♪ it is 5:00 a.m. here at cnbc and here is your top five at 5 is the trade war about to heat up even more china cutting its currency rate weaker than expected for the third-straight session. speaking of cuts, goldman sachs warning the trade war is raising the risk of recession. hong kong police and protesters clashing again in the tenth-straight weekend of unrest and now hong kong's airport canceling all remaining flights for the rest of the day. black rock buying a major stake in sports illustrated parent's company authentic brands. gymnastsy moens biles is making history, winning a

record-tying sixth u.s. all around title if that does not impress you, just think about this, she did a double twisting, double summer salt dismount from a balance beam unreal it's monday, august 12th and "worldwide exchange" begins right now. ♪ good morning, good afternoon or good evening and welcome from wherever in the world you may be watching i'm brian sullivan. happy monday well, at least for now we are seeing a little of the craziness for the recent market moves take a break to start the week, although li will say this, futures are now down -- they were down 50 points just about 15 minutes ago then we had the headlines about all flights being cancelled out of hong kong's airport and saw futures take a leg down. we lost 75 points like that. you never know what's going to happen the rest of the day in the bond market, bond yields remaining a little steady. the bond yield still on the ten

year very, very low at 1.685 again, this is what you want to watch, 1.59, 1.65, the two-ten spread that goes above that, that's called the inversion that's what people are worried about. let's talk about china because hong kong falling again overnight. with today's drop, the hang seng has now turned negative on the year three-straight weeks of declines for that market. as we noted, hong kong airport minutes ago ceasing all flight operations the rest of the day we'll get more on that breaking news in a moment as well jim cramer chiming in about what it might mean for the markets as well in europe, mixed markets we'll talk more about the other global story going on right now. increased concern about the help of european banks that's also later on in the program. fairly calm in the commodity markets with oil, euro and gold not moving too much. euro dollar 111. gold up a little bit getting a bitd on the hong kong news

it is not that calm for goldman sachs, economists there are working overtime and they're out with a big call this morning goldman warning that the trade war between the united states and china may be having a bigger impact on the american economy than previously expected let's get more now with rahel solomon. good morning. >> good morning, brian goldman says the risk of a recession is rising and a note to clients analysts led by chief u.s. economist say that a trade deal between the u.s. and china is not expected before the presidential election next year. so goldman expects this to lead to a drag of .6% on the economy versus previous estimates .2 up percent. they are cutting third quarter gdp forecast of 1.8% from earlier estimate of 2% we now include an estimate to the sentiment and uncertainly effects and that financial markets have responded notably to recent trade news goldman also says uncertainty

over trade could cause companies to reduce spending until the situation is resolved and goldman expects president trump to carry out his threat to impose a new round of tariffs on additional 300 billion in chinese goods starting september 1st. back to you. >> see you in a minute thank you very much. let's get context and analyst all now with your next guest one of the best market watchers and technicians out there and got a bit of a wicked sense of humor, couple days ago, what do you buy now? austrian debt at 2%, beyond meat at 900 times or go into the fang stocks and hope that everybody just doesn't sell them or, heck, just trust the american fed and buy the s&p 500? we sense a touch of tongue in cheek in that tweet. let's find out what he meant and bring in sven the founder of northman trader. sven, thank you very much for joining us with all that -- you're making a good point sort of with that touch of sense of humor out there, but what is out there

that you think looks like a good value to buy right now >> brooiian, that is a tongue in cheek fact there's no attractive investments in terms of the larger investable universe you either buy things that are extremely expensive and overvalued or go into negative yielding debts it's a chase as you said in the outset of your program here, there's everyday, there's a headline that may turn markets lower, turn markets higher. it's a big chase for yield it's a dangerous environment from my perspective. in terms of buy, we actually have been going and looking at gold since may it's been incredible run, 20% move and it speaks actually to the volatility that is taking place in the underlying sectors. it's not only gold, oil dropped 25% from the april high. and of course, yields have been collapsing there's a lot of stress in the system that we saw a little bit

of that spilling into equities last week. it was a sizable move. it shows how little support there is when these things happen because as you may recall, june, july we had this low volume, steady rally, uninterrupted into the key technical zone of 3,000, 3,500 and now we dropped from there. volatile environment. >> yeah. you talk about a headline driven market a few moments ago, hong kong protesters storms the airport. china had no choice but to close that airport the minute that headline came out, stock futures dropped 50 to 75 points in the blink of an eye. is that the kind of environment that we are in right now >> absolutely. it can even be a tweet, right? we saw that in july from -- early august from president trump, right, on the trade war it happens every single day. we saw it on friday. you can certainly get a headline or can drop 20 to 30 handles

it's a very difficult time for traders. you're on the right or wrong side at the same time, my larger concern, brian, is if we're -- if you take out all the noise, we're following a very clean technical structure. in july we talked about a broadening wedge pattern into 3,000, 3,500 we hit that precisely in terms of s&p 30/28 and since drop in early august and we see the vix exploding, came out of a consolidation pattern that we have seen repetitively over the last few years. there's a rising trend in volatility and from my perspective, all this points to a larger wall that we're all hitting and that is valuation on these markets. in fact, you can talk about it in context of bubbles. there's a way to define bubbles. and i can walk you through hat it's pretty fascinating from a

market count the gdp perspective. >> we don't want to send up too much of a warning flair, you noted if you go back to the late '90s and right before the financial crisis, again, very serious date comparisons when we hit the u.s. stock market is about 140 to 150% of u.s. gdp, bad things have happened >> yeah. look, if you go back to the '80s and '90s and look at the overall market value of the stock market vis-a-vis the gdp and the classic bubble definition, if markets or valuations disconnect too far from the underlying size of the economy, you run into trouble. we were in 40% to 60, 80% and then the tech bubble happened and we got to 146% that's when we had the version, the crash and right sizing, if you will then we did it again we did it in 2007 with the housing bubble and it peeked

roughly around 137%. a far extension above the gdp ratio. and now in this last ten years with all the cheap money, low yields and debt expansion, we actually have done it again. ironically, every time markets got into trouble the last year and a half is when we exceeded that ratio again, was 147% in january 2018 was 142% in september and just now in july we hit 146% again. so this seems to be a valuation wall that there's really no history to suggest we can maintain it or even exceed it. so this is uncharted territory >> we are not only at this high valuations, we are 50 year lows of unemployment at 3.6, 3.7% there's no history suggest we can extend both. so something has to give here. we need that growth spurt and we

don't see it anywhere. as you just pointed out with the goldman sachs provision, growth is slowing. >> sven henrik, always a pleasure thank you very much. appreciate it. >> thank you, brian. when we come back, dramatic scenes out of hong kong. police and protesters clashing again. people left bloody in the streets. and now that island facing another crisis all flights the rest of the day are suspended as tens of thousands of protesters storm the hong kong airport. then, put black rock on the cover the investment power house just became the biggest shareholder of the owner of "sports illustrated. we spoke with that company's ceo and we're bringing the details of that deal when "worldwide exchange" returns right after this

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♪ welcome back that is earlier today and that is hong kong's international airport. you can see thousands, maybe tens of thousands of protesters there. they stormed into the airport to protest what they believe is increased police violence. many of them, of course, are seated you can see that one young lady is holding up a sign, stop shooting eyes. there's tear gas that has been used as well earlier today at hong kong airport. as you might imagine, all flights for the rest of the day, it's 5:13 p.m. there now, have been suspended, although if flights are in the air, obviously, they will be permitted to land. pretty dramatic scenes earlier

today at hong kong international airport. that news and those videos sending stock futures here lower. in fact, we dropped about 75 points in a matter of minutes once the news came out that the airport had indeed been suspended. stock futures down 116 down on the dow. those scenes we showed you at the airport. but over the weekend, there were more clashes with police, some of them turning violence in the streets of hong kong nbc's matt bradley joining us now live from the ground with more matt >> reporter: hey, brian. yeah, all of this started because last night it said that one of the protesters, a young woman, was shot in the eye with some kind of police projectile it might have been tear gas canister, might have been one of these rubber bullets or bean bags they have been using. this really sent this -- all of the protesters into a fury and they went straight to the airport today to not just protest, which they have been doing for three days this past weekend, but to actually deliberately shut down the

airport, shut down the flights as you mentioned, you know, this is one of the biggest, busiest airports in the world. and this isn't just going to cause massive disruptions here in hong kong this is going to have a knock gone effect for flights throughout the entire region because hong kong is a major transit hug for flights throughout asia. police are supposedly gathering outside of the airport and they might be trying to consider some sort of offensive action to try to disperse the protesters now, the protesters that i have been following on social media, they consider this to be a deliberate overreaction by authorities here in hong kong. they think that the canceling of the flights was done simply to shame the protesters and to show that the protesters are damaging the economy. now, there's no evidence of that we haven't actually heard that from the hong kong airport authorities, but the hong kong authorities have been taking this line lately just this past week of trying to point out how

this has had an effect on the economy, as you mentioned the stock market brian? >> yeah. you know, matt, can you let our viewers know, obviously there's protests today about the police violence, to your note about police shooting projectiles, using clubs the violence but initially the protests were over this new extradition law where people could be sort of subject to mainland china laws, rules and regulations versus hong kong. what are the primary protesters now looking for? is there a political goal that we can discern >> reporter: it's a very good question, brian, because you know, over the last two months and we just reached that two-month anniversary now, the protests have morphed and become a self perpetuating outrage machine. nobody talks about that extradition bill it's been all but shelved by carey lamb she said the bill was dead the protesters want her to actually formally withdraw the bill from the legislative

agenda she hasn't done that yet, but now a lot of the protests are aimed directly at the police they're demanding the police have independent investigation of police brutality and investigated for what a lot of people say are collusion with armed gangs. they say the police turned a blind eye to that or maybe even helped and abetted them. so these demands have morphed. the real problem here, brian, is that this is truly a leaderless movement there's no one with which to negotiate. there's no one who you can say we made these concessions. so now stop protesting it's an amor fis leader lis movement. >> the hong kong airport, the eighth busiest in the world. 74 million passengers a year you get about 202,000 passengers per day going through that airport. matt bradley, thank you very much. by the way, from a markets

perspective, our own jim cramer tweeting out a few minutes ago, quote this hong kong protest movement will no doubt draw the ceo lam to ask the chinese pla to restore order it's textbook at this point and it could be certainly a flash point. that from jim. we saw futures react the moment those airport headlines crossed. the protests in hong kong are having big impact on big business all across china as well eunice yoon with more on this side of the story. eunice >> thanks so much, brian china and its people want big business to pick a side when it comes to hong kong here in china on social media, chinese have been calling for big brands to make a decision on what they're going to do and calling for boycotts for certain products of companies which they believe don't show enough proper respect for china's sovereignty. companies, such as coach, versace are all getting pummeled

online for t-shirts which to the chinese eye don't clearly list hong kong as part of china the hashtag coach has been viewed over 1.3 billion times so far, coach brand ambassadors cut ties today to the fashion houses and also coach apologized saying they're extremely sorry, even so, the authority tative people daily posted a warning at all multinational companies saying if you challenge the bottom line of chinese sovereignty, how far do you think you can stay in china before your body becomes cold now just moments ago a chinese official had also told state tv that they believe that hong kong is at a critical juncture and that the violence must stop. the hong kong business has also been taking a lot of pressure of airline cafe pacific in particular has been instructed by chinese aviation authorities that their staff, if they happen

to be engaged or support the hong kong protests, they will be barred from roots into mainland china. the airline had to submit all crews for china-bound flights or for beijing's approval and by thursday, next thursday, the airline has to provide the government here a planned -- detailed plan as to how they're going to adhere to beijing's demands. now cafe's chairman said they will not dictate to staff what they have to think but said that the airline would abide by china's regulations. and brian, i've been speaking to a lot of foreign business people, not only here but also in hong kong and they have been all watching this cafe situation very closely. a lot of them are concerned about what the implications could be for their business if beijing is able to influence staffing decisions at cafe over to you. >> yeah, how long can you stay in china before your body

becomes cold whoever made that statement may want to take that back thank you. appreciate that. still on deck, back to business around the world, and 4 billion dollar deal to tell you about in europe. we'll bring you the details. plus, working to go public wework expected to unveil ipo filing this week we'll bring you the latest on that potentially 47 billion dollar story next. o) the ant mindlessly marches on. carrying up to 50 times its body weight. 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! it's how we care for our patients- like job. his team at ctca treated his cancer

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welcome back wework could unveil its ipo filing as soon as this week. the company confidentially filed to go public back in april according to its most recent private funding round in january. it is valued around $47 billion. block rock has just become the largest shareholder in sports illustrated's parent company black rock 30% stake in his company for $875 million that values authentic brands for 4 to 4.5 billion for debt. they will still control about 20% of the company authentic brands owns more than 50 athletic, entertainment retail companies like sports illustrated, nine west as well as the rights to the images of marilyn monroe and even elvis. on deck, gymnastics history for superstar simone biles, she landed a move that you will not believe. we're going to show you that

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♪ welcome back let's get a check on this morning's other headlines outside of the world of money and business including more on the story gripping new york and the country. what exactly happened with jeffrey epstein's apparent suicide. nbc's phillip mena is in new york with that and more. good morning, phillip. >> everybody wants to know, brian. good morning the death of accused sex

trafficker jeffrey epstein is still very much shrouded in mystery this morning the new york city medical examiner's office revealing over night they have completed the autopsy but they need more information before determining the cause of death two days after epstein was found unresponse nif his federal jail cell, multiple people briefed on the investigation say that suicide remains the suicide cause of death. escaped convict is back in custody this morning after a five-day man hunt. police say they found and captured curtis ray watson in a soy bean field just hours after he was spotted on a doorbell camera raiding a family's outdoor refrigerator authorities say watson, who he was serving a 15-year sentence for aggravated kidnapping went missing from his work detail last wednesday finally, gymnastics superstar simone biles continues to defy gravity and amaze, landing a triple double during her floor routine, the first gymnast to pull off that feat in

competition and came just one night after she made history with a double/double dismount on the balance beam doing a double twist and double flip on that one. that was enough to earn biles her sixth all around title at the u.s. championships good enough to tie a record that was set, brian, all the way back in 1952 she continues to lay the ground work here in building a strong case as possibly the greatest gymnast we have ever seen. >> that is amazing what a move. i cannot wait for the olympics coming up next year in tokyo phillip mena, thank you very much coming up here, the rate race to the bottom the deals doing negative around the world, what is the best move for your money right now we have real world advice for you next ♪

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can't get out of its own way, yielding 1.69%, is the bond market to you saying that we're going into recession soon or is it more of a reflection of all the negative yield around the world and the fact that we're one of the few nations still offering any kind of return to investors? >> yeah. i think brian, it's really the latter we do have a slow downgoing on in the u.s. and certainly reflection of the slow down in the global economy and a lot of worries about the trade war. but i think absent the global pressure, u.s. rates probably would be higher. and i think there's a real cap on u.s. interest rates because there's really very few other places to go to get a positive return and so, we're getting a lot of capital going into the u.s. treasury market and u.s. markets in general seeking some sort of a positive yield. >> yeah. if we -- so the two and ten-year spread it's a little wonky, .1%

is the difference between the two and the ten, if we do, kathy, get that inversion, if the two-year yield goes above the ten-year yield, does that automatically signal to you that there is a recession or again maybe more of technical moves and other factors in the bond market it looks like that's where we're headed >> yeah. so the three-month, ten-year has been inverted on and off since may already. and now the two-year, ten year is getting pretty close to inversion. and has been a reliable indicator of recession in about 12 months ahead. but not every -- there have been a few false signals along the way. i would say the bigger concern for me is just the slow down in growth that we're seeing taking place globally and the spillover to the u.s so the two-year, ten-year could be a symptom rather than a cause of recession >> you know, jim, what's amazing is that i think if we didn't have the trade war and now the hong kong protests, this sort of

sickness of the european bank stocks and fear over the european banking system might be our top story. how concerned are you when you look at especially the charts of a deutsche bank or a commerce bank >> i think the concern for me extends to europe more broadly i look at europe as having more endemic problems than we realize, not only do you have the banking issues, i think the ecb tool kit is laid bear and anything they likely do is interest net margin. the banking industry is in trouble for a bank centric economy but equally demographics are poor the italy situation has flared up once again. and you have an industrial recession for an export-driven economy. and i think the odds that are now stacked up against the eurozone are quite significant if it weren't for the china

headlines the trade headlines we would be focussed on what is the end eurozone problems? >> are they endemic to the banks or larger problems that the bond market is flashing a big red flag for global investors? >> i think it's a little bit of both i think the banks in europe are unique in that their profitability has suffered i think the negative bank yields are mere to stay and lot of bad decisions on top of that the growth in the eurozone and particular any in the smes and the types of enterprises the banks have lended to, there's just no demand there simply is not an easy way out for banks to see a profitable outcome to this it's a very broad based issue. >> kathy, any reasons for our viewers out there, have been aggressive, 09 or 100% equities and it's paid off, should they

own u.s. government ten years at 1.7% >> well, the primary reason to own them is that they're a great hedge against weakness in the equity market. when you look at assets that are negatively corallated with the equity market, u.s. treasuries, particularly those with longer duration tend to do best when the equity market goes down. i would add that treasuries actually done very well this year, too. you have double digit returns and long term treasury it hasn't been that bad an investment so far this year. now, i would not advocate everybody run out and buy long-term bonds at this stage of the game, but having some intermediate term treasuries in the portfolio as a way to hedge against market volatility is still a good idea even at these low ideas. >> we appreciate advice on this monday see you soon thank you.

still to come here on "worldwide exchange," risks growing in the oil markets, including increased concern about the safety of 20 to 30% of the world's oil. that passes through the strait of hormuz everyday we'll give you a live report in the region about what the u.s. navy is doing to try to help calm some of those nerves.

tensions in the middle east continue to grow the u.s. navy is in the gulf to calm some of those nerves. hadley gamble spent a weekend in the persian gulf and joins with us a very cool story hadley >> it was an incredible 48 mohor brian. we were on board a mine sweeper

and patrol craft the patrol crafts spent the most time and most run-ins with iranian craft in this region let's listen in to what they had to say with crude oil prices in a slump that even a geopolitical crisis in the persian gulf failed to shake, the u.s. is struggling to form a global coalition to protect international meritime trade. >> in this particular case, where 20% of the world's oil comes from the strait of hormuz, that's not a united states issue, that's a global issue. >> operating today out of the north arabian sea at the southern tip of the strait of hormuz, the uss abraham lincoln is tasked with deterring teheran. >> this is 4.are 5 acres of sovereign u.s. territory i can park anywhere in the world we're the 911 force if something were to happen, we can move the ship up there very quickly the beauty of a navy aircraft

carriers are speed and agility, one of the fastest ships the navy has, so we're able to reposition very quickly. >> reporter: but with six attacks on tankers since president trump's decision to double down on security in the gulf back in may, many question whether even such a sizable force is really enough. >> the aircraft carrier is a great symbol of american presence we show up we're ready. we're ready to act what that does is we try to add stability to the region. what we have seen is we have seen there's an understanding from iran. our goal is not to go to war with iran. >> in june, president trump tweeted as much, saying china gets 91% of its oil from the strait, japan 62% and many other countries like wise. so why are we protecting the shipping lanes for other countries for zero compensation? and while the u.s. already partners with 33 nations to protect commercial shipping lanes, gulf oil exporters may find getting their crude to market in future could come at a

cost. >> what's more critical for them that freedom of navigation is maintained through the strait of hormuz probably than it is for us so, i think that they see us as a reassuring presence here in their region >> it's a pretty fascinating conversation that has been going on, as you know, brian, over the last several months in particular just basically what are the u.s. responsibilities to the persian gulf at this point when you have so much of the supply of cruel of oil that transits going to asian markets, other markets no longer the united states. is there going to be a military commitment we'll see from other countries particularly here in the gulf countries, saudi arabia, uae, or people ponying up when it come tots the cash. now the president is questioning the u.s. mission here. >> any indication of how long the u.s. navy is planning to do those support missions >> well, at this point, brian, what we heard from the folks that we were speaking to, we didn't just go to an aircraft carrier, we also spoke to folks

manning a mine sweeping and folks manning patrol boats and they are involved to some degree in operation sentinel. the president is struggling to put together this coalition is under way with certain elements with the fifth fleet they tell me this is about deterrence they want to deter any kind of trouble we can see coming from teheran particularly when it comes to the tanker traffic and the transit traffic of course in this area, but it's also about perception, isn't it the perception of a serious u.s. presence here. when i ask the folks on the uss abraham lincoln, hey, we know they know that we're here. >> yeah, very cool story amazing. u.s. navy over there, hadley gamble, we appreciate you bringing it to us. you heard that report. given all that's gone on, how surprised are you, if at all, that brent crude and our crude here is only up fractionally this year and actually lower

year over year >> well, i think it's been fascinating this year because not just because of what's been going on in the straits of hormuz, but if you look at the physical market, the physical market has been one of the tightest it's been since 2011. every crude oil benchmark right now is back which is in sharp contrast to last year. so the market is tight but i think what's been worrying the market very much is these macro concerns about the china/u.s. trade war, currency wars and i think that's been the biggest reason why oil has struggled to rally despite geopolitical risks. >> the technical term meaning the price of a future contract is actually lower than it viegt now. is that just a reflection of how much oil is actually out there in the markets >> no. it means how tight is market is right now because you're essentially asking for more supplies right here right now. >> it's now, yes but down the road, people are concerned it might get looser,

no >> well, i think it just depends in how you're interpreting it. it sernlly means you want the oil out right now and the flat price should be higher right now. of course just the very shape of the curve also means you will be continuing to draw down inventories which is what we're seeing around the world by definition then in the future unless and until demand collapses the price will be higher than what the forward curve is saying. there is absolutely no incentive to hold inventories right now. we have drawn 50 million barrels of crude oil inventories in the key areas of u.s., japan and europe over the last six weeks the market is tight. it's just that the fears of trade war are basically driving the perception like you say, prices will probably come under even more pressure next year if we enter a global recession. >> so if we did not have the u.s./china trade war and these fears of a global recession, of course, if, would have, could have, should have, you know what

i mean, if the u.s. and china made a deal and that was removed from the market, would you then expect prices to -- i don't want to say shoot higher but certainly move higher? >> absolutely. i mean, i would expect brent to be in the 75, $80 range if it wasn't for the trade war but again, like you say, it still should have or whether it happens or not, unfortunately though we don't see a proper comprehensive deal between china and u.s. because they are polls apart when it comes to exactly what both sides want this is going to drag on for a while and this has big implications for european growth, all the southeast asian economies because these are trading partners with china. question is if demand stabilizes over here, prices can still edge higher right now market just doesn't know how bad things can get. but if it continues to deteriorate, that's where you get more downside to prices. >> always appreciate your insight and analysis thank you very much.

>> thank you. on deck, will a drawn-out u.s. china trade war something we just talked about lead to a global recession the big warning from a big bank you've got to hear next. ♪ 7pgñóo

welcome back incredible college admission scandals where parents spent hundreds of thousands or a million dollars more to fake

their kids as athletes to get into elite colleges. some parents and coaches face sentencing next months and there are new indications the federals are not done yet it is the focus of tonight's all-new season premier of american greed produced by our very own scott kohn. joining us live from san francisco with more, scott good to see you. >> good to see you, brian. now we know the admitted master mind of the scam college admissions coach rick singer is still cooperating with authorities. his sentences appears on verge of another delay as singer continues to sing. he could face 20 years in prison for rigging the college admissions of the children of the rich and famous, among them allegedly olivia jay a social media influencer who just yesterday posted on instagram for the first time since the scandal broke in march with her message to the media olivia is still technically a student at usc >> that's my olivia. she's getting a youtube channel and here for fashion week. >> of course she is.

>> olivia's edge is not her famous parents television star lori layoff lin and fashion designer moss moe, those that pedigree probably doesn't hurt her biggest advantage is admission coach rick singer who promotes himself in this video audition for a reality show. >> my job is to life coach kids and families through the whole process of getting into college. >> olivia and her sister isabella have not been charged their parents have pleaded not guilty to multiple conspiracy counts and deny they or their daughters did anything wrong 51 people have been charged, including 34 wealthy parents in a scam that authorities say goes back to 2011 but we found it had roots well before that. learn more about all on tonight's season premiere of "american greed" tonight on cnbc >> scott, truly amazing. we sfrau the photograph on instagram, olivia jade, her message to either who is watching the media, her parents

was i think we call it the two laps to go, the old double bird. what are we supposed to take away from that >> kind of a double barrelled salute there, yeah it's been interesting. the family, lori, mossimo and the daughters have not said anything, other than the parents pleading not guilty to those conspiracy charges a lot of people bewildered by what their strategy is legally and what all is going on in the family well, this is a little indication that at least olivia is little defiant right now. >> and there's still a lot of questions, i would imagine, also, scott, that i'm not sure if you get into this tonight you don't want to give too much away, there are still some families who are probably not named yet but remain nervous >> that's almost certainly the case so, there were 34 parents thus far that have been charged a total of 23 people whether it's coaches, parents,

administrators have pleaded guilty, but a lot of others who are still fighting these charges. as we said, rick singer, the master mind, the admitted master mind, is still cooperating with authorities and his sentencing keeps getting pushed back, which suggests that that cooperation is continuing. >> scott kohn, we appreciate it live from san francisco. amazing stuff, scott thank you very much. be sure everybody to watch season premiere of "american greed" the college admissions scandal tonight at 10:00 p.m. eastern pacific time only on cnbc. back to the markets and your money. your next guest is calling the trade war, quote, one of the key sources drags on the world economy. joining us now is michael spencer chief economist at deutsche bank. michael, is there any indication that this trade war is going to come to a close any time in the year 2019? >> no, there isn't i think talks will continue but

neither side seems to be in a particular hurry to resolve this before the end of this year. our hope is that sometime the first half of next year a deal can be struck. i think they were close back in may, but for variety of reasons the talks fell apart and it still feels like things are getting worse and maybe have to get a little worse again before the two sides start really negotiating seriously to resolve this. >> how much worse do you think they can get, michael? >> oh, well, president trump campaigned on a 45% tariff on all things imported from china he's a long way from that. and the chinese haven't really started to name american companies on their equivalent to the u.s. entities list so it could get worse. there's a lot of dimensions in which just the economic relationship between china and the u.s. could deteriorate further. our base case is that things will be sort of stable over the

next few months. we'll get that tariff increase in september we'll get i think a bit more of a chinese response to that as i said, our hope is really and it's still a hope is that by say end of the first quarter, early second quarter next year, well before the elections, i think both sides by then will find it in their interest to come together and resolve this. >> if those tariffs hit on september 1st do you cut again u.s. or global growth forecasts? or are the cuts already priced in on the assumption that the tariffs will kick in >> well, certainly our base case for the u.s. and global economy for this year and into next year have -- had made an allowance for something like this 10% tariff that will take effect on september 1th. so we have not revised our forecast and we're not inclined to change our view of the world when that happens. i guess it would be fair to say anything beyond that, if later

this year there's another round of tariff increases, another round of this punch, counterpunch we had for the last 15 months or so, then we would have to start thinking about shaving u.s. growth maybe a little bit more. it still feels a long way from something that's going to tip the u.s. economy into recession. but we're certainly moving in that direction the longer this sort of tit for tat trade war continues, the more business uncertainty there will be. the weaker cap x will be in the united states and that, as you know, shrank already in the second quarter so the logic of this trade swar that everybody is impoverished by it and growth will get weaker and weaker and weaker until it is resolved which is why we still think it will get resolved certainly before the u.s. election. >> if we get it resolved, get a resolution then, does all of that just wash away? do we ratchet back up the growth estimates or has the damage been

done, michael? >> i guess it depends partly on what the resolution looks like the chinese are asking for all u.s. tariffs to be removed on day one. i don't think that's very likely i think it's more likely to be a phased withdrawal of tariffs in response to chinese delivery on certain objectives that the u.s. has in these negotiations. but certainly i think a lot of the uncertainty, the fear that things could get worse, that will lift. i think markets will get a very powerful boost and i think it will be very positive for growth. in a sense, yes. i think on a clear resolution, i think growth expectations will start to brighten for say the second half of next year and into 2021. but we and i think expect everybody else are reluctant to price that increase in growth of expectations in until we're a lot more confident that our

assumption that there is a deal actually is going to be corrected. >> can the u.s. federal reserve, quote, save the global markets if the trade war drags on? >> i don't think it can, no. if this escalation pattern continues, the fed could take rates to zer oh. certainly i think the global economy would slow down considerably the chinese policy hasn't really responded. monetary policy hasn't responded yet. there's a fair bit they can do to insulate their economy for this but for the u.s. and europe, this escalating trade war and especially if it does broaden out to include europe as well, as you know, president trump has talked about interest in tariffs on automobile exports to the u.s. so that kind of continued escalation of the chinese trade war are broadening out to include europe, that could very well mean recession for the u.s. and european economies, even with fed funds at zero. >> michael spencer, we

appreciate your vus, michael as always, an important topic. thank you very much. stock futures are down 116 points right now we'll see if the volatility of the last couple weeks will continue today a lot going on thank you for watching "worldwide exchange" on this business monday morning. "squawk box" begins right now. ♪ good morning we got breaking news out of hong kong this morning. disruptions from protests forcing the cancellation of all flight departures that's happening for the rest of the day. we'll take you there live in just a moment. plus, goldman sachs out with a dismal new call on the u.s. economy and blaming the trade war for it. black rock making a big investment in the parent company of "sports illustrated." it's monday, august 12th, 2019, "squawk box" begins right now. ♪ >> announcer: live from new york, where business never sleeps this is "squawk box."

good monday morning welcome to "squawk box." i'm kayla along with andrew ross sorkin and will fred frost joe and becky are both off today. our guest host is peter boockvar and cnbc contributor peter, good to see you as well let's look first and foremost where equity futures are futures started positive and unrest in hong kong, deepening concerns in the market right now the implied open for the s&p 500 is down 14 nasdaq would be down 31. overnight in asia and in europe, you're essentially seeing the same story, japan's nikkei was closed for a holiday hang sang was down by half of 1% and the shanghai composite closed up nearly 1.5%. shenzhen closed higher by nearly 2% time now for your daily yuan check. the official midpoint for the currency set for 70211, weaker than