good tuesday morning welcome to "squawk alley." i am jon fortt with morgan brennan and wilfred frost here at post 9, new york stock exchange carl has the morning off and we are going to begin, of course, with the markets stocks coming off their worst day of the year after the dow posted its sixth largest point drop ever. but back in the green this morning with names like apple and boeing leading major indices higher so what should investors make of yesterday's dive, today's rebound? joining us now to discuss is ubs global equities strategy keith parker and cantor fitzgerald global markets strategist, peter caccini. peter, you think the s&p could drop a lot from here you have a 2500 target on the s&p for year end

if not yesterday, what takes us there? >> well, you know, to put it in context, end of last year, i thought we were well oversold. recession fears were overdone at the end of the year. our narrative has been a tale of two halves rally first half, sell-off second half. why? china trade and optics around it were a big reason for rally in the first half alongside the fed pivot towards a more dovish stance i think the fed, short of new qe into the end of the year has limited ammunition to prevent what i think is a normal cycle slowdown and i think the optics certainly around trade with china have deteriorated frankly, the reason why the yuan above 7 is so important is it shows that trade wars become currency wars if they're prolonged and trade wars, by the way, are neither good nor are they easy to win >> keith, you seem to think that the next round of tariffs actually is going to have less of an impact, if i read you

correctly, than the first round did, though small business has been struggling. is that a different read than we just heard from peter? >> i think this next round -- what we had written is that the step up in may to the 25% tariffs on the original $200 billion, we found would have less of an impact than the original 10% why? because firms reacted so quickly and those initial tariffs were so disruptive. and so we saw the hit to growth materialize quicker and larger than we had originally estimated. i think the risk here is if we do see those 10% tariffs on the remaining $300 billion go into effect september 1st, the growth hit would manifest later in the year, and in particular, in the french quarter of next year. why? because the tranche is a majority of consumer goods, which would affect retail, and obviously, that's key around holiday season >> peter, i want to go back to a comment that you just made, that you sort of see this as normal

cycle slowdown why? and what does that mean in terms of how trade war fears and tariffs, et cetera, are playing into the data. >> i think yesterday's move is really emblematic of how fragile the situation to some extent really was from a valuation standpoint with the s&p well above 19 earnings, and with what's really been a burgeoning slowdown since early this year, pmis in developed nations are all in contraction at this point, except for the u.s., and even services pmi or ism, pardon me, has started to roll over and missed in its most recent read. moreover, lending standards are starting to tighten and we're no longer in an easy cycle for the federal reserve, albeit, it did just cut that's actually typical of a late cycle slowdown, where the fed cut several times on the heels of a number of hikes and a slowdown follows soon thereafter >> and you also think that there's a lot of room for yields to fall further, as well

>> i do. unfortunately, when you look at global yields, long yields have been anchoring globally. jjbs and bunds have been anchoring u.s. yields for some time and i think yields globally are really trending towards the new neutral, which is close to zero. >> so keith, given what we saw yesterday, with the market's reaction to currency and then, you know, what we saw this morning, again, with the reaction to things not being quite as bad, what's your read on the dangers particularly from here, as we head through the month of august? >> i think that the read yesterday was to me, the dominos falling so quickly as it related to u.s./china trade tensions, where the retaliation was quick and sizable with the currency moving pretty significantly on the back of that and i think today, some reassurances from markets that

the runimby is being held around 7. and when you see that reducing the purchasing power of the dollar a big risk. and we saw that play out in 2015 and '16. and something i think the market is very concerned about. but again, i think the readthrough yesterday was just how quickly things had escalated. >> yeah. very quick keith and peter, stay close. we're going to need your continued help on stuff like this appreciate it. well, top white house economic adviser larry kudlow telling "squawk on the street" this morning that chin's economy is crumbling, adding that the president is still ready to make a deal joining us now first on cnbc, former u.s. ambassador to china and former commerce secretary, gary loch. ambassador loch, thanks for joining us today >> my pleasure >> you know, one of the life lessons that i've picked up along the way is maybe pay a little less attention towards and put more stock in actions based on the actions we've seen over the last couple of days

between the u.s. and china where would you say we're at in terms of these trade talks, and i guess we should really say, this ratcheting up of tensions between the two countries. >> well, i think it's a very bad sign on both sides first, the president's announcement that he is going to raise tariffs to 10% on the rest of chinese goods that are coming into the united states, which really impacts consumers and it's going to be on clothing, electronics, toys, iphones and things like that that's really going to start hitting american households and their pocketbooks. and then for the chinese to retaliate by, excuse me, by allowing their currency to depreciate, as well as saying that they're going to halt any purchases of farm goods. this is really a sign of deepening friction, a little more animosity between the top leaders of both the united states and china i want does not bode well for any type of a trade deal >> ambassador, do you think that things won't now change course

until after the u.s. election? >> i don't think it's in any side's interest to wait until after the election american consumers are at risk chinese workers, their businesses are at risk and a huge drop in sales of chinese goods to america china is still very much dependent on exports, especially to the united states they export more to america than they do to all the eu countries combined 20% of the chinese economy depends on exports so it's not in the interest of the chinese government or the united states to allow this trade war to continue. we need to find a way to kind of come to a pause, a re-set, and to perhaps have a cessation of some of these back and forth hostilities, whether it's the president implementing tariffs on all chinese goods the fed and so many other institutions have said this is

costing american consumers, with just the tariffs already in place, the ones in may, not the ones that may go up in september, but all the tariffs in place already are costing american households anywhere from 800 to over $1,000 per year so we need to have a reset we need to pause we need to get people back to the negotiating table. >> ambassador, you've dealt with china before you've had trade talks with china before if this does actually get worse before it gets better right now, what are the levers on both sides that could still be pulled >> well, obviously, china could raise tariffs on the agricultural goods that it might want to buy, so it can say that they'll buy some more, but if it's too expensive, they're not going to do that china doesn't have to resort to tariffs in order to retaliate. we see what they're doing with their currency they can simply just tell their industries, don't buy boeing

airplanes. don't buy soybeans you don't need a tariff to do that you can say, we're going to start ordering airbus. we're going to start ordering german-made mri and cat scan and x-ray machines we can buy all of these products, heavy machinery, from other countries. we don't have to resort to a tariff on u.s. products. and the same thing, of course, with the united states the united states could, in fact, follow through on raising the tariffs on all remaining chinese goods up to 25%. and that wof, obviously, is goio hurt the chinese economy, but it's also going to hurt the american consumer. which is why your previous guests have said, in a trade war, there are no winners. everybody loses. and particularly consumers >> so, ambassador, what does a detente, a relaxation start to look like, given that both sides are accusing the other of either not negotiating in good faith or being intransigent what do we have to start to see? >> well, obviously, we need to

get the negotiators talking again. i don't think anybody is expecting a big grand bargain anymore. it's going to be modest steps. increases in purchases of u.s. goods, more liberalization of the chinese markets, allowing more u.s. or foreign companies to operate in china without having to have a chinese partner, allowing american firms to be 100% in control of their destiny, instead of being only a 49% partner or owner of an enterprise so i think those are some of the things, commitments for enforcement of intellectual property it's going to be harder for the chinese to move away far enough some of their big subsidies of some of their emerging industries, whether it's in solar, artificial intelligence, biopharmaceuticals, or semiconductors i mean, they want to move away from low-cost, low-wage export-driven manufacturing to more of an innovation economy.

and so they're going to be very much intent on trying to problem up and help some of these emerging industries. we, of course, in the united states, have great concerns about that unfair subsidy. and perhaps our tariffs would be targeted at those products coming from those industries that remain heavily subsidized but i think we need to first of all not go through with the 10% tariff, september 1, on all remaining chinese goods, which really impact consumer goods toys, electronics, clothing, et cetera, et cetera. and we need to get the chinese to recommit to purchasing agricultural goods as a first step >> ambassador gary locke, great to get your thoughts thank you. >> thank still to come, stocks coming off their worst day of the year, trying to turn things around this morning here are the names leading the charge in today's session. we'll be back in just a moment -driverless cars... -all ground personnel... ...or trips to mars. $4.95.

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in market cap after closing last wednesday at a nine-month high of course, it's getting hit particularly hard by the threat of tariffs back in april, apple told robert lighthizer that the latest proposed tariffs would hit all of its major products. in july, president trump refused apple's request for waivers for the mac pro, tweeting that apple would not be given relief for parts made in china. make them in the usa so a few ways, guys, that the latest tariffs could play out here all of them putting the company in a tough position. if apple eats or absorbs the added cost, it would hurt its bottom line by as much as $3.4 billion in fiscal 2020, according to bank of america and merrill lynch. now, if apple instead passes along costs to customers by raising customers, demand would take a hit estimates i have seen from analysts predict that tariffs could cut iphone sales by 6 million to 10 million units. major analysts say that apple, though, can weather the storm and the impact will be manageable

think of it like this, says b of a, only a $3.4 billion hit to profit is still less than 6% of earnings next year top apple analyst, ming quo says that apple has planned ahead and should be able to offset costs he said absorbing cost could garner better brand image and relationships in time for the company. several other analysts also point to expected growth in apple's services business. we talk about it a lot they say that the pullback could be a great opportunity to buy. back to you. >> okay, dee, thanks very much for that of course, it's not just apple big tech losing over $162 billion in value overall yesterday during the sell-off. so what's ahead for the sector amid these trade tensions. let's bring in ang lee, author of "what the u.s. can learn from china and will china's economy collapse." the dow has just turned negative, well off the highs of the day, which was up 229

points we are now fractionally negative the s&p is only up 0.1%. guys, very good morning to you thanks for joining us. and if we look over the course of just august, month-to-date, apple is down the most the f.a.a.n.g. stocks is down close to 9%. does that make sense to you because of the evaluated china trade fits >> sure, because there is concern how much apple is going to maintain its profits. and certainly, there have been talks about fox con, which is apple's biggest manufacturer in china, setting up shop in the u.s. but production really hasn't started yet there. and if it does relocate here, costs could certainly be higher than what it currently is in china. and not only is the cost side at risk, you also have the revenues because apple has been selling its products to the chinese mainland consumer market if there is a negative view of

american brands in china, because of this expanding trade war, it's possible that huawei will gain more market share at apple's expense as a result and so the top line could also falter so it really depends -- there are a lot of moving parts here certainly, alibaba and other companies may choose to help apple and say, oh, if you're patriotic, you know, we're going to help you out. and maybe that could offset some of the damage. but certainly, there are major risks here >> dan, microsoft's only down 1.8% month-to-date does that make sense to you on the other side, that there are some opportunities in tech, where they're not really affected by china sales? >> we see a lot of opportunities in technology. and microsoft, which you mentioned, i think what's important here is that their cloud business continues to perform very, very well. and when we speak to customers, this shift to the cloud is really very much in its fantasy. another company that we would

highlight is cisco, which is really a leader in building out next generation networks, which are ultimately critical to helping companies digitize their businesses cisco has an ongoing mix shift to software. they're executing well in security, so we think those two companies in particular, apple, we continue to like. and while acknowledging there's certainly a potential headwind to earnings from tariffs, we think what's important here is that they're continuing to innovate the iphone install base is continuing to grow services is healthy, wearables, we think, is very much underappreciated so certainly, these companies are cyclical, but we see opportunity. >> what about kind of knock-on effects to the dynamic with china? in qualcomm's report, that really struck me, that they were seeing huawei being particularly strong, other handset oems not and other oems delaying or canceling their big 4g launches,

waiting for 5g all of this getting intensified by trade stuff aren't there -- even for companies that aren't directly getting a lot of revenues from china, some of those tectonic shifts that are going to hit them >> i think that's right. i think whhuawei, even with some of the issues they're facing remains a formidable competitor. there are a lot of very strong chinese companies in handsets, to your point. we think that ultimately what's going to be important for these companies to create value is that beyond just the hardware, they need to innovate more in software and services. that is what's critical to creating a differentiated user experience and ultimately retaining those customers and continuing to grow with them so qualcomm certainly does face some headwinds we can see from the rhetoric, both in washington and beijing, the importance of 5g and really this next generation of connectivity, because of the impacts across the economic, the political, and really the social spectrum so, big issues we still see opportunities in

some of these companies, but we expect some of the overhangs to be with us in the near term. >> and just to dig into those dynamics a little bit more, above and beyond tariffs, when we talk about tech, there are also these blacklists, right you've got the entity list in the u.s., but a number of telecos and tech companies, the most notable being huawei are on but you have the chinese talking about this unreliable entity list and speculation that you could see american companies add to that as well. how sticky could those lists be and how big could those implications be? >> certainly, it would have a spillout effect. but beyond just entity lists, cfius, which basically reviews companies whether they're national security risks or not, they recently passed a law saying that venture capital firms must have an american citizen in order to invest in tech companies here and that's something that hasn't been talked about a lot i think this will have a major

impact on the tech sector, because there were a lot of tech companies in silicon valley that were actually invested by chinese investors. chinese venture capital firms had come to the u.s. to do that, as well as many had gone to china to invest in chinese companies. so there was a lot of cross-border investment that was going on and these changes in u.s. law could affect the investment flow s. and this would really retard a lot of innovation, potentially because a lot of these small companies, these start-ups are, you know, really in need of a lot of capital not all the venture capital firms in silicon valley necessarily would want to invest in them, but maybe chinese investors might. but if they are going to disappear from the scene, then these companies will have no way to get off the ground. and that could slow innovation both in the u.s. and in china.

because you need a lot collaboration and cross-exchange of ideas for innovation to happen but if everyone's just stuck in their own echochamber, that gets stifled. so i think these will have long-term implications here. >> ann lee, dan flaks, thank you both for joining us. >> thank you and when we return, stocks erasing their early gains. the dow is dipping into negative territory briefly just a few moments ago. now bumping around the flat line meanwhile, europe set to close in just a few minutes. we'll get a live report on today's action overseas, next.

welcome back stocks erasing their early gains with the dow turning negative moments ago, following a dramatic sell-off after increased trade tensions between the china and the u.s. our next guest says the numbers on that trade war is in and the u.s. is losing

joining us now from aspen is ceo and chairman of pag, asia's largest private equity firm. good morning >> good morning. >> the trump administration, the president himself has said that trade wars are easy to win, continuing to assert that the u.s. is winning. you say not so why? >> i think you just need to look at the numbers trade wars started on july 6th last year. and on the anniversary, i took stock of what happened and during this 12 months, the u.s. to china fell 31 billion, which is about 21% chinese exports to the united states rose about 1%, about $4 billion. and in the latest months, in which we have numbers, that is true, the picture is a little different. the chinese exports to the

united states fell about $3 billion, which is 8% american exports to china fell about $4 billion, which is 31% so the trade deficit for the united states, in fact, has widened. >> so what's the incentive for the chinese government to do under these circumstances with president trump seeming eager to show that he can push china to offer more concessions >> well, i'm afraid that when they look at the numbers, probably, there's very little incentive for them to give a lot of concessions last year, when the trade war first started, i think there is a panic in china and it has taken a psychological toll the stock market last year dropped 25%. but after the smoke cleared, we look at the numbers, it's not so

bad. you know, this year the stock market went up 20% so if you look at the import side, the first run of tariffs, american consumers bear 100% of all the tariffs. there's 100% pass-through, according to the fed economists. on the other side, if you look at china side, they actually only raised tariffs for american products, which they could also buy from elsewhere, like soybeans from argentina, from brazil and they actually lowered tariffs for american products that they couldn't buy from elsewhere, like aircraft, high tech products, movies, and even auto parts they actually dropped tariffs for auto parts so there's such a concept called that we lost and for the american side,

according to the new york fed, the that we lost amounts to about $26 per household and that's about $80 billion per year for the american economy. on the chinese side, so far, there's no that we lost, because on average, tariff rate has dropped, because china lowered tariffs for all other countries, but the united states. >> your company is the largest private equity firm in asia. most of the money is invested in china right now. how are you assessing your portfolio in the misdst of all o these trade tensions and how will it change color or shift your investments moving forward? >> we have adopted a policy, a strategy, since more than ten years ago that we will not invest in the manufacturing sector, industrial sector or export sector in china or elsewhere in asia. the reason for that is there's a lot of overcapacity.

so chinese export sector has been shrinking relative to gdp 2005, exports represented about 36% of gdp today, it's only 18% so we only invest in businesses which cater to domestic consumption, private consumption, which has been spending at double-digit rate in the past ten years so our portfolio companies are actually doing very well and if you look at the chinese exports, sometimes the numbers are very misleading. i heard people talk about apple just now china's value added to assembling apple in china is only 1.8% of the retail price of apple. apple itself takes 54% and the rest is third-party parts. so china -- the effect on china

is very small, when the tariff is raised for apple iphones. >> i just want to ask quickly -- your take on where things go from now and in particular, how are thing being framed back home in china and whether you think it's likely that president xi is able and/or willing to back down. >> well, by the way, i don't live in china. well, i live in hong kong, which, of course, is part of china, but not mainland. and i saw that there was a psychological toll last year in the chinese economy. that is the confidence level really dropped, almost not bottom and this year, it has recovered, as i just mentioned. i think that this trade war is going to last for some time. both sides are digging in their heels.

i think, eventually, at this particular moment, the american economy is doing very well so people don't so much feel the impact of the trade war, except the exporters like apple, which have been affected by the trade war. but by and large, the economy is just doing fine. i think when the cycle returns, which inevitably it will, people will feel more of it in china, we have not had a recession for the past 40 years, because china is still at very early stage of development you know, china's per capita gdp is only one sixth of america's so i think when the economic situation turns and probably people will think twice about it but that may be some time to come >> a different take, a unique take on this trade war between the u.s. and china thank you for joining us >> thank you let's get over to sue

herrera now for a news update. hey, sue >> good morning, morgan. good morning, everyone here's what's happening at this hour south korea's military says north korea fired unidentified projectiles twice into the sea as it continues to ramp up weapons tests. the move comes as nuclear talks with the u.s. remain at a stalemate. it also comes a day after the u.s. and south korea's militaries started scaled down joint military exercises >> i wouldn't say weapon don't do anything. we monitor these very closing and make sure we understand what they're doing and try to understand why but again, i think the key is to keep the door open for diplomacy. >> the "uss ronald reagan" sailing through the disputed south china sea amid territorial flare-ups involving china. the nuclear-powered carrier which carries about 70 supersonic f-18 jets, spy planes, and helicopters is en route to manila. and back here at home, demonstrators stood outside of nra headquarters in fairfax,

virginia, demanding changes. they held signs and candles for the victims of last weekend's mass shootings they are calling for stricter gun laws you are up to date that's the news update this hour back downtown to you guys. wilf, i'll send it back to you >> sue, thanks very much see you later today. european markets just closing. seema mody is with us now with a break d breakdown of today's action. >> we started in the green and now we're ending in the red for session lows so a sharp intraday reversal for all the european markets, even after china's central bank signaled it wouldn't let the yuan fall much further part of the reason is the data out of germany continues to disappoint manufacturing data came in weaker than expected at 49.5 versus 50 in june. that marks the first contraction since october of 2018. though worth noting that factory orders picked up in june still, it's hard to know if that will continue. barclays is writing that the reescalation of the u.s./china trade tensions might be sufficient enough to push the

german economy into recession as early as the third quarter of 2019 also, some news in the energy space. british petroleum has partnered with india's richest man and his company, reliance industries to form an oil and gas joint venture. it marks a shift towards the east as major oil producers continue to experience challenges in the west bp last week said it would launch an electronic vehicle charging system in china with ride-hailing company we are looking at shares flat on the session welcome down about 14%. that certainly has been a pocket of weakness for europe, the energy sector. back to you, morgan. >> it certainly has. a big show of "squawk alley" still ahead larry summers will join us on the other side of this break meantime, the dow is hanging on to gains of 22 points, though well off the session highs the s&p, now break even for the past 12 months more of tafter the break. (gentle music)

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i think china's getting hurt significantly, much more than we are, as i said before. and so, okay, if they want to wait, maybe so, but the chinese economy is crumbling it's just not the powerhouse it was 20 years ago everybody knows that and as i said before, you know, supply chains are moving out, the demand for their goods is moving to other places >> that was national economic council director larry kudlow

joining us earlier, defending the president's trade tactics against china. still, our next guest warns, quote, we may be -- we may well be at the most dangerous financial moment since the 2009 financial crisis, with current developments between the u.s. and china. former treasury secretary, larry summers, joins us now on the phone after releasing just moments ago an op-ed in "the washington post" saying, quote, by naming china a currency manipulator, mnuchin has damaged his credibility. larry, great to have you with us i want to get your thoughts on what kudlow just said and also on this op-ed you just published. but first, i want to start with a history lesson because the last time the u.s. designated another country a currency manipulator, it was in the 1990s, during the clinton administration it was china then, too i realized you became treasury secretary later in president clinton's tenure, but how did it happen then and how does this time around compare to that? >> it happened then because china was intervening in the

currency markets in large quantity to push the value of its current down and as a consequence of that very low artificially manipulated currency, it was running a very large surplus with the rest of the global economy. today, china is intervening in currency markets to prop up its exchange rate, not to push it down and it is in balance with the rest of the world, unlike germany, unlike japan, unlike many other countries that are in substantial surplus. so both elements of manipulation, pushing the currency down, and running a substantial surplus, are not present in the case of china

today. you know, i don't understand what economic textbooks or what data the administration looks at what larry kudlow just said, when he asserted that china was not nearly the economic power that it was 20 years ago, may be the most ludicrous economic statement i've ever heard a public official make china's economy is approximately seven times as large as it was 20 years ago china's growth rate over the last 20 years has exceeded that of the united states by a factor of about three or four china has economic challenges now, but to assert that china is not as strong an economy as it was 20 years ago is not to be living on this planet.

>> larry, larry kudlow also said that china is clearly getting the worst of this trade battle we just heard way john chong on saying that's not the case, that the u.s. is getting the worst of it does it matter who'sright? >> i don't think so. china -- i don't know why we would want to launch into a big negative sum game and take our solace only from the fact that china might be being hurt worse than we're being hurt. my thought the idea of american economic policy was to make america better off, not to make others worse off you know, whether you're --

whether the sadism in your policy exceeds the masochism in your policy doesn't seem like the right test it's enough to say that something's wrong to agree that your policy is masochistic >> larry, you tweeted earlier that we may well be at the most dangerous financial moment since 2009 do you expect a major crash or something equivalent in the next six months or so >> i think i said, we may be at the moment of greatest risk. i didn't mean to suggest that i think it's likely that we're going to see another version of 2009 just that the risks are greater than they have been -- than what they've been through the recession, through the post-recession period. i think if things continue on

the current path with major volatility injected every several weeks by some american action, you're certainly getting closer to a 50/50 risk of recession over the next year or year and a half. >> larry, the op-ed -- >> that doesn't mean it has to happen, but that's the risk. >> larry, this op-ed you just published that by naming china a currency manipulator, mnuchin has damaged his credibility, why do you believe that? what's your argument there >> because there's an established understanding of what's involved in currency manipulation it's intervening in the market to push your currency down china is not doing that. it's intervening in the market to hold its currency up. >> so how do you see -- >> it's running a substantial surplus. and china is not doing that either so it's -- it's just saying things that are not rooted in

facts. and it seems to me that when you hold an office where credibility is very important, it's very important that your statements and claims be grounded in fact and analysis rather than grounded in following your boss' latest tweet >> yeah. so, larry, how do you see what did happen with the yuan and the fact that the pboc coming into the start of this trade meeting, we'd basically step back and let it weaken past that $7 ratio, that key level do you see it as capitulation, or do you see it as provocation? and i ask, because both of those scenarios seem like they could have big implications for the markets. it certainly spooked the markets with moves we saw yesterday. >> i guess i think, i see it as allowing markets to adjust naturally. and -- which often is what is united states is asking china to

do and is not artificially intervening to prop up the market that would be how i would see what's china done. to put the point a different way, look at any country and if there's some major adverse shock to its ability to export, there'll be a tendency for its currency to go down. and the united states dmir administered a major shock to china's capacity to export, so i'm not sure why we should be surprised when its currency goes down >> larry, you agreed with the recent 25 basis pointrate cuts how inefficient, though, is that at offsetting the issues caused by the trade war and when you see such big moves in the long end of the yield curve over the last couple of days, does it make you think we need to see many more cuts in order to steepen that curve again? >> i think that the risks right

now are much more on the side of economic slowdown than they are of heating up, of the economy. i worry that part of what we may be seeing is a market judgment that exactly as you say, monetary policy may not be so effective in stimulating the economy. and therefore, there's going to be a lot of pressure to keep pushing, because when you're, to some extent, pushing on a string, it's not that efficacio efficacious. and i think the nature of the adverse shock that is being administered with this big increase in uncertainty is probably one that can be only counteracted to a limited extent by monetary policy that doesn't mean it's not worth making the attempt, but it means

that one should not be complacent that the fed will be able to keep things under control, no matter what happens. >> larry summers, great to get your thoughts. thanks for joining us today. >> thank you bye. and the nasdaq was the worst performer during yesterday's sell-off when the tech sector got crushed. it's holding up the best today here are the names trying to change the narrative in today's session from the nasdaq. take-two, kla, indexx lab. we're back after a quick break every day, visionaries are creating the future.

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we're tracking what was trying to be a bounce for stocks with a closely followed technician who tells us whether stocks have fallen far enough or if there's more to go. our call of the day hits an auto stock that's been stuck in park. our investment committee is buying stocks today. they will tell us which ones we'll see you in a bit >> we'll see you then. the dow is up about a thd a rct.of thnasdaq and s&p hanging onto gains. we're back in three. mpany. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life.

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the dow high for the first time in six days although briefly dipped negative this hour good morning to you. thanks for joining us. >> thank you >> the high of the dow is 229 points we went briefly negative about 20 minutes ago back up 62 what do you make of that move? >> that's exactly correct. the market is forgiving of one such pull back

should they roll over again and go negative again, it could have more serious consequences. yesterday looked a good deal like some form of copitulation they did pop up to around 25 in the old days it would have popped up to 40 or 50. the case is not fully there. they're trying to hold together here they better stay in plus territory. >> you throw in thursday and friday we're looking at a 5%, 6% pull back depending which indices from the high, is that enough? >> it could be it was rather extreme to see nine to one and ten to one negative i think it's a little bit too early. the other thing that we're

seeing is it's really ironic that both time wise and percentage wise we're still pretty close to the highs we had. it's been relatively sharp sell off and a relatively few days. we'll see if they can come back out of that. the market was thrown for a loop when it looked like we were going to flip into currency wars from tariff wars and that could lead to far more dramatic things markets are nervous. i'm also worried about the geo political side there's speculation that china is ready to send military forces into hong kong and india is making some changes in cashmere which is going to get pakistan riled up two nuclear powers nose to nose. that can't be very good for what's going on. >> are the markets caught looking at this trade ping-pong match between the u.s. and china

whether it's treats or currency move all these things don't seem to be having a lastic impact. >> i think you're right. for now the market is virtually obsessed with the trade negotiation, trade wars, whatever you want to call them because they can spill out into other things that was the shock of yesterday that the chinese went through the seven level and that's an area it hadn't seen in a decade. people said we're moving away pr tariffs. this may get out of someone's control. currency wars are very difficult to control it's usually a race to the bottom and for the united states, we're the major reserve currency yesterday, as you saw, when there was a concern and a flight to safety, the dollar went up which is not what the president wants to have happen >> you're seeing the ita and defense etf rally today.

it's about 1.5, almost 2%. some analyst upgrades for defense names but it's one area where you're seeing geo politics play out in markets. in terms of clooekey levels to wh -- what are they? if. >> they go negative again. it will probably cause some problems the other thing is we may be headed if we're headed significantly lower, we may be looking back down to the 200-day moving averages which are significant blow here. there's not a lot of support in between here and there i think what the market wants to do is temper itself down and hold together. >> great to see you as always. >> pleasure. we got the major indices trying to claw their way back from the flat line the dow is up over 100 points. s&p up half a percent.

nasdaq doing best of all a day after it did not do so well at all and take a look at the tech stocks and how they are doing. we mentioned take two is doing well the video game stocks were suffering yesterday. that's going to do it for us on squawk alley let's get to scott and the half. all right. thanks so much front and center this hour, what the new phase of the trade war means to you money stocks trying to bounce from their worst day of the year. it's 12:00 noon, that means this is the halftime report >> stocks trying to rebound with the s&p 500 fighting for its first day of gains in a week plus the latest on the trade war. the white house firing back. >> the president is determined to defend the american economy our investment committee is finding opportunity in this week's dip those stocks next. the halftime report begins right now.