happy back holiday welcome to "street sign"s. >> the chinese government says officials will still travel to the u.s. despite president trump's pledge to impose tariffs but beijing will not confirm meanwhile, china's blue chip stock markets plunge with the shenzhen and the shanghai composite suffering their worst drop in three years after president trump unexpectedly

rachets up tensions with beijing. european he cequity markets joined the global selloff with leading the way lower as investors react to the surprise threats. and u.s. futures fall. with the dow set to open more than 400points lower while oil prices also come under pressure. welcome to the show. a lot going on as you can rightly imagine right now. the u.s. president, donald trump, has warned the u.s. will increase tariffs on $200 billion of chinese imports to 25% at the end of this week this sharp escalation in tone, that's caused ripples through the global markets overnight trump said on twitter that he was frustrated with the slow pace of talks and he also warned

that $325 billion of additional chinese goods could, quote, shortly face tariffs as well the white house had only recently said don't forget the negotiations with beijing weren't progressing well. >> now the chinese foreign ministry has in the last hour responded with a spokesperson saying bay jinx hopes the u.s. can meet china halfway to reach an agreement they said a trade delegation is preparing to leave for the u.s. but would not directly answer questions about whether the vice premiere will go as well the shenzhen and the shanghai composites both posted their worst drops since february 2016. it is a sea of red shenzhen down 7.4%, 120 points lower. shanghai down 5.6% that is a lot of losses in asian markets overnight. for a little bit more color let's get out to matt tailor who

joins us fromsingapore. >> a lot of these markets are closing up for the trading session. this is what the monday blues look like in asia. you mentioned the big set of negativity shanghai closing down by 5.6%. hang seng down by about 2.9% even some stimulus measures that we got out a little bit earlier on, i see a triple arc from the small and medium banks not helping out sentiment as well. big markets still out and japan on holiday today singapore down by 3% big trade. that market down by 3% australia and new zealand are big trading partners seeing a fair bit of negativity new zealand down by 1% the kiwi and aussie dollars falling sharply as well. we do have an rba decision out

tomorrow as well we could see an interest rate cut so that aussie dollar trading around the 69 u.s. cent level. >> matt, thanks for breaking it down for us. we did have the payroll on friday it is a u.k. bank payroll. the tweets about tariffs have taken precedent over everything else you can see the picture for european markets is in deep red territory as well. not as much as chinese equities but there are a lot of effects to the european supply chains. a lot of companies exposed there. tech at home, the french index is down 2% already started off weaker and zet at that dax, the german is down 1.8% italian a high beater down 420 points or 2% let's talk a little bit more about dax. obviously the auto sector is one

we've been watching closely. a lot of names within the german index are trading on the down side this is a picture for the composite. a lot of red ink on the screen it's not just autos, auto tech names getting hit in germany the general index is down 1 3/4 of a percentage point. i talked about autos let's talk about the price today in our roche you can s -- europe. this isn't just about the trade talks between the u.s. and china. the markets are raising the probability of there being some tariffs on the auto sector i should tell you that year to date autos are up more than 20%. yes, we're preparing for that and it's still significantly up. you can see some of the big names. bmw down 3.5%. volkswagen down 4% as well

let's switch our attention as well to another sector we've been focused on. tech of course tech are going to be very heavily caught in the cross winds due to the supply chain's effect because a lot of the u.s. companies and products in china. a lot of the software they use does come from europe. this is the picture across the board where some of the european names. ams down 4.8%. afml down 2 1/2 percent. tech sector, specifically the chip makers, being hit and more red on the board switching to another sector that has a lot of impact on china as you can imagine, the luxury sector year to date on back of some of the green chutes that are picking up in the chinese economy. we hear it's company earnings. many of the ceos have pointed to the strength of consumption coming out of china, particularly when it comes to luxury spots you would imagine with the latest news unfolding that these

are some of the names that would also get hit as well hermes is down 1.7%. kering down 3% remember, all of these are luxury companies that have a good amount of sales exposure to china. bad news for china bad news for luxury in europe. also let's talk about foreign exchange as well just to get a sense for how some of the g10 currencies are reacting. i should mention, sterling is weaker and the other a different story. today is the u.k. bank holiday there were talks about the trust party talks between the conservative party and labor may be on the verge of breaking down we are seeing a bit of weakness being manifested that's down to 131.20. euro just a little bit softer to the tune of .10 of a percentage point. you can see dollar is trading a

little bit weaker versus the yen as well. all eyes on the reaction and this is the number one focal point of the traders as to whether or not the pboc or authorities would look to use the currency again in case these trade talks do break down. it's .5% weaker. this will be a very, very important one to watch it will have an effect not only in sentiment but global equity and currency markets we're keeping a very close eye on that. >> as is valentine maranof that number is a dollar lower. do you expect that to further weaken over the next couple of days if the tensions persists. >> that's one of the pressure valves in the market if indeed the talks do unravel which is the concern at the moment, we could see it potentially weaker

still, 685 is another level to the up side. obviously there are risks still out there. i have to say that there are other kucurrencies as investors are looking for ways to express that concern have the australian dollar which is particularly vulnerable now that you've given our expectation that the rba may cut rates. it's like 40, 45%. that is a 50% chance priced in the market there are ways to express the concern and i think the markets may be quick to look for those. >> one of the conversations i was having with people, we've been having people for the last couple of months is whether or not china can actually afford the currency depreciating significantly. i remember they are set out for msa later on in the year surely financial stability is more important to them right now than scoring points with the u.s. >> it was an ongoing discussion.

it's going to continue to sell off. we are seeing financial stability considerations may, indeed, encourage some really attempts to stabilize the exchange rate eventually china is running a pretty significant gdp lows if anything, if you look at a savings rate, if you look at the fact that the policy of financial repression is helping feel in keeping rates low, encouraging domestic investments, that may have reached its limits so the chinese will now have to turn to foreign investors to foot the bill for that they needstable currency it's helping but a condition for all of that is stable currency to answer your question, we do not expect accentuated losses any time soon. >> depreciation? >> controlled depreciation, yes. >> when we see this sentiment ramp up, you mentioned the

aussie dollar already. where else do you think you can see reaction is the yen trade something -- >> the drivers of the dollar yen, in particular seeing that the yen has been responding to risk sentiment a bit more than to rates of late it is a correlation between yen and risk aversion does persist, the yen could become one of the safe havens, what we used to call in the g10 and the markets could benefit. >> let's assume the worst case scenario it's monday. let's be bearish for monday. the trade talks get called off, extra tariffs are imposed. what does that mean for the u.s. dollar because i've heard hypotheses on both sides it could be dollar positive but also dollar negative because of the growth impacts. >> a couple of things here potentially a decisive thing here could be the market

positioning. first of all, the condition is to punish the currencies exposed to china, euro, aussie name it. but, indeed, the dollar, investors will likely take their cue from positioning and the reaction to the u.s. stock market if you look at it, the markets are long very long stocks if we see an escalation in the trade tensions, risk aversion on the back of that, chances are the dollar may under perform against the yen and against the swiss frank. what people are for getting at the moment is that the fed is the only global central bank with some fire power in fact, the ability to cut in response to unwarranted tightening in the global financial conditions which would be another way of saying an escalation in risk aversion. the dollar will likely suffer against more traditional safe havens gold, if you wish, even the euro the ecb, i believe, is the rock bottom of its easing cycle there is not much they could do

beyond what they've announced already. it does feel looking at the valuations in the eurozone, stock market, a lot of negative with respect to future trade war between really the u.s. or the e.u. may be in the price. >> down 4 or 5% today. maybe not so. >> just in terms of the u.s., you mentioned it there we've seen some more strong economic data this week. what specifically in your view is it about the fed stance that's helping strengthen the dollar >> it's a case that we've been looking at one is the absolute advantage that commands across the board it is the case that just going short euro dollar gdp percent analynua annualized return. given the low return yield environment we are in, the dollar is a preferred investment currency on the other side -- the same side, if you wish, pt yield momentum, it's the prospect for

further pickup in the yield advantage, that thing has been negative for some time it's weighing on the dollar. it's tempering its gains across the board. the other thing to position at a point in time, very similar to 2006, if you look at the dollar rate advantage versus its yield momentum, we had such a divergent path that some correction is likely warned. our longer term all, 6, 12 months is based on the yield momentum is ever more negative and it will ultimately prevail and drive it -- well, not across the board but against really your usual safe haven for the low yielding currencies. in other words, what we're expecting is that the feds will start gradually converging to the banks and that should play out as dollar negative. >> we're going to leave it there. the head of g10 fx research at credit agricole. we were talking about the impact of tariffs but we've had

data out of europe i want to bring you the april final composite pmi numbers. they have been confirmed at 51.5 this is slightly higher than the flash print of 51.3. a tad lower than the march final numbers of 51.6. those are the final composites i want to bring you the services pmi numbers. those actually came in higher so 52.8 versus the flash print of 52.5 still crucially lower than the march final prints 563.3 i just want to also say one thing. the april final composite backlogs of work pmi came out 43.6 in the u.k. there's been a lot of talk about stockpiling, backlogs, et cetera, this is also showing up a little bit at some of the eurozone data as well generally speaking the data has come in a little bit better than expectations on a day like this no one is

paying attention to the pmi services numbers. >> in china the services sector number expanded to its highest point since january of 2018. higher export sales help to boost the services pmi to 54.5 in april this was higher than the number for march. meanwhile, a weaker manufacturing sector pushed the composite lower to 52.7. and sticking with china, the central bank there will cut reserve ratio for small and medium sized banks as to boost a rather slowing economy it will be effective from may 15th the pboc will reduce the requirement from the current range of 10 and 11.5% to 8%. beijing made this announcement after president trump's threat to hike tariffs on chinese imports. that may have been a coincidence. >> it's been in the works for a

while. there's been a lot of pressure on chinese authorities so somewhat of a tiny bit there. >> coming up on the show tehran pledges to use all available resources to dodge sanctions. we'll take you a look at the crude prices right now you can see brent is off 1 3/4 of a percent wti, meanwhile, down almost 2% on the day's trade

but he insisted the move was not illegal because the u.s. measures themselves were, quote, illegitimate our colleague dan murphy joins us from dubai. can you give us more details about the additional measures the u.s. has now taken to clamp down on iran and how this fits into the context of recent

relations between those two countries? >> willem, hi to you this is interesting because of the relationship in the past few hours we have seen the united states announce it will be deploying additional military resources into the region as it looks to further isolate iran as it sees as a regional aggressor at the same time it's attempting to bolster its relationships in the region with the likes of saudi arabia and the uae which the united states is relying on to make up for the oil short fall that is being created by the u.s. sanctions of iran and the cancellation of the recent export wavers. what we are seeing is the u.s. national security advisor john bolton saying this is going to send a clear and unmistakable message to the iranian regime that any attack on the u.s.

interests or those of their allies will be met with, quote, unrelenting force. the military is going to send in "the u.s.s. abraham lincoln" and a bomber task force. this is also in response to recent iranian threats including the potential threat that the iranians are on the strait of who are mu hormuz they have indicated in the past that they would look to shut down that important shipping hub which would have huge shipping consequences for the oil market. at least for the united states moving into the region and increasing their own rhetoric, perhaps that does reduce the risk of that happening at least in the short term. guys, oil prices are really not taking much value in stride.

brent crude has a reaction to what we're seeing on the new rhetoric when it comes to increased tensions between the u.s. and china and the thought from oil traders that that could also be demand destructive if we saw tensions continuing to rise in an all out trade war breaking out between the u.s. and china back over to you. >> it sounds like not just rhetoric but action from the u.s. sticking with geopolitical developments, russian foreign minister has demanded that the u.s. over throws nicolas maduro. he made the comments with his counterpart and u.s. secretary mike pompeo is going to hold his own talks with lavrov this week when they attend the arctic counsel in northern finland. we're joined by temir porra temir porras ponceleon do you think there's any way

back for venezuela economically, politically from where you sit in the neighboring country >> willem, thank you for having me yes, of course venezuela can recover economically they have great, great potential. it can also find its own way back but of course for that to happen there needs to be inside venezuela different political forces in order to break the national deal or reach some sort of internal agreement that allows the country to move on. we must remember the country has been in a political stalemate for three months while at the same time undergoing very severe economic package any sort of political escalation has shown in the past that only leads to internal violence and

violence on turmoil. i think it's now time to recommend that some agreement be reached. >> that agreement necessarily include the continued role of nicolas maduro do you think, sir? >> i don't think so. the problem is that so far the position which i have said in the past, the problem with this bill is that it's very far from the political sector in venezuela and it's perceived by the venezuelan military as being an enemy for somebody who doesn't, you know, guarantee it in a postma ndur row era so far gauido in opposition has

been very conflicting, confrontational approach to the resolution of the problem and on the other hand he has an overwhelming backing by the trump administration which as you can imagine in a society like most lattin american societies is very divisive so i think we can move on. we're going to have a future postma ndur row but there needs to be a coalition at the center of the political divide that somehow is powerful for the military the problem is that paying out the divisions is not necessarily the fastest way to overcome the political crisis and propose a postma ndur row future. >> sir, you mentioned the military where is the military in all of

this because so far there have been multiple opportunities for the army to turn against president maduro but they have not done it so what vision is he offering to the army that are making them so loyal to him given the economy is stagnating, inflation is out of control and poverty is rampant. why are the army so loyal? >> well, that's exactly the point i'm making i think the problem is not that the army are being loyal to mr. maduro, the army in venezuela have a history of, if you will, institutional behavior and they side with what they perceive as the legitimate authority of the country and the problem is the alternative. today the alternative that is being proposed is too far away from the political center, has

the backing of the u.s. government and the venezuelan military remain in the sort of nationalistic position in my opinion they won't be willing to move on as long as they see something that is not threatening for their current position or situation. remember the views of the administration has threatened the vens military with deporting them to guantanamo or taking them to international criminal court. so i think an alternative that lowers the cost of the transition of, quote, would facilitate an evolution. the political forces agree on a more sort of theater. >> it would have to be organic rather than imposed. we have to leave it there. the former chief of staff to nicolas maduro joining us on the line there before we head to the break,

let's take a look at the european equities. it is a heavy day of losses across the board for global markets. european markets are not immune to that. stay with us we'll be right back with more.

european equity markets lead the way lower as investors react to the surprise threat. and u.s. futures fall with the dow lower and oil prices

come under pressure. well, as we said, global markets are seeing steep declines overnight in asia worst session for chinese equities in the past three years. that is continuing into europe as well. you can see all of the majors trading deeply in the red. we opened up 2% lower and have pretty much stayed there for the course of the session. we've been open for 90 minutes now. cac carant down. moving on, let's take a quick look at germany in a little bit more detail. some of the big names. auto sector, tech names also getting hit. a lot of red you can see in the blue chip names for the german index. overall the dax is about 200 points lower 1.8% weaker as people really start pricing the probability of further tariffs also on the auto sector in europe as well

that is one of the sectors that is under performing. but given all of the doom and gloom out there this morning, let's also take a look at how some of the more traditional safe havens are performing gold is trading a little bit higher, .3 of a percentage point. the gold obviously is a safe haven trade but a lot of that is a function of what's happening to the u.s. dollar to be honest, the dollar isn't trading that much weaker in the last 24 hours or so. you can see dollar/yen is showing some strength for the yen side of things we have yen trading a little bit firmer versus the u.s. dollar. it is one of the reasons why we are not seeing much of a rebound in oil and gold. we'll see how it progresses today. quick look at u.s. futures which are seeing the opening of much lower across the board s&p 500 about 50 points lower. dow about 480 points lower in percentage terms, that is 2%. in line with the losses that we are seeing in europe today.

meanwhile, u.s. president donald trump the big focus of all of this has warned the u.s. will increase tariffs on $200 billion on chinese imports to 25% at the end of this week. this sharp escalation in tone has caused ripples throughout the markets. trump said on twitter he was frustrated with the slow pace of talks and he also warned that $325 billion of additional chinese goods could, quote, shortly face tariffs as well the white house had only recently said the negotiations with beijing were progressing well the shanghai and shenzhen composites have posted their worst numbers. the chinese composite said in the last half hour beijing hopes the u.s. can meet china halfway. he insisted that a trade delegation is preparing to leave for the u.s. but would not directly answer a question about

whether the vice premiere will travel with other delegates. separately, prime minister theresa may said she hopes the country won't have to head to the polls if a brexit deal goes through but the u.k. may still field candidates and participate anyway our colleague is here. she's been looking at how the next parliament could go on with and without the u.k. >> the parliamentary elections are approaching us political analysts are describing this upcoming vote as critical and trendsetting. let's understand why at the bottom we see how the parliament looks at this stage and really the biggest difference here is that the majority that we've seen at the last 40 years between the e.p.p., conservative party and over there the s&p, the socialist group, they have been forming a coalition over the last couple of years passing

legislation but that isn't likely to continue so we could see these two parties seeking further alliances. for instance, with the liberal family there in the middle the second point here to make is really about the performance of the far right party. they expected to get about 26% of the seats you can see here that they're divided in three political families and so the biggest challenge for this party is in european elections it is to consider whether they could form one big group because if, indeed, they join forces, then the expectation is that they could derail negotiations on the upcoming european budget. they could stop sanctions against countries that disrespect the european rule of law as well as block trade negotiations of course, when we talk about the european elections we cannot forget about brexit. the expectation is that british lawmakers believe the european parliament as soon as brexit

takes place ending that scenario in that place. then the chamber is going to be reduced from 751 members to 705. so if you look at the currency of projection, we can see that it's the socialist family, the s&p group that is going to be vented by the fact that labor neps will no longer be at the european parliament. when we look at the performance of the far right as well, in this scenario without the u.k., nep is still expected to get about 24% of the seats having spoken with different analysts, they have told me that the risks that the far right poses are not so much in the short term but more medium to longer term. it is whether they will be able to use european platform to make gains at home. let me just say as well that the data that you're seeing here is from an independent website called european election stat

stats.eu. >> you have some similar but very slightly numbers here i want to ask you first how challenging is it for you, for a team like yours, having worked in elections across the world in more than half a dozen countries when it comes to trying to predict 28 different nations with various levels of turnout >> exactly turnout is a huge issue. in some countries where there's lower levels of turnout you can expect much more volatility. people that are voting are people that are interested in a particular election. what we do is we look at past european elections and look at the nature of the relation between public opinion polls and the national outcomes in those elections and what we find is slight differences typically in european elections the main governing parties typically do a little bit worse and the smaller parties do a little bit better. there's another aspect to this that's the socialist parties historically have done just that little bit worse

the net effect of this is typically green parties and the far right actually do that little bit better as well. >> let's talk about the next european commission president. that's what a lot of people are focused on and the expectation that will have on budget and sanctions. they have had a long run in having people there. according to your data, are you expecting the next commission president to also be a member of epp? >> it's all due to negotiation at the end of the day. we probably would expect the next european commission member to be an e pe p member it's difficult we know historically speaking the socialist group and the european party's democratic group have historically held a majority for the entire length of the party's existence n. this next group we are fairly sure they won't

we have to look to the green party as well to get to sport. not that they're going to pro integration. if they decide to go in the other direction, then they might have to get more euro skeptics manfred weaver, he's the spitting candidate of the european people's party. he is likely to -- he's trying to get both camps really. >> let's look at the u.k what are your expectations in terms of results here in the u.k. and what sort of message would you expect to resonate about brexit >> well, european elections in the u.k., at this point they're probably the most unstable at the moment we can see how obviously the brexit party is in the lead in the latest polls, a bit of instability. a lot of people moving from the labor parties to the greens and the liberal democrats. it's certainly the most instable electoral context of all the member states that are having an

election it will definitely have an impact on the narrative of how people perceiveeuropean elections, how people perceive brexit it's a multi-party system. although the brexit party might win with 30%, people probably need to reconcile the fact that there's another kind of 30% between the liberals, change u.k. and the green party in there in the mix so their analysis of the election is one thing. the impact is another. i mean, broadly speaking we talk a lot about the rise of euro skeptic parties in the european parliament, but actually whether or not the u.k. actually competes even though the brexit party is doing relatively well, it actually only makes a small difference we know in fact whether the u.k. compete, the socialist group won't actually hold a majority there. >> one question i have here is from a business perspective, political uncertainty is something people don't tend to enjoy and i wonder, you talked about the changing shape of the

coalitions inside the european parliament next session based on your numbers do you expect more gridlock? do you expect there to be these coalitions that actually work together across left and right >> you're exactly right. the rise of the u.s. skeptic group, we expect 25% of the euro skeptic left and also the larger block of the right they're going to slow down legislation. historically speaking it isn't regarded as being that important even though it has to pass legislation. if anything passes it has to go through the parliament and the council. historically speaking it hasn't been as important. those that control the council control the parliament the prime ministers that were socialist and christians that control the workings would have their parties quite largely in large groups within the european parliament yeah, you can definitely expect things to slow down. what that means for business is uncertain i guess because in

some sense the european parliament has had groups which, you know, between the coalitions that have environmental concerns on the left and then there have been coalitions between the christians and the right which have been pushing an expansion of the internal market >> it will be interesting to see how markets react to that, specifically your line that it may slow down decision making. already decision making is pretty slow. it's something that we'll be keeping a close eye on kevin cunningham, at dublin. stay with us, also coming up in our show, should the fed change course? one of the fed sitting presidents has told cnbc the policy is a little tight it has showed the u.s. unemployment rate falling the lowest since 1969. ♪ applebee's bigger, bolder

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welcome back to "street sign signs" if you've been living under a rock for the last week or more, you may not know that the

non-farm pay rolls have increased. the unemployment rate has fallen to 3.6%. it is the lowest since december 1969 our u.s. colleagues at cnbc spoke with a number of federal reserve policy makers in palo alto on friday to see if that strong job report has prompted a change of views when it comes to the fed's interest rate policy. >> i think we're a little tight on the fund trade, not too much, but a little bit tight i think the global safe real interest rate short term is about zero but you add the 2% inflation mark, you get 2%, we're at 2407. >> the seg nal was that growth was going down but there's no evidence of that the economy is at a slow pace. i'm willing to be patient on the inflation on the down side as well as inflation on the up side. >> i worry that weak growth outside the united states, particularly in europe, we're not immune to it and some of

that is spilling over and particularly that's the case because, you know, almost 50% of s&p 500 earnings and profits come from outside the united states i think that's a bigger issue that i think will have some muting effect on gdp growth here >> our number one story overnight, u.s. president donald trump has warned the u.s. will increase tariffs on $200 billion worth of chinese imports to 25% at the end of this week. now the shanghai and shenzhen composites have posted their worst drop since february of 2016 the chinese foreign ministry said the trade delegation is, however, preparing to leave for the u.s. but would not directly answer the question whether the vice premiere will travel with other delegates. >> translator: we hope that the u.s. and china will work together to reach a mutually beneficial treaty on the basis of mutual respect. this is not only in the

interests of china but also in the interests of the u.s. as well as the aspiration of the international community. i know there is much attention in the next round of trade talks. the chinese team is prepared to travel to the u.s. for trade talks. >> the worst session for chinese in three years the french index is down 2.2%. xetra dax is catching up ftse mib is down 2.3% as well. a lot of red on the screen the sectors getting hit are all of the sectors that have exposure with china. here i'm talking about auto, luxury it's getting hit it is a u.k. bank holiday so ftse 100 isn't open for trading. keep in mind when things do open up there may be a bit of a catchup there. let's talk about u.s. futures as well which is the epicenter. you can see that equities are opening up 55 points lower dow is opening up about 500

points lower as well so in line with some of the losses, europe is trading 2% weaker let's get a little bit more color about where we go from here i want to bring in brett u wiew. we were going to talk about non-farm payrolls, but in the last 24 hours there have been developments on the tariff front. how do you see this playing out? are you working on the assumption that at this point we can work on the assumption that trade talks will be held up? >> well, it has been an interesting 24 hours for sure. how i look at this situation is it is probably one of the most important signals that i'm looking at right now is, in fact, the china trade delegation is intending to show up at the meeting here and i think the meeting is going to be on thursday i think that's sending a really positive signal and there could

be a situation where that could say that these tariffs don't occur. >> to follow up on that, you've obviously been talking to clients about these subjects how does this rate when it comes to investment cycle compared to, let's say, the fed's stance on interest rate policy >> well, it certainly has a major impact, especially in the business community psychology. if these tariffs do come along, i think that the u.s. markets are going to have some major volatility because that's creating a very high level of uncertain uncertainty. as far as the consumer psychology, we look at the job market here. we think that's very strong. the fed's in the right position. i think they did an incredible job last week holding the line i agree with your fed comments earlier. i think they are a little tight and they could come down probably another quarter, but i

think consumer psychology will hold up in the meantime. >> you say that consumer psychology is going to hold up but then again if we are looking at more tariffs, the pass through is going to be greater for the u.s. consumer, it will start hitting them from a discretionary spending standpoint a lot of people are saying this second round of tariffs if they do end up being applied could be negative for growth. what do you think the fed do in that circumstance? do you think they would be willing to look through the inflation because of the extra tariffs because of the weaker growth back drop >> well, i understand what you're saying, but we have to look back over the last 12 months when the tariffs were first put on we have not seen a lot of inflation flow through the economy so as far as the fed's concerned, i'm not quite sure how it's going to affect

consumer psychology. when i'm going under the assumption, look, china and the united states both need a deal i realize throwing this curveball with the 25% tariffs is jolting the markets here, but both sides need a deal and they need it done rather quickly. >> why do you think those strong job numbers you've already referenced are not playing into the inflation number in the u.s. >> you know, that is the fed and many economists, and i feel that productivity has recently started to come up we just hit one of the biggest numbers at 3.4%. that is helping out in the situation. it's very important because keeps wage inflation in zblek yes, certainly something we're going to be watching out for and we'll see how things transpire

the next couple of months. certainly the fed are in an interesting spot brett ewing. make sure you join u.s. colleagues chairman and ceo warren buffet, no doubt he'll have comments on all of this. >> but all eyes on how u.s. futures are going to open up in a couple of hours' time. all of the three majors opening up weaker. s&p came back from the all-time high, 56 points lower and dow 16 points down. >> i'm willem marks. thank you for working on the u.k. holiday "worldwide exchange" coming up right now. target date fund? 529 plan? a 10-k? what's an etf? an ipo? 401(k)? where do i start? empower yourself with the free tools and resources on investor.gov. before you invest, investor.gov.

breaking news at the 5:00 a.m. hour, stock futures plunge as president trump wraps up the trade war with china the president threatened to raise current tariffs and slapping on a new round of tariffs. china responding saying that it may pull out of this week's trade talks. stocks in china falling overnight. we have full team coverage of this major developing story as "worldwide exchange" begins right now. good morning good afternoon and good evening.