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 friday's session and could stoke some concerns in

washington many. but it is stronger than expected much more on china coming up in a few minutes. european equities, again, sliding in the last few hours. germany basically flat we're taking that to 3 decimal points here. france, uk, spain slightly negative, italy essentially flat as well. finally treasury yields, the ten-year hovering right around 1.7% 1.69 is where we have it right now. so certainly something that investors are watching. >> yeah. you have yields slipping again a little bit this morning, but we're off the lows of last week, which briefly dipped below 1.6 on the ten-year. that's encouraging yields had such a big effect on equities as we all know. i think on europe the interesting thing to note this morning is that we're not seeing a gap up again in terms of the spread of italian over german yields and talk about the potential new election coming up hong kong, is down 9.5%, shanghai down 5.5%

it is weighing more on the shanghai market. we saw that elevation escalation of concerns with the protests in the airport, it's not weighing on mainland market over the course of the weekend. >> not yet. >> well, it has done of late, but this latest escalation perhaps has been expected or provided things don't escalate further with the peoples liberation army being sent in, it's not actually hitting the hang high market today goldman sachs out with a new call, warning the trade war may be having a bigger impact on the u.s. economy than expected in a note to clients, anl litss led by chief u.s. economist now say a trade deal between the u.s. and china isn't expected before the presidential election next year. goldman expects this to lead to a drag of 0.6% on the economy versus previous estimate of 0 prntd.2% cutting 1.8% from earlier estimate of 2% goldman says uncertainty over trade could reduce companies to

reduce spending. goldman expects president trump to carry out his threat to impose a new round of tariffs on additional $300 billion on chinese goods starting september 1st. our guest host is peter boockvar good morning. >> good morning. >> let's start on that gdp print. where do you stand relative to that and are they playing a little bit of a late catchup or stand alone estimate at the moment >> i think it's a late catchup global trade, global manufacturing i believe is essentially in a recession so the question now is how much does this spill over into the services side which has held up better and at least in the u.s. can consumer and we've already seen a reduction in hours worked and manufacturing. that's going to lead to slower hiring and then if this continues that will lead to eventual layoffs, weakness and services consumer and so on. so we're sort of sacrificing a potential global slow down in a global recession for reasons i can't figure out in order to address our beef with china.

>> and you think that that beef with china has now gone too far perhaps initially it wasn't having too much impact on the u.s. but now we crossed some sort of line >> from day one i said the tariffs were really bad mistake. a really bad choice to address as a tool with our issues with china. now we have a global slow down to what end? we're more than a year into this with china, instead of making progress on a deal we're further apart. now we keep doubling down, doubling down with tariffs and think china will say, let's make a deal there was an editorial saying the tariffs are working and the definition of tariffs working is china is going through pain. well, the whole world now is going through pain and that's how they define the tariffs working? i don't get it. >> hold on hold on. you were on the other end. >> never i was always against the tariffs from day one. >> but there have been times when you come on and we had a conversation about the idea that maybe this could be working or worth it. >> never not me. >> not you ever.

>> another guest. >> another guest. >> but is it fair to say, peter, that other countries, even if it's not your definition of winning, other countries are hurting more, china in particular, sadly lost eurozone counties as well and the u.s. has more ammunition to play with to offset this such that it might lead to china blinking first? >> that's the strategy that's the hope, right but i don't think that you bang somebody in the head enough that they're all of a sudden going to say let's make a deal. i think the better strategy to address our worries about china stealing our technology was go after those that are actually stealing with like what we're doing with huawei. we almost took down zte. go directly to the companies that are stealing our technology rather than just spraying these bonds in the sky, lands on our intended target but there's a lot of collateral damage here. >> i think even the white house officials who supported tariffs as a strategy in the last week are increasingly on edge because they're not sure what the road

map is from here or exactly where this goes and what the outcome will be in the next few months. >> right now you are touching consumer products in fact, the consumer product portion of the tariffs could hurt us a lot more than it hurts china. you look at china when they build an iphone. they're really just assembling it a lot of those parts are made in other countries. you'll be damaging these other countries more than you're hurting china. china is just assembling it and shipping it back out i think this has gone way too far, it's getting out of control and really concerns me. >> we have more news we'll talk to you more in just a little bit. give you little piece of news this morning, black rock has just become the largest shareholder in sports illustrated parent company and all of this just moved around quite recently authentic brands ceo told black ds rock bought roughly 30% stake for 875 million dollars values company brand management at $4 billion that includes debt

salter and his family will still control 20% of the firm. authentic brands also owns 50 athletic retail brands includin aeropostale and nine west. we'll see whether blackrock play this game. >> i thought it was a typo that it was supposed to be blackstone. >> right. >> interesting this is blackrock. >> early story was blackrock was spun out of blackstone there you have it. this one is the one everyone has been waiting for wework could unveil ipo filing as soon as this week they confidentially filed to go public if you remember back in april, talked about that back in the time according to its most recent private funding ground in january, wework is valued at -- i can't say this number because it's just so spee shous, $47 billion. the issue is whatever you see in

the next week or two is not going to be $47 billion, more likely to be 25 and $35 billion. they're worth so many different ratchets and other provisions inside that funding deal then with softbank that it's unclear what the actual valuation will be but that's what everybody is waiting with baited breath to figure out. >> most of the unicorns have been asset light their assets are their people and their software and their technology this is very much a different ball of wax, a company will real estate leases, corporate debt obligations, completely different financial model than anything else we have seen. >> totally agree different financial model to the likes of uber, but i wonder how much they were watching not uber's ipo fall after their earnings last week and how annoyed they'll be about that despite the massive successful ipos the headline will be the compares with youtuuber with rae

after growth slowing >> they're rushing it, too they see what's going on in the capital markets and trying really to pull this forward to get it done as quickly as possible. >> investors will likely have a lot of questions about adam newman cashing out that massive equity stake. >> cashing out the stake, investing in some of the buildings, his own company -- >> you'll be at the road show? >> this will be rated nc 17. >> only financial journalist could make that kind of a joke. >> and nobody will laugh so it's okay. serious story now. update on the apparent death by suicide by jeffrey epstein an autopsy has been performed but the chief medical examiner says more information is needed before a cause of death determination could be made. epstein was found dead saturday morning. he is believed to have hanged himself in his cell at the metropolitan correctional center in new york. he was accused of sexually assaulting and trafficking girls as young as 14 attorney general william barr

said he was appalled by epstein's apparent death by suicide it raises serious questions and would be nfg investigated by the fbi. he was thought to be on a 24-hour suicide watch after a previous attempt but sources said that was lifted after a psychiatric evaluation. now new reports that security guys, two security -- it's two security people at the prison who had been working overtime, it was their fifth day of overtime, they somehow didn't look i don't know >> lots of -- >> there's no video. >> there's lots of conspiracy theories. >> there was no cell roommate. right. so, i don't know i don't know how far down the rabbit hole we want to go on this whole conspiracy theory by the way, i believe president trump was retweeting conspiracy theories about what may or may not have happened. but -- >> new york city mayor bill de blasio was asked about this on msnbc last night he has full confidence in the medical

examiner's office to get down to the bottom of the autopsy report and cause of death but has no confidence in the department of justice which is leading the investigation. of course a political commentary there. he has access to information about this. >> this story is not ending for a very, very, very, very, very long time and separately there's a whole move afoot on the estate to freeze the estate and freeze all the money because there's so many people who want justice and want the financial justice and how that's going to get dispersed. >> unclear if he has a will and whether that would stand any way given that he was under investigation. >> we'll talk to kate kelly in an hour or so. she's been doing a lot of the reporting to untangle the estate. when we come back on "squawk box," breaking news out of hong kong protests forcing the airport to cancel all flights for the rest of the day we'll take you there live coming up next. as we head to break, here is a look at the biggest premarket winners and losers on the dow.

[leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. is it to carry cargo... greatness of an suv? or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground?

this is the time to get an exceptional offer on the mercedes of your midsummer dreams at the mercedes-benz summer event, going on now. lease the gla 250 suv for just $329 a month with credit toward your first month's payment at the mercedes-benz summer event. mercedes-benz. the best or nothing.

hey! i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. ♪ welcome back to "squawk box. protests in hong kong forcing the airport to cancel now all remaining flights for the day. nbc's matt bradley joins us now

from hong kong this morning. good morning to you. >> reporter: hi, andrew. i actually have to catch a flight tonight because i have to go to my sister's wedding in baltimore this weekend, so this is a big, big problem. but it's a major escalation for this entire city you know, it's consistent with what's been going on in the last couple of days hong kong authorities have been trying to draw a line between the protesters and the public by pointing out that these protests, which are now in their third month, are really damaging the economy. shutting down the airport is a major escalation for the protesters and it all started because last night we saw scenes of the police using what a lot of protesters say is excessive force against the demonstrators. now, we saw the police firing tear gas at close range at protesters inside one of the mass transit rail stations here in hong kong and then we also saw an image of a young woman who had been hit by some kind of projectile the police say it wasn't them. and she might actually have to lose sight in her right eye.

that's why you're seeing a lot of these protesters at the airport with eye patches on. it's part of the demonstration so it's unclear where this goes from here. this is a huge escalation on both sides a lot of the protesters i have been following on social media are speculating this is turning down all the flights in hong kong airport was a deliberate overreaction by the hong kong authorities. they're trying to embarrass the protesters and again trying to separate the protesters from the public here in hong kong of course, if hong kong is nothing else, it's a place of doing business you know, the authorities here are worried that if they continue to rile up beijing, that they could really damage the bottom line here that's what we heard today an officer in beijing said there was terrorism and this chaos was getting out of control that's a very ominous sign and warning to some of the protesters and authorities that china themselves could escalate this situation that would be a major problem for everybody. andrew >> okay. matt bradley, we appreciate it. >> one quick question, sorry, andrew matt, clearly we look at all

these amazing pictures from over the weekend and know that the airport is still closed at the moment but how much have things changed in the last 12 hours the weekend ended and monday morning began. >> reporter: like i said, this is a major escalation. there's been thousands and thousands of at one point early on in the protests there was something like a million people on the streets of hong kong. so this really has ramped up you know, the interesting thing about this is that we don't talk about the extradition bill that much anymore wh when i talk to the protesters, they don't mention it as one of their primary complaints every time the protesters confront the police and the police confront them back, it just creates more images like the ones that are inspiring the protesters to go out to the

airport today. police brutality has become the main issue, not that extradition bill so things are changing very quickly. the problem is this is a leaderless movement. it's unclear who the authorities in hong kong can negotiate with in order to try to appease or end these protests andrew >> matt bradley, thank you we'll continue this conversation we want to get over to eunice yoon in beijing with more on the fallout from the hong kong protests i have a million questions, eunice i will leave it to you first eunice >> reporter: thanks so much, andrew businesses are under pressure to pick a side over hong kong here in the mainland, on social media, the chinese have been calling for boycotts of brands which they believe don't appear to pay enough respect to china's sovereignty. so companies such as coach, versace are all being fiercely criticized for t-shirt design which the chinese eye appear to show hong kong as separate, as a separate country from china as opposed to a chinese territory

the hashtag coach has been viewed over 1.3 billion times so far. chinese celebrities and brand ambassadors have cut their ties with the fashion houses. all three labels have apologized fiercely in order to try to ease some of these concerns, but the authoritative people's daily posted a warning directed at all multinational companies which said if you challenge the bottom line of chinese sovereignty, how far do you think you can stay in china before your body becomes cold businesses in hong kong are also feeling squeezed airline cafe pacific in particular it received instructions from the chinese aviation authorities said all of its staffers who are engaged in or support the hong kong protests are barred from flying on mainland chinese routes the ids for all of the crews that come in here that are china bound have been submitted to the beijing authorities and also by

next thursday the airline has to come up with a more detailed plan of exactly how it plans to comply with beijing's demands even further so the chairman of cafe pacific has said that he doesn't plan and the company doesn't plan to dictate to their staffers how they should think, but one pilot has been suspended and other ground crew have been fired. and the airline said that overall it will comply with chinese regulations. guys >> eunice, i think the big question, at least in the markets, is capital flight, does the pla show up, if they do, what does that mean? and i would even raise the question of where you think president trump is in all of this and what he wants. >> well, right so, in terms of what's happening on the border, there have been a lot of reports about how a pla troops or chinese troops have amassed on the border. nothing has happened so far. and if we were to see them

coming into hong kong for some kind of similar tiananmen square sort of incident, which has -- is really the big concern among a lot of hong kong activists, that that would be the nuclear option when it comes to beijing because the authorities here are very aware of what kind of message that would send to the international community. there would be international condemnation also very likely hong kong would lose its special status in the u.s. congress with u.s. that allows it to be autonomous and to be treated differently from the rest of china when it comes to tariffs, for example. so the chinese government knows that very well and even though they have been saying not to mistake their restraint for weakness, the u.s. does have this as a leverage point in terms of what president trump thinks, as of right now, president trump has said

repeatedly that he believes hong kong is a chinese affair, and that has gone down very well over here for beijing authorities because they believe that hong kong is a chinese affair, but what the concern has been among a lot of the chinese officials and some of the people in academic circles who i speak to who understand what's going on over there, there is a concern that hong kong is going to be used as leverage in the trade negotiations it would just be another thing that would be added to the list. of course, the trade talks don't look as though they're going very well but that's one of the big fears of beijing. >> eunice yoon, thank you for that let's bring in the asia editor for the financial times. we just heard matt bradley talk about the fact that the protesters aren't talking about the extradition bill anymore what do they want now? what do you think could placate them in lieu of any sort of

military intervention? >> yeah. i think so if you listen to the protester what they're asking for, they have five demands. they want to rescind the label of riot for everything that's happened up until now. they would like carrie lam to step down, the chief executive of hong kong, they would like her to step down they would like the extradition bill to be removed entirely. and they would really like democracy in hong kong it's a bit of a long shot for them these days. but i think the government has mishandled this whole affair badly, the hong kong government with beijing's backing it has to be pointed out i think if the hong kong government at this point made some concessions, some sort of amnesty for people who damaged property, not necessarily for people who have injured anyone, but amnesty for anyone who damaged property, rescind the bill entirely and i think that

would largely implicate the mass of people in hong kong the more moderate people in hong kong frankly, if they just shut down the mass transit railway in the evening, that would make it impossible for most of these protesters to even turn up at the protests that we're seeing at the moment. >> well, it would seem in terms of moving towards democracy that beijing is moving in the other direction with the build up of pla troops at the border so what is the level of desire by beijing to actually deliver on any of those principles and if they don't do that, how much longer could we expect these protests to go on? >> i think if the hong kong government doesn't -- isn't seen to make some concessions at this point, then the protests are definitely going to continue the hong kong government and the beijing authorities seem to be gambling that if they raise the level of violence, if the police

act in a more brutal way on a steadily increasing way of violence with a steadily increasing level of threat from across the border, the threat of invasion from across the border that that will scare most hong kong people into staying at home i just don't think that they're correct in that gamble i think frankly, and i wrote this in my column which will come out tomorrow, i actually believe that the chances of the pla or some sort of chinese military or para military force coming across the border greater than 50% now and that would be obviously a disaster for asia's premier financial center >> even if things do calm down in the next month or so, looking further out, medium and long-term, how much damage has this done in the minds of hong kong citizens to the image of the place where they live and they feel and want to call home? does this lead to a more mobile work force whether it's from the

employees or the company's perspective? will places like singapore welcome more companies and workers? >> the damage to hong kong that has already happened is inkal kubl, i think. you talk to people who have dual nationality, very large proportion, many of them are already looking at their exit strategy singapore interestingly has been quite quiet. apparently the singapore government has issued orders to civil servants not to gloat over the fate of hong kong at the moment because singapore is the obvious place for many people in this region to go. obviously, though, if you're looking for a vibrant democracy with all the freedoms that are supposed to be guaranteed in hong kong, singapore is not necessarily the place you would be going >> hong kong's chief executive

says the economic fallout already worse than the 2003 sars outbreak we'll watch that thank you very much. and when we come back, i want to hear what you have to think about this, peter. when we come back a major milestone for disney's "lion king" remake also, programming note, delivery alpha investor summit is back now for its ninth year in new york. huge lineup of ceos and influential investors, also a one on one nterview with vice president mike pence that's on september 19th you can register for tickets at deliveryingalpha.com ♪ unfortunately we've gotten

some bad news. >>to whom it may concern, due to budget shortfalls, the panther's baseball program >>ballard softball >>vikings basketball >>woodlawn soccer the tigers basketball program ...is indefinitely suspended. ♪ to whom it may concern to whom it may concern to whom it may concern every kid deserves a chance to play ♪

every kid deserves a chance to play they give us excellent customer otservice, every time.e. our 18 year old was in an accident. usaa took care of her car rental, and getting her car towed. all i had to take care of was making sure that my daughter was ok. if i met another veteran, and they were with another insurance company, i would tell them, you need to join usaa because they have better rates, and better service. we're the gomez family... we're the rivera family... we're the kirby family, and we are usaa members for life.

get your auto insurance quote today.

♪ let it go, let it go ♪ can't hold me back anymore ♪ let it go, let it go turn awa and slam the door ♪ welcome back to "squawk box. a new milestone for disney's "lion king" remake it has overtaken "frozen" to be the highest grossing animated movie of all time, if you can believe that its global take climbed to approximately $1.3 billion, that's with a b over the weekend. passing "frozen's" $1.2 billion. "lion king" is disney is top

grossing remake ever "hobbs&shaw" was the top grossing with the 25.4 million its take was significantly lower than its number one take last week i have not seen this new remake yet. "frozen" yes i have seen. >> i have loyalties to jonathan taylor thomas to simba >> lion is now live action remake. >> it's computer animated. >> it's not like a cartoon "frozen" is a cartoon. >> we have a totally different category of animation. >> i've seen it and i thought it was incredible >> did you >> i absolutely adored it but the main reason being actually is that i had forgotten how brilliant the original is.

it's such a great story, such great songs, happy ending, wonderful philosophical lessons in it and this stays so close to the original is why it's so good and all the reboots are brilliant. i love the new cast list i love they kept james earl jones. i thought it was outstanding. >> i have to tell you because i know the hard work that went into this the sorkin boys the review from the sorkin boys and i heard this now from people in the sort of 8 to 12-year-old range, not as high as the adults >> why >> adults seem to love it. 16 years and older, love it. younger, i don't know. >> i appreciate the critique of the sorkin boys, but i think the numbers speak for themselves here. >> they do >> i don't want to rain on anyone's parade. >> do they like the original better >> they like the original better because they're younger. >> to your point, though, some of the critics have been lukewarm at best on this >> that's true, too. >> the numbers have been fantastic. so i was just pleased when i went to see it that i align more with the numbers than the

critics. i just thought it was so good. >> you like to be part of the masses >> no. i just happen to have been part of the masses on this one. and mouffasa's death terrible. >> it's a tough story line for kids. >> but it ends well. i'm not ruining it for anyone who hasn't seen it. still to come, fallout from the protests in hong kong. hundreds of flights have been cancelled. update on this morning's breaking news straight ahead right now as we head to break, let's have a look at friday's s&p 500 winners and losers the s&p ended the week down about half of 1% ♪

through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

how you watch it does too. tv just keeps getting better. this is xfinity x1. featuring the emmy award-winning voice remote. streaming services without changing passwords and input. live sports - with real-time stats and scores. access to the most 4k content. and your movies and shows to go. the best tv experience is the best tv value. xfinity x1. simple. easy. awesome. xfinity. the future of awesome. ♪ >> announcer: welcome back you're watching "squawk box," live from the nasdaq market site

in times square. ♪ ♪ more than a feeling good morning, welcome back to "squawk box." i want to show you the u.s. equity futures a in the hour because they have now dropped, we're off now triple digits as the u.s./china trade war continues and more volatility and anxiety about what's taking place in hong kong overnight given the protests there dow jones looks like it would open off 182 points, nasdaq looking to open lower as well, 57 points down and the s&p 500 would open off about 21 points let's show you what's happened overnight in asia. we should tell you that the nikkei was closed for a public holiday, but the hang sang off marginally shanghai composite and sheng zen composite up 2%. mixed situation taking place in terms of psychology of what's happening in china versus what's happening in the united states. >> yeah. potentially a little more

involvement in the chinese market than the free market in hong kong. we are following that developing story out of hong kong, a tenth-straight weekend of protests taking place now the city's airport has cancelled all flights today. authorities are blaming protesters for the disruption. during the weekend, police and demonstrators clashed, according to state media china says the protests are showing science of emerging terrorism. and there have just been some extraordinary images from over the weekend of some brutality between police and protesters. and certainly no signs of dying down as we heard from nbc's matt bradley and we will continue to watch that developing situation there. coming up, a pulse check on markets after last week's wild ride we'll get you caught up and tell you what you need to know for the trading days ahead. later, senator rick scott joins us at 7:00 a.m. to talk the latest on the trade war. stay tuned you're watching "squawk box" on cnbc ♪

his luxurious fur calms my nerves when i'm worried about moving into our new apartment. why don't we just ask geico for help with renters insurance? i didn't know geico helps with renters insurance. yeah, and we could save a bunch too. antonio! fetch computer! antonio? i'll get it. get to know geico and see how much you could save on renters insurance. you mighyour joints...ng for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life.

can the past help you write the future? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions of today to meet the energy needs of tomorrow.

southern company welcome back to "squawk box" this morning time now for a look at some potential market moving events in the weeks ahead. >> good morning, andrew. a lot happening this week. key economic data released this week will provide some insight as to how the u.s./china trade

war dispute is impacting u.s. consumers and what the fed could do next. watch inflation data on tuesday. anticipating consumer prices risen 0.2% from june and 2% from the same period last year. we'll also get a read on the consumer with july retail sales out on thursday. keep in mind, aside from february, retail sales have increased every month so far this year. and retail will dominate the earnings discussion this week as well with walmart on thursday. we have department stores, jcpenney and macy's reporting on wednesday. last week, we had four central banks cut rates and the question is whether that trend will continue and if other countries will also cut rates. mexico central bank meet on thursday and they are expected to cut rates so that is something to watch out for as well. andrew, back to you. >> thank you for that. joining us to talk about the selloff and big goldman sachs call on the u.s. economy, chief market strategist at prudential financial, lindsey, chief

economist at steeple is also with us. want to go to quincy first quincy, good morning to you. you saw this goldman sachs report saying this trade war is actually bad for the united states you buy it >> well, until there's an actual very clear truce, creates a lot of uncertainty as we already know and whether or not this continues capital expenditures, for example, does it bleed into hiring expectations? that's the main worry is that suddenly companies if this continues begin to not just not hire but begin to lay people off. yeah, it is a concern if this continues and if it also deepens into europe, for example, with tariffs there. >> to the extent that you're gambling, it is going to continue, what are you doing about it >> well, you want to have a portfolio that, you know, is as balanced as possible but quality. companies with excellent cash flow, with dividends and you want to also want to hedge it. you want to have treasuries in

your portfolio you want to have some gold you want to have rates and utilities. >> at the rate we're going, treasuries will have negative yields do you think that's a good idea? >> well, we don't know i mean, remember janet yellen was asked will you ever resort to negative interest rates in the u.s. and her answer was, we'll see how it works in other countries. so that would be the eurozone and that would be japan. interesting the eurozone is going to introduce more of it come september it would be a shock for the u.s., but you know like everything else, everything becomes normal if you do it long enough and we certainly are looking at quantitative easing again. that's become normal so i suppose negative interest rates at some point would become normal. >> lindsey -- >> not good. not good >> lindsey, i was going to say, big story in "the wall street journal" this morning talking about volatility not just in the equity market but pretty much

across the board which really raises the question sort of is there a safe haven anywhere right now >> well, it doesn't appear that there is when you look at currencies, commodities, equities, certainly it's a risk-off trading environment at this point and this is simply going to compound the pressure on the fed to take action at the upcoming september meeting. remember in july, they told us that if we continue to see the risks weigh on the outlook, they will act as appropriate and arguably the risks are higher at this point than they were last month. when we look at what's happening overseas, we see confidence waning in italy. manufacturing data deteriorating in germany the latest gdp read in the uk showing the first contraction in years and of course we don't have to just look overseas when we look at home we see manufacturing data really very much under pressure as a result of deteriorating trade conditions, home sales turning negative for more than a year. we do see this compounding pressure both on the international stage and on the domestic stage weighing on

markets which will by extension weigh on the fed to take action in september. >> so, lindsey, the fed is going to cut likely and they may cut again after that the question is will it matter, will it work >> well, i do think the fact that they stepped up and they took preemptive action, added a bit of confidence to the market but that level of confidence was retreated after the fed said, well, this is just a mid-cycle recalibration, as opposed to taking a stronger stance saying we're here, we're ready to engage in a longer period of slow -- excuse me, lower rates going forward. so it was almost as if they were adding support and then taking it away at the same time so, i do think that if they go again in september they're going to have to back it up with rhetoric saying, yes, we are willing to engage in further rate cuts from here suggesting that this is more of an end cycle scenarios opposed to mid cycle support. >> lindsey, appreciate your time this morning quincy, thank you. >> thank you >> thank you still to come, the recent

market volatility has taken some big name ipos right back to their first-day levels or lower. we'll take a look at those names coming up. a quick check in on what's happening with european markets, just softening a little bit in the last half hour, down half percent or so on the uk and french indexes we're back in a couple minutes y. 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. from the day you're born we never stop taking care of you.

1234 the ipo rush has turned into an ipo wreck for some of the big companies that made their debut in the last year or so good morning. look at the real when the consignment retailer

went public six weeks ago, the stocks surged 45 pr it's a similar story with the african e-commerce retailer. that stock is 15 below the freelance marketplace is 7% of its price the vast majority of ipos are trading down from their debut performance. some have actually improved. vidro trade ed 12%, it's now 65 higher than its ipo.

>> do you think this is a good environment when they work those out? >> it could be problematic for those coming out in september, because one of the big components of an ipo, is how pastperformed. if you are a worker in one of the companies looking to come in the near future, this could be problematic for you. although, it could prevent things from getting worse, as well >> a lot of the ipos from this spring, are going to face lockups pretty soon. that could be a potential sliding event. >> lockup expiration are supposed to start next week. cnbc found out that could leash $215 billion

>> if you see a performance like this, more employees would otherwise. >> exactly >> how about the clapder, outside of the big name, that we work >> it's pretty significant other reports have shown that smile direct club. they were aiming for september debut. >> post mates. >> not sure if that's september. >> where is peloton. >> peloton is september. i'm told it will be a busy september and not to take vacation >> leslie, thank you very much changing topics, final questions to peter you're skeptical that a fed cut can help you're skeptical

>> he has taken what he will do. >> do you think he will be changing policy in september >> i think he wants to but the deterioration and what's happening to the european bank stocks is really scary i wonder if that's a trigger for him not to here in a situation where if he doesn't follow through, we'll see him. if lagarde is good at fiscal spending, that creates another problem for european bonds it's a difficult situation anywhere you look. >> in terms of what that means for the dollar, where do you stand at the moment? >> everyone is looking at it, going up or going down look how well the euro trades against the dallas with all of the issues that europeans have with negative

interest rates and slow growth >> peter, appreciate it. two big hours ahead on "squawk box. we'll talk about the factors doing the driving. rick scott is going to join us saying that china has manipulated their currency and that huawei and others shouldn't have access to the u.s hong kong, after hundreds of flights were canceled at the airport. stay with us "changing what's po" mean anyway? ♪ well... if you run a business, it means a lot. for starters, we provide you with financing options for your customers. that way, you can help them buy the things they love instantly and pay over time. and that turns them into serious fans.

hang on, there's more. want customer insights? we've got those, too. we use data to show you what your shoppers have already bought so we can tell you what they might consider buying next. and you can offer them the perfect products. that ceo gets it. from adding unique capabilities to your company's apps to bringing you loyalty programs, our technology and financial solutions are changing what's possible in all sorts of ways. so, how can we change what's possible for you?

seeing red investors getting ready for another big trading week we're going to break it down and find out what you need to be watching as we head toward the opening bell on wall street. protests in hong kong, shutting down the international airport. we'll go live for the latest and find out what it means for the economy. walmart and macy's gets ready to report. we'll break downthat sector. the second hour of "squawk box" starts right now live, from the beating heart of business this is "squawk box.

joe and becky are off. long-time -- you're a cnbcer for life and it's so important that you're here, given what's happening in china and hong kong we're going to talk about it in a second we're triple digits. the nasdaq off about 38 points the s&p 500 off about 15 points. this is as concerns continue to mount in hong kong, after new protests have canceled all flights out of the airport we're going to talk about that in a little bit. here's what's making headlines at this hour

an autopsy has been performed on jeffrey epstein. details have yet to be released. epstein could have been facing up to 45s in the prison. >> blackrock is buying a stake in brands group. they own "sports illustrated," 9 west and aeropostale the falling price of oil has been reflected at the gasoline pump the latest lumbergh surface puts gas at $2.74 per gallon. >> on futures pointing to a lower open, the trade war could push economies around the world for a recession. aman joins us from washington. >> trying to digest the trade

war on this economy. goldman sachs has concluded the situation is worse than they thought. goldman sachs is lowering their estimate to 1.8% saying it's caused by sentiment and survey capping by companies that are less likely to be willing to invest in this climate all of that, they say, due to taking into consideration, the confusion surrounding the trade situation, as the trade war between the united states and china grinds on this week. the president over the weekend, tweeting positive sentiment himself. not offering specifics but suggestingthat things are going well

>> the headline this morning, with trade worriy ies bubbling over, seemed to be aimed at hong kong how more or less likely does that make beijing's willingness to do a trade deal we haven't heard from the president on hong kong specifically it had been going on for a long time any sense of where this stands right now? >> the president is taking a light touch on the hong kong issue. he has kept a hands-off approach on that. and i think the question to look at here is what does this mean for the politics he can't afford to look weak here in the face of the protests he can't afford to look weak at american pressure. is there spillover from the hong kong situation or the trade situation into hong kong and vice versa this is a leader, china, arouun

lot of pressure. it's something to watch. i don't think anybody can predict this here. >> the state department has started to message hard, calling china a thuggish regime, referring to their broken commitment you had a guest on last hour who said that he thought, now, that the pli, the people liberation army, was going in, higher than 50%. that's a startling number. that's probably in the wake of the shutdown of the airport. i wouldn't be surprised if that's pressuring the markets more this morning. until now, you could have thought, china will show restwrar restrai restraint. but not anymore. >> do you think they what secretary pompeo and esper said when they were over in china >> the chinese started to speak

negatively over a diplomat there. that's led to an escalation and rhetoric between both sides. >> i don't think people's base case is higher than 50%. and i spoke to people who live in hong kong and they say the two game-changers to look out for. one if the pla comes in and the other if there's a death of a protester. but people don't expect that and think that china will sit this out >> because the kids go back to school that's the hope. >> and the pressure hits president trump. if the pla moves in hong kong, what do the united states do >> he's tended to play good cop/bad cop, and we'll see if that continues eamon javers, thank you. we're joined by senator rick scott. we're going to start with trade but start with a conversation about hong kong, the protests

and what you think is going to happen there and where you think the u.s. stands in the middle of all this senator? >> sure. china is like a business partner that embezzles they weren't supposed to change the political structure of hong kong they are they were supposed to open up the markets with the wto, they don't. they're not supposed to steal our technology, they do. they promised not to militaryize the south china see. they're helping maduro in venezuela. they're not a great partner. they're a adversary. political adversary, economic adversary. we have to do everything we can to take care of ourselves and see if we can get them to change i don't see how we get a deal done with them we have to help american companies to buy american products and get more american jobs and stop helping china. stop acting like they are a

partner. they're not a partner. >> at what cost -- and i raise the question because we have the report from goldman sachs over the weekend, that budgsuggests trade war is now costing us. it's costing american citizens it's costing us our growth >> sure. clearly, we're going to have short-term pain. we have to stop china from stealing our technology. they have to open up their markets. they're not a partner. anything we raise in tariffs, we should give back to the rank and public in tax reductions we have to help american farmers open up more markets around the world. we have to understand, they are not our partner. we will have short-term pain, unfortunately. >> a week ago, the u.s. has declared china a currency manipulator. president trump said, the

devaluation of the yuan, means that consumers feeling it here at home aren't feeling the trade war? >> if they keep reducing their currency, we'll be able to buy things >> is that a good thing then >> they're manipulating the currency >> is it going to help us, absolutely but we have to get china to stop stealing technology. they have to open up their markets. they have to act like a partner rather than an adversary >> it's michelle ka russrusmiche how is hong kong going to react? >> everybody will be furious if you look at what comes out of d.c. now, china does not have a lot of friends we all know that what they're doing with huawei is not in our best interest.

that's a national security threat whether it's a republican or a democrat, everybody has seen that china is our adversary. nair trying to build a military to defeat us long-term this is another leg up we're spending $4 million a year, through the peace corps, teaching chinese in china to learn english. why are we doing that? we need to make sure we do no business with huawei and we need to stop taking chinese drones that takes our technology there's men and women and senators, we have to get china to act responsibly in the meantime, we have to take care of american jobs. >> senator, do you have any question in how we're doing it now, there's a question about whether this is going to cost the united states, whether we would have been better off or could still be better off by

negotiating with china, not by such a bilateral way, but by bringing in allies >> you would like to bring in every ally and do all these things we pacified china for decades. we acted like there's a partner and watch them take advantage of it i'm not sure what we can do, other than stand up for american interests and american values. i'm not sure what the president can do otherwise than the tariffs he is doing. china has agreed to things and then, just backed off. they were never supposed to change the political structure of hong kong they are think about it this is not a group that you can negotiate with >> senator, what if it starts to push the u.s. economy into recession early next year. in an election year, do you think it will be okay for the president to soften the rhetoric for a period of time

>> i think we have to keep going down this path it's the only chance to get them to open up the markets, stop stealing the technology. i mean, we all have to understand they are adversary. they're not a partner. you hate this. you would love for people to work together. you see it in business you think, why are people fighting and why don't they figure out how to cooperate? but they o china has decided they are a e totalitarian government. we bring in american values and free enterprise, we have to fight. >> hong kong, senator, has been treated differently, because of the one country, two systems policy your colleague, marco rubio was among a handful of senators who introduced a bill that would strip hong kong of its special

status that allows it to be exempt from tariffs and policies that are put on china. i wonder if you think that that special status should be revoked? and if we're getting close >> if the pla goes in and if they changed the rules where hong kong is no different than mainland china, we have to change how we perceive them. hopefully that won't happen. you feel sorry for the people of hong kong, that's had prosperity and had political freedom, and got to live under a free market system and now, the rug is being taken out from under them. and if china does this, if mainland china does this, we have to change the way we act. these are decisions by the chinese government trump didn't make the decision for the chinese government to steal our technology or not comply with the wto or change the deal in hong kong.

this is president xi making these decisions. all president trump can do is reacting >> i want to pivot on to a different topic real quick over the weekend, you wrote a piece in "the washington post," and you said, i support red flag laws to stop mass shootings. was that a turn for you? in terms of the way you think of this we've had a lot of conversations about gun control. >> 17 people killed at parkland, parkland or el paso, or dayton, or gilroy, your heart goes out to the families. i got law enforcement together, and we came up with legislation to make our schools safer. the key of it, was the red flag

laws if you're threatening to harm yourself or anybody else, you shouldn't have access to any weapon you have to have due process if you're threatening to harm yourself or someone else, there's no weapon you should have access to >> this is joe biden in "the new york times" this morning, saying, we will only see more and more deadlier shootings if we continue to dodge the core issue of high capacity magazines in our communities it won't just be a political failure but a moral one. it means we accept the next inevitable tragedy do you believe that? >> no. i support the second amendment i don't think we should be taking weapons away from law-abiding citizens we have to look at the fact that

many people out here, for whatever reason, mental illness, or whatever, they are threatening to harm themselves or somebody else that's what we have to focus on. >> you don't think there should be a focus on high-capacity magazines? >> i don't think we should be taking away weapons. there's second amendment rights for law-abiding citizens >> it's a longer discussion. we disagree on this one. we will continue it, i know. we appreciate your time this morning. coming up -- it's a big week for retail macy macy's, walmart and tapestry are set to report in the coming days how has the sector been performing since then? look at futures this hour. dow opening down 169 that's off the lows of the morning. tv just keeps getting better.

how you watch it does too.

this is xfinity x1. featuring the emmy award-winning voice remote. streaming services without changing passwords and input. live sports - with real-time stats and scores. access to the most 4k content. and your movies and shows to go. the best tv experience is the best tv value. xfinity x1. simple. easy. awesome. xfinity. the future of awesome. welcome back clo cloudera icahn proposed a push for change he is appointing two employees to the board of directors.

giving about a 2% pop in the pre market we're looking at how the trade war has hit the sector courtney reagan hits us with that >> we know it got rocked from the trade war. but this hasn't been depressed for all retail ames. that makes some sense because not all retailers will be hit as hard some near term floors may have been put in for some names in early may, the xrt took a big trade down, after trade talks between the u.s. and china broke down the xrt started to rebound a week ago it would be $300 billion north of chinese goods the xrt is down since the may 3rd high since before the escalation

began. but a number of retailers are higher than the previous high on may 3rd. perhaps we've seen a near term floor. costco, up 12% from before the trade talks broke down in early may. ross stores, up 9.5% dollar general, up 8.7%. target, higher by 7.8% many retailers will be reporting earnings this week and next. if tariffs are levied on the remaining 3$300 billion of good, it would impact our categories it's not in guidance and if you do the math, it's hard to find a path through that wouldn't impact customers, meaning higher prices. >> to be fair, we have had that kind of rhetoric from retailer management throughout this

process. and it hasn't hit so far this is more specific. >> because this list is very focused on the consumer goods, like apparel, shoes, electronics, toys. things we haven't seen yet that's why the fear ratcheted up that's why you see the big sell-offs where all of the retailstocks go down you think about it and do your homework tapestry shouldn't be selling off every time >> every time it weakens the currency, that offsets the tariffs. >> that's a good point we talk about walmart a lot. they are the world's largest retailer but they tell us, in the united states, they import one-third of the inside of that third, is china. but not all of it. >> let's bring in jonathan

good morning to you. what is your take on this 10%? do you think it will hit earnings guidance for the rest of the year? >> it will affect things this will happen about mid-october, which will feed into pricing and my contention is you won't see it entering. we've seen inflation and in the ten years, we saw deflation 13 of the years. there's never been ability to raise price in your business the pair of pants you have on, is 40% cheaper than ten years ago. the consumer is going to say, i have lots of options and by the way, if i never buy another piece of apparel, i won't go naked they will still spend the money. but we're not going to see a big inkreels to the consumer on

apparel and accessories, except for attractive brands maybe gucci or hemes can raise prices but it's going to get absorbed in the factory, and not for the customer >> you're talking about new items. is there any chance we see some of the demand goes into ebay, companies that sell jept gently goods. >> if they're not dancing in the aisle, i would be surprised this morning. yes. it should be fabulous for their business they don't have a price increase they should be able to put through a price increase, theoretically. >> the earnings coming up, wall

mar mart, macy's >> macy's needs to be positive on anything. they need to put in 45 cents and the world will be thrilled walmart, they need to put in 0 $130 billion of sales. and bob is going to report that's all that matters. they say what will happen on tariffs. we heard what courtney has said. we're all working through it just the other day, wolverine worldwide, said we bring 7 1/2 million pairs from china every year from 2021, that will be 3 million to 3.5 million >> as long as you've been in retail, i'm sure you've done business in hong kong and have been there a lot what's happening there >> we opened our office in 64. i think it's macy's biggest foreign buying office. we thought it was the safest,

easiest place to do business in the world. and i never thought i would see huge protests. i'm terrified that the pla is going to clamp it all down >> then what happens >> that's a good question. what happens to the people they think they're living in a democracy. >> they never one. never even in '99. >> good to see you coming up, flights canceled from the hong kong international airport after serious disrupt n disruptions by protesters. we'll give a live report and markets are watching democrats were in iowa as they try to win over a key battleground state their economic message straight ahead. "squawk box" returns after this. tv just keeps getting better.

how you watch it does too. this is xfinity x1. featuring the emmy award-winning voice remote. streaming services without changing passwords and input. live sports - with real-time stats and scores. access to the most 4k content. and your movies and shows to go. the best tv experience is the best tv value. xfinity x1. simple. easy. awesome. xfinity. the future of awesome. this admitted mastermind of the largest college scam ever prosecuted by the department of justice, is still naming names that means the case dubbed "operation varsity blues" is far from over. it's on tonight's "american greed" produced ed bd by our ot cohen, who joins us from san francisco with the latest.

>> rick singer's sentencing appears to be on the merge of another delay as he continues to sing he admits he rigged college tuitions for the kids of the rich among those, olivia jade, who yesterday broke her instagram silence with a two-finger salute to the media lori loughlin have pleaded not guilty to conspiracy charges singer started in sacramento that's when we found a competing college admission consultant, who said she smelled something fishy early on >> his main pitch was, i can get you into college "x. i was appalled because no counselor can say that >> in 1996, three years after singer sets up shot, she decides she can do better.

she sets up her own college admissions business. she is the only competition in town almost immediately, she hears stories from former singer clients, like a mother who says that singer has filled out the application for him. >> it was filled with these spectacular lies >> the lies were get more spectacular, as we know. find out how singer got away with it for so long, tonight on the season premiere of "american dpre greed. >> scott, to the point that authorities are getting new names, am i right that less of those are getting into the public sphere in the last few months than the first few months >> we had one additional parents charged. we haven't had others charged. singer is still talking. others who have pleaded guilty may also still be talking. that means that it's a fair bet we'll see more names and the fed have not ruled out

accusing stunl accusing students or schools >> what's it like when stacy keach voiced your words? >> that is something he is amazing. he brings a great depth to all of these programs. i've been used to, for years, writing for myself this voice, such as it is. but you heard the words come out of stacy keach's mouth and he is a talent >> the voice of god. >> great to see you. that was the -- he's the west coast guy. not scott, i'm saying. this scandal on the west coast i assume there's got to be a new york version of this still hasn't come out. still to come on "squawk box," protests in hong kong shutting the airport down. we'll discuss what the international response should be opinio

welcome back to "squawk box. the airport in hong kong, cancelling flights because of protests matt, now, day turns tonight, what's the update?

some of the protesters still to be camped out in the airport concourse. a lot of them are leaving. all of the public transportation that leads up to the airport was also shut down the mass transit rail won't stop at the airport terminal. a lot of them are taking off on foot this is a successful operation as far as the protesters are concerned. they shut down one of the busiest airports in the world. they've been doing that a lot. they shut down the cross-harbor tunnel several times in the past week it's a disruption tactic that's bringing this city to its knees. and a lot of people, the officials, say this is going to hurt the economy car carrey lam said the rivals are down 30%

this is a city where business should get done. it's a major hub the strategy for the hong kong government, is to separate the protesters from the public, who really just want to do business. the other major problem today, beijing came out and said they were seeing acts of terrorism in the protests that is an ominous warning and one of a serious ominous warnings from beijing in the last week or two it could be a prelude for beiji beijing, coming in and taking care of business themselves. >> that's one of the worries in the market why wouldn't the protesters shut down the metro and keep protesters from getting to where they are demonstrating >> i don't know. if you have been following the last couple days, this is the fourth-straight day of protests

in the airport they've never been so disruptive up to now. they spent a couple of days in the airport. they were not blocking any of the passageways. they were allowing passengers to go free think. they were chanting in english and telling them the demands of the protest movement it was only today, where suddenly, this huge mass of protests showed up at the airport. and they were inspired by acts of police brutality they saw, including a woman who was shot in the eye with some police projectile that's why you saw this massive outpouring of anger and all of the protesters rush to the airport, which has been the scene for the last protests. >> if the protesters can't get to the protests, but people can't get around that's what they're trying to measure. the woman losing the eye that matt just mentioned, and the shutting down of the airport, which is very typical in france.

it's not typical in hong kong. if that has not raised the level of this situation enough, where people really start to get worried about what is going to be the beijing reaction at this point. >> okay. matt, thank you for that report. more on the situation in hong kong, the trade war and your money, we're joined by the global head of fundamental equities and managing mark what do you make of this news this morning is there a way to handicap the response from beijing? >> i think the worry is legitimate china really believes in symbolism. and today is the anniversary of the people republic of china

china could decide this is too much for them to deal with and you heard about this being terrorists and the change if you want in rhetoric it could mean that the pla is on the table for china. >> has that changed how you would set up or advice people who are watching this morning? >> hong kong is not an emerging market, per se >> it has a trickle effect everywhere >> and the effect will be on the different markets. there's a lot of develop market companies that have decided to such help in hong kong because they consider hong kong one of the safest areas also from a law perspective. and now, the concern is, it's not going to be as safe anymore. i think i heard one of your commentators or guests earlier today, who said, i'm surprised about that i'm shocked. this is the feeling that a lot of companies have.

>> how much does china rely on hong kong today versus 10, 20 years ago? and is shanghai ready to pick up the slack if things escalated further in hong kong >> that's an excellent point china has been relying on hong kong less and less but hong kong is still very important for china. having said that, china has been setting up this free economic zone in shanghai what's happened in hong kong, shanghai is not 100% ready, you can't look at that one thing we have learned from the chinese government, twhan decide something needs to get done, everyone works towards it and we'll get it done. >> the emerging markets are so indebted looking back, gosh, where did you think the emerging markets would be, right?

it's been a lost decade. it's a sad commentary where most of them are. if china weakens the currency, what happens to them >> the point is that i don't believe china will keep on weakened currency. at least not in terms of weaponizing it you will probably see china staying over the seven line because this is a new -- the new area where they will play with but i don't think we're going to see any big deappreciation >> what if it's about offsetting tariffs and it's about bolstering the economy >> china has some very strong priorities one of them is the internationalization of the domestic currency. and one thing they have learned from the example of japan, is if the currency is unreliable,

investors will not use it. for them, having the r&b that is relatively stable, is priority over everything else and that if they can affect the trade wars through stimulus. >> michelle, looking forward how long do you think one country, two systems can last year >> it's always going to come to an end and that's written in the handover process from the u.k. i don't know where this goes that's the biggest question we ma face in the world right now. i find it interesting, that the kids think they live in a democracy. a lot of the kids weren't alive when the handover happened they have a world of social media. and they see democracy and other parts of the world they don't realize they were never a democracy, even before the handover to the chinese. but they want more and they're asking for things

that china is never going to give them. the only hope that china has is when september comes, they go back to school because they don't want bad grades. >> can i ask you about capital flight we talked about bitcoin a week ago. it's come down it's about 11,300 and what this says about capital flight. >> if bitcoin falls, there's not as much capital flight out of china? >> i've been speculating that there's not real capital flight out of china there's just speculation and that's what pushed up the price of bitcoin last week >> possibly. you're in mainland china and seeing what's happening with hong kong, don't you worry about the stability of the regime and whether this sends a message to the rest of the country? they're parking money on 57th

street >> i think the direction that actually is against them this could have been a trigger in mainland china. you think of much of the new reseptemberment that you see in hong kong, a lot of it is against mainland chinese >> they call them yacht people as opposed to boat people. >> what this is doing, it is putting mainland chinese, at odds with the hong kong people i don't see that as a trigger at the moment >> have you seen how different the protests are you see the flags in hong kong they announce with the black flag, we're going to use tear gas. they have a whole series of flags before they tell them

what's coming next >> there it is >> teargas >> thanks for the conversation >> thank you still to come here on "squawk box," democrats taking their message to the people of iowa over the weekend. here are the futures pointing lower. european markets 0.3%. w.0 in othwn, 16potsn e do ech, let's talk. ech, we have a pretty good relationship. you've done a lot of good for the world. but i feel like you have the potential to do so much more. can we build ai without bias? how do we bake security into everything we do? we need tech that helps people understand each other. that understands my business. we've got some work to do. and we need your help. we need your support. let's expect more from technology. let's put smart to work. ♪ ♪

i need your attention for a minute. what are you looking for? is it inspiration? because she's changing the world. every post out there is like "dream big"

but when it comes time to take action- girl scouts are making a change. we're the risk takers. athletes. leaders. i'm not saying you can't be part trendsetter, but i am saying you need to be all girl scout. how you watch it does too. tv just keeps getting better. this is xfinity x1. featuring the emmy award-winning voice remote. streaming services without changing passwords and input. live sports - with real-time stats and scores. access to the most 4k content. and your movies and shows to go. the best tv experience is the best tv value. xfinity x1. simple. easy. awesome. xfinity. the future of awesome. together, here in iowa, and

all across this country, we will defeat the most dangerous president in the mystery of this country. >> we've had enough of an america where the government works better and better and better for a thinner and thinner slice at the top >> we choose truth over lies we choose unity over division. we choose in a we're going to stand for what we always have. if we do, if we do, we can take it all back tomorrow and we must. >> the presidential democratic candidates working the crowds at diners, bus tours and the iowa state fair for more on how the democratic field should run against the economy, let's welcome in andy green, center for progress action funds economic policy managing director. and joel griffith. andy, i'll start with you.

did you hear messages refined on the economic front that should give the markets direction where the field stands >> it's clear that this economy is not working for working families the trump administration gave a mass cut for those at top. locked in corporate tax rates that are locked in forever and working families are working harder and longer and the minimum wage is not going up for them we have to make sure that working families can be part of the middle class you see that with all of the candidates in iowa >> you look at kamala harris' speech she led with a middle class tax cut and got little to no applau applause does that tell you that the democratic field is farther to the left than maybe some of the candidates that want to brand themselves as centrists might believe? >> not just farther to the left but detached from reality.

what i hear from the candidates and the comments i heard from mr. green, that's not reality. the average american family saw a $2,800 tax cut and that the tax cuts for businesses, that's sparked a boom in investment and a boom in productivity growth. and mr. green says those at the bottom are not earning more. those at the bottom have seen a year of increase in pay at 6%. that's dwarfing inflation. the way to continue the growth is not to impose the enormous tax hikes that the democratic candidates are proposing >> the expansion can be used as a political rorschach test, right? you can say, the reason we're in this expansion is because of eight years of obama if you're a republican, you can say the trump administration's policies of deregulation and

lower corporate taxes to do the trick. can't both parties do that effectively? >> the democratic candidates are not admitting we're in the midst of an economic boom. we can have a discussion of which policies are best. history shows that lower regulations and tax reductions, that's helps the economy they are not admitting that we're in the midst of a record-long economic expansion when the american public look at their retirement accounts and paychecks and their standard of living over the last six years, they're going to call malarkey on a lot of claims >> the boone has been for those that own stocks. the bottom 50% of americans, and those well in the middle the bottom 50% of the americans own less than 2% of the nation's wealth they've seen their wealth drop

by 50% since 1999. it's not the reality that people are doing great in this country unless you're at the very top. and you see a lot of democrats with various plans coming forward to try to address that but working families are not doing well and this president, who ran for getting tough on wall street, who ran on getting stuff on antitrust and monopoly, has done exactly the opposite has done deregulation for wall street has done nothing on antitrust and does nothing on monopoly and all those folks and farmers in iowa, they see tariffs hit their bottom line. this is an economy that is not working for ordinary families. >> that is a key group that they were trying to reach i want to talk about "the new york times" piece saying the democrats will have a hard time being tougher than president trump on trade andy, can they make that argument >> absolutely. president trump is getting tough and slapping tariffs on working

families to achieve negotiating goals that are the koorcorporat proftds. >> we need more free trade tariffs are taxes. american families are seeing thousands of dollars of benefit from the tax cuts. and a boom in take-home pay. more on the big market sell-off after the break

hong kong cancels flights amid more protests inside jeffrey epstein's death many questions where his money came from and where it went. and was uber's last quarter a once-in-a-lifetime loss? the ride giants as they await profits. the final hour of "squawk box" begins right now >> live from the most powerful

city in the world, new york. this is "squawk box. >> we're live at the nasdaq market joe and becky are off. but our guest host is peter krause we got a lot to talk to him about in a little bit. one of the big topics will be the way that markets are trading this morning let's show you what's going on with the futures we have a triple-digit loss. the dow looks like it would open down about 171 points. nasdaq looking to open lower, as well the s&p 500, looking lower, as well about 18 points off. let's show you treasury yields at this moment the ten-year, at 1.69. juxtapose that with the two-year you should look at those statistics because we're getting close to that so-called inversion. >> that's true here's some of the top

stories. goldman sachs is warning the trade war between the u.s. and china may have a bigger impact than expected. goldman sachs is lowering their estimate to 1.8% from an earlier estimate of 2% goldman expects president trump to carry out a new round of tariffs for chinese goods, starting september 1st and that downgrade getting attention. blackrock will buy authentic brands it's worth about $75 million and check out shares of

capri holdings, versace. after criticism of one of its t-shirts no move in the share price at the moment, on the u.s. extended hours listing. >> that leads us to our next story. this morning's breaking news out of hong kong the airport authority has canceled all remaining flights amid anti-government protests. eunice joining us with more. what's the latest? >> the latest is that the hong kong airport is effectively shut down the check-in counters are closed there's fears there will be a major shutdown the riot police have been carrying signs warning about teargas. the demonstrations have been peaceful they've been handing out

leaflets to the incoming travelers to try to raise awareness of what they see as their city's plight. they've been protecting freedoms from an encroaching beijing. there's footage that's emerged that's been enraging a lot of people it's footage of riot police going into underground stations, firing at home, point-blank with nonlethal weapons. one woman is damaged in the eye. there's talk that she could lose vision all of that has been incensing a lot of the people in hong kong, who have been flooding to the airport, to join the demonstrations there, to voice out their concerned. the tdemonstrators have been demanding a police inquiry the government has been talking about how they're concerned about the violence chinese officials, not only in hong kong, but here in beijing, saying that the recent violence is showing signs of terrorism. and state media, a couple of

hours ago, are starting to show videos online, on the social media accounts, showing armed police, in the city across the border from hong kong. and that's raising concerns about what beijing would do next >> thank you for that report we're going to continue the conversation back here and what it means to markets this morning. and perhaps where you should put your money as a result it's been a volatile month joining us now is head of global asset allocation at janus. and peter courthouse is here just on china and hong kong, how do you handicap the pla going into hong kong and what that means? >> it's a concern. 5% concern 10% concern? 50% concern?

>> teiananmen was a case that happened the chances that the pla come to hong kong is not immaterial. >> are you doing anything as a function of it >> volatility has increased. all of the investors we have is looking at increased volatility and how to figure out how to best position their portfolios to take advantage of it. whether it's inducing some risk, increasing optionalty in the portfolio. underneath that, you still have growth that's occurring in many companies. and the stocks are behaving well >> you had people sitting cash for a while. you thought it was a moment. this moment that was going to come, great inflection point >> i still think that. the stock market hasn't gone up at all it's basically flat. cash has been equal to the stock market >> what are you waiting for? >> i think you're in a volatile time period.

that's not to say that stocks are outperforming value because they are but growth is slowing down we would be foolish to think there's no issues out there. >> you think it should be in wa cash right now >> you're not suggesting that the moment is led by china >> i'm not suggesting that i'm not saying people sell the stocks and go to cash. if i had cash, i would wait. >> ash, what would you do? >> i think you have to go and think fundamentally, what's the biggest risk that poses a crisis real economic activity in our opinion, it's inflation if inflation comes in unexpectedly, the fed has to respond. the era of bad muse news news i good news might be over. and you're going to see a rapid

richening in money and every recession postwar was sauce e caused by money being expensive. we know that this is more powerful than the trade wars we like holding gold gold is one of the things that perform well the movements of the portfolio will act like a cushion, as well >> when does that materialize? do we get a couple more cuts from the fed or will it materialize before that >> what i like to call the widowmaker of every central bank, they have kept the music loud and bright for too long they had to react quickly when

inflation came i like to think of it as a hype nating bear. it doesn't wake up slowly. it makes up aggressively when is inflation going to show up in the official numbers i read a fascinating statistic. the average price or the average trip to walmart today is 5% more expensive than the average trip a year ago so, you are seeing inflation in retail and i see prices going up each and every month. why this inflation and price pressure is not showing in the official numbers, that's an enigma that's a puzzle. it reflects the fact that the official price indices are opaq opaque

it requires someone with a ph.d. in economics to understand what's going on. i feel that conditions are ripe for inflation to really come in. you're seeing it in retail numbers. at the end of the day, retail prices are what's most important. >> do you think the rediction in rates by the fed have a chance of accelerating that inflation that you're talking about? >> yes absolutely true. i believe the fed is making a policy mistake the overnight rate equals about the inflation rate today, your overnight rate is around 200 basis points. close to your inflation rate conditions today are neutral at the front end. but the back end of the curve, your real rates in the u.s., the ten-year rate is zero.

simple macro economics, is it should hover around the ten-year gdp we're looking at and we're far below the ten-year in the u.s if you believe the new normal, the pimlico type of story, it's 150 points and if you believe reversion back to the mean, it's 200 basis points price of money is very cheap in the long end when you have conditions when the price of money is cheap and the fed accelerates the cheapness in the front end, the layton inflation can showcase itself, which leads to a reactive response by the fed and in life, when you react, it turns out to be expensive. >> we have to leave the conversation there ash, thank you very much peter is here for the rest of the hour coming up on "squawk box," inside jeffrey epstein's wealth.

after his apparent suicide, it's part of the investigation into epstein, that will include a look at his finances in depth. when we come back, we'll talk about what authorities could be looking for and how long it might take them to find it stay tuned u'yore watching "squawk box," on cnbc ♪ i got that vibe, got that vibe ♪ ♪ got that vibe, yeah, i ain't petty, ♪ ♪ looking fly, looking fly, ♪ ♪ looking fly, yeah, they ain't ready. ♪ ♪ i can shine, i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time. ♪ they have businesses to grow customers to care for lives to get home to they use stamps.com print discounted postage for any letter any package any time right from your computer

all the amazing services of the post office only cheaper get our special tv offer a 4-week trial plus postage and a digital scale go to stamps.com/tv and never go to the post office again!

welcome back to "squawk box. dow would open up down 146 the nasdaq down 4. they have gone into the red on the back of unrest in hong kong, which we have been covering throughout the morning, andrew >> big news over the weekend brought shocking news of the depth of jeffrey epstein the former financier was found dead on saturday morning, about 6:30 in the morning, after an apparent suicide his death is not ending questions of his sizable health. where it came from and how it was used we're joined by kate kelly, "new

york times" reporter and cnbc contributor. what a weekend it has been >> what a weekend. >> the story does not end here clearly. tell us what happens next. >> a variety of things first and foremost, we're waiting for a detailed report from the medical examiner. they have to spend a few more days getting test results. we assume they're checking for chemicals or drugs in his blood. it's not clear they've performed the autopsy. >> there's so many conspiracy near theories is there any evidence that this is not a suicide >> the only reason, as you know, so many conspiracy theories, there's so many people that appeared there was so much to lose if epstein was to sing. you have two dozen figures from

politics and finance, who were supposedly people who rode on the plane. people who visited on the island people who consorted with him generally. we don't know if they were clients in the sexual sense. but they certainly were around him. the question is, what might have come forward we don't entirely know there was information that came out friday, that was part of the documents of the litigation. from my read, and i'm talking ig to colleagues who shifted through all of the pages, island's a lot of people i haven't seen themselves. >> do we know where maxwell is >> i don't >> nobody knows where she is this is going to be the next leg of the investigation she may not be in the united states >> either that or i assume people can still audit the money trail.

>> right mark epstein, his closest kin, who had an opaque situation. and the little dots suggest he had financial distress because he had a lien. also, he had large charitable contributions, which suggested wealth >> do we know if jeffrey epstein has a will and what is the normal process when something like this happens? >> i don't know the status of his will in any reportable way what i have heard and not corroborated, that there was a will or estate planning. and there were a couple of heirs identified >> i can't believe this guy has not done estate planning >> if he has, is that up in the air while the investigation is ongoing? >> i think that's up in the air.

and some of the victims said they will file civil litigation against the state. they want more victims to come forward. they will look at that piece >> is the estate frozen? >> i would assume further investigation is the risk to people, if they have something they want to hide. >> do you believe the statement last week? in 2007, he realized all of this money -- or some of the money was misappropriated. and we're only finding out about that now and that it appears, depending how you think the money was moved, that there might have been a settlement later with some epstein charity >> and the wexler comment is that the upside of those investments was paid over in due course >> and if true, why he didn't

say this in 2007 publicly. unless he was trying to protect himself. i was trying to understand the psychology of what may or may not be happening here, unless you think he's throwing him under the bus now. >> it strikes me that there needs to be a full and complete audit of the financial transactions they will be able to do it if they want to pursuit it. the numbers are there. the transfer has occurred. people had to sign documents all those things can be reviewed and looked at. i suspect they will be >> right >> then, we will know. we need some transparency here >> i think the broad story is that wexler realized epstein was not someone he wanted to have managing his money he wanted to end that relationship as quietly as he could. >> you normally go to the police

and say this guy stole my money. >> or you are embarrassed by a situation or you have an inkling impror pryty is going on >> given the situation we have here, there's any sense that the public prosecutors or state prosecutors will not look at the details financial transactions >> my sense is that they are one thing in "the times" story today, is jpmorgan and deutsche bank who were his private wealth managers for a 20-year period are combing through documents that prosecutors have asked deutche for a transaction breakdown. there's questions in how far they're going to take in light of the man's death they are going full steam. and i would imagine that

prosecutors want to make something of this effort >> whether he's alive or not, obviously, he's not. the participants involved in the money transfers are culpable for the things that happened the banks and they persons or entities that moved that money have responsibility. >> i think heads are going to roll >> i don't know how it shouldn't. there's a large number of financial transactions and as kate points out, there will be investigation here >> deutsche bank is already under scrutiny and making sure they are vetting and reporting improper client activity this, in a large way, part of the wheelhouse and the early indications are, during that banking relationship

with epstein from 2013 to 2019, when it was severed recently, he was using the money for illegal means. >> what a story. >> it is quite an unfolding story. i think it will take dozens of journalists. i'm happy to be on the bus, as it were. >> thank you still to come, what this month's wild ride for interest rates means for the financial sector and we go wide with pimlico's chief officer.

welcome back to "squawk box. futures are pointing lower 150 points the last time we looked slight improvement 126 points lower on the dow. coming up, a lot more on "squawk. uber's road ahead. hopefully a profit after a bruising week on wall street and the volatile moves in the interest rates that are common place. "squawk" returns in a moment music (plays throughout): [ 'watch me walk' by spencer ludwig ] yo dj, can i put in a request? ♪ don't have no sass about this ♪ ♪ i'm on my way i'm on my way ♪

♪ can't take no class about this ♪ ♪ i'm on my way i'm on my ♪ like this! ♪ this is a moment you plan for. to start your investment plan, find an advisor at massmutual.com sfx: [ mnemonic ] ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

with sofi, get your credit cards right- by consolidating your credit card debt into one monthly payment. and get your interest rate right. so you can save big. get a no-fee personal loan up to $100k.

♪ welcome back to "squawk box" here on cnbc we're live at the nasdaq office in times square.

shares of cloudera icahn has an 18% stake in the company. it's putting two icahn officials on its board as part of a deal to limit his ownership to no more than 20% this morning also, another premarket winner shart shares of barrick gold. gold prices rise it is forecasting annual gold production at the upper end of its guidance look at sysco, $1.10 per share let's talk financials, the wild moves of the interest rates this month joining us, marty mo good to see you this morning the second-worst performing

sector, i should say, last week, given the big move in interest rates. does that make sense to you? and to what expect are you expecting downgrades in interest income forecasts the next time we hear from the bank ceos, only a month after they report it >> good morning. yes. what we have is really with the banks, two different discounts that come in different waitings. one is the interest rate cycle the other is credit. right now, we're dealing with the interest rate cycle. and the markets are starting to take out a lot of that value the stock prices reflected a full 5% to 6% discount on top of what we already had. so, when you start thinking about earnings coming down, we'll probably see downgrades in net interest compression, as we have more drops and interest rates going forward. but overall, what you'd see, is the value in the stocks reflects most of the downgrades that

we're going to see >> is it too simple, it's better to have exposure of the banks to have a lower proportion of those earnings of the interest income like goldman sachs and morgan stanley. >> that's the easy way to look at it. really, what you want to look at, is what else is going on with these banks you look at citigroup, for instance right now, it's below the book value. the positive is it's excess capital. they can have a 17% to 20% return, just buying back the stock and paying the dividend. you look at the element, the positive side of this. and some of the banks have much more of a punch from that side, that will win over as the calm on the risk fear begins tolessen >> does the trading environment bear on the stocks

is that something they have reaching an r.o.e. that would be attractive >> that's been the case. we've seen investors cinch up because of uncertainty going on in the market, especially with the interest rates and mixed income is really the big mover in a sense of what you want to see in trading, to generate the profits as we start to see any of this begin to plateau, and we see direction of interest rates begin to illuminated a little better and clearer, you'll see the trades will start to come back in. that will help morgan stanley and goldman sachs, once that happens. >> marty, there's a lot of challenges, as you've outlined already. what about valuations. and you think of the broad sector as a whole. is this a moment when you look and think it is a screaming bye? or there's a lot of risks to the discount of the s&p 500 is legitimate >> a lot of the discounts that we talked about, interest rates

and credit, are being factored in what we're looking at is right now, the market reflects increased credit costs and it takes away all of the benefit the banks have had over the last couple years in riding the interest rates up higher as if they didn't restructure the balance sheets the banks have restructured. they will defend the margin over the next couple years. they risked the balance sheets but the credit cost will go up they have to fight the perception as long as there's a perception on the horizon, interest rates are going lower, and you can't look at that as, we have to be all-in because the perception will drive valuation eventually, if that perception bursts, the fundamentals will drive prices higher. >> marty, good to see you, as always thanks for having me let's talk tech. uber's loss in the last quarter

was a once-in-a-lifetime hit, according to the ceo but do investors feel the company is in the driver's seat? joining us to talk this, bradley tusk, the ceo of tusk ventures and ed lee, also a cnbc contributor. i want to talk to you about uber we thought there would be a massive merger between cbs and viac viacom >> we've been waiting. if it's not today, it's this week if it's not this week, not happening. >> not happening ever? >> it's going to happen. going to happen. sherri red stone wants this deal to happen. the last thing they're trying to dot on the "is," is the exchange ratio. that's the fundamental part of this how much cbs shares are viacom worth? the last time they discussed this, 0.61 cbs shares for every viacom share that's where viacom wants it

higher cbs is saying, your shares are trading with that baked in let's go back. >> and amass any executive payouts. that's all settled? >> a chance iaonelo stays on and he gets to stay and keep the money. that's what my sources are been telling me >> do you think that cbs/viacom merged is a stronger company >> yeah. if you look at the consolidation. everybody is terrified of disney right now, after acquiring fox and launching the streaming service. if you want to compete, you have to keep doing that >> i think just to get to par. i don't know if it makes them stronger but it puts them to be able to play with the other guy. it gets them larger to go after disney can the organizations merge themselves effectively can they put them together and

make them work or will it be two things >> i think it's a great question can they tie themselves up, when they go to the cable operators and the satellite operators, do they have enough left to extract higher fees. a lot of the deals have been worked out the next time the renewals come up, it's a different world i don't know if you get an advantage by having more channels in your lineup. what they can do, they have a deeper bench and more money to play with. if they can take a deeper run streaming, cbs has one viacom has bun called pluto. they make it more than an experiment, they have a chance >> wait to see if we get that announcement bradley is an uber shareholder you have one-time hits and once-in-a-lifetime hits. >> i think for the company to be

profitable, they have to be the a-to-z of transportation if you get yourself on a bike, a scooter, a car, a bus, furniture or a burrito, they've got to be the default for all of that to really reach the profitability they want to be at do i think they can get there eventually yes. but as a shareholder, am i concerned? absolutely >> do you think investors would be more willing to give uber a break for what they're billing as a technical charge, issuing more stock this quarter, if there were a clearer path to profitability in the long run? >> clearer path and some sense that the innovation that the company was for in the early days is back when uber went from ruthless innovation to kinder and jender will, that solved a lot of problems but it created new ones. whether it's dara or someone else on the team, there has to

be more belief by the market that they're going to be able to be the first in all these things >> if you take out the noise with the one-quarter hit, where is this company going where it becomes profitable the transportation is a service idea where they get more in line with mass transit services where they become an operating system for mass transit? are they making profit at that point? >> that's what they've been saying, amazon for transportation the same way that so many of us default. i need to get somewhere, i go on this platform. i need to get something, i go on this platform. if they can be that, the future is unlimited for them. >> investors have been listening to that. original bought into that. but there's no catalyst to buy into that. >> there needs to be thing uber freight will have to be a bigger deal.

i really think, i was investing in 2011, i understand the mojo i understand the change. but clearly, there's leadership. >> now, you're back to being a travis fan >> i think some of what travis had in exchange and intensity. >> you called it ruthless innovation, in large part. he was chosen because he is not ruthless >> and the stock is reflecting that so, there's got to be some world where you cannot have a culture of harassment and uncomfortable work environment and still be able to really innovate and compete. we had one and the other >> the model unto itself is a hard one and maybe they get there but this is a ten-year journey >> yeah. it depends on what you think about things like car ownership. if you think -- i have a 13-year-old. she's never mentioned getting a driver's license if she never really does and that's typical and maybe it's not because we live in manhattan. if it is, and ultimately, everyone is going to get around

other ways, uber and lyft have scratched the surface of what can be if it stays the way it is, it's harder >> given the point that you think uber needs to make other business lines grow to make it profitable, do you think lyft will go bust >> i think it's harder lyft had a less bad quarter than uber did the share reflected it ultimately, uber is a u.s.-only ride sharing business. it's hard to achieve a big vision at the valuation you want to have. >> what happens if lyft, given it's a more focused business has a better chance of getting picked off or bought, from an acquisition strategy a car manufacturer or computer a.i., you say you want to be in this space this is clean -- >> it will be a big company. lyft's valuation, smaller than ubers, is bigger than car manufacturers. one of the challenges, it's late stage companies. sometimes when we're in the

middle of a series, and by "d," it's a unicorn that's wonderful i don't think anyone can acquire them at this point because it's too expensive and ipo is the only path. you run the risk of pricing yourself out of that >> if you're right about your 13-year-old and she never wants to drive a car >> i hope so, too. >> there's room for these companies in the world there will be tremendous demand. the real question is, what is the capacity of uber to actually right its culture and execute on its vision that's where it's struggling it will continue to struggle into earnings and meeting smeet objects, and it solves that problem. >> the coo has been removed, the head of marketing has been removed. the layoffs of marketing in the division there's a lot of turnover already, at the leadership ranks. clearly, they don't have what they need to do, the latter part of what they said. i think they fix their culture and it's a better place to work.

but fundamentally, they have to demonstrate they can innovate. >> i'm going to put a note, three years from now, to see if she's changed her tune on that coming up, we're going to take an in-depth look of the biggest movers of the opening bell this orning pimco's chief officer for growing market risks see where u.s. interest rates are going to zero or not and the odds that a profit recession is on the way. stay tuned you're watching "squawk box" on cnbc

welcome back to "squawk box. under an hour for the opening bell on wall street. let's get a macro level picture of markets as the week kicks off. what are you looking for >> the note from goldman sachs is getting attention now, kayla. the likelihood of a trade deal at the equity markets stands at 13%. that's down from 80% back in april. the escalation of the u.s./china trade dispute that we saw last week, and china responding by allowing its currency, the yuan, to fall, really rattled markets. energy was the worst performing while real estate and utilities ended the week higher. stocks ended the worst on the dow. that tells the story two major industrials, caterpillar and 3m, both down last week. part of it is concerns about

tariff-related costs moving higher, as a new round of tariffs go into effect in september. the other concern is that this protracted trade dispute will lead to competitive pressures on the ground and make it harder to win business inside china, which is an important growth market for all of these companies, including apple and intrel those stocks underperformed next week >> thank you very much for that. one of the biggest markets around the world the bond powerhouse pimco, and the treasuries could join this group. with us is marc keisel good morning to you. what rates do you put on here in the u.s. >> it's not near-term. ultimately, if we have a recessi recession, we think it will go

to ser rzero and expand qe growth was 3% real and it's slowed to 1.5% real there's no -- its logical rates are coming down because slower growth, low inflation and low inflationary expectations. whether or not we get negative rates, we actually need to see a u.s. recession for that to happen >> mark, we talked about the last ten days in bond markets, which we all know how treasuries reacted with a sharp fall. bit of a recovery at the end of last week in terms of yields how did credit track that? >> we've seen a rotation into high-quality credit. clearly, high-yield has underperformed the high-quality sectors are underperforming. including the noncyclicals and what's underperforming has been the global manufacturing sector auto retail ers.

a lot of the sectors will be more vulnerable to the u.s./china trade war >> how about the credit? do you want to see that going into rotation? high quality, i think you said >> we think the equity market is at risk here we think growth is slowing pretty sharply around the world. we want to take low risk in portfolios we want to stay up in quality. we like the consumer the consumer is doing well with decent wage growth and low rates supporting the consumer. we like telecom and cable towers we like real estate. and u.s. housing market's actually holding up well we like nonagency mortgages, as well as building materials overall, we would favor very high quality bonds right now, given slower growth and given the trade vulnerabilities. >> just a question on the negative rates in europe and the

demand for yield in the world. what impact is that having on your view of long-term rates whether there's a recession or not. >> so, i think long-term rates will come down, particularly given low inflation and the fact that recession risks are you lo, ten year yields are minus 22 basis points ten year yields in germany are minus 58 basis points. believe it or not, 30 year german yields are minus 8. so basically there is very low yield offered all over the world. in fact, there is now 15 trillion of negative yield in sovereign government bond assets around the world so that should support u.s. treasuries and i do think with low inflation and global growth slowing, u.s. treasuries relative to the rest of global bond market should be supported. >> when we see weeks like last week and you see u.s. treasury yields slide, it is clearly because of risk off sentiment and therefore that is bad for u.s. equities. but if volatility and treasuries

settles down, do the lower rates actually support u.s. equities in a sort of relative sense? >> i think mark made a number of good points, the search for yield is going to continue to support long-term treasuries in my view. but that doesn't mean that there is not a real risk of earnings slowdown or any declines, i think equities are going to continue to be volatile as there becomes more clarity around whether there is going to be a recession or this is just a growth slowdown and growth reaccelerates. we see no evidence that growth is reaccelerating. we just continue to see evidence of growth slowing and we see evidence of continued volatil y volatility i think mark is talking about investing of things that have a little less volatility, a little more higher quality to them, and i think that probably makes sense in this environment. >> mark, just quickly, any sectors in the u.s. that are screaming any worrying signals to you >> well, we actually fell back

in october that china was really slowing pretty dramatically and i think the sectors that are going to be very vulnerable are going to be those that are subject to trade, terrific risks, et cetera we think the retail sector is going to have a difficulty pricing through, higher tariffs. and technology as well, which could see supply disruption. so in general, a lot of these cyclical sectors, sectors prone to global trade and manufacturing we have been quite underweight and have been cautious on. >> mark, thank you very much >> thank you >> let's get down to the new york stock exchange where our friend jim cramer has been hanging out. i was watching you on twitter, you seem to be very worried about the situation in hong kong right now, jim >> yeah, i think that the ceo there, miss lamb, has to call in the government the airport. they're just begging for it, these protesters and we had a good report this morning about how there is no leader to the protest, don't know how to get their handle on it

i don't know how she continues to ignore it she doesn't have a police force that can stop it, clearly. i know that hong kong airport is a real will be let's say that's a flashpoint for the chinese i'm worried about it i don't think the chinese -- the chinese communists can avoid it anymore. >> if you're right, the moment that happens it becomes an almost global story. talk about a sell-off, don't you think it will change the whole dynamic of where we are right now. >> i do. it is my biggest worry i think germany -- we have been -- there is a certain point where the free liberties that -- of the hong kong people are going to be -- it is going to end. how does germany stay on the sidelines. how does germany not declare they're against the pla and the people's republic government i think they have to i don't know how the uk, ask wilf, but the uk has to come out

against them they all want the chinese market if there is a tiananmen square in hong kong, we know this market has to get hit. just will. >> and jim, what's the impact if congress decides to say, hey, no more special status for hong kong, that goes away if this situation ratchets up. they have been able to be in an economic sweet spot. >> well, i think that it is all the president. the president, by the way, is not really weighed in on this party. it is all trade. and i think that the chinese -- i've been saying all along that the chinese government is more worried about hong kong than they're worried about trade. because hong kong is something that is very visible in europe i think we just can't ignore it because they can't ignore it the gentleman was on before, talking about retail being bad that's the safe haven. banks can certainly go down. i am less bullish because of hong kong. but i just don't see that there is going to be negative yields here i think that's what the president seems to want. but you're not going to get it. >> the thing i would say is they

do send the pla in, it shows that china is putting principle above economic impact because of the huge implications that would have and that might have an interesting read across for how they're seeing the trade talks and for all those questions of how much, who is going to budge first, if they went as far as saying the pla into hong kong, the long-term implications that could have and the damage it could do to hong kong would suggest they're willing to take the economic impact in order to put principle first, which might have implications for how they think. >> i agree with that the reason why they can take that long-term view against the united states is because germany is not -- europe is on the side of china europe wants to do a lot of business with china. i got to tell you, this would be an afront to all the european governments. an affront to korea, affront to japan, but long-standing enemies. >> we had a reporter on this morning, hong kong bureau chief,

who said it was greater than 15% chance now in his view that the pla sends people in. i don't think that's most people's base case, but definitely rising. >> any sense the hong kong dollar peg would change? >> you know, that's a great question because i think it is military i don't think it is financial. don't mean to laugh about it something has to happen, something big, because you can't have the airport shut down i don't know what it does to the currency, it is not positive a lot of businesses done in hong kong by american companies, i think that should be talked about more particularly, look, i think estee lauder is a great company and will have great numbers. but when you think of hong kong, you think of the metaphor of estee lauder, that's where the chinese go to shop i'm concerned short-term definitely about this. longer term, i think it will -- it will come to a head and then like tiananmen square go away. how does the pla let this happen >> it is the worst economic impact they have seen in 15 years, jim you have a lot to unpack next

hour we'll see you in a few minutes. >> most important thing out there. most important story outhe tre now. >> good to see you let me ask you something. can the past help you write the future? can you feel calm in the eye of a storm? can you do more with less? can you raise the bar while reducing your footprint? for our 100 years we've been answering the questions

of today to meet the energy needs of tomorrow. southern company some bad news. >>to whom it may concern, due to budget shortfalls, the panther's baseball program >>ballard softball >>vikings basketball >>woodlawn soccer the tigers basketball program ...is indefinitely suspended. ♪ to whom it may concern to whom it may concern to whom it may concern every kid deserves a chance to play ♪

want to take a quick final check on the markets

we are off triple digits now, dow looking to open lower, 126 points lower nasdaq looking to open about 39 points lower s&p 500 off about 13 points, want to thank kayla and wilf for hanging out this morning want to wish a happy birthday to peter. >> happy birthday, peter >> thank you for hanging out with us. join us tomorrow "squawk on the street" begins right now. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jame cramer at the new york stock exchange david faber has the morning off. dow futures red to start the week down about 120 here as we watch protests in hong kong, goldman cutting its gdp forecast europe is mostly red ten year yielding 1.68 today road map begins with futures falling.