strategy, if that's what he has. it's august 2, 2019, q"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times squarement we start with the markets reaction to the news that president trump is planning to slap 10% tariff on the remaining 3$300 billion in china made goos that are not already tariffed. the dow went from up 311 points to down 280 points on this news. we'll show you how things stand now. this morning u.s. equity futures are indicated lower again. dow futures down by 85 points. s&p futures down by 14 the nasdaq is off by 58 points this is just the beginning of

the moves we've seen markets everywhere were rattled by this news look at the treasury market. the tep-yen-year went all the w down to 1.89%. this morning the yield is lower, 1.847% this is happening as you look at yields rolling back to levels we have not seen since november of 2016 the 30-year is yielding 2.377% the two-year is at 1.70% the five year at 1.648 overnight in asia, stock there's took it hard you will see that the nikkei was down 2.1%. the hang sens off by 2.35% the shanghai was down by 1.4%. in europe this morning, there are red arrows there as well with significant losses. the cac is down by 2.75% the dax is off by 2.6% the ftse off by 1.9% so around the world all of this,

people are watching closely to see what this means for the economy. maybe no better market to see that in than the move in crude oil prices yesterday wti was off by more than $4. a decline of 7.9%. that's the worst single day performance since february of 2015 concerns about what this all will mean for the global economy. this morning wti rebounding a bit. up 2%. >> it said slapped in the teleprompter >> slapped >> you slap a tariff >> you are used to slapping it on the schiffhips >> so i can refinance my mortgage i can fill my tank cheaper >> and the stock market is down. >> my comcast -- >> anything you want to buy as a consumer will be more expensive. >> let's show you what happened yesterday exactly. >> schumer is happy. you should be happy. >> i know schumer is happy the tweets that sparked the selloff.

the president said nergs thougo thought they had a deal with china three months ago he said china had not followed through on promises to buy u.s. agricultural products and stop the sale of fentanyl to the united states. he said during trade talks the u.s. would put a small additional tariff of 10% on the remaining 3$300 billion of good and products coming from china into our country the president spoke about his tariffs threat at a rally last night in ohio. >> we've been losing hundreds of billions of dollars a year to china. it has to stop they understand that president xi is a good man he's a friend of mine. he understands it. until such time as there is a deal, we will be taxing the hell out of china that's all there is. >> with friends like these, right? earlier we showed you the reaction in blue chip stocks retail names were the hardest hit.

check out some of the names that you need to watch including best buy. it fell 10% on the tariff news, office depot, kohl's as well breaking overnight we want to show you and get over to china china did respond to president trump's new tariff threat. eunice yoon has more on that >> thank you very much here in china people are using a popular chinese saying to explain president trump's decision they say that president trump changes his mind faster than flipping pages on a book so chinese officials not as generous china's commerce ministry said that the move was a serious violation of the consensus at the g20. the country's top diplomat called it a move that was neither constructive nor correct. and the foreign ministry said that beijing would be forced to take countermeasures it's that last point that has been really worrying a lot of american businesses here in china.

the u.s./china business council said their members are most concerned about increase regulatory scrutiny, delays in licenses and approvals and discrimination in government procurement tenders. retailers say that american consumers will be hit hard but chinese manufacturers are wor worried about their bottom line. system of them say the 10% tariff, even though it's not as bad as what could happen with 25%, it is still a blow to their business one in particular that makes goods for christmas gifts for american consumers said they're thinking they'll have to pull out of the u.s. market altogether in terms of the trade deal itself, there's a lot of reports in the stayed media, particularly the global times, which said at this point the new tariffs would only lower the prospects of a trade deal and that beijing will hunker down instead for a prolonged trade war.

one more point i'd make, i spoke with one academic who closely watches the trade talks on the chinese side, he said that what he's most worried about is the chinese negotiating team won't take part in this september meeting that is supposed to happen in the u.s., between the u.s. and china on the trade deal if these tariffs go through. >> eunice, was this a situation -- reading it from the sidelines, it looked like there was no progress made in the talks, the president -- president trump hinted that, look, they'll wait until the election an see what happens i guess maybe this is inevitable if you are looking at a situation where things were freezing up any way. >> well, i mean, what is interesting here is that there's been a lot of talk about how beijing is probably going to wait things out at this point. that there wasn't a whole lot of progress made.

that experts say china wasn't going to make dramatic changes to its economy and the way it runs at the end of the day, you know, in state media today there were stories will pow americabout hon consumers will be hurt the worst. beijing is watching this so there's a sense beijing has more time on its side and would be better off to wait things out. >> we'll talk about it quite a bit. we'll have different guests on there will be -- fred kemp is coming on. he says that -- he thinks it's sort of the opposite view. the u.s. can fair this better than china if you are going to wait, it's still a year and a half away try this on for size, this 10% on 300 billion see how that feels he's trying to make it not an option to weight for now more on the president's tariff announcement and china's response, let's bring in leland

miller of china's beige book international. the president said the deal they almost came to, there were 30 things they didn't do. they also said they would start buying grain immediately haven't bought any he also got a promise for fentanyl, that president xi would do something for fentanyl. president trump says there's been no progress in that area. it's still flooding in and people are dying is it possible that all along -- we've seen this for quite awhile, you're a china expert, they'll nod and say, yeah, we'll do these things when they have no intention perhaps of doing any of these things and they're on a mission to get where they want to get by 2025, and by hook or crook they'll get there is that what's happening here? >> look, the chinese would love nothing more than to talk and do nothing. i think there's another dynamic at play. if you have a timeline not rushed, so the chinese don't

see -- >> no elections, president xi is fine >> nothing coming up you don't have politics on the chinese side, but you also don't have a deadline to end talks they didn't think there was a new tariff deadline hitting, so you're about to take a multi-month hiatus off from the talks because of the chinese holiday in october so they were never going to do anything in september or october any ways but of how politically sensitive that holiday is. so the chinese looked at this and said we're not getting into the hard negotiations, even if there is a deal, until november or december. why are we talking about the text right now let's go some ag buys to buy off the president, get some concessions on huawei and depending on what happens -- >> so you're saying he saw that move for what it was and said okay, take another 10% on another 300 billion? >> i think the chinese didn't play the game well instead of having some sort of

pretend move, the chinese sat down and they didn't want to talk about anything except agricultural buys and huawei there's no acknowledgement of going back to the old text lighthizer i think returned from the meetings and said this is propaganda >> we looked at the pictures of them all standing together, and it basically looked like all of them thinking, okay, how will i go back and report this? >> don't you think that you will play the long game against china, you will lose maybe we have much more -- >> threshold for pain is the thing. >> that's the thing. i think their economy can get hurt more than ours, but in general they're ready to play the long game more we definitely have short-term considerations over here >> no question that's been the problem from the beginning. there's a new deputy sheriff are in town, his name is the fed the fed by jerome powell's own

explicit words has back stopped president trump's trade agenda you could argue this is a good thing or a bad thing, but he's told the president if you make things bad enough we'll step in and back you going forward so this is completely changed the president's trajectory in terms of how much brinksmanship he can do. >> you don't think this is a coincidence that this happened after chairman powell -- >> not at all. i think if there was a 50 basis point hike, he would have delayed this more. >> really? >> yeah. >> i don't understand that >> these guys came back and told him -- i think he got p.o.'d when -- it was after 11:30 yesterday it seems like it was impulsive. they met, lighthizer and mnuchin, i think they delivered -- >> the tweet was uncharacteristically muted in terms of what he was saying --

>> mnuchin wanted to say we need to alert the chinese we're doing this trump said no we'll just come out and do it. the olive branch was there he may not put these on if he -- >> if china comes around >> seems like he laid out a path for china to avoid this. start buying some of these agricultural goods, do something on fentanyl, then we can save face >> the falks wetalks were not constructive and the fed did not listen to the president. when theed if markets reacted t fed announcement, the president was happy to lay it on, let's get a bigger market hit and i'll get my 50 basis points cut in september. >> you have the beijing view which is just let this roll through the election and trump also seems to think that he should let this roll through the election who is right

>> i think -- >> why do they both think the same thing it's a very strange situation. >> it is it's different from a few months ago. the chinese economy has strengthened since the end of 2018 2018 it was a mess they spent a lot of time, effort and resources to build it up what president trump is looking at now is he's looking at the democratic field he's saying to himself if i'm going against sanders or warren or one of these protectionists, i have to be the protectionist on that stage. i can't get outflanked he's trying to position himself in a way where he has flexibility on a deal if joe biden is the candidate -- >> we had people come here and say if this deal happens after the election and trump is still in office, it's worse for china. is that right or wrong >> i think if this thing is stretched down the road, the president doesn't need the ag buys the need for the president to demand big purchases before an

election goes away there's probably a need for more substance. structural reform wasn't on the table now or before. it won't be on the table in the future this goes to the question what do they want from a trade deal if the president is happy with getting agricultural purchases, a push back against the trade deficit, in the short-term he can get himself a deal if he thinks he's changing chinese behave yr ior on s.o.e., that's not going to happen >> thank you coming up, we'll get you ready for today's jobs report. you thought the news was over for this week? it's not we'll tell you what the jobs report could mean and how it could complicate the fed's moves for the rest of the year. and coming up we'll talk to former white house chief strategist steve bannon. that's coming up at 8:00 a.m. eastern time as we head to break, a look at

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a new round of tariffs on china sent markets tumbling, and today's jobs number could further complicate the fed's plans for interest rates joining us is jim o'sullivan and matt toms. matt, i want to start with you, your assessment of where the market stands, where valuations stand. do you think the market was

correct in its assessment of valuations on wednesday before we heard from the trump tweets, before we heard from jerome powell do you think the market's assessment is correct today? >> more correct before the tweets we think the fed will do what's necessary. the market was bouncing become ahead of those tweets, it's now overreacting to trade rhetoric that will stoke from time to time and fall away we don't think that will get overly heated. we think this is a overreaction to trade fears and a buying opportunity. >> you think it's an overreaction because 10% tariffs are not a big deal for the u.s. economy or the global economy or those 10% tariffs never happen >> they may happen it's more likely they don't. the dominant strategy by the u.s. administration is to elongate this battle we don't think a victory is needed ahead of the election better to have an enemy that you can poke atascaderan tit time a.

>> most people thought president trump would like to see a victory on this sooner rather than later, so things don't rise up and rattle markets and the economy between now and his election you don't think that's the case? >> we don't. it's easy to stand back and say you don't like how we're fighting the battle, but who else will do it. it's a strong strategy >> let's talk about the fed and the position jay powell and company are in now they told us they would be watching to see what happened with the trade talks they would be watching to make sure things didn't get worse if they get worse, are they obligated to step in and cut rates once more? >> there's no question that yesterday's news increases the likelihood they'll be going ban in september this is in context of what's happening on the numbers front the fed is easing, but not dramatically easing.

they view those trade tensions as a drag on the economy the economy is clearly slowing on the other side the prod econobroa economy has held up reasonably well every number that comes in, is it showing the broad economy weakening a bit or not with trade tensions intensifying, the likelihood of them going in september is even more >> the next piece of data is the jobs report in about two hours time what number do you expect? what would be a number that changes the equation >> of course monthly numbers are volatile we'll get another employment report in early september before the next meeting last month employment was much stronger than expected we had 224,000 on payrolls i don't think the trend is that strong there is some slowing here if anything we're due for a belowtrend number. we have 140, it's a bit below

consensus. the one thing to watch for, we could start to get hiring for the 2020 census, which could be temporary hiring and boost the number people should look at that numb number >> matt, the stocks under the most remember sure yesterday were energy stocks, concerns about the broader economy there an trade sensitive stocks, smuktesmuk e smu smu semiconductors and retail. >> things that are tied to commercial real estate, things like housing related, they have a tailwind from this low rate structure and the pinch lower i rates to offset the volatility >> but the pressure points and selloffs, you have retailers down more than 10% oil prices dropping dramatically you wouldn't be willing to step into those areas even though

we've seen the biggest pullbacks there? >> i think there will be opportunities. this has a bit more to run it will create opportunities we're not courageous enough to go to that front end, any weaker in stronger assets is a good opportunity. >> thank you both. coming up, activists in the cloud, we'll break down the latest investment from carl icahn and show you how the stock is reacting. that's next.

time for the executive edge. and we've got a stock mover.

we don't have stock movers to tell you about toyota, the automaker reporting profit rose 4% in the first quarter. sales improved but they did fall in north america toyota lowering its forecast blaming unfavorable exchange rates. we have activist news to tell you about carl icahn disclosed a 12% stake in cloudera. cloudera was founded by engineers from google, facebook and oracle and yahoo! but they have struggled to shift to the cloud. they are 10% on the news, but they have come off the highs they are less than half of what they were back in march. >> this is still the executive edge >> we're still there >> i thought i got to do the executive edge >> no, you get to --

>> i get to do one part? >> yes >> i don't get to do this part >> this is my good luck. comcast announcing a new universal theme park in orlando, florida it's called epic universe it's the largest investment comcast has made in the theme park business. it will be located on a 750 acre plot of land it's across the street from where the existing campus is to find that much land that close to your existing park is kind of phenomenal what do we know? >> we know how many workers, but what is epic universe? what does that mean? >> it's epic >> going to be an empic park do we know anything? you looking it up, sorkin? >> i don't know what they've made public. >> i've seen -- >> is it super heroes? >> i don't know. >> i don't know what has --

>> i'm just conjecturing >> it's really cool. it's literally across the street >> that's all you can tell me? 750 ache seniores is really cool >> to find that in orlando, right next to your existing park, that's amazing it's literally across the street from the rest of it. >> maybe a water park. >> they have a water park already. >> what is it that they don't have did you find anything, sorkin? >> you know -- >> dinosaurs or something? >> i had one conversation with someone. that's why i'm being scircumsp t circumspect. it's much more about the space and the land >> wait a second -- >> isn't "jurassic park" our thing? >> it is >> is it possible -- >> there's a "jurassic park" ride that exists already >> is it possible we've done it?

there is one >> is it possible we've done it with the dna -- >> that we have actual dinosaurs? >> i wouldn't let that out that would be embarg oembargoed wouldn't it? do you think we're trying it for real >> i don't think so. >> why >> it's pretty cool. >> i'll tell you during the commercial break. coming up, we'll tell you about a couple of big earnings movers and president trump's tariff news wreaking havoc on retail stocks yesterday we'll tell you which retailers will be hardest hit this hour. as we go to break, a look at the s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning you're waking up to a busy friday global markets reacting to the news that president trump will slap another 10% tariff on the remaining 3$300 billion of chinese goods not subject to taxes. we'll get the monthly jobs report in two hours time that could put additional pressure on the fed to cut rates again in september if it comes in weak. or if it comes in strong, it could raise questions about why they'llen c ee ebe cutting rate. you can see global markets are under pressure hang seng down by 2.3% the cac in france down by 2.5% look at the yield on germany's

30-year bund it just turned negative. the yield on the u.s. ten-year bond hitting its lowest level since november of 2016 it was down 13 basis points yesterday. this morning trading at 1.843%, even further pressuring the yield. u.s. equity futures at this hour are showing some additional declines down by 42 points. s&p futures down by 10 the nasdaq off by 45 stocks to watch, look at etsy shares fell as much as 7.5% late yesterday but the stock pared some of those losses back. they reported an earnings beat but revenue fell short of expectations that stock down about 2% in the premarket. the company's ceo says there are new initiatives coming that will improve the shipping experience for etsy customers shares of payment company square are falling

earnings and revenue beat expectations, though adjusted results beat forecast the payments company is issuing third quarter guidance that is weaker than expected square selling its food delivery service caviar to door dash for 400 million. >> it's not the same as door dash >> no. it's part of -- >> higher end? >> higher end. all sorts of things with it. it's been part of square for some time. there's always questions about why it's part of square. square was trying to really build a reservation system and a system for restaurants and it was an inducement to get restaurants to use the square platform, if you will. worked a bit i don't think it worked as well. they thought it was a focus that was -- that they shouldn't be focusing on. they have a spat paeparate parti

with door dash. president trump's announcements of new tariffs has businesses worried, we'll get you up to speed with the big retail losers. and it is once again jobs friday we'll bring you predictions from our panel of experts plus more importantly instant reaction after the numbers. it all happens at 8:30 futures may move in all sorts of different ways stay tun, u' wchg edyoreatin "squawk box" on cnbc pressure r, and racing. this is also mia's pulse. that her doctor keeps in check, so she can find balance. this is mia's pulse, and now it's more stable than ever. this is what medicare from blue cross blue shield does for mia. and with over 80 years of healthcare expertise, imagine what we can do for you. this is the benefit of blue.

the markets reaction to president trump's new tariff threat is our top story this morning. courtney reagan has more on the carnage. >> this is a fear that now looks like a reality retailers were worried about the possibility of the fourth tranche of tariffs on things like clothing, shoes, personal electronics. best buy falling almost 11% on president trump's tweet saying a 10% tariff is coming september 1st. and in may best buy said we think it's premature to think about tariffs. you shouldmaker steve madden lost nearly 9%

nearly all the product it makes is made in china gap inc sells its own goods, and there are no vendors to absorb the costs. they fell 8% even coach and michael kors sold off as well. many retailers have been working on diversifying supply chains out of china for years, but more u.s. apparel and footwear is made there than anywhere else. the issue with investors, they want to wait for earnings. but in a statement colombia's sports wear ceo calls the tariffs a disaster for the american economy, employers and consumers saying his company and others will be forced to raise prices and let's not tank the economy with the misguided conception that trade wars are fun. >> all right

let's talk more and continue the conversation on the impacted of tariffs on retail. let's bring in liz dunn, founder and ceo of pro forma i was looking at the averages thinking, okay, couple percent yesterday. only 45% points today. then i look at oil, best buy, look at 1.85 on the ten-year, there's serious moves, reactions to this. stocks are holding up well, actually we are seeing some effects in other markets, broad in the markets as well. >> yeah. i think for apparel it's particularly -- it's a horrible event. these apparel companies are fighting for their lives in many cases because they already have razor thin profit margins. there's not pricing power. there's too much competition they're dealing with the impact of digital it's very difficult for them to navigate this. i think that for a company like best buy, while in general electronic shoo iics should have

pricing power, they have been doing a great job competing on price with some of the larger threats. the amazons of the world i think for them it is going to be pretty tough to navigate. >> is this the only thing wrong with retail? we have obviously digital competition, but the consumer is strong the economy is good. things would be great, i guess, right? >> the consumer is strong-ish. but this is a direct impacted to the sconsumer some retailers and trade groups are coming out saying this will impact hiring. that's another impact for the consumer with the rate cut yesterday, part of it is are we causing some sort of self inflected problem? >> is this a situation where total retail sales is going to remain constant but you'll be selling fewer units and be less profitable as a result just a profitability picture really >> yeah. it's profitability and units

consumers will cut back on some of the more discretionary categories, certainly in cases like apparel, where you don't have pricing power, i don't think any -- there are very few apparel companies that can pass through 8% or 10%. >> if they're really weakening their currency and absorbing the damage, could it be not as bad as you're forecasting here when it finally gets to our shores? >> immediately no. i think when -- i think a year from now possibly. there are categories that are somewhat easy to move out of china. we saw it with some of the leather goods manufacturers. i'm working with one now who is moving product to vietnam and by next year this will be a footnote but it is immediately quite challenging. some factories are absorbing some of this i think there's still much they're going to be willing to do >> looking at these spedrs,

that's a move, but what's the high and low what's the 52-week on the spdrs? >> gosh. >> is it in the middle of the range or absolutely decimated? >> i think there's still more damage to go here. i think we also need to figure out -- you have to look at the retail picture and who can absorb this better than others as liz is talking about the retailers that sell apparel, they can't spread the pain around if you're a retailer like a walmart or a target, you can look at other categories and say this product is price sensitive. i can't risk raising the price on this because we'll see that demand fall. but this product doesn't move as often. consumers are not as sensitive to that price. maybe that's where i move the prices up. if you sell one category and that whole category is hit, you're in trouble. >> they got us, china does, in the sense that it's been decades that we've been the beneficiary of this cheap stuff. we have been lulled.

we let them do whatever they want with ip theft and things that happen over there knockoffs, all that stuff, they showily make like -- we have bannon on at 8:00 -- >> making the case for him >> no, just making the argument that we have become addicted to cheap things from china. when you try to reverse it, it's painful. what's why we're feeling pain here >> i think the retail groups say we agree there are some unfair practices that china is engaging in >> but don't take it out on us >> we don't think tariffs are the way to do it because china doesn't pay the tariffs, the consumers pay the tariffs. >> you move to vietnam, you move to -- >> they got out of the v.a.t. tax. the border adjustment tax. >> this is the new thing they have to deal with. >> that's true but the retail lobby groups do acknowledge there are issues with china and with the trade partnerships, they don't think tariffs are the way to do it >> no one wants a nuclear waste site in their backyard >> right

>> no one wants to be the people that take -- i don't know how it finally plays out it seems like it will be a years-long confrontation. >> probably will be. >> and it could be longer. now we're talking retaliatory tariffs that could have ripple effects in the economy >> remember the guy from -- >> myron brilliant yeah >> a lot of people switching sides. >> salt taxes. >> yeah. >> all kinds of things >> yeah. >> i put up salt taxes for the greater good didn't you oh, you don't like that lower corporate tax. >> i have a complicated issue. >> because you have so many different tax shelters that -- and llcs here, i'm here. i'm moving this over here. any way, thank you >> liz, thank you for coming in. when we come back, shares

of -- >> do you pay anything in taxes? >> we'll break don't move with an early pinterest investor and talkibili ibilitabout the impac president trump's threat on technology stocks. that's next. as we head to break, let's take a quick check of what's happening in the european markets. france down by 2.6%. germany off 2.4% the ftse down by 1%. 'lbeight back.

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welcome back to "squawk box. president trump's announcement of a new round of tariffs against china sent stocks stumbling thursday this coincided way drop in bilateral investments specifically in the tech sector. joining us whether that's likely

to happen again, principal and venture partner, and a pinterest shareholder. talk about pinterest given the number, but what's your take what this all means. >> on the tariffs. >> yeah. >> you've already seen the reduction, the tension created in cross-space we saw it with moneygram, blocked from buying them you know, i think china investment from the venture perspective is a specialized thing and always been and becoming even more so. u.s. firms are more reluctant now to do one or two investments in china without a proper presence there. >> did you see peter thiel out in the op-ed times another commentary on this idea that google is giving china information by, by this, by creating an ai lab in beijing and that is sort of arming them,

if you will, with a new weapon what do you make of that argument >> i don't know what the rationale or motivation for that would be on the part of google so -- i mean, sounds a little farfetched >> let me ask you a separate question if you owned a tech company, would you open an office in beijing? do you believe you could open an office in beijing without that information being taken, stolen, used by the government >> it's an absolute risk but these companies that set up there try to put up safeguards and controls to make sure it doesn't happen, but look in the case of pinterest, for example we never had an office there for that reason. >> i guess the balance of the question, is there more value in having an office and being able to track and use the talent and benefit, benefit from the talent that might well be in beijing son an ai project, versus whatever you think may happen to the intellectual/property

created in that city >> probably not. therapy great talent engineers all over the world you can certainly set that up even in montreal has phenomenal talents so you don't have to deal with all that. >> what's your take on pinterest now? >> the company put out great results. beat estimates heartily the main thing going forward how they monetize naturally a bright spot as well as commerce to this it day most of the revenue, almost all, coming from advertising, but not taking revenue share or taking advantage of fact they're driving so many sales for merchants. >> the question is why not >> it's early. there was a program for years ago. something called buyable pins. you see it today with a new check-out product. early. the product launched in 2015 might not have been kind of ready for that environment you'll see them reenter the

commerce in some ways in the coming years. >> more growth outside of u.s. than in the u.s. >> i think so, yeah. >> and do business in china? >> not the foreseeable future. pinterest is deliberate where they've grown. they don't grown by turning on the lights's they pick countries they think they can have meaningful advertising revenue western europe, australia, canada, japan, et cetera. >> when you think -- i want to go back to the china trade issue a second when you think now about making investments, or -- let me backtrack. >> yeah. >> when was there a time you said to yourself i'm making an investment and psyched because one of great opportunities is to sell to a chinese company, and is that ever coming back and what it, there, doing to valuations, ability to buy certain things or think about that >> it will come back at some point. in the foreseeable future absolutely we have, i have companies in my portfolio we

thought about chinese buyers off the table at this point. >> thank you for being here. coming up, much more on the market president trump's new trade threat and how it could impact you and your money next and talk to one of the architects, steve bannon a little aside less than two hours away from the july jobs reports. what you nd eeto know before the big number hits. "squawk box" will be right back. y to extremely happy. there's also angry. i'm really angry clive! actually, really angry. thank you. but what if your business could understand what your customers are feeling... and then do something about it. turn problems into opportunities. thanks drone. customers into fanatics change the whole experience. alright who wants to go again? i do! i do! i have a really good feeling about this.

global stocks reeling as president trump takes the trade war up a notch threatening a new 10% tariff on $300 billion in chinese-made goods. the july jobs report in focus. preview of the data and what it mean s for the market. how tariffs are rocking the basin and beyond as the second hour of "squawk box" begins right now. ♪ working for a living working for a living ♪ >> announcer: live from the beating heart of business, new york this is "squawk box." good morning, and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity at this hour pared down losses to 38 points

38 nasdaq taking down worse, down about 41 and the s&p down about 9. the real action that we saw, though, a little bit of a reversal of some of the moves, but the treasuries, ten years, 185. that's -- >> november of 2016. levels lowest since november -- >> and then oil. which is obviously economically sensitive. everything else. finally saw the dollar -- >> down 7.9% biggest one-day drop we've seen since 2017. >> and the dollar strengthen, makes no sense, weakness yesterday. >> what else is making headlines at this hour 90 minutes away from the july jobs report. looking for 165,000 new non-farm jobs unemployment rate expected to tick down. more on that in a few minutes. activist investors carl icahn has a new target

a snake a cloud software company and plans to push for changes and possibly seek board representation and as often happens when icahn gets involved, stock up by 17%. a gain of $1.09 to $7.44 loew loews -- lows is outsourcing did not describe the number of layoffs, thousands of workers will lose their jobs look at lowes shares another round of tariffs on $300 billion worth of goods. beijing responding and planning countermeasures. over to kayla tausche. >> after that surprise tweet yesterday by the president saying the u.s. will charge 10% on all remaining chinese imports china's foreign ministry had no choice to retaliate saying we don't want to fight but are not afraid to fight. they will not accept

intimidation and blackmail and not give in regarding major principles the action came after an interest rate cut in response to the trade war and after the lead u.s. negotiator, briefed the president yesterday on how talks went this week in shanghai while theround was publicly described as constructive sources say chinese officials dug in their heels and little progress was made. here's president trump yesterday afternoon. >> when my people came home they said we're talking we have another meeting in early september. i said, that's fine, but in the meantime, until such time as there's a deal, we'll be taxing them. >> this last set of tariffs includes things like footwear, smartphones, toys. even the treasury secretary ak nomged in a may testimony this round could have a dramatic impact on the economy. >> the way the tariffs were designed was the last tranche the consumer issue we are monitoring carefully. there will be exceptions the last tranche is subject to the president's approval and

exemptions consumer products are by design in the last tranche. >> that last tranche, fw it goes forward, set to go into effect september 1st. of course, four weeks before noi now and then, guys, because itic tas that long for ships to leave china and reach u.s. shores but my sources say it also gives china a little time to make concessions. back to you. >> kayla, right. seems the president laid out in this tweet the path for those concessions basically saying two of his big complaints were they weren't buying some of the, the farm, farming things that they had promised to buy and then the fentanyl if they could answer on those two fronts you could see this potential lly pulling back befoe september 1st, we'll see. >> and made at the g20 back in december in bane owes aires and the farm goods an interesting part i was told by sources briefed on that g20 bilateral what china

said, they would consider buying farm products but that president xi was carol not to dmoit-ocommo so, something they said they never did but the president thought they did. and president and ceo of the atlantic council and a cnbc contributor. fred, what happened? what caused these tweets yesterday? >> i think this is classic trump. his negotiators came back. they found a much harder line chinese approach one of the things that's changed that's interesting is the commerce minister has taken over and more of a player in the talks and put in the more as a hard-line person a person who will stick very much to the facts and any big deal he'll take back to chinese leadership they've done a shift in thinking since may where they believe more and more that the united states is actually out to undermine their rise and decided

let's wait out president trump our economy's okay we think it's bottomed out things are going in the right direction. i think trump's answer yesterday was, well, you're not going to be able to wait me out i'm going to make sure that's not easy for you. >> what do you think happens next >> i think you will have countermeasures. let's see what comes before september. under the current atmosphere where the chinese are not only just looking at this trade situation, they're also taking a look at protests in hong kong. worried about independence moves in taiwan. seeing themselves more and more in a generational struggle with the united states. not just over what happens in the markets the next day or in the trade talks more of a generational struggle between capitalism and feel they have momentum behind them at current trajectories within five years non-free countries rated by freedom house will be

the ma jompt jority of gdp firse in a century see the u.s. out to undermine them. >> fred, in terms of timing, seeming to be this -- well, there's the election in the u.s., and there's how the trump administration thinks about the election and also how the chinese se -- xi thinks about the election and leverage what would you tell them >> i'd say this is longer term don't look so short term the chinese are saying, the president can't hit consumers ahead of the election. can't hit the farm country i think the president just said i'm willing to do that, because i think the economy's strong enough, and if i'm tough enough i'm going to put jay powell until a position he's going to have to give me more, give me more rate cuts. >> did the chinese miscalculate? the other issue we saw president trump in ohio last night he now has a real boogie man that can be a powerful thing. >> sadly i think both sides are

miscalculating they're so dug in, in their own political bases. trump has his turning him on but so does xi xi can't show weakness they're in a leadership retreat and do that the first two weeks of every august and make major decisions then they're looking at a dispute with the united states which they didn't want and don't know how to get out of, but looking at a dispute in hong kong where they've got troops poised on the borders and have to decide whether to go in or not and from there standpoint this is a bigger deal. they're even blaming the u.s. for that saying there's a u.s. dark hand behind that, which is not true, but it's become much, much more cold war atmosphere. what i would watch for if i were u.s. companies is non-tariff measures to answer so trump is figuring, well, on a one to one basis i have the strength, because we have nor goods to tax than they have of ours to max. >> non-tariff measures like

bringing in north korea? >> not so much's north korea, unreliable entities list, put more american companies there. licensing problems, harassment of u.s. company employees. just making life more difficult for companies, many u.s. companies that are operating on the ground in beijing and throughout china that don't fall under any of these trade deals. >> fred, in your comments, you said that china does have more to loose near term, in terms of the economy. and so are they willing to, you said -- trump saying you're not going to be able to wait are they going to wait willing to wait and take the pain between now and november of 2020 >> so i, i have a friend over the years in china, chinese. he's relatively high ranking, and he says that they look at economic indicators as political indicators so they have 6.2% growth in the last quarter that's the slowest growth

they've had since 1992 they have a lot of stimulus they can throw at this. they can do more to juice up the domestic economy with infrastructure spending and that sort of thing but then reach the danger of driving up debt. so they are in a position where they feel they were better off than the end of last year economically, but if the tariffs start being jacked up again, the people start disinvesting, you have decoupling of the u.s. economy from the chinese economy. a lot of kwis, cummings, diesel, apple, reducing supply chains how that china the economic shut far more than the tariffs. >> yeah. and so they're willing to, to take -- thought it was funny authoritarian capitalism versus democratic capitalism, i thought you were talking about debate but you weren't because it was still capitalism jit y right? you would have said, socialism

>> but before the 2008, 2009 financial crisis i don't think the chinese thought they had a system that would be competitive globally against our system. i actually think they believe that and think they're -- >> but hong kong might be making, to rethink whether it is going to work forever. isn't the writing on the wall? people are -- you know, a lot of people are doing much better in china than decades ago. >> is it like glasnost >> right how long do the, the -- call them meager economic -- substantial economic gains but a lot of stuff there isn't in terms of personal freedom that just isn't with the rest of the world and i think that the internet and everything else, i think a lot of people know that by now how long do they say, all right. i'm willing to exchange that for economic progress? >> well, don't forget, though, in 1989 when the berlin wall fell was the tiananmen square

crisis now in retrospect the crackdown wasn't as important as the berlin wall breaking down. authoritarianism wins in beijing. >> interesting point. >> now we may have another situation like that in hong kong, and august is a time when crackdowns happen. i'm really watching that very closely. i think the, the key thing to say to market players is, i understand people will trade up and trade down and what people say on trade, but this is a generational contest taking place, and you have to start thinking about, well, who profits if we decouple economies? who profits -- clearly year seeing more going to vietnam, malaysia, to mexico. what is going to be the future of our relationship with china and who -- aside from the economy, who's going to take the commanding heights of technology because that means -- that's the

company that will set the standards, regulatory standards for ai, 5g and all sorts of other things an exciting space to watch. >> i wonder if it's worth it do you think this is worth it what we're doing, or not, fred >> i'm very glad the president has finally calmed china on unfair trade practices now we need a strategy to talk to each other and reach a truce that understands we'll be at this for a few decades >> decades. >> right fred, good to see you. a lot more to talk about coming up, it's jobs friday. preview the data and talk markets in a few minutes and later the announcement of new tariffs. stocks sliding a look at -- what's fueling those worries. stay tuned you're watching "squawk box" on cnbc. here, it all starts with a simple...

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welcome back to "squawk box. futures now down about 53 points jobs number coming up. nasdaq down 48 and change and s&p off about 11 really, today's the day we probably should be looking at yields every time we check the futures, because we haven't seen these in quite a while three years. right? >> november of 2016. those levels we hit -- >> not quite three years. >> what we hit yesterday and

then the yields weakened from there. 1.8, 2.5% now. >> in the stratosphere. >> i admit, should you look at refinancing again. >> and in our country people actually pay you to keep your money with -- >> versus germany, where the -- bund went negative, earlier today. >> 30 years. every year you lose -- >> just a little bit a little bit take just a little bit >> yeah. unbelievable >> countdown to the july jobs report is on we're now less than 90 minutes away from the numbers and steve liesman joins us with a preview. back from washington >> washington. thank you. >> real fireworks both from mr. powell and the president. >> and andrew, before the president announced yesterday potential new tariffs on china kmichts wanted to know howed jobs report would affect slowing global growth and the fed chair. both elevated d concerns

mentioned trade war 27 times in his comments and economists believe it already had an affect job growth slowed from 1.3 million to 965,000 this year looking at three sectors economists say are trade sensitive. manufacturing, mining and construction, job growth slows from 376,000 to 179,000. what you need to know. bottom line, more than half of the job growth slowdown from last year to this year came from the trade sensitive sectors eve thon e they represent just 16% of all private sector employment may already be seeing an effect. how much persist today the expectations 165, a slowdown from strong numbers back in june, unemployment rate down a tick to 3.6. average hourly wages seem to have slowed a little up to 0.2% on the month as the expectation today and adp coming in the place you might expect looking for 165 today.

jobs and tariffs have an affect on the fed yesterday's threat of new tariffs raising the odds of more and/or deeper interest rate cuts goldman sachs writing "the tariff announcement tilts the risk towards deeper cuts and raises odds from 60% to 80%. thinking about that second cut, the third one this year but two from now, the tariff threats looks to have boosted odds to about 50%. before i got on the plane, tweet came out while on the plane, odds well below 50% for that december rate cut and now back up right there. >> you saw the tweet on the plane. the reaction from the crowd around you >> collective groan kind of came out. yeah kind of ooh. what do you make of the -- >> what do you make of the argument powell is in lock step with trump it's allowing him to do this? >> allowing trump to do this >> yes just had a guest on that made that comment. >> i know -- >> last hour. >> i have a hard time thinking that this is all sort of, of one

piece. i mean, less than a hard time thinking that the president now sees a way to get the chairman to move. >> right. >> but i have a really hard time believing that he's putting tariffs on in order to -- >> they're separate parts of the brain that -- we see some kind of connection. >> the idea he now has a backstop. >> that's true but if you ask me the motivation, i have a hard time thinking that powell is cutting in order to give the president the leeway to move. >> correct still mad didn't go 50 and even madder at the chinese. >> also have a hard time thinking these things are not related. cuts on wednesday and hikes tariffs on thursday. >> the guest said it wasn't what powell did as much as what he said basically said we have to watch and see what happens with the trade talks, and the tariffs by putting that into the equation. >> if it quacks like a duck it's

a duck stayed six hours give me the check at breakfast, come back, go at 11:30 in the morning, not buying -- >> and potentially puts tariffs on. >> he loses it crazy enough pup don't have to make him crazier for some or reason use that you can turn that into an impulsive -- >> mnuchin and -- can you see their faces? like, oh, my gosh. got worse. >> maybe the answer is the president feels a little bit freer. >> tough emboldened. >> because he knows this will result in more likely a rate cut. i do not believe the president -- some people think this read it in the twittersphere putting on more tariffs to get a rate cut sounds crazy but i wouldn't deny it of the president. >> and conspiracy theory, i

know, but -- >> close to new highs again. >> can i say something else? which is, i see the opposite here i think that the one thing we might have missed in our reporting about powell on wednesday. he was specifically being not political about tariffs, except he was. he was practically screaming to the president, look, this is the biggest threat this is the thing we're most worried about. hint, hint wink, wink nod, nod if you tonight want this economy to slow down further, which would be how i interpreted it, don't put nor tariffs on. >> spoke his mind on everything else he should speak his mind on that. >> he goes as far as he thinks he can by laying out, here are the risks, and it is clear, tariffs and trade and global economic weakness of the number one things the federal reserve is worried about the president choosing to listen or not to his appointed fed chairman at his own risk. >> powell has the economy to worry about.

trump thinks, has got a lot of things he's thinking about economy's one of them, but securities, china, the future. all of those things that -- >> right, and i think the fed sees it as -- >> it's a part of it. >> they're going to have to play the hand that's dealt to them. they don't get to pick the cards. >> all your fat cats in front of the plane groaning, all the private equity guys all own stock, all got -- i saw it yesterday. i was like, doggone it comcast on its way to 52. >> were we going to make 52? >> the target a lot of banks -- >> in the afternoon or the morning? >> kidding since that's the only stock we can own, that's my -- >> right your thing. >> the way i say i care about the stock market for a thing of my own reasons as well saying you see it's like, wait a minute we were up 300 looked at it i'm like -- right after -- >> at the -- >> i looked tat right aft eed ar the tweet. >> 311 down 200 plus a swing of over 500 points

>> which is -- 2%. >> joe you know the president. >> i do. >> he cares deeply about the stock market. >> he does. >> the number one indicator. >> you know who's on it? bannon is on at 8:00 and says what happens with china the most important thing a president can do the most -- by, you know -- leaps and bounds how we handle -- he's got his own obviously viewpoint about that, which is probably for hawkish than almost anyone on the planet, but we'll hear it from him thanks. >> tom friedman. >> those two guys. >> david leibovitz is a global market strategist at jpmorgan asset management and, chris harvey head of equity strategy add wells fargo securities our teleprompters splits words

that aren't normally who'll do you agree with >> we're here, talking about the economy. payroll friday 2q numbers as of late and thin s s clearly slowing down from an economic standpoint we've focused more on potential impact to earnings businesses have essentially cut all of the investment spending in the cap x they can. unclear they can reduce further if trace tenses continue to es ta late the next thing is hiring if the labor market begins to soften, that's when the outlook for the economy deteriorates could be a series of unfortunate events here, i think. >> did you groan, chris? >> i did groan >> you did we were watching rates just melt away. >> and we're scratching our head was it -- foreign buyers see the tweet. oh i agree with what most of what people are saying. from trump's point of view, it's

all positive for him political, the fed, china. he can go out on the trail and say, hey, i'm being tough on china. >> which he did last night in ohio and got applause for. >> in addition to that,puts uncertainty in the global markets so puts pressure on powell. >> the economy blames the fed. >> exactly. >> but can always toggle it back, too. >> which was interesting more restrained than he normally is in a tweet like this. >> right. >> granted, there were mnuchin and larry kudlow and others in the room advising him wan what to say but kept saying even in the speech, my friend, president xi, leaving the door open. >> right use as heavy hand. same token, we can still be friends. jit you're a litt right you're a little confused he goes out to the nth degree and comes back in. does it make the wheels fall off the cart no we had a detente that had lasted for a month, a month plus. now the question is uncertainty. >> their idea of detente and

ours is probably very different. we think detente, continue to move, make progress. they say, wait and see and maybe get back to you in four months, or longer. >> chinese had a great deal and don't want it go away. if they can wake it oit it out, and a half is nothing to them. >> and focused on the stock market, what the president needs to get re-elected is an economy growing and a stock market continuing to go up. we're fundamentally seeing the economy begin to bump into the supply side constraints pt knop just about trade it's running out of available workers. he doesn't want to use up all the dry powder today his eye is on next november are and how much he's gauging how much to escalate trade. >> if people are losing jobs kwum-o come election time -- >> slowing jobs. that's the question. >> i had a formula i've been

working with which is potential growth is 2%. i believe the tax cuts and the deregulation of the president hall potential to add 0.3% to 0.5% and a rate of 2.1, 2.5 to the economy. back down below 2 and the idea that companies are responding to the uncertainty, not by bringing down capex but bringing down hiring, i think the president gets blame noor. he can blame the fed but i don't flow how much -- >> 3.7 now and go to, what 4? still say historically great >> it's not that it's direction. >> and direction -- >> maybe i'm wrong >> all of a sudden pops up in a big way you have a problem. >> number one what you're talking about, tariffs would suddenly have to be a lot more consequences than they have been so far. and your rate of direction, okay so -- it's not going to 3.2, back to 4.2 instead of down

going up that's a change, but between now and november, you're not going to be in a, a -- a jobless mess. most likely. i think you've over-thought from the beginning on the effect on the economy. >> you look at the chart, joe? >> do you think that's fair. >> i don't think so. i don't think so at all. i've correctly thought through there was a positive from the tax cuts and regulation and negative from -- >> and in december -- >> that's been forced to reverse course central banks around the world -- >> announcer: time now for today's affleck trivia question. which car did james bond drive in "the spy who loved me"? the answer when cnbc "squawk box" continues. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere?

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now the answer to today's of a flak trivia question what car did james bond drive in "the spy who loves me" the answer a lotus esprit. >> all right welcome back, everybody. exxon mobile shares is out with earnings look at it earned 73 cents a share.

that included a favorable item of about $500 million or 12 cents a share asoviet unisumingn because of a cap in canada strip that back out, earnings gain of 61 cents street looking for 66 cents. again, the diluted number, 73 cents a share includes a tax gain with exxon mobile not sure which ones include the tax change or don't, but you can see that the stock is indicated up up by about 2.8% on that we don't normally look at revenues estimates for exxon mobile because the company does not have a lot of analysts that actually put in revenue estimates. some of the numbers to pay attention to, revenue came in 69.09 billion dollars and oil equivalent production rose by 7% and the new u.s. gulf coast steam cracker exceeded design capacity by 10%.

upstream liquid production up 8% again, stock up by 2.8%. exxon mobile was gaining ground before these earnings came out a little bit of bounceback after yesterday's decline for stocks like ex-sang mobile and chevron based on decline in oil prices that gain looking like 2.1% gain after earnings came out. >> almost no sector is immune totally from a trade car phil lebeau joins us with a check on well-known names. boeing, phil, just on a chart, not at december yet, not at december lows, but we're way bl below any of the max numbers we saw. >> right. >> the new 300 billion doesn't affect boeing, right it's on other things >> that's my understanding does no affect boeing. >> the overall -- >> right. >> -- the trade war getting worse? >> and the general concern that as the trade tensions continue with china, eventually boeing

will become the big target in the room that the chinese government goes after. that they say, you know what you got issues with huawei we might have issues with boeing no indication that is happening or that it will happen but that's the concern one reason why shares of boeing under pressure after this announcement yesterday again, you said it, joe. holding that 340, low as 338 since the max. now we've punched through that now down to 332. look at the auto parts supplier this is another if group that is not impacted by this new round of tariffs they were impacted by the previous round but all of them were under pressure late in the day warner, look at tenicco. any name when it comes to alto parts under tension. tesla, trade tensions increase, further problems for tesla remember, they build in free mor mont, california, ship to china.

in theory you shouldn't see this stock moving dramatically lower but didn't stop traders from selling it off yesterday afternoon and finally the european utomakers pep we show you these european automakers, the president may make an announcement regarding eu trade this afternoon in washington and if he does, will he say, look, looking at tariffs for vehicles or engine that's built in europe and then shipped over here to the u.s. all of these guys, they really haven't done anything over the last six months largely because of the trade concerns. >> yeah. you would think -- well, not going to do it today not after china, but -- you can't say that. >> you would think >> you can't say that. who knows? >> you say anything trade related people run for the hills in stocks. >> use the word -- do it today it wouldn't -- you know? he does what he does. all right. coming up when we return, still 0 come on "squawk box," just heard from exxon.

expecting to hear from chevron with their quarterly results in a bit. discuss oil stocks many hit hard on yesterday's trade news and it is jobs friday always comes 23569er than you think. july numbers will be released. all happening 8:30 a.m. eastern time this morning. bring you the data, instant market reaction. don't want to miss it. "squawk" returns in just a minute. let's do it. [ sniffing ] come on. this summer, add a new member to the family. hurry into the mercedes-benz summer event today for exceptional offers. lease the glc 300 suv for just $419 a month at the mercedes-benz summer event. going on now.

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higher now following the company's quarterly report earnings of 73 cents a share the expectations of 66, but it did include a 12 cent benefit from tax changes brian sullivan covers the oil sector for us. >> you figure it out. >> yeah. down -- could be a rebound today from yesterday as oil rebounds or could be that the 12 cents was the -- >> maybe some analysts figured it out some didn't. >> whatever you say, no one's going to be able to prove you wrong. >> a dirty secret in television. heard you talking tab in the commercial break because that's what we do look at the top line number. becky said that. eps, tax benefits, share buybacks on that basis, yeah, exxon beat.

a billion and a half more than the consensus forecast still, though, going to be a decent story today up 2.4% guys, this is a one-month chart. even with the gain we're seeing here still a couple bucks off. by the way, exxon is about the best performing major oil company of the last couple of months, and it's well underperformed the s&p 500 oil yesterday, down nearly 8%. cratered worst day in a year. by the way, didn't get a lot of attention. so much was going on this is yesterday. these are some of the higher cost oil producers whitingetroleum yesterday down 38%. concho, oasis, got smaller yesterday, one-day drops xop, biggest etf has exxon in it look at that up now a percent but look at the drop yesterday where we saw that tariff tweet

and then just kind of a continued slide down here's the stat of the day call it the rbi. the average return of a company operating in the basin over of the last months is a loss of 45%. in the past month. 30 days. 22 stocks in the oil patch are down 20% or more these companies, many struggle, guys, or go away i know it's jobs friday, there are millions are jobs in oil and gas. oil continues to weaken up, guys not sure what will happen with the job market look at that negative 43% for every company on average operating in the red hot permian basis. ate a lot of debt in these always al debt story. >> thank you and steve liesman's point made earlier about job losses and what that could mean and affect on elections and everything

else a check on currencies are affecting us from clearview energy partners senior analyst at fx treat hearder what brie hadn't to s ey what do you do about this? >> the bearish story is the leading story. not just the front risk, you can see trade tensions, frictional loss of demand, but also the hah background this is keeping oil aloft and geopolitical risk. still have shortfalling by acute events even in a time of chronic risk when you go into the front of next year, though, you have seasonal weakness and you'll see demands softening anyway at a time which inventory builds read by the market extremely bearishly. what do you do about it? producers will do better or worse depending on the price

differentially we see oil moving to the down side 65 to 70 room to travel up still this year next year, 60 to 65 with room to the down side on trade i think that the second half is really, got seasonal strength helping a lot. >> kevin, i'm worried the hedge start investing restructuring bankers, though. no >> part of what phil lebeau said i would keep in mind we're watching china don't forget the eu trade story. multifaceted demand side destroyer and could show up later in the year. talking 4q think when it's time to refinance and restructure debt towards the end of the year. you could have an even worse environment. >> talk currencies, joe. what are you doing >> jed's movyesterday's move -- >> looking at connections. >> i try to. yesterday's move, a surprise tariffs took everybody -- >> by surprise >> off the back foot nobody really expected this. you have the dollar reacting

immediately, because this looks like, well, maybe the fed will lower rates more but it's really a global trade story as everyone said because it really is true, that whatever affect this has on the united states and its economy,ratified around the world. the dollar got sold a little bit, the immediate reaction. if you looked ahead, whatever the fed does will be either duplicated or envied by other central banks. doing one thing. cutting rates or providing more liquidity in a case like ecb not looking to cut rates on bank of japan the rate is already negative in that situation you have the u.s. economy still in better shape than everyone else that's one you also have something on the chinese side, which, of course, is hong kong so i was thinking after i heard this news. why would the president choose now to put on tariffs?

well, his goal is a trade deal with china china may be under more pressure than is obvious in the economy sense, because of hong kong. >> what's the chance, by the way -- we always discuss what the president knows before everybody else knows whatful he knows the job number will be pretty good? gives him more leverage? >> yes anything that keeps the u.s. economy rolling, gives a sense of that is good for both his trade policy and the dollar. >> wouldn't have found out before the tweets yesterday. >> probably not but i don't know -- >> kudlow explains when he gets the numbers, it's late. >> i would be cavloathe to speculate what mr. trump knows. >> kevin, thank you, joe, thank you. >> appreciate it, guys you bet. when we return, the trump agenda and reaction from many the governor of west virginia. that interview is coming up quk x"ilbeig b "sawbo wl rhtack.

we're reversing decades of clamanous trade policies that led other countries to pillage our job, plunder our factories and devastate ohio communities and communities in every state. the era of economic surrender is over. >> that was president trump at a

rally in ohio last night joining us now is jim justice. he's the governor of west virginia governor justice switched his party affiliation from democrat to republican in 2017 and governor thanks for being here today. >> thank you for having me do you a wonderful job every day. >> appreciate your being here. when we first booked you we wanted to talk about all the great things happening in west virginia and we're going to. highest per capita gdp growth you've seen in any state in the first quarter. i want to get to all that. because of china front and center right now and the because of your state's relationship with china, hopefully we can start there based on what we heard from the president last night. >> sure. >> china has promised to invest i believe $84 billion in west virginia when you hear things like this with the trade talks and pressure ratcheting up what do you think? >> first and foremost, china has promised the u.s. for aening although, long, long time. our president's doing a marvelous job. that's all there it to it. $500 billion trade deficit with

china is unacceptable in every way and we have to renegotiate another deal what he's doing with tariffses and everything, sure, could be hutting and hurting different people in different sections of our count right now in different ways but we've all got to step up to the plate and everything i think absolutely without any question whatsoever we'll get this worked out. and end of the day better for all of us. >> what has been the situation with china to this point slow to coming to thelooked into that $84 billion they promised to invest. not the only place china renegedwhat do you see happening? >> i really believe the chinese are truly interested in west virginia because of the industry, an incredible, incredible promise, but when i guess we got on a bigger level than west virginia, you know, got in a little, you know -- pushing battle back and forth in regards to the tariffs it shut

down everything and everything got shut down. they still come and still are sending delegations and doing a lot of work and they've spent a lot of money doing a lot of that work, and i think it's real, but same time, we've got to run down every opportunity in west virginia and try to do that, because i'm a business guy i'm not a politician you know that's what the media and people have such a hard time understanding president trump over, because he's a business guy. you know he's not one of the lifers that grew up as a position and sell influence and all that he doesn't care about all that he's doing a great job and west virginia's doing great stuff and we're all happy. >> looking for potential investors where would the replacements be? other countries or investments from the united states >> we have, we've had interest from qatar, but we have real, live interest within our own country. the whole premise is just this too many eggs maybe in one basket in the gulf, and you

know, and we're exposed there. i always say this. i talk, you know -- they say always folksy, but it boils down to it, you always had the hog confinement building near the corn field and you've got to -- you've got to look at the petra kem calle pockets where natural gas is the cheapest and there's so many opportunities within the natural gas. that's flight our lap in west virginia. >> governor, you just switched okay >> switched parties that is. >> you could be still a democrat and you could, seeing your most moderate candidate at the debate the other night, joe biden, say no fossil fuels in ten years get off fossil fuels in ten years. when you're in detroit and you say that, in michigan. if you're in west virginia if you're in ohio, how do you possibly win those states when you say you're going to put the hydrocarbon -- >> you don't win those states. >> in the next ten years

>> we hope and pray you don't win those states i mean -- >> but you'd have to -- right now have to be backing joe biden if you were still a democrat. >> yeah, but no way on god's earth i would do that. even when i was running as a democrat i wouldn't back hillary. up know? i good not endorse hillary in any way, shape, form or fashion. >> manchin, too, he's -- >> joe just jumps around and everything else and joe is a politician he's a great politician. >> you're not a politician. >> no, i'm not i'm a business guy i tell the truth i tell the truth all the time and i challenge anybody to find me not telling the truth. >> you're not a politician. >> no, i'm not. >> quickly, mining, one of the big booms we've seen in your state. why you had gdp in first quarter of 5.2% leading all 50 states. >> right. >> what do you see in terms of the economy? what's your outlook? >> our mining industry bounced back no question about that and everything president trump has been a big contributor there. the export thermal market was a big contributor, metallurgical

and steel market a big contributor. but we have to have an all-in approach in west virginia. our tourism is booming manufacturing is booming we're building roads like crazy and everything we have a roads to prosperity thing and we're doing it we've got a real life commitment to education and things are happening all because it's all-in it's not -- we love our coal miners and wish we could have more and more coal miners to work but end of the day we've got have an all-in approach. >> governor justice, thank you for coming in today. appreciate it. >> you guys are great. thank you y'all. >> thank you. coming up, former white house strategist steve bannon is our special guest joining us top of the hour. of course, the july jobs report set to be released the numbers, a little over 30 minutes away the president, by the way, see that last night maybe around 3.5% in his rally. see what really happens. back in a moment.

global stocks slammed after president trump's new tariff threat to china. >> we will be taxing the hell out of china that's all there is. >> kick off this hour talking with a man behind much of the

trump playbook when it comes to china. former white house chief strategist steve bannon. it's jobs friday in america. the july employment report taking on new importance for the fed's rate cut strategy. numbers due in half an hour. plus earnings alert. exxon mobile beating bottom line latest quarter and chevron due out any minute the final hour of "squawk box" begins right now. live frompowerful city in the record, new york this is "squawk box." good morning welcome laback coul"squawk box. i'm joe kernen along with becky quick and andrew ross sorkin nasdaq down 55 and s&p indicated down 12 and change

treasuries if you just are waking up, weren't paying attention yesterday, sub 2 number on the ten year 185 now. 185 lower than at one point in germany turning negative on the 30 year. right to the story impacting markets around the world president trump's threat to impose tariffs on all remaining imports to the u.s. from china works out to a 10% tax on $300 billion worth of goods global stocks slid today taking a cue from yesterday'sstreet president trump spoke about the tariffs at a rally in cincinnati last night. >> we've been losing hundreds of billions are chine in it has to stop and they understand that. president xi is a good man a friend of mine he understands it. and until such time as there is a deal, we will be taxing the hell out of china. that's all there is. okay >> now, to are more on the president's china tariff threat, welcome former white house chief

strategist steve bannon. bannon known as an ak detect of many of trump's america first policies and steve one of the main things that you used to, in terms of being a presidential whisperer was about china and few people around us as hawkish as you on china or as worried about the eventual way that the plan looks be s in 2025 and 20 china continues along its current path subpoena any surpriany --. is anything surprise ug? >> this is to the core of what donald trump believes and understands. the architect of this from day one. go back through the pattern how this has developed, his consistency has been remarkable. not just what he said over many years what he said on the campaign trail, you heard last night the response of working class and middle class people at at rally in the midwest.

from mar-a-lago through yesterday, it's very consistent with what the president laid out and has to happen. it's pretty remarkable how the chinese have tried to, the ccp, what it's about. the seener in leadership of the communist chinese party tried to gain the system once again use of american leaders. business, finance leaders buckling under this false, you know, this false concept of engagement donald trump has been consistent i think coming from buenos aires and osaka. two basic things to commit to. purchases are agriculture product and stopping of fentanyl killing you what 28,000 to 50,000 people a year and couldn't even do that. i think yesterdaywas a very important day in american economic history, because on september 1st we're going to cross a psychological barrier. every good that comes into the united states from china will have a tariff on it.

yesterday was a very big day i think president trump's given the chinese communist party enough time to respond to this fundamental restructuring of their economy that he's been working on and they've got a leader now who's not going to back down. >> you're on record saying that the most important thing a president and in this case president donald trump can do is to have this, this for lack of a better term, confrontation with china? this is "the" most important thing, if it's one term, two terms whatever, this is what he'll be remembered for and you say you're watching history unfold realtime? >> yeah. i've been talking on this show to you guys the last four, five, six months from around the world. it's been pretty straightforward this is the defining event of our time the relationship between china and the united states is going to set, i think, the framework for how we go forward as a world, a world economy for the

next 25, 30, 40, 50 years. that's why this is history in realtime i think what's quite remarkable is the foreign policy establishment, all the elites, all the geniuses that got us into this situation. remember, we deindustrialized this country because of this this is wall street and the corporate leaders this is the i.r. department of all of these investment banks, goldman sachs, all investment banks and giant corporations that got us into this situation. the american elite this is the fundamental reason donald trump's president of the united states. return of american greatness bringing manufacturing base back it's not easy. that's why i think he's unwavering in this. >> steve, speak to the political cal kl calculus here. described what it means, an election coming up and how chinese are viewing that election, how the trump administration is tru viewing that election. the idea fighting this fight throughout the election. what the tariffs ultimately mean to jobs in the united states, if

we actually do see a fall in jobs does that actually impact the president? to the extent you would be advising the president or thinking about these issues, how do you see it? >> i think clearly the chinese are hoping for a democratic administration i don't think there's any doubt. even with jim cramer brought up economic patriotism of elizabeth warren the other day her paper. if you look at biden, look at harris very weak on china president trump understands the china situation will frame 2020 particularly because it's about bringing back our manufacturing base one thing people miss, though, i think, is the concept xi because he's consolidated power after the 18th party congress, he's voted on every day by the powers that be, all of these factions in china and put hard-liners in charge lee ha lead negotiator, reformer, essentially laird by

sang, a hard-liner you've seen the negotiations go sideways the pret understand the not just immediate politics of 2020, the direction of the nation and free market capitalism and the next 20 years those who mock this guy don't get the fact he understands deeply what the geopolitical struggle is and how important this is. this is going to power him to 220 because people see this is what leadership is, what presidential leadership it. >> reading the tweet yesterday, parsing at trying to see if there was room for maneuvering on it. seemed he kind of laid out a path to put a halt on some of these tariffs before september 1st if china went ahead and bought farm goods president xi promised they would do and did something about fentanyl, goes back to the g20 meeting. did those two things and tariffs

materialized, how would you feel about that >> becky, i think this is what i -- when we first came on his signaling, from mar-a-lago forward, he's always laid through a path of how the chinese, we could come to some accommodation. he still calls president xi his. very much broad. two things in the world, cheong and huawei the president of the united states is trying to work with the chinese. i 100% agree he signals strongly to the chinese what you need to do to go forward they've renieged on many, many o the basic things particularly, a sina con -- sinacon, had to be addressed, properties, intellectual

properties all that. chinese reneged because of weak leader's in in the united states they had to confront yesterday he signalled to the chinese again, committed to this in osaka here's what you need to do if you don't do to september 1 is it the it we're passing a psychological barrier. everything you send to the united states will have a tariff on it. he reinforced that last night and you saw the response from american patrons up in the midwest. this thing gets more serious and focused every day. >> how did hong kong play into this our president, president xi, looking here, looking there, wondering how many things i want to be juggling at once i think -- i don't want something that's unfortunate to happen, obviously, and it's concerning to watch, but that seems like it's helping trump as well in this because, you know, if that cat gets out of the bag, in a big way i don't know i don't know how that ends. >> you know, the world's media,

which is, you know, the party at davos khmer khalidi cheer pr le- cheerleading quad. you talk about new york city being world's financial capital. correct. the other two, city of london and hon hong kong. hong kong particularly english common law and chinese people can do when united. the people, these young patriots in hong kong are fighting for free market capitalism president xi i happen to believe, i believe you're going to see these patriots, these young chinese, these millennials being tear gassed, having bullets shot at them and riot police come in and beat them i happen to believe they're going to stand i don't think they're going to break. they understand what the future is and how important to have the rule of law, and they're prepared to sacrifice themselves, and i got to tell you. i think this weekend if the chinese communist party declares

martial law in hong kong, problems i think it shows the statesmanship of president trump. he is trying to work with the ccp that has clearly mishandled the situation. trying to work with president xi and president xi made consistent missteps, misreading of the strength of president trump and the western democracies pulling together i think president xi has to start paying attention to the signaling president trump is giving him to get out of the situation, got to tell you i don't think the world's prepared to have another tiananmen square the world's changed in the last 30 years they declare martial law on sunday, looks like we could be heading towards that path and i don't think these chinese, young chinese people will back down, i don't think the world's prepared to hey lew the chinese communist party to have another tiananmen square against these young people. >> i don't know how much you saw of the debates but sure you read about them at least. do you think biden is front-runner, or -- i don't think -- i don't know.

i think maybe kamala harris. i've heard people say she's in the poll position right now. what's your view >> first off, i don't think joe biden -- look, on the polling and whatever this polling is, i just don't see it. the democratic party want to take on donald trump i got news flash for them not taking on donald trump with joe biden. not a stand-up to the withering assault that it donald trump -- dwr you've got to bring it hit a fastball joe biden's days hitting a fastball are many years behind him. shows, i did get a chance to see those although i'm down on the border i don't think people -- i think it's still a pillow fight and kamala harris and leadership of the democratic party are not addressing the central issues in the world today and very weak on china. biden is aproeshs trocious on c. he's soft on china kamala harris is soft onchina. this is the key geostrategic, to be commander in chief you have to have a defined point of view

and let the american people know that what that is. the debates, a summer replacement show that's not getting picked up for the fall ratings down, no energy. i don't see excitement in these candidates still got people on the sideline i think this democratic primary and the makeup of this thing is, bloomberg, clinton, you've got pretty savvy people on the sidelines i think watching this and right now -- the democratic party think they're going to beat -- i think the democratic party was -- if they want to take out donald trump, i don't see anybody on the stage end of the night that will come close to taking on donald trump. >> you see michael bloomberg and hillary clinton jumping in to this >> i think that people are going to step back and watch this and look in to the fall of this year, and see if any of these candidates really come up and step up to the plate and can take on donald trump you know, donald trump -- donald trump is not only i think a great leader as a president, he's an amazing campaigner i think the democratic party's

number one objective is to defeat donald trump. i don't see it on those stages maybe it emerges it hasn't yet but by this fall, you know, by this fall, iffing it hag not emerged one of these candidates can take him on people like bloomberg, clinton paper me mock and ridicule those this democratic primary who's going to take on and defeat donald trump, their number one priority has not emerged yet. >> as far as our words go, steve, i didn't hear russia on either night of the debates but heard racist a lot and heard that there are suburban people, i'm not getting gender specific concerns the tweets, divisiveness or being so confrontational can turn off voters that trump would need and that someone like a bernie sanders or someone like that could eventually be elected. do you think that's a real possibility, or no >> no. i don't think it's a real

possibility. i think people also, remember, one of are the things the american people, give permission to vote nor commander in chief bernie sanders is not going to be commander in chief of united states of america. i don't think that's going to happen other candidates could be, if they could step forward but i don't think you see it right now. look, i think president trump's, the logic, goes back to the '16 campaign what the hell do you have to lose remember, working class african meshes or working class hispanics are a part trying to pull together this trump constituency i say if you bring in working class african-americans and working class ispanics, you can put together a governing agenda 30, 40 years here. that's about low unemployment and wages starting to rise the key. if you really poll hispanics, they understand a lot of these manufacturing jobs that have gone to china, they would be filling, if the jobs were back

here in the united states. this is what president trump -- i think president trump is confronting something we've avoided having a real conversation on. >> steve, but how do you explain these what might be described it's a, have been described racist, retrograde comments about places like baltimore and other places that clearly have an impact on the national discourse? >> they do, but look, my mom comes from boug s fros from bale i was a colts fan growing up the inner city, the point of president trump on both immigration policy to stop this constant competition by unskilled labor. really to focus on ameritocracy for even for immigration for regular immigration. trying to go in to baltimore and detroit and st. louis and have a renaissance and say it's the whole reason we argued about getting troops in this drawdown in afghanistan take that capital and put it to inner cities i think president trump's got a well throw through plan here and tell you he's not backing down we're going to have in

conversation beyond the thing throwing up he's a racist and get down to the fact why baltimore is in the shape it's in or detroit is in the shape it's in, wooey is st. louis in the shape it is? >> retrogade. >> look, he's got a different house style but you know what? he's trying to drive home the point. we have to have a real conversation about this. >> you've owned bitcoin how long three years, or how far back does it go and were you buying down when it got down to 4,000, 5,000. bitcoin bannon >> i would like to say i had enough, had enough foresight and courage to buy as it went all the way down no i think cryptocurrencies have a big future really do. could be a very important part going forward particularly in this global populace revolt. >> and fed making it lgts easier maybe to make that sale to

people about non-fiat assets, i guess? wouldn't you say not the fed -- >> listen, i think the fed's policy has been terrible up until here recently. this thing has been one of the reasons i think for the economic numbers and hopefully the federal reserve chairman understands about this over valued dollar, but look, i also think that -- the fearmongers about what president trump is doing on the tariff side fail to understand that the chinese have been cutting prices and devaluing the currency doing currency manipulation since the first tariffs in february of '18 cut 10%. 100% tariffs on everything september 1st and psychological barrier of seven you know the exchange rate. going to -- i believe they're going to blow through that psychological barrier and a new day. >> steve, on the crypto front, what did you make of the g7 and regulatory scheme sort of have a freakout when facebook announced

a lieber plan and what does it mean to regulation longer term over things like bitcoin >> look i think the central banks in all of the, the central banks and banking communities want to regulate get in and regulate crypto they want to still stick to fiat currency i think facebook was principally against some of the chinese alibaba, 10 cent et cetera, these payment systems. people need to look how the chinese and third world countries and subsaharan africa and south asia potentially latin america are starting to put payment systems in that will give them, try to give them global dominance and able to get off the reserve currency of the dollar is what i think has to be looked at. >> steve bannon, from the border, in oracle, arizona thanks for touching on all of these different subjects see you again. hopefully soon. coming up, ten minutes big news coming. july jobs report due out just

moments away predictions from our all-star jobs panel and then thbie g number and reaction right after this. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

coming up, the final countdown of the july jobs report next. ♪

can i get some help. watch his head. ♪ i'm so happy. ♪ whatever they went through, they went through together. welcome guys. life well planned. see what a raymond james financial advisor can do for you. so, every day, we put our latest technology and unrivaled network to work. the united states postal service makes more e-commerce deliveries to homes than anyone else in the country.

♪ welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. predictions in our jobs panel ahead of the 8:30 jobs report. former cea chair and from strategyist and steve liesman here what do you think? >> we think 162,000. >> 162 >> yeah. >> 162.5 or exactly 162? >> 162. >> santelli is here, too you don't give predictions right? liesman, you don't want to do the it >> our chief economist says 160. so -- >> 174 now. >> oh, you do? private sector >> rick, where are you >> 196 >> 196. >> do that >> all right you might -- still do that "price is right" stuff

taken! sorry. he's going to get mad. i don't wait for the -- for the obama officials last let me gelt you first -- doug will be -- hear about it on twitter if i do, if i do you before him jason? >> i'll go with 180,000, 170,000 average this year, add 10 for the census. >> now oug >> i'm at 120. the geographic center of gravity is 90,000. 120 is a good number where we're headed. >> jason, did you see that, the journal piece the other day? are you feeling better about what the bureau of economic analysis said about wage gain ace cross the board? did it make you happy? i want so much to make you happy but better than previous years right? >> i'm always happy. good wage gains at the bottom. need some on average and see now if we get that. >> the point was made and i didn't mention larry sommers or

you or any in particular liberals who argued, deregulate supply side things, can get wage growth do you attribute it to that or not? >> look, we had 2.5% growth q4 over q4 last year. not wildly different than we were getting before. >> you averages 1-7. >> this is extremely low interest rates. >> averaged 1-7 now 2.4. >> include the recession. >> okay. how about you, doug? >> deregulation an enormous impact on the economy. tax bill in that positive, net positive without the trade head winds we'd be above three. >> i think stimulus boosted growth last year knop doubt about that along with that saw wage growth break through 3% the question, can it be sustained? that's the critical question. >> just a few seconds left ef before the official number

ahead of that dow futures down 42 points. in the red all morning long. s&p futures down by throws to ten and nasdaq off by 47 and watching what's happening in the bond market closely. after trump's tweets concerning the trade tariffs, that saw incredible pressure on the ten year right now yielding 1.878%. >> 164,000 non-farm pay rolls rose by 164,000 jobs in july right in line with expectations. unemployment rate meanwhile unchanged at 3.7%. now, average hourly earnings rose by 8 cents to $27.98. that is a 3.3% increase compared to the previous month and over the past 12 months up by 3.2%. looking back to may and june, however, disappointment. may's job number was revised downward by 10,000 jobs from 72,000 to 62,000 jobs.

june's blockbuster number also revised downward by 31,000 from 224,000 to just 193,000 jobs all told, 41,000 fewer jobs than previously reported and the three-month moving average is now 140,000 job as month the labor department also highlighted what it called markedly slower job growth in manufacturing. the sector added 16,000 jobs in july, but the average so far this year is just 8,000 jobs compare that to 2018 when the sector was adding 22,000 jobs a month on average the manufacturing work week is also down .3 hours to 40.4 hours in july. that is the lowest level since november of 2011 the retail sector also continued to struggle. it lost 3,600 jobs in july that is the sixth consecutive month of declines. now, where we saw strength was in professional and technical

services's that sector added 31,000 jobs. health care added 30,000 jobs and social assistance added 20,000 jobs. labor force participation rate also edged up slightly from 62.9% to 63% and broadest measure of unemployment fell from 7.2% to 7%. guys >> elon, thank you so close get reaction from our desk didn't go over "price is right." 162. jason, sorry painful. 160 but you don't win. good report. >> yeah, it's a good report. even with the downward revisions from the previous report, still a good number. you expect average earnings up 0.3, better than expected. unemployment up to 3.7 participation went up. all in all, a solid report. >> do i have the wrong -- two

jasons where were you >> 160 that's you, then. >> i quoted fi fuhrman. >> didn't correct me >> yelling at me didn't want to interrupt. >> let's see rick, why were you so high and are you disappointed how were the revisions >> well, i think of, we'll get revisions up next month so come back and revisit my guess. you know what? i think it's a very average report everybody's thinking lacelace -- late cycle get trade issues, supply chains moved, maybe turn out better historically looking at it from the future i think regain horse power in jobs three thi things in the report that are big, average hour workweek disappointing represent a lot of

lost jobs. with respect to wages, not too bad on wages recouped a little bit up at 3.2, .3 month over month best news, including more people we forgot to count in the labor force on the participation rate. to me it's average, c, c-minus report because i am more optimistic don't think jobs has run its course one of the jasons probably understands that eight years i think we were on hold with regard to the economy. i don't even think you include that in the longevity of this expansion. >> rick, got a contingent not optimistic because of the tariffs. think we'll see serious job growth that could threaten re-election of trump do you see that? >> no. i don't think we're particularly late cycle talked about that. >> what about the latest round of tariffs >> absolutely impacting

manufacturing. you saw that in this report. probably impacting the willingness of companies to spend on capex this year that's true. same token it can change quickly. u.s., the structure of the gdp report is such that it's difficult without participation of the consumer to get a recession. a slowdown but hard to get a recession. >> jason fuhrman, is this going to be a big problem in terms of the economy and also jobs? the latest round the 300 billion? >> i think the latest round is a big problem for consumers. >> consumers. >> hit apparel, going to hit mobile phones, toy, a lot of things people buy. >> what about jobs, though >> where i think you'll see -- i think you'll see it in the real wage numbers more than you see it in the jobs numbers this stage of our economy you know, our participation rate rose this month.

puchlt 6 fe u6 fell to a cycle low biggest issue isn't the number of jobs but how much they're being paid and tariffs are not going to help. they're going to hurt. >> douglas >> i'm going to agree with rick and jason in that i agree with rick the bad number here's is the workweek troubling development. i don't like that a bit. really strong numbers in participation and wages. that's how we should grade the labor market not on the number of jobs. the demography dictates that will slow. the labor market is performing very, very well and i'm concerned about the latest round of tariffs hits the household sector that's been carrying it and not what we need at the moment >> steve, i mean, referencing your, your worries do you want to -- >> i'm a little more worried about this report than maybe the average bear here. i don't like the revisions to the prior month. look, let's consider the framework. the framework is we expect job growth to slow, and the three-month average now is off

by 100,000 compared to where we were in january. three-month average now 140,000. slowing maybe a bit more than i would have hoped for manufacturing and construction, manufacturing not too bad this month. elon said overall average for the year is down and could take another hit. retail is just a sea of negatives. one after another. one negative, and something i like to look at temporary help a sign of future hiring, that's down now either negative or just up a little bit over the past three months i think do you have a cooling here i don't know how much of it is related to trade and tariffs of the service sector. seems to be doing okay at 133,000, plus you're getting a big boost from the government here you've done 16, 14 -- 14,000 over the last two months that's -- 30,000 jobs have come from an increase in government having a chance to look at that, haven't had a chance, state or

local, but we want to watch this carefully. the job market has been "the" thing that has been -- you could point to it and say the economy's not slowing that much and a guest in the last hour said if you can no longer express your concern about the future, through a decline in capex because you brought it down much as you can, you might then as a corporate executive express that concern through less hiring. so that's where i'm -- my big worry is. >> interesting >> i was, that was a guest we had here who brout thght that u. further capex to come maybe or hiring reduced because of that a lot to be said for as much center as you can provide the business. >> although funny at a time we're cutting rates, worried about what's happening, the worst we can come up with, they may not hire as much not that they'll be firing necessarily? >> that's right. but then a rise in unemployment rate as a result joe was right. last hour said you can't really raise it that much, because it's

a very long way to go until unemployment gets worrisome but watch softening. a hard thing to calibrate. >> immediately it said there's nobody around left to hire you know it's -- you just wonder when, when zandi comes on, usually says, what do you expect not enough people around to hire. >> we're not going to go if corporations stopped hiring or -- >> that is true. >> wages, price, wages will give you that indication. >> a weird thing though, jason you have not had this classic supply/demand relationship. >> i would think, though -- >> you would think. >> that price would be the arbiter of where supply and demand f. that were the case, though, you would have had much stronger wage growth that suggests more slack in the labor market than you might think. that the labor force participation, more people that can come in to the labor market as a result. or there's another issue, whether immigration or other things, that are changing the

supply/demand. >> my theory, what it's worth, i think if you're going down the experience and skill set of people you're bringing from to the workforce as the labor market gets tighter, they do not command ay w higher wage. >> precisely. >> add one thing that i think we could have 130,000 or so jobs and actually keep unemployment rate steady. the threshold, we weren't going to maintain 190,000 per month in jobs as we have less workers and the whole overall economy matures you'll have less job growth. i don't necessarily see this report as worry soisome but agr with steve we don't know where it leads coal hiring be far behind? that's a concern. >> can rick give us a quick rundown what's happening in the interest rate markets out there? rick, i don't see much change at all in the futures market and the outlook from the fed from

this report? >> no, no. as a matter of fact, whether you look at the dollar index, 2s throughs 30s, not much changed and peripheral markets one thing worth mentioning fed fund futures in the december month, the catchall of all the log jams in front of it, up about three ticks today. up yesterday after reversal on fed day. the market is bringing back expectations dollar futures, mixed bag -- >> that's post-tariffs. not post-jobs? >> well under way in earnest before the tariff tweet and it did accelerate after the tariff tweet. >> right okay. hmm. okay >> you're too quiet. the other jason. fuhrman? give us some -- we need wisdom from you >> look, i mean we're seeing slowing pace of job growth it was interrupted last year by the fiscal stimulus but now

we're back on, you know, the same track and trend line we were on before that fink's stimulus. i'm not worried about that 3.2% over the year on wage growth is pretty good, but it was better six months ago. and where is that? what's that a sign of? maybe a sign there's still more slack. i'm worried it's a sign we don't have enough productivity growth to generate the type of wage growth we'd want, and to get productivity growth you need real reforms i'm not sure the ones we have are going to do it. >> but will the economy be a positive story by the time the election rolls around or will there be signs of a crack in the economy by the time november of 2020 -- is it a tail wind or will it be neutral or a head wind >> in the absence of a policy era, a tail wind benefit the president. you know, if you look at it right now. hold the election, the democrats

are not talking about the economy, because they have nothing to say i mean, it's doing really well so the question is, would that change between now and november of 2020? i think only a big policy error would do it. the fed and the president both really have to play this right. >> okay. n need to save time to thank everyone let me do this, thank you all. thank you all. jason and the other jason -- i know you're name but trying to think of a better way to say it. >> and thank you joe. >> oh. you're thanking him. >> i'm thanking you. nobody ever thanks you. >> oh, you're thanking me. okay coming up, digging into this morning's results from two of america's biggest oil companies and then talk about the latest u.s. tariff threat towards china, and what it could spell in terms of disruption in the energy sector. something every investors needs

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welcome back to "squawk box. the government's july employment report showing a gain of 164,000 jobs unemployment rate 3.7% futures are down a little bit from the where they were prior to it. not a lot of movement right after it, basically unchanged.

85 on the dow. s&p off 14 dollar, quick look versus i guess, probably look at the index itself. as you can see, it's been, finally, going in the right direction. i don't know what do we want? what do we want? >> you wanted stronger or weaker yesterday weaker after the trade -- tweets. >> keep hearing it's too stubbornly strong. check out the ten year you can see it all the way back to almost 1.88 >> while talking jobs got another big quarterly report chevron out with its second quarter results. earnings in at $2.27 a share better than the street's consensus of $1.78 including one-time benefits. analysts generally included those items in estimates you can see chevron shares up by about 1% chevron joins exxon mobile as the second major oil to report this morning exxon shares trading higher after its report joining to talk about these companies and how president trump's latest tariff threat

could impact that energy sector is john killdorf, founder of a capital and cnbc contributor and sell-off in oil yesterday was sharp and it was steep 7.9% just came, the worst day we've seen in one day since 2015 was it warranted >>f a handful of the biggest losses on record actually look, a lot of things going on that hit the oil market yesterday. beyond the tariffs one of the other rumors in the market is that president trump has tasked senator lindsey graham talking to iran to strike annie cord that undercut the iran tensions. commodity remains under pressure spectacular dollar strength another pressure point on commodities in general but oil in particular. yes, oil prices have taken the tariff situation the hardest of all asset classes. keep saying that, because they're breadbasket, demand

growth breadbasket, asia, has taken the tariff, u.s./china trade wore the worst as a region. >> what do you think of exxon's and chevron's numbers this morning? >> a mixed bag look okay on their face. give both a c-plus exxon's profits down year on year you're supposed to a commodity obviously in trouble no matter how much they talk about refining and chemicals, this and that, end of the day, low oil prices and low natural gas prices particularly in exxon mobile's case you're hurting also, too, now with the global slowdown, sometimes low oil price, reduced input cost for the petra chemical segment of their businesses which are substantial. slowdown in the global economy, less pretro chemical and hits i hard another drag. >> what can they do about that almost out of their control if you're just watching oil prices

and natural gas prices >> again, you are exposed big time to the commodity and now you have an added, you know, drag of being exposed to the global slowing economy >> you're describing almost the situation the opec nations are faced with. producing a pumping and producing a lot, great news if you're an american, maybe not great news if you're a person reliant on energy prices >> i know we have a growing energy -- we have a growing energy sector in this country, we're producing 12 million barrels a day. our economy is still two-thirds of the consumer though to the extent of the consumer can spend and feel great about getting a 30 or $40 tank fillup, it helps that. that's why the united states is to a degree in my view a real island of prosperity here for the time being these results are just so mediocre, no reason why, it is the exact reason why energy is less than 5% on the s&p 500, not even worth bothering. >> we got the jobs report today, and the numbers were pretty

decent up 160,000 or 162,000, from 164 kathy said 164 >> yes, 164. >> brian sullivan pointed out today if you're looking at the oil production jobs, where there has been losses, you expect that to continue. >> i do. i'm actually getting increasingly concerned about a potential rollover in the oil patch in the permian in particular the strain on their years and years and years of losses is finally maybe catching up with them, wall street and financiers seemed to have lost some patience with the sector i think i saw brian put some notable drops in stock prices yesterday in that sector and so i'm concerned that we definitely plateaued for some time now at u.s. production levels of 12.2 million barrels it could go in reverse >> john, thank you for coming in great to see you. >> thanks so much. >> we got a lot more in the next ten minutes. we'll get you ready for the final opening bell of what has

been a wild week on wall street, what to watch in the markets today and next week when "squawk" returns right after this it never questions the tasks at hand. but this year, there's a more thrilling path to follow. (father) kids... ...change of plans! (vo) defy the laws of human nature... ...at the summer of audi sales event get exceptional offers now!

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between china and the united states is going to set, i think, the framework for how we go forward as a world, a world economy for the next 25, 30, 35, 40 years this is the fundamental reason donald trump is the president of the united states. this is the return of american greatness. this is bringing manufacturing base back. it is not easy >> that was former white house chief strategist steve bannon speaking with us earlier this hour on president trump's new china tariff threat. let's get the latest from kayla tausche in washington. hi, kayla. >> good morning, joe businesses are awaiting details on exactly how this new round of tariffs would be implemented the office of the u.s. trade representative tells me there should be a federal register notice published soon that entails exactly how this will be put in place and exactly which items are going to be included from that list that was originally put out back in may i spoke to a senior administration official this morning also who said the

expectation of how this goes is that goods that arrive on u.s. shores at -- on september 1st would be subject to those tariffs. not goods that leave china on september 1st. but, of course, we await the details. this official also tells me the president is open to potentially delaying or halting the imposition of the tariffs if he feels it is something that china has done in the interim is good enough though this official said when i asked about how china talks went with shanghai earlier this week, this official said the china talks do not go well enough. here is how the president himself described the decision to put these tariffs on and his relationship with china at a rally in cincinnati last night >> we have been losing hundreds of billions of dollars a year to china and has to stop. president xi is a good man, a friend of mine, he understands it and until such time as there is a deal we will be taxing the hell out of china. that's all there is.

>> the white house will surely be hearing from a litany of business organizations, hundreds of them appeared at a hearing or signed petitions for the administration not to put these tariffs in place they range from the consumer tech association, chamber of commerce, national retail federation, all of these consumer facing industries that say our items are on that list, this would hurt jobs and it would raise prices if it goes into effect. >> kayla, thank you for that want to talk more about the market impact from this new tariff threat as well as next week's slate of corporate earnings, which may be overshadowed for that, we're joined by aaron gibb and jason trainer is here with us. we have all these earnings we'll be heari ing about next week bu will we be paying attention to them. >> i think we'll be looking at what we're expecting for the second half. we're already done with three quarters of the earnings season for q2, we're over it. no big names are coming out. disney is one. >> we have disney, uber and

lyft >> but they're not moving the market they're new ipos, ones to watch in the media, but not ones that are going to move the market overall. what we're looking at for the u.s. economy, disney, eventually lowe's, names that will be important on what is happening in the overall economy and so for the most part, we have a really good sense of what q2 happened. we have gone from expecting a negative 2% contraction to positive 2% growth for the second half of the year, we have revised estimates down by 2%. and that's before the tariff announcement so, again, could be looking at further revisions down for all your consumer stocks, consumer discretionary, some of your staples as well, and this could be a more -- >> before everybody hits the lie this afternoon, sell everything, is that what you're trying to say? >> then we have the accommodative fed. i'm not saying sell yet, but it

could be more volatility just like we have been seeing where we have big upmoves and then just like may, we go down by 15%. and so you can again see this market volatility of up and down, maybe slowly heading towards an upward trend. we're still heading towards better growth. but it is going to slow down and that is something that investors are really aware of. >> before you take your half day friday, you already have been up half the day already, what will you do >> i think it is tough to be short. clearly are some head winds in terms of earnings by the same token, 184, ten year treasury yield, most likely the fed will ease more, the fed has one of the highest policy rates in the world, the ecb doubles down, it gets -- it is very tough to be short, almost regardless of what the earnings are the earnings, we were very worried about earnings recession at the start of the year and we clearly had a slowdown in earnings, i don't think you

reached the earnings recession -- i would ask you, do you get that in the second half of the year. >> we have -- >> i can't anser >> probably not. i would be long in equities. look at small and midcaps. >> thank you thank you, all >> have a great weekend, everybody. "squawk on the street" begins right now. ♪ ♪ how deep is your love good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, sara eisen, cramer is off today. futures red. jobs number in line, 164 k, revisions weak all three indices could post longest losing streak today since march. europe and asia catching up to us