to keep it in perspective talking about a decline probably less than 1.4% however, you're talking about the dow opening at these levels. wiping out their gains for the year for that index. >> the nasdaq is -- >> yeah. it's down by about 94 points but, yes s&p futures down, as well. that does it for us today. make sure you join us tomorrow right now time for "squawk on the street." >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber the president asks the trade rep to identify $200 billion in additional tariffs on chinese goods. europe is red. china below 3k for the first time since 2016. flight to safety takes the ten

year to 2.87 the trade tumble stocks set to open sharply lower as president trump ratchets pressure on china with more tariffs. china is calling it a u.s.-led trade war vowing to fight back what it will mean for the u.s. companies which have made big investments in china growth. >> right. >> and elon musk's warning to tesla employees saying there's a sab tour within the company's ranks. the president issued a statement saying, quote, i drejted the u.s. trade representative to identify $200 billion worth of chinese goods for additional tariffs at a rate of 10% these tariffs will go into effect if china refuses to change its practices and if it insists on going forward with the new tariffs it recently announced. those tariffs were a response to already some announced by the u.s. some, jim, saying today isn't about trade as much as it is about european politics.

european banks, emerging markets. pressures we've had for several weeks. >> yeah. throughout the world, things are uncertain. if you go to $400 billion, okay. well, there's like half a trillion, that's all there is. he would put a tariff on everything we have to understand that everything comes from there is going to have a tariff now if you're european, you would back us and take up the slack. but they're not going to do that they sell too much into china. there's a lot of uncertainty and when people get this kind of uncertainty, they sell they're not going to figure you know what are they going to sell okay first, they sell boeing. all right. then they sell apple they tell caterpillar, they sell qualcomm they're going to sell the various semis, broad com, intel. they sell united technology. 600,000 elevators a year they sell kimberly clark because they have a big diaper business. they sell gm and 4 million vehicles in china. then, yeah

then we go and we buy wendy's. i mean, i know it's absurd but the money never leaves the casino it goes to another place and remember, the index funds do not sell so they just buy and they buy and they don't have any brains and, you know, it is all kind of by rogue and by tomorrow maybe if we get to s&p 2700, you can pick. because you're now got the worst case out there except we don't know whether china is going to retaliate by saying you're on the tarmac. we don't know if they'll say kfc, we found something in your food we don't know. >> no, we don't. there are other ways the chinese can respond other than trying to put more tariffs on what is a much smaller amount of u.s. goods they import than they export to us in that way, we have more room than they do but the question is, will they start to do things that are negative or have negative consequences for u.s. businesses that have invested heavily in china?

we can go down a long list of companies that fit that bill i don't know the answer. jim, i wonder whether investors are responding to what seems to be a lack of perhaps broader strategy here in terms of how we're going about doing this. >> you think >> i do. do you agree with that >> all right washing machines so whirlpool good. but then steel okay whirlpool bad. like, what is the end game here to try to accomplish whatever they trying to accomplish? >> here is what they're waiting for. you take these companies that have joint ventures that have not been approved. let's use american express okay they've applied 14 years ago for a card but they don't have a card why? >> in china. >> yeah. why because china is intransient. if you saw something, qualcomm and any company that has been trying to do business there that

hasn't been able to, that's the signal the president is saying they're walking back the trade deficit with us. maybe we can come to terms but, you know, i think everybody -- i think the president believes they're paper tired. as far as he's concerned, china rallied last night how much money do the chinese have to be able to keep their market up $5 trillion from the top i hear they're going to sell treasuries do we not think that the 30-year -- do you think the 30-year couldn't handle it we need to curve inflected i think the president is betting that they -- >> when you say you would welcome them skipping an auction or showing up light at an auction? >> oh, yeah. >> because we have the cushion. >> yeah. they can't they can't they have to recycle the dollars. they can't afford it they were $500 billion ten years ago. now they're $1 trillion. i've got all the numbers. >> how about a massive

devaluation of the yaun. according to the times, the president has assured tim cook they would not impose tariffs on china. >> i thought that was a funny piece. it's obvious we know it's not us it's the chinese saying, okay, listen it costs $750 more than yesterday. that's what they do. i keep coming back and saying how leveraged is china how much industries are they propping up? right now that are used to target other countries, including europe. >> so you think we can break them >> no. >> that's what you're saying. >> no. i'm saying the president thinks he can break them. >> you think he's wrong? >> i think it's hard to break the chinese. i think it's very hard. >> all right then it would seem to me that people who saw the futures today based on it's going to continue down a road that is not going to lead anywhere necessarily good for global growth. >> the futures you sell united health, which has 100 million

share buy back okay what good does that do you you're such a single stock risk. i'm telling you, there's a lot of stocks in the s&p verizon. hey, you know verizon better than anybody in america. think verizon should get hit think verizon should get hit how about verizon. >> no, most likely not. >> high percentage of domestic revenue. >> right. >> so futures will take down verizon, mr. paper tiger. >> equipment they're putting in a lot of, you know, obviously, equipment they're buying that. >> that's okay >> you want to sell -- are you worried about twitter? facebook how much business do they do in china? how about percentage of faang. >> we've spent -- [overlapping speakers] >> learn how to spell. >> i thought it was faang. >> not today.

>> we're coming into earnings season in a few weeks. we spent the last few weeks asking ceos of large multinationals about their views on where this trade dispute may lead take a listen. >> in terms of trade otherwise, in terms of tariffs and things like that, we're not hugely exposed to largely our goods are in country. certain items like coffee beans, happy meal toys, we have to trade those around the world so we're keeping an eye on what it means but at the moment, we don't feel significant. >> we're now over 3200 stores in china. we're opening a new store on average every 15 hours in china. and with the middle class population growing to over 600 million. we think we have a phenomenal opportunity to reach more and more customers in china. all of mainland china is a company operated

much we're focussed on the long-term growth potential it presents for starbucks. >> our fear, of course, is that a trade war, depending on how it develops, could dampen economic growth that might be in the united states it might be globally you never know it's pretty early in this process. but we're watching these steps that are taken by the united states and other countries around the world in trying to figure out what it means to economic activity. >> that's right. i mean, there is our economy is red hot and it could certainly cool a bit. if you believe in what kevin johnson is talking about, look, short, young china and buy young. but that hasn't worked they're the same exact price we've had a lot of stocks in technology just soar i think they can give it back. we've been looking at 12, 13 times sales for the new ipos those seem excessive but again watch call coqualcomm the banks get hurt because

people sell the banks. no matter what any time there's a slowdown. what arnie said. any time there's a slowdown, people sell the banks. marriott has some exposure to china. >> yeah. especially in china. >> yeah. huge boeing has exposure but boeing would tell you boeing needs china more than china needs boeing i'm looking at united technologies, that to me is bedrock. otis is so clear but the same time you know as soon as that rockwell collins deal closes, you'll get a split up. >> most likely i think many people expect you'll get a split up. >> yeah. what do you do that's the toughest one. >> right. >> that's the toughest one because otis is 600,000 elevators. >> yeah. >> real china. >> people are going to be focussed even more on this you know, when they start to boycott apple over there. >> that's what i'm worried about. >> then you got -- >> that's what i'm worried about. boycott apple, starbucks, young

china. that's what i'm worried about. for more how this is playing in china we go to eunice yoon in china. >> reporter: china has described trump's tariffs as blackmailing. the commerce ministry today said that china would fight back firmly and is considering qualitative as well as quantitative measures. now those words have caught the attention of the american business community here because the fact of the matter is, that china cannot match the u.s. when it comes to tariffs covering $200 billion worth of goods. and that's because china only buys $130 billion worth of goods. and that's been raising a lot of questions among business people here as to what china can do next to retaliate. a lot of them feel vulnerable. some of the business people i've been speaking to today say they worry about investigations or safety inspections, delayed license approvals to block their expansion, they're worried about what you were talking about.

encouragement of consumer boycotts now despite the tough talk, there are chinese who are concerned about the impact of u.s. tariffs on the chinese economy. and that was reflected in the stock markets today. the shanghai market was down by 5% at one point. shenzhenb tumbled by 6%. and one of the former officials i spoke to today said that he's worried about the economy because all the economic indicators are that we're pointing to a weaker economy here so the property market is showing signs of trouble mai is slowing down. also, the debt is rising on top of that, china's economy still relies much more heavily on the export sector than the united states. so it's quite vulnerable on the other hand, he was quick to point out that china does have strong political will so just as president trump might not want to appear weak in front of his supporters, president xi wants to make sure he doesn't

look as though he's caving to international pressure this is not a democracy. china has a lot of levers to pull that was reflected in the state press today. one state paper said the u.s. seems to fooled itself thinking that china is running out of bullets. the truth is, as long as the u.s. wants to fight it, china will not run out of bullets. guys >> thank you very much eunice yoon in beijing. not lost on people that kim jong-un made a surprise visit to beijing meeting with xi. there's additional leverage there. >> yeah and i think they're a dictatorship that's why they have staying power. they do not have to respond to anything they don't have a lot -- they have to -- >> no but keeping social order and keeping people more or less content and employed is a key. >> right. >> you're saying that the -- >> the chinese. >> yeah. the weakness is revolution which is what they worry about

every day. >> right you don't want to have massive unemployment or a huge economic shock. it becomes more difficult to manage. >> yeah. >> by the way, in 3 k shanghai 3 k is seen as a line where they start to dip their toe. >> yeah. >> we saw how immature that market is. we saw how material and manipulative the government is to try to get those back they wanted that line in the sand for 3,000 they propped up for a long time. but, you know, they play with the house's money. we do forget they are a communist dictatorship communist dictatorships have a lot of fire power. >> yeah. there's no midterms coming up. >> no. [ laughter ] >> you're not worried about the farmers and, you know, the iowa primary over there. >> when we come back, sabotage elon musk warning that a sab tour within the company's ranks. we'll take another look at the futures here

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elon muchk said tesla has been the target of employee sabotage he told employees in an e-mail

that an unnamed worker engaged in sabotage and given sensitive data to unknown third parties. please be extremely vigilant as we ramp up the production rate to 5,000 per week. this is when the outside forces have the strongest motivation to stop us. apparently this employee, i think they did figure out who it is but this is getting stranger as they get closer to the end of the month. >> was he short? was he short in stock? >> who, the employee >> we don't know what the employee did, do we? we have no idea. >> it's a legitimate question. >> listen, the stealing of trade secrets, or the accusations of that is common place in silicon valley whether it's the ongoing war between fit bit and jawbone. i don't know if you saw the indictments come down or waymo and uber. >> right. >> or, you know, you can go on and on so it's not something we don't

see. >> i know he thinks that -- >> that's sabotage, to your point, is not what i'm thinking of, i guess. >> he did say the shorts have three weeks before their short position explodes. >> yeah. it's kind of interesting i don't know if he -- >> haven't you found, jim, that ceos are particularly focussed on the shorts. >> it's been a sucker year. >> yeah. it's not typically the way to go just execute. >> yeah. >> don't worry about it. >> know who did that i have to admit that wayfair the huge short position. they said we're going to execute. and people talk about furniture, wayfair is always in the equation so, yes, that's the best way to deal with the shorts just to execute and keep your head down. >> i think it can be frustrating when you're a ceo if there are rumors out there and things you know are completely false. >> right. >> you know they're being done to damage the company.

you want to fight back sometimes you're better off not showing everybody that you're to focussed on it. >> people come on-air and say they're about to run out of money. no he came out with narcos. >> he did. >> and it worked for him. >> all though i will say bezos responded very strongly about 18 years ago or whatever it was when that guy was completely wrong. >> right you're right. >> bezos now the billionaire list $142 billion buffett and gates in the dust. >> $142 billion? >> buffett and gates, think they're worried? jeez, guys. >> it's a number that is inconceivable. inconceivable! cramer's mad dash and count down to the opening bell. the sell-off looks like it's going to hit us at the open. more "squawk on the street" in a moment

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that matter most. get ready, because we're helping leading companies see it- and see it through-with digital. we're counting down to the opening bell about seven minutes to go the. we're looking for a significantly lower open certainly not a good day if you are along this market at this point with the s&p looking down as much as -- well, you see it there. >> yeah. >> the open is coming. it's always a little bit different a few hours later. >> yeah. >> let's see if the buy backs come in at 10. buy backs start walking back that's when you want to buy. they're going to market down

any broker who is selling, say, microsoft will try to have the closing price be the lowest so they can say to the client look how well i did jam the closing price. that's why we have the closing prices. >> let's get to a mad dash. >> yesterday you mused to me that baseball -- >> yes. >> morgan stanley comes out with a very, very harsh piece about, wow, downgrading airmark david lower third quarter -- lower attendance is going to lower the third quarter. and i think it's a spectacularly done piece get this tennis declined 9.5% of their ten stadiums that's unbelievable, isn't it? >> it is. >> unbelievable. >> i still happen to love it. >> only stadiums are up. can you name them? >> yankees, if they have it. >> i don't know. >> houston astros and here is one.

>>well, they're the world champions. >> and shocking the new york mets what are they thinking what are they thinking >> that's up >> how many losses does it take? >> keep going. keep sinking it in. >> where is your mr. bed hat >> we won three in a row >> i know. i'm starting to shake. >> we're only ten games out. >> we're close to a wild card. >> i don't want to hear about your phillies. you won the super bowl that's all you get. >> if the jets win the super bowl, you won't see me again i'm done. >> that's it fine, be done. >> an opening bell coming up you saw a lot weaker market this morning. fea fears about an ongoing trade more coverage when we come back. at the marine mammal center, the environment is everything.

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year since the january peak. in this neighborhood, we've only had three of 1% or more. and they've all been tariff-related there was one where cahn resigned and that got us close to a 1% downside. >> you have to give this a little berth if only because you want to see what happens there's a couple of stocks we can use to measure there was a big push for netflix. that may be one to look at to see if it can hold i think that piper takes -- i'm sorry barclays takes nike from 75 to 80 they have a china situation. i'm looking at situations particularly today that have china exposure that are pushed hard i would point out this part of the nasdaq that has gone up every day. this is the adobe part.

[ applause ] there's the opening bell [ opening bell ] >> you can see weak at the start. >> right. >> and watch the big multinationals and the industrials you mentioned a the top of the show. >> yeah. what do you think about this growth do you remember we used to come in every day and fret about the ten year going to three. are we going to be fretting about the ten year going to 2.75 it can be heads i win and tails you lose we're headed to 2.75 suddenly that was nirvana. how we hate it we're kind of -- we really are

so duplicitous in our thinking. >> this was the point made earlier on squawk. if you were going to choose a time to tackle some of the long-term structure trade issues, you would do it when unemployment is at 3.8 markets are a couple of percentage points off the all time high. >> i didn't like the permits number this morning in housing that would indicate the fed should be a little careful that rates are starting to impact we had a downgrade yesterday from zillow. we didn't talk about it but a lot is mortgage related. >> yeah. they downgraded zillow. >> you didn't have spencer on? >> no. >> how could you not have spencer? >> spencer wasn't available? i don't know maybe we didn't ask him. >> he was citing the evaluation on zillow. >> yeah. here is another one to watch broad com. at 10:00, they've got the most

powerful buyback i have seen they're there at 10:00 and buying a huge percent able of the stock. they have a lot at stake their deals will be bought they have a lot of fire power. i'm watching broad com i'm calling qualcomm and nxp also, of course, apple a lot of people confused they think that trump can spare apple. no it's the prc not trump. >> on nxp, because you mentioned it let me update people it's down another 2.5% the deal for $127.50 the reason jim mentions it, it was a key reflection of the ongoing dispute between our two countries. they're wait, qualcomm, for the approval to come through with the anti-trust regulatory authorities. toshiba's deal was done. they approved the transaction. china buyer of general.

>> yes it's out there still the south china morning post last week reported it was done that is not a state organ, we should add i think it's owned by -- >> yeah. that's the problem why we got fuelled. >> that was not a good report, i guess. >> no. remedies are all done. they've gotten until july 25th they could extend even then. they want to. >> who is running nxp now? >> i don't know. i guess the management that was there as it goes on and on. >> i want people to watch these stocks i want people to watch netflix that push was real. >> netflix is up 1%. >> talk about foreign accelerating i'm looking at these things, if we looked at yesterday, if you

remember, the market was down horribly and suddenly google took off i don't think it will be as easy today. i think the buyers of netflix are dumb as a bag of hammers let the thing come in, for heaven's sake. >> it's un-american to sell netflix. didn't you hear? >> i didn't know that. >> yes. >> there's a new target. is it 500 from a firm i'm not familiar with. >> i look at these things. >> it's up 105%. >> only 4 220 and no china. >> >> i got a big auction coming up i'm going to crush it! >> $13 billion larger than disney. >> what? netflix? it's having a better year than disney that's babe ruth versus the

president. >> yes. >> dominos that's another one to watch. saw a dominos price bump dominos. i mean, holy cow some of these things are just horses they won't stop. >> yeah. said a lot of bad things about keurig the margins have gone down. >> verizon gets an upgrade today. >> i think that's a perfect stock to buy. >> they site o.a.t.h. which is aol and yahoo! >> that's like saying jeff is a great american. >> he is a great american. >> what is he going to do? i haven't talked to jeff. >> he'll be an advisor for awhile. >> be a trade ambassador. >> to cahn. >> he would be good in the field trying to get things done.

they cited discounted evaluation at verizon that is deutsche bank. right now i believethey're a significant free cash flow benefits from the likes of tax reform it's going to be leveraged about 2.5 times. that's versus at&t's average which is going to be about 3.3 a advised on the deal. >> isn't that a slap in the face >> they see cash flow -- free cash flow of $21 billion this year and $24 billion next year and then leverage, obviously, declining. >> that's a quick believer. >> $175 billion is where they have the debt load for at&t. that is lower than moffit.

>> i thought it was funny the verizon upgrade one of the reasons they give is the relative simplicity of the verizon story. as everybody else is just just embroiled in the massive games. >> it is brilliant it's understandable, verizon and they got rid of the stuff that wasn't any good that interview with ivan. >> yeah. >> verizon doesn't get talked about enough. >> thank you. >> he's incredible ivan is forever long long time ceo. lowell mcadam has been the relatively short time ceo seven years is going to be handing the reigns to mr. vestberg you're right it's a similar story in they want you focussed on 5g. that's where they're focussed. >> right. >> it would seem their fortunes are going to rise or fall on that bet. >> 5g i think a lot people have to be more worried than they are about what it is going to be by the way, the companies in the tech sector that are 5g are not doing well they're going down

today is a weird day the individual stocks are down much less than the future supply but it's a long day. it's a very long day and we're going to start putting pen to paper for the companies that import 20% from china some of the department stores, for instance we're not going to love them as much as we do now. >> your buddy tusa might be right for the wrong reasons. ge is $13. >> tusa is my buddy. i didn't know that i wear a tie even when i go out. he doesn't wear a tie. you think jamie likes that >> jamie doesn't care. he doesn't wear a tie either. >> really? the tie is out. >> we're like the only people. >> look at this. >> we're like the only people that wear ties. >> it's a boeing tie in honor of the collapse of trade talk remember mnuchin what would he say?

>> hold. >> it's on hold. this is on hold. can you imagine -- i don't know. i need to see the bank stabilize. i don't know if you saw wells fargo shuffling things. >> yeah. >> people love the shuffling they love wells. wells became favorite again, which is amazing they can't stop buying wells fargo. >> a bit of a bid coming in, too, as you might expect. >> part of my glum index it's interesting. >> yeah. there's no real reason to sell the futures say sell everything. when you start breaking down the individual stocks, you start saying to yourself well, what do i do that company doesn't import anything from china. it has nothing to do with china. now just to go full circle, i know you probably think these are ray bans i got these for -- i got five pair of these for $5 at dollar tree do you think these things are

made in michigan no. >> no. >> not until we bring sun glass jobs back to this country. >> it's time we got to get onthat we've got to get on that sun glass thing. >> don't you think >> totally. >> sun glass hut sells a lot of -- >> yes, they do. >> they sell a lot wasn't there a worldwide monopoly what is the name of the company? >> the expensive ones. kimberly is up today when you give me a break kimberly is banking on selling diapers to the two-child policy in china if there was a real stock to sell, i would sell kimberly. you can't because of the treasuries. >> so interesting. >> you're right. any growth story they have but that is a key point, isn't it, jim. if there's a growth story, potentially dependent to a certain extent on china, you have to wonder a little bit. but, you know, we have a lot of these companies they depend on

the additional growth, united technologies is dependent upon china for otis until you maybe you get a split up. >> united technologies down 1.3% we heard kevin johnson talking about starbucks earlier. when he was talking about -- >> they open one every 15 seconds. >> does that mean like at 1:00 a.m. and then one like, you know, 1:00 p.m.? how does that work >> i don't know. they've got to open all those. don't they have to like, you know, be putting them up all the time >> that's a lot. they're drinking a lot of caffeine. >> triple venti cappuccino wet. >> people are like is he fully caffeinated. >> who >> you. >> that's a venti there. >> he doesn't need it. he produces it internally. >> i've been up since 3:20 is that all? i wanted to get up earlier but i had the trader coming up at quarter to 4:00.

>> watch nvidia. nvidia is the bellwether semistock. intel has more china than nvidia. >> boeing and cat about 90 points. >> there you go. >> session low is 342. we're off the low. good morning, bob. >> good morning. happy tuesday. not so happy for the markets off the lows the concern now is about third quarter revenues remember, we're not a peak earnings third quarter numbers and second quarter and fourth quarter have been going up and the fact they went up last week. so here is what we're seeing for the third quarter. these numbers are now questionable energy a big mover, of course, but materials, industrials, technology stocks all have big gains in the third quarter we're expecting overall gains at close to 20% but tech is the big one there. with nearly 16% gains. the problem is, these may be questionable now because the analysts are starting to look at this and say we don't have numbers yet but the market is betting we'll be

putting in our numbers down in the third quarter if we get into this trade war sector exposure, well, it's no surprise tech down the most know they have the biggest exposure to china 14% revenue exposure this is the msci materials, industrials, consumer staples, and energy. it's no surprise, if you take a look now, at the sectors under pressure today, technology is the number one sector that is down energy is down financials are down because the rate outlook is rather poor. that's a separate story here industrials, also, on the weak side a big tech names significant exposure overseas. you have call com, apple thoec even though apple was currently exempt from the current round. the iphone you have a secondary problem here the dollar index at a new high for the year and that is putting a lot of pressure on commodities and commodity stocks of any kind so if you look at any of the oil, look at marathon or eog

look at the steel names. metal names. they've been coming under pressure already as the dollar strength has intensified elsewhere in terms of revenue exposure people asked me how big is it, really it's not as big as you might think. u.s. revenues from china, this is a mid and large cap stocks. about 5% these are msci numbers they gave to me. the china revenue from the u.s. almost a half of that. only 2.8% of the companies in china get their revenues directly from the united states. but it's a matter of supply chain. because once you start getting other companies that are affected here, it becomes much broader. it's not just a revenue question the supply chains are interconnected all over the world. it's a much bigger problem than those numbers would indicate meantime, china has got problems of its own see what happened here s shenzhenb is a three-year low.

china has been having individual problems with small caps and mid cap companies. shenzhenb is like the nasdaq three-year lows. two-year lows in the shanghai over there, which is more established companies. the bottom line we're trying to figure out all the supply chain issues the analysts can't really change the numbers until they get clear indications of what kind of tariffs are coming in. we don't know that the market is now speculating, though, that third quarter earnings and fourth quarter earnings are going to come under pressure that's why you're seeing the decline. 313 points now in the dow. carl, back to you. >> thank you very much, bob. we'll get to the bond pits important story over there rick santelli at the cme good morning, rick. >> a variety of important stories this morning, carl let's start with one that is real time. from 8:30 this morning we saw our may housing start and permits. permits were a bit lacking

remember the talk about interest rates. the first increase was december of 2015. let's start a june 1st, 2007, housing start. today is 1.35 million adjusted annualized units is the best since july of 2007 but there's always a but isn't there? zoom it back to year 2000 and you can see our high water mark is still way up there at 2.27 million units from june of '06. now let's look at one week of tens today going to be the day we dropped with regard to the closing range? it would be the 13th day, if we close in the 129 -- 290s i think we will. i understand the flight to safety the topic all day has been timing think about what bob said about the stock market and the deterioration in china think about the leverage in china. think about what emerging markets are how they're being affected by the big run up in the dollar timing, yeah, it's good timing for the u.s.

i'm not say i advocate or don't advocate what is going on in trade. it is, from a game of chez chess, the time to do it the one week of ten year, let's open the chart up a bit to may 1st. on the 29th we had volatility. you remember those times emanating from europe. we eked out a 2.78 close i don't think you'll be anywhere near there with the issues currently in front of the market the one week of the aforementioned dollar index, it convincingly, finally traded over 59. if you open the chart up, bob referenced this. these are the best levels for the dollar should we close here since july 17th of 2017. i think that is important, as you see in the next chart, the strength in the dollar really is very impressive. remember we're well below 90 for the first couple of months of the year it's been a very solid run carl, david, and jim, back to you. >> all right, rick

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verizon and proctor the only components in the green. dollar 11-month high cracks 95 on the index. something to watch >> this isn't a real sell off. you have to respect it and wait until the afternoon. let's see these stocks. it's a long, long day. apple has gotten additional dollar from where it was. i think the people have to recognize that you cannot have a quick snapback but to watch it when the buybacks walk away let's see what happens. >> you are nowhere near calling out for the day? >> i think yesterday was easier.

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time for stop trading. >> a very exciting story that c captivated this market. when use it for their caviar product. this morning key bank takes it from 55 to 70. i regard square as other than twitter the hottest single stock in the market. so this is a great tell about whether the stock market can come back today. long day but watch square because it is a very aggressive push. i know what momentum is and momentum is that. >> wells fargo went green for a moment. >> that's ridiculous. people love wells again. they can do anything they want. maybe they are cross selling again. just kidding.

>> cross selling is actually good. you just don't want to jam. it's a great idea to cross sell. i have probably the smartest oil company. they bought right at the bottom. peter miller, this company does a lot of algas. they have a migraine nose spray which i think is important. i'm just telling people to take your time. you haven't heard what the chinese have to say. but the president thinks that they are a target. >> we'll see you tonight. there is a lot between now and mad money. dow down 342. some june gains in jeopardy. let's begin.

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♪ good tuesday morning. welcome back to "squawk on the street." sarah is off today. big tumble at the open, one of the biggest of the year so far.

dow is down 358 on escalated trade tensions. our road map will begin with trade tensions as the president talks about them and asks his trade rep to identify 2$200 billion more. markets are responding as a global selloff is underway. the dow opening lower for a sixth day wiping out all gains for the year. and google is jumping into streaming with the launch of youtube music. we will speak with the head of youtube music. let's get to the story of the day which is in washington president trump ramping up trade rhetoric with china considering tariffs on another $200 billion worth of goods. >> reporter: the white house is considering another $200 billion after that if china keeps retaliating. trade principipals met yesterda with the president and this

announcement was the result of a meeting and it was a response internally by the administration's trade hawk whose voice has grown louder amid larry kudlow's absence and steven mnuchin's red zns. it would touch a large portion of goods coming into the u.s. from china and would seem to go outside the mandate of the u.s. trade representative to try to limit the impact on goods that are bought by consumers across the board. were china to retaliate in kind as it has so far it suggested it would retaliate quantitatively and qualitatively. it would incapsulate all u.s. exports to china. investors fear they would do something else like devalue or sell treasuries and that would hit the market harder. who will strike first? the u.s. has a lengthy legal process to follow which would delay the new set from taking

effect for months saying the u.s. will need to provide evidence that there is a triggering issue for the tariffs and go through a notice and comment period. this means no matter how fast trump moves china will always be able to move faster. the president is showing signs of wanting to make a deal. the white house will appeal to gop senators tomorrow to try to restore business for china's zte. the white house wants to. the senate overwhelmingly opposed that. the white house wants to soften or remove that language that would hinder a potential reprieve for zte. they want to retain the leverage as talks with china continue behind the scenes. >> he sees it all as one thing. as kala points out china doesn't buy $200 billion worth of stuff from the united states so what will they do >> reporter: china has described president trump's tariffs as

blackmailing and china said it will be fighting back firmly and said it will take measures that are qualitative and quantitative. those words have caught the attention of many here. as you guys were talking about china doesn't actually buy enough stuff for the u.s. to really match the u.s. tariffs. the u.s. tariffs would be covering $200 billion worth of goods. china buys $130 billion worth of goods. a lot are wondering what china can do to retaliate and they are worried they are vulnerable. they are worried about investigations or safety inspections, delayed license approvals that could block their expansion plans and potential for consumer boycotts. china has had a history of doing this when it is in a political dispute with other countries such as japan, south korea and norway and the state media hinted at china's options.

one paper ran an editorial saying the u.s. seems to have fooled itself thinking china is running out of bullets in this ongoing trade war. the truth is as long as the u.s. wants to fight it china will not run out of bullets. fears of a full blown trade war weighed on stock markets out here today. the shanghai market dropped by five percent at one point. the hong kong markets were also down by three percent. part of that was because of zte down by over 20% today. investors here have been losing hope that zte can survive. as you guys were talking about, congress is looking for a way to block the deal that the trump administration had organized to rescue zte. and the state media has been trying to play up zte's long term potential as well as its

capability in 5 g technology. however, to date that did not convince investors enough to hold on to the stocks. >> a couple of things you mentioned that china can use soft boycotts, delays in permits, et cetera. a lot of critics of china would say they already do that. >> reporter: well, you could say that and we have seen evidence of some slow walking on the ports because of the greater scrutiny for a lot of american as well as other international companies, but at the same time what a lot of people who i have been talking to say they are worried it could just get worse, that they are the ones who have been investing heavily in this country and over the years they find that china is now one of the most important markets for them and into the future. yet they are the ones who are vulnerable and they don't like

the looks of it. >> thank you. it's obviously the story of the day. for a closer look at how the tariffs and threats are impacting the markets let's bring in mike wilson. good morning guys. good to see you both. russ, we have been here before, several times in fact since the january peak where trade tensions rise, industrials and multinational selloff. is there a reason to think today's chapter is different >> we are a little further along in terms of the tit for tat trade dispute. i think our base case is this gets revolved but clearly it has gone farther than the market would have thought. financial kwisconditions have tightened. i believe financial conditions are mostly accommodative.

if any of the issues becomes a bit more serious when it is happening in the context of tighter and more expensive money. >> mike, you have a note and you talk about the fact that even though we have been range bound for a while you argue the market has taken on more risk than people realize in certain areas. can you expand on that and talk about are this week's action sort of an offset to what some say is peak sentiment at least in tech? >> this year is interesting. the nasdaq has been the best performing index withinic waets than the large cap s&p. it is clearly a skewed market towards riskier assets having outperformed. some of that is skewed towards growth meaning the market is willing to pay for companies that can grow in any kind of an environment. the presumption is that the tech companies aren't wildly effected

by trade at least in the near term and earnings trajectory looks good. that has gotten pretty extreme. we did write a note saying maybe this is a time for a reversion where some of the riskier stuff comes back in and we upgraded utilities as part of that. i would say in addition what has changed is we are getting closer to the mid term elections. if i'm president trump and looking at how the markets are reacting it is kind of a win. the s&p is flat for the year. the chinese stock markets are down quite a bit. there is kind of a positive feedback loop in that regard. i just don't expect the white house to back off here as we go into mid terms. that is probably the biggest risk is that this is a political gesture as much as anything else. >> you talked about us being farther along in the process. are we getting to the point where you can start to price into earnings estimates, changes in earnings estimates because of tariffs? up until now it has been mostly

theoretical except for solar panels and washing machines. now we haven't seen anybody change. we think boeing will make x less because of -- is that where we are going to where you can say we have to change out the multiple in the earnings and that is a real effect on where the stock market is going? >> i think that is fair. we mentioned the manufacturers and industrials are vulnerable and we continue with the stronger dollar. when you get away from the company specifics and industry specifics the other thing to take into account is that analyst expectations are fairly robust. that was premised on the notion that this year would be global synchronized recovery. we have seen europe decel rate much more than investors thought. if investors start to call that synchronized narrative into

question then i think not only will you see revisions and questioning of earnings to more cyclical international companies but to market earnings in general. that is a risk to the market particularly coming into the seasonable period of the year. >> we should point out we are approaching lows of the session. the dow down 384 points getting close to the 400 mark. >> people are looking for excuses x trade for the sell off. they point to em, european politics, european banks, break down in synchronized growth. how much is equal to the attention the trade gets today >> trade is just the latest. this year has played out i would say kind of as expected. it is a flattish year with air pockets. i think one of the biggest

changes that is not talked about enough is the tightening of financial conditions. i don't think growth is a problem in the sense that it is too slow or slowing down. the problem is that growth is too fast. growth is accelerating in a way that is forcing the fed to be a bit more deliberate with the tightening of the financial conditions. as a result we are seeing that manifest itself in the weakest parts of the cappital markets. we have seen crypto currencies get destroyed. and credit has not traded well, either. these are areas that are most vulnerable. that will persist no matter what happens with trade this year. >> thank you guys. obviously an important day. good to have both of you on. we really appreciate it. when we come back will the escalating trade tensions stall u.s. growth? economists warning it could harm

gdp. we will ask the former u.s. trade p r inwhrefocha en "squawk on the street" comes back. once . >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

president trump says the economy is better than it has been. are there economic head winds to worry about? steve liesman has a look at that subject. >> president trump now going where economists had feared, escalating the trade disputes to a place where totals can have

measurable impacts on global growth and inflation. >> if you were to have 400 billion of tariffs executed not just discussed but actually executed you are probably talking about four 10off. >> most agree the amounts were not enough to move the gdp or inflation needles. the primary concern was one on sentiment and certainty. oxford economics writing china has quickly vowed to retaliate and if such an escalation were to materialize -- the probability of a full blown trade war is rising. oxford says it can't rule out cooler heads will prevail but says the tariffs could shave 0.3 off chinese growth. if strong growth continues we may be upwards of four percent these will be nothing more than

modest opportunity loss. the negatives from the tariffs could wipe out the extra growth that economists think could come from the tax cuts. there is growing concern about the cost of potential effectiveness of the president's tactics. >> i suppose the next step is you were talking about the overall effect on macro. next you wait to see what the analysts are going to say about specific companies' exposure. >> and also the idea of perhaps upsetting existing trade routes and supply chains. that is another big factor. i was just reading this morning -- sells it here for 800, 900 or $1,000. that kind of markup can be a

substantial hit to apple profits. and the bigger question would be if these tariffs move along and start hitting consumer products. >> we'll be watching for that. thanks, steve. >> as you heard earlier, china is vowing retaliatory tariffs. take a look at soybean futures. that's a two-year low. we are joined by former u.s. trade representative for china, jeff moon, founder and president of the international trade consultancy. good to have you here. >> you work for the obama administration and the bush administration, correct? >> correct. i just wanted to set the table there. the white house's ultimate goal here is to get china to open their markets more to u.s. products and also to curb this industrial policy that by default ends up hurting american companies. these methods, do you think they are going to work?

>> i'm certainly on the front end the purchases we think that is definitely going to result in positive impact. however, in terms of changing policies that will be a lot harder. the administration has yet to really define its goals in that regard. we don't have any specifics yet. i think that if the administration tries to seek a broad repeal of the china 2025 or other broad policies that will not succeed. if there are targeted requests that can improve the playing field for american firms in china then we have a possibility. >> haven't there been targeted requests i have heard wilbur ross talk banking licenses that the chinese have promised for decades and never materialized. there are things they can do immediately that can satisfy specific asks. >> the banking licenses and insurance, those are i think more transactional things that

would open specific sectors. i think in terms of policy openings we are looking at broader things in terms of technology transfer, investment practices by the chinese, cyber intrusions. those are the kinds of things that we are talking about. i'm thinking more about measures like waiving joint venture requirements to avoid technology transfer or ease up licensing practices in general sgmpt a. >> if they were going to be more combatative, we talk about how they have limits themselves. what do you think they have whether on currency or microlevel >> just looking at the quantitative numbers is a bit misleading because they have a number of active and passive measures that they can take. they can also launch tax investigations and can be stricter on anti-trust due

diligence. on the passive side they cannot buy treasury bills and cannot approve medical products that we want to sell, agricultural sales. they have a wider variety of actions, i think, on this area than we do mostly because the difference in china is that the government is both your regulator and customer. so they have a lot more authority than the u.s. government does with respect to the u.s. market. >> it's not as though previous administrations including ones you worked for have not been aware of this behavior and have tried to change it somewhat unsuccessfully. do you think the trump administration is going about it correctly or if there was another way that would be effective what would it be >> the good news is that they have the chinese attention in a way that we haven't been able to obtain before. i think a little less rhetoric

and more policy talk might be more successful. there are pathways to a settlement here. during the obama administration there was a bilateral investment treaty that was being negotiated. there was substantial progress made. there are market openings that are available. the trans pacific partnership contains many principles that address a lot of practices. so there are less combative ways to address this. what i fear the most out of what is happening right now is that wildcards are going to enter into the picture. for example, nationalism. the more we stoke chinese nationalism the less settlement remains in the hands of the chinese government. and the more the congress gets involved the less president trump has the ability to control negotiations. these wildcards entering the picture are troubling at this stage in the negotiations. >> dow is down 400 points.

>> are there examples that you can point to in the past that would be helpful for people to understand in terms of where it is possible the chinese would go >> just a year ago the government encouraged a boycott of korean products. the koreans agreed to host some of our missiles. the chinese were very upset about that so the chinese shut off all tourism and impose investigations and discouraged purchases. this spreads very quickly in chinese social media. a few weeks ago we saw the beginnings of something like that but the government has tamped it down. now the government is saying that it will impose comprehensive quantitative and qualitative measures. these are the kind of qualitative pictures that come into the picture. we are starting to see iphones getting smashed in the street i think most people assumed it was highly anecdotal. you think that could happen at scale?

>> this is something that the government will try to control to a certain extent. my fear is that it gets out of control. >> go ahead. >> not only has this happened with regard to korea but also with japan. there are real visceral emotions in china about japan. this bubbles up from time to time and the government tries to control it and does so successfully but the government is saying at least in statements that it is starting to take the gloves off. we have to watch this spot very carefully. >> give me your prediction here. how does this end up you have 20 years experience as a u.s. diplomat in republican and democratic administrations. where does this end up in your prediction understanding you may not be right but i would love to hear. >> i think there will be a settlement. the alternative is mutually assured destruction. the chinese goal here is to maintain the status quo. the u.s. goal is to get some policy changes and some

reduction of the deficit. i think all of that is possible. we need to tone down the rhetoric. if we look at past history of president trump's negotiations with north korea with regard to the korean u.s. trade agreement the president has employed a lot of rhetoric. in the end in every case has settled for fairly modest terms. i think the settlement is likely. >> to call on your 21 years experience when china ascended the world believed there would be this march towards more openness in china. more and more markets would open. maybe there would be more democracy there. what happened? >> that was a hope. i don't think anyone thought china would become a western like country. what happened with regard to trade was that we made a deal with the chinese in trade. we allowed them to sell a lot of

things to the u.s. that we couldn't sell to china. now 15 years later things have changed. we need to renegotiate that deal and come to new understanding. >> why did we allow china to impose tariffs on things we did. >> i think it is better to have them a part of the world trading community than outside. so in that sense by bringing them in there was a certain success and a certain rule of order that was imposed by wto and having china be a player in there. i think most folks would think that right now the terms are no longer equal and we need to bring them into parity. >> thank you, jeff. good to have you on. >> my pleasure. thank you. as we go to break, take a look at the sell off. close to session lows here. dow is down 409 points.

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dow up by more th-- down by mor than 400 points. boeing is off by $15, decline more than four percent. 3 m is lower by about 2.5%. >> worth pointing out the s&p down about 1% right now. time for our etf spot light. taking a look at oil which is also low today. >> good morning to you. energy certainly in focus today as the equity market and oil both under pressure in the session. crude and equity sharing this heightened tensions with china. potential for a trade war does two things, causes currency fluctuations. second there is a possibility for tariffs on energy. that impacts demand. both factors driving prices lower.

boosting their output because of short falls we are expecting from iran and venezuela. they will hold the combined cut. now may be the time that they change things. the market is looking for anything from a couple hundred thousand barrels a day. no one noes what opec and russia will do. u.s. production edging towards 11 million barrels a day. even if the market worked through supply gut there is still a steady stream of product being pumped out. the energy etfs are feeling the squeeze this morning. they are all in the red. they are talking about three to five percent losses over the course of the last week of trade for those etfs. >> thank you very much. let's get to contessa brewer. >> here is what is happening. north korean leader kim jong-un meeting with chinese president xi jinping.

the two to discuss the recent summit with president trump. it was kim's third trip to china. german chancellor angela merkel welcoming french president emmanuel macron. the video of macron strongly ad maungsi monishing a teenager. the teenager asked how it is going and macron responded call me mr. president of the republic. fewer americans are smoking than ever before. shows about 14% of adults were cigarette smokers. only nine percent of high school students were smoking. >> thanks, contessa. the president's latest trade threats rocking markets around

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welcome back to "squawk on the street." sell off continues just slightly off of session lows. a few more dow components have been managing to sneak into the green. negative for the year. gains for june which at one point was the strongest month since january. there is still cushion here about 150 points until we lose. >> president trump of course ramping up the trade war with china calling on the u.s. trade representative to increase potential tariffs to $200 billion. michael santoli joins us now. he is here to talk about the market impact of that ever-changing trade policy. not quite sure where it stands.

>> there is no way to paint it as a net negative for stocks in the short term. it's not the only thing going on. i think the context matters. it is obviously a down side catalyst, a trigger, psychological overhang for the market but it feeds into other anxieties that have come to the surface which are the slow down in overseas growth, stresses in emerging markets that have already kind of been a little bit top of mind for investors. i think trade wars as a threat to global trade flows at a time when you are worrying about if the rest of the world is sturdy or not is having more of an effect. the rally it stalled. we came right up to a level where it seemed like we would threaten the march hiez. he hesitated there and did not have a lot of momentum so it almost feels like the market is grabbing for an excuse in the form of this incremental trade announcement. i think context matters when you

look attitudeitude the magnitus this is a chart of the u.s. market against the developed overseas markets. you see that the u.s. market has been hovering and kind of resisting the downward pull of the rest of the world. this is in the form of the etfs. we are succumbing a little bit to that. that is why i think the uptrend hasn't yet been threatened. it is much more about what is next, what currency moves this drives. we keep talking about product impact and what products china will target. what if they let the currency be the value and be a broad based response that says we will see who has the higher pain threshold? >> and also the effect of the tax cuts which apparently was a point of discussion between the president and tim cook that they could be offset or maybe we are waiting for the real juice to kick in.

>> you totally don't know how much of the total fiscal stimulus this is. some argue that is why it is a good time to do this and others say you are squandering that economic momentum. >> that chart where you see e.m. down as much as it is that could suggest that perhaps fears of rising interest rates. >> absolutely. and that is another part of the context. the fed is raising rates, tightening financial conditions and doesn't seem particularly worried about changing course based on what is going on overseas. jay powell's testimony he didn't want to give a lot of ground saying we are watching the global situation. if you have that setup where the fed is going to be continuing to tighten, the rest of the world has to deal with it. i think that is one of the reasons. we have had big rallies the last two sessions. i'm not saying we are going to

get it again. i don't think this is all about now we have an escalating trade battle, game over. >> are we supposed to take away from it that foreign markets suffer more than ours do >> that has been the case. >> percentage of our overall economy not as important as it is for others. >> i don't know if you consider it a victory to say the chinese market is down more than ours. that is the reality so far. >> michael santoli, thanks. our next guest says the latest moves will take the situation from bad to worse. joining us is stephen roach. it's good to have you back. >> good to be with you. >> what do you make of the argument that if you were going to do this you would probably choose about now to tackle some of the long term structural trade imbalance snz. >> i think it is dead wrong because the trade issues do not occur in a vacuum for saving u.s. economy. we have an extremely low

domestic savings rate in early 2018. lacking in saving and wanting to grow we import surplus savings from abroad. we run trade deficits with 102 countries last year to attract the capital. we are going after the biggest piece of our trade deficit. but this problem will go from bad to worse because of the budget deficits you guys were just talking about. so our domestic savings will get lower and need for surplus savings from abroad will only grow. the irony is that we are turning protectionist at a time when we need more surplus savings from abroad. >> i see norway became the sixth wto member to challenge our steel and aluminum tariffs. is there any semblance of unity going up against china's trade

>> no. i think we stand alone here in trying to make america great again by biting the hand that feeds us. i think president trump is clearly using what he perceives to be a lot of political capital to address economic issues that continue to afflict the middle class ironically at a time when the national employment rate is down to 3.8%. i think we are alone in our misguided application of economic policy. >> really, stephen i know president trump isn't popular with european leaders so they don't want to be seen as being on the same band wagon but they had imposed stafftariffs on steel and restrictions on chinese purchases of european companies. they are almost ahead of us and the world didn't seem to fall

apart. >> i don't think they are doing that at all. i think we are very aggressive in utilizing the so-called section 301 investigation to allege nefarrious practices of forced technology transfer. when china retaliates as you would expect any trading partner to do when they are singled out then we have a leader how dare they retaliate we are going to up the ante by first he said another 100 and now he said 200. who knows what he will see tomorrow >> the forced technology transfers are a reality. given all the years you spent studying china there, what are your expectations for what they can do beyond just tariffs themselves do you really think that the idea of boycotts, for example, that has been introduced or

other regularatory impediments, what are your expectations for response >> i think they will respond in kind. and i think it will be tit for tat. when they are threatened by the united states they have their own sort of political view to send to their domestic leadership and public and just like our own president can't back down to his base xi jinping has a base that he must be responsive to both within the party and within the general party. nationalism is very strong on both sides. >> finally, stephen, no one is really talking about gdp impact. i see atlanta fed has tracking at 47. do you think we would feel this pain anytime soon? >> these are trivial amounts at this point in time.

if you look at these globally in a world economy, 75 to $80 trillion, even if the tariffs go up to say 250 billion on both sides of the u.s. china trade flows to make it 500 billion that is 0.6 of world gdp. these are not big numbers. the problem is what comes next and what it signifies in terms of a world that has benefitted a lot from trade liberalization to reduce the prices of goods purchased by consumers. if we are going to unwind that whole process then these small amounts are likely to get bigger. >> it's a significant day. we love checking in with you on

this stuff. stephen, thanks again. meg terrell back at headquarters. >> we are looking at shares of surepresenta as -- sarepta. the stock up 55%. the company has added about $4 billion in market cap just on this move. this is a gene therapy which aims to replace the gene that goes wrong. the data is from three patients in a clinical trial but being perceived very favorably there and it is up more than 50%. we will highlight solid bio sciences up more than 20% working on similar technology. people may be seeing it as validation for technology.

quite a move for this field which needs new treatments. pretty exciting day for science. >> wonderful news for the afflicted. great news for the shareholders, as well. as we go to break, keeping a close eye on the big selloff. the dow industrials lowered by 385 points. you can see a couple of names in positive territory. look at the lower right. all big sellers of china getting hit the hardest. we saw a lot of agricultural products. second biggest buyer of agricultural products. much more ahead on "squawk on the street" so don't go away. what about him?

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welcome back to "squawk on the street." president trump ramping up trade rhetoric with china. the major averages all falling as trump considers tariffs on another $200 billion worth of chinese goods. dominic chu is joining us now looking at the companies with the most exposure. a lot of technology names have been the huge focus for a lot of investors. let's take a look at some of the blue chips and other s&p 500 stocks that have a good amount of exposure in terms of sales to china. not every company breaks out revenue exposure specific to countries and geographies. according to data these are the ones that you should watch in terms of focus. john deere gets about 8% of total sales from china. also caterpillar and heavy construction equipment and machinery, nine percent of total sales. boeing biggest drag on the dow today. 11% there.

3 m gets 13% of sales and then ao smith which makes water heaters and other hvac type systems. the consumer names are in focus. check out these. if you take a look at gets 12% sales from china tiffany & company gets 13% of its sales. tapestry formerly known as coach, starbucks, 15% and mcdonald's, biggest company in the world, 15% of its total sales. as we talk about the idea of big revenue exposure, these are among the brands that could take some of the biggest hits or recover the most if trade talks get resumed or at least move forward, let's say, in a positive way back to you. >> some of those names highlight the fact that even if they're not selling product directly in to the country, maybe it's that they suffer from some kind of soft boycott mandated by the

government. >> we talk about technology companies in particular, we focus on semi conductors they provide stuff that goes into computers let's say a semi conductor company sells its stuff to china, to a chinese computer manufacturer who then turned around and sells that computer back to the united states. how does that get impacted, if the all? remember, china wants our semi conductors because they use them in the computers we make to sell to everybody around the world, including to the united states >> thanks, dom dom chu. let's send it over to jon fortt for what's coming up on "squawk alley. >> we have an eye on media that landscape is shifting quickly. we'll be o iutn cannes with the ceo of hulu.

certainly our food basket is typically locally sourced. coffee beans, happy meal toys, we do have to trade those around

the world. we're keeping an eye on what that means. >> we're opening a new store, on average, every 15 hours in china and with the middle class population growing to over 600 million, you know, we think we have a fem on nal opportunity to reach china. we're focused on the growth potential, long-term growth potential that presents for starbucks. that might be in the united states and it might be globally. we're trying to figure out what it means to economic activity.

in just a few more weeks, that's going to color a lot of the commentary, you can imagine, barring dramatic reversal and rhetoric dow down 326 boeing the worst component for the 50 day for the first time since early may. >> earnings could very well be impacted before it was it could be. let's see what happens now it's we're getting closer to the pedal mooelt meets the metal, rubber meets the road jackie deangelis is at headquarters. >> a lot of attention has been on tech and industrial stocks with exposure to china, energy also on the downside group of stocks is down as much as a percent in early training what's driving this action

today? the trade dispute. crude prices that opec and russia will gradually increase their profit and potential losses for iran. back to you guys. >> thank you, jackie "squawk alley" starts in a few minutes.

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