i'm sure sean doesn't like it. but it suspect a long term fundamental changer of the value of stocks and the u.s. economy so i think we call it today and we say have a good weekend and start again on monday when there's going to be more people back at their desks making
decision for the right reasons. >> just joining us, three minutes left until the close the market is sinking. near session lows heading in the final minutes down 745 on the dow. er group in the s&p 500 is negative right now we are looking at declines of almost 4% for energy, technology down 3.6%. session lows for treasury yields and for the u.s. dollar. this is all happening after president trump promised retaliation against china in a series of tweets today, ordered u.s. companies the move out of china and then just a few minutes hearing directly from vice chair richard clarida will be joining steve liesman. you have a few more charts to highlight here >> just to look at the breadth
of the market. you see new york stock exchange about 6 or 7 to 1 down stocks to advancing stocks that's relatively steep. looking at the volume, just about on a 90% of all trading volume on the new york stock exchange that's a washout level number. not the mean but it shows some pretty intense activity to the sell side. i did want to look at the vix again, too one-year chart of the volatility index. sean talking ant 20. what i find interesting is we are below where we were earlier in the month and then another high around 22. what that means is over the course of the month of august we have been in the shakeout mode and a lot of people hedging. the volatility index is a been there, done that, response until perhaps we break out of it let's get up to courtney reagan at the nasdaq.
>> thank you very much, mike we are likely going to close at or very close to near the session lows nasdaq down about 3.25% here for the week the nasdaq is going to lose about 2% of course, we had the tariffs mentioned early this morning the response via tweet from president trump is the pressure here chip stocks hit hard this is a group caught in the middle of this trade tension because of all the business that gets done in china look at amd shares down 8% and then look at the percentage of revenues that these chip stocks actually generate in china. 57% of micron's revenue from china. 48% of broadcom. now to seema mody at the new york stock exchange. >> the selloff accelerating into the low. the dow down 640
powell hinting to cut in september but did little to clarify anything beyond that trade sensitive names. the dow closing down 623 points. s&p 500 closing down 2.8%. ♪ that's a wrap on an ugly day on wall street welcome back to "closing bell," everyone i'm secret service. >> i'm mike santoli in for wilfred frost today. a steep drop you see the dow jones industrial average down 2.4%. s&p worse. so basically, revisiting the bottom end of the range.
nasdaq down an even 3% russell 2000 small caps also an underperformer today. >> really hard to find pocks of strength in the session. all 11 sectors lower you can go into the industry groups only one that's green is tobacco stocks very defensive and then sub sectors, only one that's positive today was gold gold did make a move higher. that's where you go when you get the policy uncertainty lower prospects. >> treasury yields collapsing further, as well feeds into the same risk off we did not hear from the white house of the sort of president's talk about what he wants companies to do with regard to pulling away from china and snowmobiled a little bit into the close in terms of the removal from risk. >> we have full team coverage of the selloff here on wall street. ow team to get you up to date. >> a panel of experts to break down what it could mean for your
money including jeremy siegel with his take. china announcing retaliatory measures against president trump's latest tariff threat ylan >> we are watching and waiting for president trump's next move after this latest escalation by china. he promised on twitter this morning to respond by the amp and ordering companies to look for alternatives to china. still no word from the white house what authority the president has to do that the question is whether the rhetoric is real or the bluster ahead of g7 and expected meeting of chinese and u.s. negotiators here in washington next month. we'll let you know if we hear out of the white house back to you. >> keep us posted, thank you here to break down the reaction to the headlines, seema mody what did it lock like?
>> a volatile day to say the least. we were higher on premarket comments but then china unveiled the tariffs. powell's speech at 10:00 a.m. tried to calm markets a bit and then tweets from president trump taking aim at powell and urging companies to prove out of china sent stocks sharply lower. in response, industrial names sold off we have a new comment of cummins saying it's a tax and will be passed down to consumers now here's where we stand, guys. with the loss the dow down about 6% from the record high. we will have to see what happens next week. a lot of china data coming out including industrial profits on monday. >> back to you. >> we will have to see if there's further talk over the weekend on the policy salvos
thrown out tech taking a big hit today. josh lipton is here to assess that damage. >> tech is closely tied to trade tensions for many companies. china is an important market and a key part of the supply chains and check out apple down about 5% this month though up nearly 30% this year. just in week president trump praising ceo tim cook as a great executive in his words the semis also slipping hard check out amd, broadcom and nvidia in the red. tech names in the green hard to find in today's trade. salesforce did end higher after better than expected quarterly revenue. back the you. >> might be a day, josh, that tim cook phones president trump. they apparently have a good phone relationship right? >> that's it
that was interesting that was ayman asking the president for the thoughts and got him to sound off on the relationship and president trump praising cook and the abilities there. certainly for apple investors that could help. you have big dates circled on the calendar for the iphone, tariffs may be pushed through to december but then september 1st when the wearables hit with tariffs apple could file for an exemption. we'll see. >> josh lipton, thank you. as mike mentioned a few moments hearing from federal reserve vice chair richard clarida nancy tengler is still with us and jeremy siegel joins us by phone. professor siegel, your thoughts on the action and the tweet storm that caused the action on wall street today and just in
terms of how much of a game changer if at all this was >> well, president trump is playing a game of chicken and i don't think the stock market likes it at all. it's my belief, i've said this, at the end you can turn the steering wheel awayality the last moment. this is his way of getting a deal but if he, you know, keeps on threatening tariffs and raising tariffs, it's going to be very bad market and economy they know that and will try to get the best deal he can i'm not surprised at this ramping up that would cause up 700-point drop in the dow. >> jeff, only this additional escalation not welcome we have pretty firm i guess
resolve on the fed's part, probably after today's news, that it will be easing in september and probably more to come after that. the u.s. economic numbers were okay and the stock market is wobbly and not really gone to fresh lows for the month what do you think of the market's response in the context of all of that >> i think the market is counting on the consumer to continue to hold up the economy. we know that manufacturing is slipping into a recession. that's a global thing. we have seen business leaders begin to pull back on the spending plans but not yet on their hiring plans so the job market remains solid and the consumer remains solid but a difficult thing to foresee we could see that pick up. that's a concern if you have to step back from this, the one thing to take away from today is diversification. we saw foreign markets hold up better than the u.s. today
and that may say something still vulnerable of the global slowdown but not the threat of the barriers that could be applied to individual companies and further downside for the markets. >> yes, it's an escalation of trade fears, jeremy. two things were different today. one, the president using twitter to say i order companies to step out of china and come back home. that's not an engagement strategy >> no. >> if you're worried about the strong dollar's impact on earn, you you should see if the companies pull out of china. >> a lot of words trump uses are not well advised i don't think he'll say do not buy from china and try to persuade them and hope that firms move there i think the fear is there's a presidential order on that are not well founded
going back to the fed, you know, over two weeks ago i was i think on your program saying to move down 50 basis points 10-year's back to 1.50 you know fed fund's at 2.10 60 basis points higher that's really an inversion if powell and the fed lowered it 50 basis points they'd take that off the table as one of trump's excuses for, hey, maybe the economy is reacting badly and will be on him at that point and there's very good economic reasons for them to actually move aggressively. i thought it was very interesting. there's a battle royale going on at the fed there's two groups, one says the economy is doing well, not moving the other group looks at the term structure and the yield structure and what's going on saying i'm worried i think this next september meeting is one of the most
contentious that the fed had for years. >> nancy, we're going to hear from richard clarida here. do you think the fed has the ability to soothe the market with wourds? >> no. the market understands that the fed's in bind and so maybe the market's still expecting too much and 25 basis points is kind of universally under i think we have to look to companies and i thought this co-ceo of salesforce gave good news today or yesterday. >> last night. >> last night when he said ceos around the globe with problems locking to us. you saw it in the sales number raised guidance. the fed is not designed to determine the market and the results and step back and go to fundamentals. >> salesforce up today a rare bright spot.
>> absolutely. nancy, jeff, professor siegel, thank you to you all. >> thank you. dow closing lower by more than 600 points and stocks initially got a lift this morning after jay powell said the fed will do what's necessary and then tweets from president trump criticizing the federal reserve saying in part my only question is who is our bigger enemy, biggest enemy, yeah powell or chairman xi? let's get to steve liesman with an exclusive interview with richard clarida. i hope you have cell service to monitor the tweets. >> yeah. they have definitely seen the tweets here. we're going to get to nose in a sec. thank you very much. we are joined by richard clarida. thank you for joining us. >> absolutely. >> i want to start with the
market selloff down 745 at the low. how do you process as a policymaker the impact of this on the economy and the volatility >> steve, we are looking into the economic outlook because that's what's going to drive our decisions. the economy's in a good place right now. markets go up and down and try to filter through the day and obviously the global outlook worsened since our july meeting. global economy is slowing and inflation pressures so we are not looking at any one day but the trepd in the data to make the decisions. >> what about the financial conditions overall and the way of a lower stock market suggests tighter financial conditions something that all speak or the fed has to offset? >> we want to try to understand why they're changing and obviously they can go up and down but trends in financial conditions are a factor, absolutely. >> you are not dismissing a
decline in the dow, are you? >> i am not. obviously. but again, we are looking at the longer run trends in the economy and the financial markets for a sense of where the economy is going and the appropriate monetary policy. >> give me your summary of the general message was today of fed chairman powell's economic speech tie outlook is favorable. the economy's in a good place and significant risk the global economy is slowing. powerful disinflationary pressures and factoring in we run monetary policy for the u.s. but we have to take into account global developments. they impact exports, inflation and factor that in as we need to. >> talk about your outlook right now. >> it's in a good place. the consumer is strong unemployment rate's at a 50-year low. top line gdp at a solid rate
exports are down capital spendingis soft. manufacturing is soft. so we need to look at entire picture but the top line numbers look good. >> is it an economy that needs further accommodation, further easing, further help from the federal reserve? >> we adjusted policy at the july meeting we take our policy decisions one meeting at a time. but as we've indicated we'll do what we need to to put in place the appropriate policies and keep the economy in a good place. >> that begs the question of if it needs it. you haven't decided if we are at this point in. >> we have a meeting in september. we will certainly go into that meeting. i will be going into the meeting to look at what happened since the july meeting steve, monetary policy operates with a lag and we need to take into account where the economy is going into 2020 and that's why monetary policy needs to look at the outlook more broadly and not just the data.
>> when you say more broadly, you pointed out sectors affected by global economic weakness. has it dragged down gofer all gdp already? >> top line gdp this year about as we expected. >> 2%. >> second quarter came in a little bit below the first quarter and the underlying momentum in the economy north of 2% close to many estimates of trend growth in the economy and if anything the data on the economy since the july meeting is coming in pretty well it is a kim play kated picture and that was indicated today to try to understand right now and the economy's in good place. we'll nut policies to keep it there. >> do you gauge the probability of recession higher than normal right now? >> i myself do not there's different models of recession out there. i think you have to look at a
broad range of indicators but i focus on those that are not signaling an elevated risk of recession. if you look at a lot of other indicators i don't see it. we need to be vigilant to the data flow, for sure. >> the new york fed has a model, 30-ish, 40% and a place it's been before. a lot of that is the yield curve. what message do you get from a flat yield curve today the -- apparently the one you look at is inverted for quite a while. >> steve, the way i look at the yield curve is it's a signal that i look at i think it's a complicated set of constellation of inputs you can't take a clear read but a flatter invertded yield curve is having i pay attention to the flattening of the curve and the inversion is really not been so much of what's going on in the u.s. but it's been the real
marking down of the global outlook. we have $16 trillion of debt that's in negative yields right now capital flowing into the u.s. and driving down our yields over and above what else is going on in the u.s. so we need to try to understand why the yield curve is flattening or invertding but a signal i look at. >> is it possible that a yield curve inversion this time means something different than what it did previous times >> it could. many experts said you need to adjust for term premium and that and i understand that which is why i'm not handcuffed to it but i wouldn't ignore it. >> dallas kaplan pointed out that the fed funds rate is above all over points on the yield curve, astonishing to understand that it means the priced for overnight money is higher than the price for 10-year money. is that right? >> not only that, steve, but
it's currently u.s. federal funds rate is above rates and other advanced industrial countries in the world we are in a global economy we have a global trading system and if global forces are powerful and we need to respect them i do. >> respect i understand. but more pointedly i guess the question is, is the differential with global yields a reason to bring down interest rates? >> you need to look at implications so again, you can't look at any one linkage but respect the global economy >> let me change gears but speaking of respect, president trump today asked the question, is jerome powell a bigger enemy than chairman xi >> this is an institution created by congress more than 100 years ago. we have an obligation from the
congress the achieve maximum employment and price stability and what we are doing. we have low unemployment, stable inflation and continue to focus on that mission and deliver the best economic outcomes for the country we can. >> i get that. personally hearing the president of the united states call the chairman of the fed an enemy, how do you react to that >> i wasn't looking at tweets this morning i was listening to the conference. >> that was the dweet. >> tweet. >> no personal reaction to that? jaw didn't drop. >> anyway. >> you don't think that's inappropriate? >> what i'm saying is that i didn't see the tweet and focusing on the conference. >> let's talk about generally the affect if at all that the president's continued tweets have on the federal reserve. today would be 20 days out of 23 or 22 days in the month of
august that thepresident's tweeted about the federal reserve. does this have an affect >> again, we have a very clear assignment from the congress we have a committee 17 strong. we have a set of tools and staff to think about the economy: a lot of folks have opinions on monetary policy including some others and so we're just focusing on doing our job and not having an impact as i see on the committee and discuss appropriate policy. >> let's pivot more to the trade issue out there. a couple times now the fed has acted and the next day a major trade announcement from the president. how does that work in your mind now? are you now factoring in worse or at least unresolved outcomes from trade in your forecast for the future or do you have built boo the forecast an idea that the trade problems go away >> as you know, we don't do trade policy we just really focus on the outlook for the economy.
to the extent that it impacts that outlook we have to factor it in and we do. and some important respects we are just going along meeting by meeting looking at the impacts in the data. we have contacts in business, in our beige book and folks that come in to the building who we see and trying to draw on the broad pool of information for a sense of trade impacting the outlook. >> tell us about the contacts. >> we are hearing from those contacts that uncertainty of trade policy is having an affect on investment and on economic activity in certain sectors and certainly something to take into account. there are different indexes and they're elevated. >> what people may not know the s the extent of you are a recognized expert. is your estimation that monetary policy can offset trade policy that the chairman seemed to
suggest not today. is that his mess a you know? >> what policy can do is use the tools to do the best it can to keep the economy close to full employment in a stable inflation. depending upon the shock hitting the economy and the response so that shock, the insulation may not be perfect i think what the chair indicated today is we in the u.s. don't have a lot of experience with how the economy will respond to this the last 50 years is liberationization and now a different period again we don't do trade policy and focusing on the impact of the outlook. >> more specifically, the question becomes can a lowering in the price of capital or the price of debt be something that offsets a rise or tariffs or a decline in global trade? >> oh sure oh yeah. >> you think it can? >> a trade shock to impact exports and investment and
policy makers have the tools to deal with the shocks so we'll have just have to assess this as it proceeds. >> we have a situation -- let me talk about one specific area, business. >> yeah. >> cap-x is declining and hiring remains relatively strong. do you think it's a weird sort of set of data points that you have businesses are cutting back on the cap-x side and not hiring side does that raise questions of how the confidence level of ceos >> the u.s. economy is a bright spot in the global economy right now in terms of growth, productivity, employment and it's a robust and resilient economy as we are seeing we had strong capital spending number last year and hard to know how much is transitory and
how much is sustained and something to consider. >> the issue of the consumer versus the manufacturer. the consumer seems to be strong. manufacturing. global is the consumer able to sustain him and or herself in the face of what's going on in the manufacturing sector >> i think so far. manufacturing is tied into the global economy a small part of economic activity but it does tend or the core lated with other things we look at. the u.s. economy is resilient, a good place and that's a good position for us on in here today and the beautiful grand teton mountains. >> if we are lucky to be back here next year, is it more than likely the u.s. economy is growing at trend what is your best guess? >> my best guess next year is that the economy will be at or above trend growth under appropriate policy. >> you won't tell me what that policy
>> meeting before meeting. >> higher or lower >> meeting by meeting. >> i had to try. >> i know you did. >> steve liesman, thank you very much and thanks to richard clarida. in terms of the biggest head loins, the global outlook he said worsened since the july meeting but very positive on the u.s. economy said a few times that the u.s. is in a good place he doesn't believe recession risks are elevated and would not bite coming the political pressure and the tweets from president trump. >> very meshed take on the yield curve. something we watch decline in the stock market is something we watch in general, yeah, very kind of upbeat assessment. said the u.s. economy is resilient and he said a couple of times deflationary forces to pay attention to >> if the view heading into the
big jackson hole con fab was the fed to give the market what it wants, more aggressive easing, i don't know that we got that. >> it seems they have e cysted that, actually. >> painting a rosier picture of the u.s. economy great but is the bond market demanding more and more and more >> trying to today, yes. >> let's get reaction. we are joined by jeremy siegel on the phone any market implications that stood out to you, professor siegel >> i thought richard was skillfully noncommittal. very well spoken certainly he didn't commit as he mentioned, it is almost four weeks until the next meeting. that's a lot of time who knows? we could have a china deal by then or we could have a much worsening situation. we'll get economic data between
now and then his thing, they do decide on a meeting by meeting basis no preconceived notion by the fed. it's going to be a war out there in september if situations stays the way it is right now. right now i don't see any cut to 50 basis points but i'm pretty -- i'm pretty sure if the -- unless the yield curve steepens 25 is the minimum but honestly, and i know this, you know, we talked about the yield curve, i think the fed is behind the curve. i think given that we have had 100 basis point, 150 basis point drop dramatic over the last 6 months, 8 months that the fed just moving 25 basis points is just far too little. it has to respond to the global conditions i know bullard, of course, we
know he is one that pays more attention to the yield curve than anyone else he's claimed and been 0 the board for a long time saying every time when it inverted in the past they told me, there are special reasons this does not mean a recession he said fooled months and not a third time he'll be a spokesman for the other side but that's the war. >> many officials in jackson hole had the opportunity to cite the yield curve as something specifically to be targeted. they have clearly resisted that and don't want to elevate it as an indicator above the other data they look at. it's almost as if they want to hope that that's enough for now. >> yeah, absolutely. remember what the june dot plot
showed it showed half the fmoc wanted no change and half wanted two cuts that was last june i had never see a dichotomy like that those are going -- those two factions are going to be put in sharp focus in september they're going to have to confront it. those people that believe in the phillips curve no reason to cut and then those people that believe in financial markets and those are the people saying, hey, look at what's going on around the world. we can't stay the highest as fed funds is of any country in the world of any maturity. those are the actions that are going to have to fight it out and more data coming up for them to consider this. >> add it all up and what is your take right now on the equity market and whether there's more room to fall from this point. >> more room -- yeah
>> we have seen the vix at 30 and 35 under uncertain conditions which means there is some hedging going on but really not as much as there could be given the uncertainty. you know i would like to clarified. without trade it is worrisome. >> jeremy siegel, thank you for joining us. >> thank you. >> big selloff on wall street today. stocks having the worst day since august 14th. after president trump ordered u.s. companies to consider alternatives to china. that came after china unveiled new tariffs on american goods this morning including on autos. 2.5% decline for the s&p 500 3% drop for the nasdaq the dow closing lower by 623 one point it was down more than
700 points because it's august, we have seen a few days like this and because the trade war sort of flared up in august. >> the last time of a clustering of at least this daily losses in september of 2011. another kind of macro panic. it was actually not too far from a low in the market. >> you had a lot of the systematic trading that's active today. time now for a news update. >> her's what's happening at this hour. the supreme court says justice ruth bader ginsburg completed treatment for pan creatic cancer she has been treated for cancer several times in the past two decades. last december she had surgery
for lung cancer. lawyers for men suing ohio state university are reporting that the number of victims has topped 300 more than half are plaintiffs in federal lawsuits claiming officials failed to address concerns. firefighters are investigating a massive fire just blocks from the governor's mansion in new york. the blaze ripped through and destroyed five buildings and displaced almost 40 people two people were taken to the hospital. and the phrase tom terrific sacked by the u.s. patent and trademark office tom brady put in a request to trademark the phrase and denied because fans calling tom seaver tom terrific for decades now that's the news update this hour back downtown to you. >> all right thank you. let's get more on today's selloff. seema mody looking at the big
new york stock exchange movers >> fed chair powell's speech overshadowed by the escalating trade conflict and the losses wide ranging across all 11 sectors. a number of auto stocks taking a hit. largely dominated by retail, target, lowe's, nordstrom, helped by encouraging earnings >> the nasdaq underperforming. courtney with the details. >> the nasdaq closed down 3% off session lows and down 3.4% at one point for the one-week performance. nasdaq shedding about 1.8% chip stocks, the worst performing group following that etf tracks
closely. that shed more than 4% just on today's sessions some of the individual big movers in that chip group. more than 4% today microchip, nvidia down more than 5% and a lot of companies generate from china. 57% of micron's from china those are two of the big e names in china back down to you at the new york stock exchange. >> thank you very much yes. uptown, downtown ian bremer says whether the trade war is increasing the risk of recession. >> as we head to break, here's the biggest losers today in the dow. most dow components were losers today. boeing the only winner appleby far the biggest loser. intel, american express d an
out the gains for the week after president trump's tweeted he is ordering u.s. companies to look for an alternative to china for business after china said it would implement new tariffs on u.s. goods jonning us now to discuss it all is ian bremmer you know, there's been a persistent pattern of folks on wall street suggested that this trade dispute was almost inevitably headed for an agreement and in both party's interest i guess we are seeing evidence to the contrary here how do you see it playing out from here? >> i don't think it's inevitable of an explosi explosive tit fort exchange, that frankly is a bigger deal for the chinese government than the tariffs that the americans put on them so far.% the chinese now just coming out
of their big annual summer leadership retreat hitting back hard after president trump had said that he can't see working with huawei for national security purposes so it seems to me we kind of hit the tipping point and the fact is you are not going to get any form of constructive engagement between the u.s. and china soon. the question is whether the wheels are falling off or whether we are just going to continue to be an at new status quo. >> the president tweeted we don't need china and would be better off without them. is he right? >> well, he's certainly right that the united states would be better off if we didn't have confrontation with the world's second largest economy that doesn't agree with a free market system so in that regard it would be better if we didn't have that competitor, didn't have a major
state capital economy. but given that china is there and they are the size they are and they do have the system they do, the two largest economies in the world need to trade. and while we certainly would much rather if they adhere to our rules and stopped stealing our intellectual property, the fact that trump tweets that american companies need to start making plan to get out of china's not in any way feasible for the foreseeable future. >> ian, president heading to the g7 gathering this weekend. there's no real sense that high school going to be front and center on the agenda, these suggestions he made today. how do the allies view this and what's their role if anything as they try to essentially look for ways to revive their own economies? >> they're worried about this. friends of mine attending the g7 gone from nothing's going to happen it's now interesting,
concerning certainly the fact that president xi made this announcement lirt rally as trump is traveling to the g7, max mall embarrassment undermining the president of the u.s. president saying, no, we are not moving more to negotiations in a month. actually, we'll hit you preem t preeffortively to the meeting. the first time they have decided to not both we are a communique since starting in 1975 that's a big deal. the potential that trump is a lot more combative off a 700-market down day for that weekend with a whole bunch of leaders that he has a hard time in many cases getting on with at all and doesn't like to be in a room multilaterally with them bodes for a rocky weekend. >> so what next, ian when your wall street clients
call and ask, what can the chinese do for further retaliation? are what are the americans going to do? what are the risks you lay out >> there's a big question of whether huawei will last as a company. can they sustain them if all they have is access to consumer telecom markets? if it looks like they fall apart then i think the chinese have to move beyond tariffs and start looking at direct hits to access of american corporations on the ground for example, is apple doing business in china in the same way of right now over the course of next three, six moths everyone has to be watching that carefully. what about americans that are on the ground in china? you saw once we hit huawei, canadians decided to grab that cfo, the daughter of the founder, when the americans asked them to. canadians were detained as a consequence in china are americans going to start
getting detained how does trump respond to that how's american media going to operate in china going forward there are an awful lot of linkages with the world's two largest economies and the chinese with much less to do on tariffs against the americans they, of course, don't export, don't import nearly as much from the united states as they export to us, they have nontariff means to hit back if they want to. i suspect in the near term future they're going to. >> jonathan swan of axios is tweeting right now, mike sources briefed on the president's thinking say to expect a new announcement and keep an eye on his twitter we did expect the president to announce something. >> foreshadow something. >> such a steep decline in the markets. said he'll respond to the chinese. ian srks this the way it goes back and forth >> i think that trump had been
very concerned that going after the consumer goods in the united states that the reason he made that delay until christmastime is he doesn't want the average american to feel it directly in the pocketbook if he feels that's inevitable and the standardbearer for a harder line standing on china, there's support for that, from democrats and republicans across the aisle in congress, then you can imagine what someone with well over a year before the d l actual economy says i'll take the hit. i'm actually all in on tariffs i do think that the next few months have the potential to be pretty severe in terms of geo politics of the most important relationship impacting the markets and hear more of the "r" word as a result of that
>> ian, thank you for weighing in. >> sure. we are all over today's market selloff the dow closing lower by 623 points more than 2% declined across the board. 3% for the nasdaq. we'll discuss how manufacturers are reacting to trump's china tweet. when we speak with the head of the american apparel and footwear association later, the bank of england governor live from jackson hole on the heels on the comments of a new virtual rrcy tcueno ease reliance on the american dollar.
h china today announcing retaliatory tariffs ranging from 5% to 10% on 75 billion dollars worth of u.s. goods that go into that country, going into effect in two batches, september 1 and december 15th. in a tweet thread, president trump saying in part, our great american companies are hereby ordered to immediately start looking for an alternative to china. the u.s./china business council putting out a statement saying in part, as many as 2.3 to 2.6 million american citizens work within the framework of u.s.-china trade and investment. american workers, farmer, ranchers, consumers and companies will all be hurt by increased trade and investment tension. let's bring in rick helfenbein of the american apparel and footwear association how do you take the order from
twitter today? >> just another day in paradise of late. i mean honest to god, what is going on here? we are -- you know, our membership just, frankly, doesn't know what is coming next it is no way to run a business it is just like another one-way ticket on the titanic. i really dislike being called great american companies, like calling the farmers patriotic. you know, the next thing we will be in line for our bailout they're getting 28 billion we're going to need one, too this is not funny. this is no way to run a business this is just lousy, lousy way to do things. it is, needless to say, that we're getting an earful from our members. we are less than a week away from supposed 10% tariff and, you know, that hits 91 of apparel. 91% of apparel, 52% of apparel. >> even with the ones that are delayed? >> even with the ones that are
delayed, on september 1st, 91% of apparel coming into the country will be hit with a tariff. >> 91% of what is coming from china? >> which is coming from china. >> which is how much percent total? >> which is 41% total. it is frightening. we know we will be hit you had retail earnings all week, and you noticed they were all over the board that's not a surprise. china retaliating today was not a surprise, and yet telling us to get out of china -- in fact, giving us tariffs is already telling us to get out of china but now telling us, to tell us, to tell us to get out of china is one of the most ludicrous things that we've ever heard you know, the grinch has stolen christmas from us. we don't know what else there is to steal frankly, why would you leave china if you are trying to get your intellectual property protected and your transfer of technology protected and to gain
market access into china, and you are telling us to leave at the same time? this whole argument makes no sense. >> you mentioned that we heard from a lot of retailers with results this week. they were all asked how they could contend with tariffs being imposed, a new round of tariffs being imposed. the message seemed to be, we're working on it, we can navigate around it, we can negotiate perhaps discounts, we can try to get pricing where we can in other words the message seemed to be it was not necessarily going to be a vast markup on goods for consumers. >> you know something? we're a pretty smart group we are savvy retailers we are savvy manufacturers we are savvy brands. we know how to work around these things, but too much is coming too fast we have goods on the water this september 1 thing, when it clicks across the border, we're hit. somebody has to pay. the participate you don't see, like a lot of our members have to take loans. they have to borrow money to pay for the tariffs. their working capital is sh
shrinking. in 2007 we had more bankruptcies than 2008. in 2008 we lost over 100 million square feet of retail. 2019, the first four months of the year and now it is more door closings more door closings than all of last year. retail is struggling to get by we thought we were getting on our feet, and we just keep getting hampered. >> that had nothing to do with tariffs, does it >> it has something to do with tariffs, not everything to do with tariffs we have a changing consumer. we have a changing retail environment. companies like target, who know how to adjust to it, are doing just fine. others are struggling. but add tariff on top of that, big problem. >> yes, doesn't help for sure. >> another day in paradise. >> all right, rick we appreciate you coming in. rick helfenbein. up next, we will bring you the top headlines you may have missed among all of the market
dear tech, let's talk. we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do? we need tech that helps people understand each other. that understands my business.
we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪ who used expedia to book the vacation rental which led to the discovery that sometimes a little down time can lift you right up. expedia. everything you need to go. welcome back today's market action has certainly been front and center since the president's late-morning tweet storm, but we wanted to highlight some other business stories in the world that you may have missed first, green light capital
president and tesla short seller david einhorn taking aim at musk over solar panels have caused fire he tweeted, how many are defective and could still cause fires? recall should have happened long ago. musk should resign. >> wall street saying it found thousands of banned or unsafe and mislabeled products on the site amazon told the journal they've removed or changed description on more than half of the items. >> down 3% today finally, check out shares of foot locker. they closed down almost 19% after missing earnings, revenues and comparable store sales estimates next week we will get more retail earnings tiffany, best buy, dollar general and more next week we'll see whether this kind of reaction to president trump, the escalation in the trade war, whatever happens tonight or if the president
announces more will be here with us, whether -- >> one week until the september 1st deadline and we probably will hear a lot of maneuvering around that. the s&p 500 closed just barely off the august lows, so pretty much down at the bottom of the range again. >> don't miss the special report "markets in tour menounos" tonight at 6:00 p.m. we will be there fors. >> that's it for "closing bell." >> "fast money" begins right now. live from the nasdaq market site overlooking new york city's times square this is "fast money" i'm melissa lee. traders on the desk, sincere, brian kelly, karen finerman and steve grasso a major market sell-off, stocks plummeting as the president turns up the heat on the trade war with china, the president blasting china in a tweet at 10:59 a.m. eastern time. and look at the market reaction after that stocks plunged and never recovered. we finished the day near the lows of the session, all of this as fed chair jerome powell