it is 5:00 a.m here's your top five at 5:00 it's official, the white house confirming reports that you heard here first yesterday the president looking to raise the tariff to 25% on 200 billion worth of chinese goods futures are down. tesla shares jumping after elon musk told investors he expects to turn a profit by the end of this quarter. starbucks teaming up with alibaba to expand its delivery service in china jim cramer sat down with the starbucks ceo. cbi hiring mary jo white to help lead its investigation into misconduct by les moon vest.

and disappointing news from sonos before its public debut. all that on this thursday, august 2, 2018 "worldwide exchange" begins right now. ♪ good morning welcome from wherever in the world you may be watching. i'm brian sullivan trade tensions are topping the headlines. the president instructing his top trade representative to look into slapping a 25% tariff on 2$200 billion worth of chinese imports. as we told you yesterday morning, that would be up from the proposed 10% tariff rate on those goods. u.s. trade rep robert lighthizer saying the rate increase is to encourage china to change its harmful policies china has vowed to retaliate against any new tariffs. markets are reacting to the news keep in mind no tariffs are in

place just yet it's subject to public comment congress reversing in the senate some tariffs last week so nothing has changed right now. these are proposals, but enough to spook the market. dow futures are down about 138 a couple hours ago it was more seeing selling across the board. let's see if that moves the bond market, maybe brings people in the haven of treasuries. the ten-year note, that yield back below 3%. it's basically at 3, but 2.997 so we are seeing a move in the bond market on those headlines what about overseas and in asia? let's check the asian boards china has been a weak stock market over the last couple of months it remains that way today. it's a sea of red across china the hang seng down 2.2%. shanghai composite down 2% japan down 1%. the asian markets all getting walloped overnight on that news. what about the european trade.

let's bring that up. we'll look at europe german dax up 1.7% all the major indexes are in the red. outside of the stock market, crude oil not being impacted euro/dollar down to 116.18 gold not moving. bitcoin up 0.4%. all right. let's get into all of this news and bring in simon derek from bny mellon we have china out there. we have new trade concerns that are in the market. do you think china will directly or indirectly retaliate by continuing to let its currency weaken >> indirectly i do i don't think they will intervene to drive the currency lower, but stepping back at a time when there are concerns about the my and at a point when

easing monetary conditions are putting in, it's easy for him to weaken his currency consistently this is what happened in the aftermath of the 10% tariffs maybe the move towards 25% tariffs now is in response to that so, yeah, it feels like we have a fairly direct move taking place here cause and effect i do think the chinese could do some more? yes, i do. >>ways it would negate the tariffs by making those products less costly to consumers. it could also set off a global currency war as well as a trade war. what's your ultimate fear? how do you see this playing out? >> i think where we are at the moment, it's been china allowing its currency to move most of the other regional currencies have weakened a

little bit, but nowhere near as much as the yuan has however, if they start to see the impact of yuan weakness impacting no their own local markets because they're losing competitiveness, if they start to see the local equity markets come under pressure, there will be a growing temptation for those nations to allow their currencies to weaken as well i think it's interesting what's happening in japan you saw the bank of japan intervene this morning or threatening to intervene this morning. the local market stopping money flowing back overseas to seek higher yields. so it seems to me people are becoming increasingly sensitive and if the yuan starts to weaken again, the other guys out there will want to see their currencies weaken alongside them what do you view is more damaging to the global economic story, a tariff or trade war through tariffs or would it be a

race to the bottom with global currencies >> always hard to say. as a currency guy i'm going to focus on the currency story. yeah, i do think a race to the bottom is dangerous. it's hard to see who the winners can be in that story where it's particularly an issue now is if you look over the course of the last five or six years, one of the big concerns consistently is what's been happening with asian currencies. remember 2015 and the concerns about the yuan devaluation then. it can feed through into global equity markets quickly historically, the last 20 years, august has been one of the more dangerous months for markets at the moment we are kind of okay, but it's easy to manage this uncertainty feed nothing broader unrest in markets and feeding through to something more substantial

>> a lot of red across the screen in europe, in the equity markets of asia, currency markets as well. simon, we'll see you soon. thank you very much. let's switch gears now to today's top corporate stories. shares of tesla are popping. they're up more than 8% following an upbeat conference call with elon musk musk telling investors the company will be profitable for every quarter going forward. tesla producing 5,000 model 3 sedans per week. for the quarter, tesla lost $3.06 a share but revenues beat coming in at $4 billion last quarter. musk also apologizing for lashing out at some wall street analysts during last quarter's conference call. >> first of all, you know, i wo like t would like to apologize for the prior call there's no excows fuse for bad

manners. i have no reasons for it i got no sleep, you know, been working sort of 100, 110-our weeks. so my apologies for not being polite on the prior call >> let's bring in dan mccrum what do you make of mr. musk's semi-mea culpa. >> i think we can call that the billion dollar apology there was a big jump in the after market stock price last night following that some of the main takeaways are what musk said on the call in terms of numbers, we can talk about those in a second, but mixed, and i think are not going to change anyone's minds you either think tesla is the second coming and will dominate the auto industry or it's overvalued musk did say, as well as

apologizing to those analysts he insulted in the last call, he said a few things which gave the stock positive momentum today. one he was emphatic that even though tesla can raise equity if it wants to, he said it's not going to the company turned the corner and it will be profit all the way from here. and in answering that question he was asked sort -- the impolice say the question was has tesla received a wells notice if it has, it has not risen to get getting one of these, and it comes down to cash flow, he said once again they will be producing cash flow in the quarters ahead i think that's a lot of positive takeaways from it. but he said he's very tired, he sounded it this sounded like a man who's been awake for 50 hours

straight it was slow, a bit garbled, he was talking about ongoing production difficulties at tesla trying to get these cars out the door there were some positives, but the skeptics have a lot to feed on here. >> he mumbled through a lot of that i think he said he was working 110 or 120 hours per week and he was tired. so it was an apology with an asterisk alongside of it, saying yeah, i'm sorry i said those things, but i've been working hard on behalf of the company. as good as the revenue numbers were, this is a company that has had a massive number of high level executives leave over the last couple months so the work cloload, it would s, is falling more and more on elon musk's shoulders >> musk has centralized a lot of decisionmaking on himself. he talked about how he's having to deal with these departures and these ongoing issues which

you don't see from established car companies. tesla decide ed d to try thingsh the automation it is putting in and it abandoned some safety checks -- not safety checks, but production checks that would get these kings aks and problems ouf the production process before ramping up to these 5,000 cars a week so muss k is dealing with a lotf problems on a hands-on way >> is he the single most important person at a company, dan? >> yeah. i don't think there's any other company that is quite like this. i mean, i've been talking to some very experienced and successful investors, it's incredible to see the debates they have amongst themselves about do they believe musk can he do it sort of so many people want this company to win because we want

there to be a good electric car future but at the same time there's so many signs that he's really struggling to do it. i think you saw that again in the numbers. one thing which a lot of people are focusing on is the cash flow so the cash flow was better than analysts had expected when you look at free cash flow after cap capex, but tesla is pulling a couple levers here to improve cash flow. these are the sorts of things you see in a company that's really struggling to generate and hold on to cash. >> we have to leave it there history has not been kind to smaller car companies going up against big global giants, maybe elon musk will do the impossible dan, thank you very much so this leaves us now with a question of this, are tesla shares a good buy for you and your money joining us now is tasha keeney, she managing the arc etf have

has tesla as a top holding do you think tesla shares are a good buy >> we were just talking about tesla as a start up in the auto industry i think there's this idea that they're heading into a market with competition they're spending heavily ahead of that. you know, i think a lot of people are ignoring tesla's software advantage tesla's the only auouautomaker e to collect data off of customer cars on the road, and when you buy a tesla it's not the same car that left the lot. it improves over time. you get over the air updates to your car overnight these are amazing products they're convenient for the consumer this software advantage is unrivaled. so far the traditional automakers have not been able to replicate that i think that pushes tesla towards becoming a major player in electric vehicle market and the autonomous vehicle market. >> to your point, jaguar,

e-pace, a number of companies are coming out with fully electric or hybrid electric vehicles do you believe that the cult of tesla, if you will is enough to keep those buyers loyal even in the face of increased competition? >> so, you know, right now tesla's very far ahead of the competition. we heard they're producing more batteries than the other automakers combined. we know they're ahead on the technology front this is something that should last for years it's not as if other automakers can come back overnight. on the data collection side, you have to install hardware in the car to make that possible. it's not just a switch others can flip on. so i think for now they'll stay in that competitive advantage. we're looking for ward to when they turn on autonomous mode

that's when cash concerns should be culled a bit. if you buy a model 3 and it turns autonomous, you can put it on the tesla network, set it up as an autonomous taxi, you can actually make money off of that car. that changes the game. we think there will be software like margin the for tesla. >> we'll see if that happens maybe bad news for uber, but that's a different conversation. tasha, thanks for joining us cbs hired a pair of heavy hitters to investigate sexual misconduct claims against les moonves. the company's board says mary jo white and nancy kestenbaum will lead that investigation. mary jo white is the former chair of the s.e.c cbs says mr. moonves will have no role in the probe cbs will release its latest quarterly results after the bell

tonight. a windfall the casino giant down big this morning following an earnings miss. and jim cramer spoke with starbucks ceo kevin johnson about a huge new partnership in hin tha china. his comments when "worldwide exchange" returns. and teaching my kids that no ambition's out of reach. ambitions live everywhere. synchrony helps make them happen with data, insights, financing and technologies. ♪ ♪ synchrony. what are you working forward to? synchrony. show of hands. let's get started. who wants customizable options chains? ones that make it fast and easy to analyze and take action? how about some of the lowest options fees?

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welcome back let's talk gaming, let's talk casinos.

shares of wynn are in the red following an earnings miss contessa brewer covers the gaming industry for us what went wrong at wynn? >> a lot of disappointment over the numbers from macau misses on the top and bottom line and the stock took a dive wif wynn macau, the operating revenue was down 18% casino revenue, property ebita, 18% down wynn palace in macau and vegas revenues grew but not enough to offset the losses. on the call, the ceo blamed the world cup which took attention away from gambling but also other operators. >> our competitors neglected the vip market during the downturn many of them got back into the game in the last six months with new rooms, more credit, creating competition. >> though maddox did not mention then by name, las vegas sands

reported strength on vip gambling wynn stock rebounded somewhat on the outlook for the third quarter macau numbers. caesars is another company that got hammered yesterday by investors following remarks predicting flat to slow growth in las vegas because of competitive pressure on room rates. then wynn's ceo mirrored those comments, the expectation that revenue per available room would be flat in the third quarter shares of caesars turning slightly positive in premarket trade. another name caught up in this, mgm. it closed down 9% ahead of its earnings report before the bell this morning we'll listen to mgm's ceo. >> i know you have to go we'll see you in a few minutes.

barclays second quarter profits soared beating forecasts. it was able to avoid heavy restructuring and legal costs that marred past results shares are not reacting on that news. you also want to watch square second quarter profit topping estimates. revenues from lending doubled, but the company issued third quarter guidance that was weaker than expected. square shares are down a bit t-mobile added more wireless customers in the second quarter than wall street expected. the ce oshg says heo says he's regulators will approve the deal to merge with sprint without conditions also up today, starbucks teaming up with alibaba to expand its delivery service in china. starbucks ceo kevin johnson confirms that deal in an interview with our own jim cramer jim pressed johnson on the deal and asked how it fits into the

company's growth plans in china overall. >> let's say you're a shareholder of starbucks you have seen the starbucks trajectory in china go from high single digits to mid, to low, to minus 2. can we listen to this announcement and presume you can get back on a trajectory of positive same-store sale numbers in china >> i'll remind you in china last quarter we posted a 17% top line growth most of the growth of transactions in china is coming from the new store growth. yes, we did have a negative 2% same-store sales comp last quarter. but, you know, if i look at what we're doing with ale aibaba andh digital flywheel, this is like rocket fuel for the digital flywheel in china. this will be an accelerator for our business no doubt >> you can hear more from jim's interview with kevin johnson

later today on "squawk on the street." still to come, a double dose of ipos to put on your radar for this thursday. and a super swimmer, a 10-year-old boy broke a record that michael phelps held for 23 years. there's so much more to this or wllell you how coming up it's all so... smart. but how do you work with it? ask this farmer. he's using satellite data to help increase crop yields. that's smart for the food we eat. at this port, supply chains are becoming more transparent with blockchain. that's smart for millions of shipments. in this lab, researchers are working with watson to help them find new treatments. that's smart for medicine. at this bank, the world's most encrypted mainframe is helping prevent cybercrime. that's smart for everyone. and in africa, iot sensors and the ibm cloud

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devastating wildfires out west frances rivera has more on that. good morning wildfires continue to scorch the west coast leaving behind a path of devastation in oregon the south valley fire charred over 3,000 acres forcing hundreds of residents to evacuate investigators say a person started that fire. dry conditions continue to fuel the massive carr fire in california 17,000 homes are still under threat a headache for one colorado driver a bear trashed the inside of a car left unlocked while looking for food, a bear cub broke in and got trapped inside a sheriffs deputy used the rope to open the car door allowing the bear to hop out and run away. justify is officially retired with a perfect 6-0 record after suffering a left ankle injury the thoroughbred champion landed at hits new home in kentucky where he will wait to be sold to a breeder. he's estimated to bring in around $150,000 per mare

you do the math. that equates to about 37$37.5 million a year in stud fees. you could say justify will get around >> 37.5 million divided by that number do i tayou take suns off? >> you don't can't those numbers. >> happy retirement to old justify. on deck, markets everywhere are down this morning. losses in asia, more than 2% in hong kong and shanghai the president threatening to raise tar riffs to 25%. a food and fitness pop and drop two companies going in opposite directions this moinrng. the names and more on the market moves this morning when "worldwide exchange" returns

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global markets take a tumble as president trump turns up the he'd on china. musk's mea culpa tesla shares higher and elon musk says he's sorry. more money, more problems. wait until you hear how much money the world's richest man needs to spend every day just to avoid getting richer it's thursday, august 2nd. the second half of the show begins right now

all right. welcome back good thursday morning. thank you for being with us on cnbc i'm brian sullivan let's check on the top big money headlines. contessa brewer is back with those. >> here's what's leading cnbc.com shares of tesla popping following an upbeat call with its ceo. musk told investors that the company will be profitable for every quarter going forward. the company also crossing a key milestone producing 5,000 model 3 sedans per week. musk apologized for lashing out at some is during last quarter's earnings call. cbs has hired mary jo white lead the investigation into les moonves. and starbucks confirms its relationship with alibaba. she are linking up to expand its digital presence in china. kevin johnson saturday down with

jim cramermentcramerment you can see that interview in a bit on "squawk on the street." let's look at how your money and investments are shaping up unless you are short this market, they're not shaping up with well. global markets pretty much down across the board dow futures now indicating a drop of 181 points two hours ago they were down fractionally the selling or the bids down have accelerated losses expected on the s&p, the dow and the nasdaq overseas we're seeing asia markets tumble japan down 1%. hong kong, shanghai indexes down more than 2% europe is down across the board as well. the markets are moving on big trade news president trump instructing his top trade representative to look into slapping a 25% tariff on 2$200 billion worth of chinese imports. if it happens it would be up from a 10% jump.

china vowed to retaliate against any new tariffs. let's bring in tony fratto, former white house deputy press secretary. we have to make it clear, nothing has happened yet this is talk, this is explorato exploratory. congress will have something to say about it, that aside how concerned are you that this is another escalation, if not a trade war, increased trade talk. >> i'm pretty concerned. you know, i do think congress would want to have some say about it it's not clear that they would be able to do that, to have a say about it that means you'll be going into the midterm elections having opposed their president on a position he's taken that they disagree with, but if they make it public it makes it difficult going into the midterm elections. i am pessimistic about it, the administration more than

doubling down, threatening to go beyond 10% to 25%. the chinese are watching this. they're ready to retaliate we should remember on that 2$200 billion worth of products, these are not just chinese products coming into the united states, these are american firms who are importing chinese products into the united states. it hits american firms as well i think market participants need to be wary of that >> true. do you believe china has the economic power to retaliate on the tariff side? they don't buy that much from us it's about 150 billion a year. i know it's a big number but about the gdp of the state of maryland the president knows this do you think china has the economic might on the trade side, they sure do on the currency side, but on the trade side do they >> they do on the currency side for sure we've seen some of that already. i know i talk to people who are worried about what they might do

in terms of their purchases of u.s. treasuries. i think they will only do what's in their own best interest on that on the trade side, there is a misconception, as i said earlier, the order of battle, if you look at 5$500 billion of imports from china or 1$130 billion, 1$150 billion of export from the united states, that's masking a lot of trade that are actually -- that are american firms that are handling that trade. so it does hit american firms. the other question you have to have, like the asymmetric politics, you know, the chinese premiere is premiere for life. the president does have to worry and the republican party does have to worry about these midterm elections. i think the chinese are willing to wait out and see what happens in november. if the president loses the house of representatives, if that

happens, they're going to feel emboldened that they're in a stronger position negotiating with a weakened position >> do you think the chinese went county by county, which counties are likely to flip on the president, i want to target their products it seems that way. >> i will tell you, back in the bush administration, back in the treasury department in 2004, 2005, we looked at a lot of the same tools that the trump administration is using to try to encourage better behavior by the chi knee banese back then our bilateral meetings with the chinese, it was clear they have a very good feel for who produces what where in the united states. i think they've been preparing for this for a long time across a number of administrations. i know the obama administration

looked at some of these tools. the chinese are prepared for it. i don't think they had to do much studying this time. >> yeah. i think you bring up an important point as always. this is not the first time let's be clear the previous few administrations are also not innocent of trade actions. the bush administration had a number of anti-dumping and counter veiling type actions against it obama put them on as well. not to this size and scope and not with this level of bombast, if you will, but how rare are these trade fights >> it's rare to do it in the blanket way the trump administration is doing it, and then the 232 actions, the national security reviews, which are still ongoing with autos

at least in the bush and obama administrations, they were try doing it within the existing roles. i think the trump administration would argue they are as well that's a lonely view right now in the trade world these seem to be outside the wto rules. so this is unusual also in the size and scope those were for particular -- >> they weremuch smaller yes. bottom line it here, tony. put the odds on it, what are the odds that we will get a 25% tariff on those 2$200 billion do you think it happens? >> i think it's better than even that that happens before the midterm elections. i do i would have a bias towards that being more likely than less likely to happen >> better than even. okay you got better than even odds to make the playoffs. >> i'm feeling good about it >> tony fratto, thank you very much let's dive into the market

implications of that and everything else going on now michael purves joins us. you heard tony's excellent analysis better than even chance we go to 25% on those 200 billion if that happens, what happens? >> you know, all the economic data, both the hard and soft data, soft data meaning the ceo surveys, let alone the consumer confidence numbers, have not reflected anything negative yet. everything coming in strong. the market's take has been, like, we'll just see -- we need to see some of this data weaken before we get worried. we've seen these moves so many times throughout the whole trade discussion from the spring one thing i find interesting, i don't have the political context that tony does, i think the

market's take on this was trump would push this narrative because he promised it, but he would lighten up before the midterms what seems to be happening is that he's going full speed ahead here and escalating that i guess he's confident enough to think he won't alienate his base along the way. >> they're cheering this they are you hear that, and the dow futures are now down 200 points. i think you mentioned a word that may be the most dangerous single word in the markets, that's yet we have had a lot of that, nothing has happened yet we're starting to see now a market that appears believes a little more that things could happen >> right as you game through this, let's say the market were to sell off 10% into september and october, because some of that data does turn negative, you know, does

the market perceive that trump can undo this? sort of negotiate his way out of a weaker stock market? you know, sort of start undoing that i think as the rhetoric builds, it's harder to do that >> could you do that we don't talk about the second tier scenarios let's say the administration puts these 25% tariffs on the 200 billion. we know this is a president who loves to look at the stock market the market starts to tumble. they could reverse it, i guess if you punch somebody in the face, you better be ready to be hit back >> i don't know if i have a clear context on how the chinese will respond, but as tony was referencing they're long-term strategic thinkers, and they will certainly try, regardless of what happens with the house in november, they will try to extract every possible strategic

advantage out of this. >> they're still buying our treasuries we know they have not conducted that kind of a treasury trade war. but the fact that the currency is weakening, whether or not they want it to, that's the economic bazooka if the chinese currency were to significantly devalue, that could rattle the world could it not >> august 2015, when they did the shock deval, the currency was devalued right now it has been occurring. one of the fascinating parts of the discussion is the chinese currency is weakening now but global markets are not rat thinth -- rattling the macro data is holding together pretty well some of it has been improving. >> some viewers may have heard the term global macro, global macro may be no more important than it is now in the last decade michael purvepurves, thank you.

>> still ahead on "worldwide exchange," as dow futures are down 200 points, we'll give you all the business headlines you need to know, three stocks to watch. a lot going on on a urthsday morning. ch may cause trouble with recall. - learning from him is great... when i can keep up! - anncr: thankfully, prevagen helps your brain and improves memory. - dad's got all the answers. - anncr: prevagen is now the number-one-selling brain health supplement in drug stores nationwide. - she outsmarts me every single time. - checkmate! you wanna play again? - anncr: prevagen. healthier brain. better life.

we are seeing the markets react to trade fears the dow down 188 points. the nasdaq and the s&p are also

down as well the european markets are down across the board more than 1% drops there overseas in asia, asia markets, particularly china falling big the hang seng and shanghai down more than 2% a lot of moves in the global markets. bonds getting a bit of a push up we're seeing the yield come just back below 3%. yesterday ticked right above 3% for the first time in a couple months ten-year treasury at 2.986%. a bit of buying in the bond market now we're seeing a haven trade people coming out of equities and into treasuries. let's welcome in a pair of new stocks to your market as well sonos pricing its ipo at $15 a share, below the expected range of 17 to 19, but it values sonos at just under 1$1.5 billion you will hear from the ceo coming up on "squawk box."

and cushman and wakefield pricing their ipo at $17 a share. that company valued at 3.1 billion. they will begin trading today on the new york stock exchange. new this morning, the s.e.c. and the cftc are reportedly investigating options clearing corp that's a major clearinghouse that's supposed to curb risk in the options market dow jones reports that regulators are taking issue with how that company handled some market turbulence back in february saying it failed to accurately forecast how much cash would be needed to cover traded losses that were triggered by a spike in volatility we got that huge move in volatility and some of those short volatility etf products. i know it's complicated, but options trading corp is a major

player in the options market this is a big story. one you will hear more about on cnbc tripadvisor shares are set to trade at a two-month low today. second quarter revenue missing forecasts. performances hurt by lower bookings yum china trading lower. second quarter profit beating estimates. revenue in line. same-store sales fell on flat revenues from kfc and a 4 had% decline from pizza hut. fitbit reporting a second quarter loss strong sales of smart watches that can go in line with the yum china and kfc stories. fitbit stock slightly up today. time for the top trending stories. contessa brewer has those. >> michael phelps is used to holding world records here, but his record has been broken that's what happened this

weekend. a 10-year-old named clark kent broke fell m -- phelps long-standing record clark swam the 100 meter butterfly almost a second faster than phelps did. a 10-year-old broke michael phelps record. >> if you name your kid clark kent, you better be ready for something big. two sets of identical twins will tie the knot this weekend chrissy and cassie will marry nick and zack in separate ceremonies on friday and saturday in twin fashion they will share a reception. they went on their first dates together at church they got engaged at the same time they don't even plan to split from their twins once they're married. all four twins -- >> different dogs, thankfully.

>> all four will share a two-bedroom apartment. >> this will ab brbe a bravo sh some day contes contessa, thank you. the fed leaving rates unchanged, but another central bank is expected to take a big step today we're seeing dow futures down 180 points as trade fears ratchet up we'll talk rates, markets and we'll tell you how much jeff bezos needs to spend just to not get richer but it's not kayak confident. kayak searches hundreds of travel and airline sites to find the best flight for me. so i'm more than confident. how's your family? kayak. search one and done.

the smoother the skin, the more comfortable you are in it. and now there's a new way to smooth. introducing new venus platinum. a premium metal handle boosts control... to reveal up to 100% smooth skin. venus the federal reserve yesterday leaving policy rates unchanged, but they signaled a rate hike is likely coming in september and made some strong and hawkish language now it's the bank of england's turn we'll get a rate decision from them in a couple hours the boe expected to raise rates for the second time isn't tsinc

final crisis began let's bring in danielle dimartino booth. i hated the commentary on twitter, nothing happened. that was a strongly worded statement, because they used the word strong -- >> strong, strongly, strengthen, six times in 273 words >> what does that tell you >> well, he is signaling and he's not being subtle about it >> it's like he's hitting somebody over the head >> who would have said that was a dovish statement? it wasn't. >> people who want it to be dovish >> he's not using big words, but using direct words >> plain words >> if it's 1.9%, 2%, for jay powell, it's all one in the same >> let's put words to action then you think we get a rate hike in september? >> absolutely. >> you think we get a rate hike in december. >> i think he's telling us we are. >> do we get a rate hike in

january? so we go from skipping a meeting to back-to-back rate hikes >> i think if he feels we'll slide into recession -- i believe he did not throw 3% out as his target. he doesn't do things on accident he doesn't he's very clear. he wants to see 3% if it requires him going in january and the subsequent meeting to get there, so be it >> you have this weird dichotomy going on now the things we know and the things we don't, we know this. the u.s. economy is rocket strong it's booming the fed told us that yesterday >> today it is >> yes then we have markets down nearly 200 because the president telling his people look into seriously raising tariffs. possible trade fight escalation could continue how much is that going to affect fed thinking >> well, bear in mind -- >> we don't know if it will happen >> this is somebody who like my former boss, richard fisher, speaks to hundreds of ceos

around the world all the time. if you were to ask him now, jerome powell would tell you the kospi is down 6.5% this year >> he's paying that close of attention. >> because he understands markets. >> chinese markets fell another 2% today they got decimated this year >> they have but again, i think he will back up from that bump in the night volatility because china is taking it harder on the chin than any other major market. he will back up and look at bellwethers. if the data changes so will jerome powell. >> why do you think we're getting three more rate hikes? >> i think the inventory draw down that was unexpected in the second quarter, thatwill be pa back in agood way in the third quarter. we could have two back-to-back strong quarters. that will give him momentum and leeway to keep going into the

winter >> is the unknown, the wildcard, whatever term you wanted to use, trade and the president? >> of course it is >> was that -- yes that was rhetorical, wasn't it >> we're simple folk on tv >> but market, ism, all of it. the ceos, they're all starting to use the language and say this is effecting business. and he will -- jay powell will listen to these ceos that's why he was so strong about inflation. if we don't see average hourly earnings come up tomorrow, that's a statistician error. i know from ceos that labor costs are rising >> danielle, thank you this morning's rbi, jeff bezos, who is worth an estimated 1$150 billion, he would need to spend $28 million a day just to

avoid getting richer if amazon stock keeps going up we call those good problems. thank you ryucfor tcngve mh wahi "worldwide exchange. "squawk box" begins right now.

good morning tesla shares are surging this morning after the company posted a revenue beat and elon musk pledged profitability and offered an apology on the conference call. also a big ipo for sonos the pricing below the expected range, we'll bring you that story. and u.s. equity futures are sharply lower as president trump turns up the heat in the trade war with china we'll explain. it's thursday, august 2, 2018, "squawk box" begins right now. ♪

live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm becky quick along with andrew ross sorkin and wilfred frost. joe is out today also joining us for the hour is michelle girard from natwest markets. let's talk about the u.s. markets. looks like there's rough sledding this morning. dow futures down by 182 points s&p off by 19. nasdaq down by 58. this is coming as we saw some weakness that started overnight in asia and spread through to europe a lot of people are saying this is because of the trade issues we knew about the heightened tariffs yesterday. you didn't see much of an impact yesterday. the dow was down by 80 points. s&p