♪ ♪ good friday morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan here at post 9 of the new york stock exchange. jon fortt has the morning off. vmware announcing two new acquisitions and at the bottom of the hour, imf chief economist live from jackson hole to talk about the remarkable morning we've had with chair powell, china tariffs and a lot more >> remarkable, to say the least. but we begin in washington with

president trump tweeting about jerome powell again following the fed chair's comments the last hour. >> morgan, the president continues to tweet in realtime i'm reading some of these tweets for the very first time. i can tell you, just a second ago, i was in the west wing and saw peter navarro and robert lighthizer, just standing just outside of the oval office, presumably set to go in and meet with the president to talk about this chinese retaliation this morning. they didn't talk to me, so i don't know exactly what they're up to there, but they are within feet of the oval office as of a couple of seconds ago. so the president tweeting, within the past couple of seconds about china, responding here, saying, our country has lost, stupidly, trillions of dollars with china over many years. they have stolen our intellectual property at a rate of hundreds of billions of dollars a year and they want to continue i won't let that happen. we don't need china and frankly would be far better off without them so the president saying here that stealing intellectual property must stop he's saying that american companies need to start looking

for an alternative to china, including bringing companies home and making products in the united states. the president saying here, i will be responding to china tariffs this afternoon this is a great opportunity for the united states. also, i am ordering all carriers, including fedex, amazon, u.p.s., and the post office to search for and refuse all deliveries of fentanyl from china or anywhere else the president saying our economy, because of our gains in the last two and a half years is much larger than that of china we will keep it that way so based on the positions of all the principles here over the past couple of minutes, it's entirely possible the president tweeting that with peter navarro and robert lighthizer by his side now inside the west wing. don't know exactly where all of those players are, but i just saw them outside the oval office just a couple of minutes ago and then the president tweeted this. so that's the reaction from the president of the united states, sort of a belligerent one, but also promising a further respond this afternoon so belligerent in terms of rhetoric we'll see if it's belligerent in

terms of policy this afternoon, morgan >> eamon, thank you for that what a remarkable series of tweets from the president a moment ago fed chair powell, of course, saying in a speech today, there are no rule books on trade wars, as china initiates more than -- or retaliates with tariffs on $75 billion worth of u.s. goods. our next guest's latest op-ed says that trump is losing the trade war. for more on that and the fed, let's bring in former council of economic advisers chair jason furman live from jackson hole. jason, thanks for the time today. appreciate it. >> great to be with you. >> i'm not sure if you've been able to see the president's tweet, but this one line our great american companies are hereby ordered to start immediately looking for an alternative to china including to start bringing your companies home and making your products in the usa. what does that mean when the president is ordering u.s. companies to change their supply chains >> it means nothing. so many of the words in so many

of his tweets means nothing and it means absolutely nothing. what we should be doing is making america a more attractive place to invest and then we'll have more companies investing here other than china. ordering them to stop just means nothing. >> so how do you make america a more attractive place to invest? we've seen tax reform -- how else >> having more stability and predictability the type of trade policy we've had tariffs on one day, tariffs off the next day, the type of macro policy, payroll tax cuts one day, no payroll tax cuts the next day, just making some of that more stable and consistent would be a good start. certainly things like investing more in education, infrastructure and the like but we're also going to have global economies they're going to be operating around the world china's a huge market. you have to be in china to serve that market. to tell american companies to go out of china would be, you know,

hugely crippling to the u.s. economy, relative to the rest of the world, which is becoming more integrated with china >> i want to get your thoughts on the speech we just got from fed chair powell the president also tweeting about that as well, saying the fed did, quote, nothing. it is incredible that they can speak without knowing or asking what i am doing, which will be announced shortly. we have a very strong dollar and a very weak fed. ly work brilliantly with both. and he goes on to keep tweeting, along this line. what is your sense what is your takeaway from what the fed chair had to say this morning, given the fact that he has been walking really such a fine line? >> at a moment like this, i'm just so grateful that there's an adult in the room for the u.s. economy. jay powell gave a terrific speech he talked more clearly about the risks that trade policies is posing to the u.s. economy than he ever has before he was clear that he was going to look through the noise and look at the longer term in terms of how he's setting u.s. monetary policy, and he

certainly didn't tell us what he was doing next on rates, because i don't think he knows what he's doing next on rates. he's going to see what goes on in the world, what goes on in the u.s., what goes on in the data, and make a decision based on those facts, not on some pre-conceived theory >> jason, the market took a spill, and it's clearly related to that presidential tweet the dow is down 213. obviously, it's barely 1%, not even quite that. so what degree do you think the market is going to start reacting violently to requests from the white house that appear to be more and more extreme? >> yeah, the question is, do people believe them and do they think or are they just noise on twitter? to date, a lot of this has just been noise on twitter, but every now and then, you have another set of tariffs placed on china china places another set of tariffs on us. it's just an enormously uncertain situation right now. where we don't know if these are words or actions and you have to

place some probability on them being tied to action >> and i think that sort of gets to what's so challenging about this environment right now, jason, which is the fact that a lot of what we're seeing in terms of the slowdown in global economic growth right now is tied to politics, is tied to fiscal policy, or in some cases lack thereof you can point to brexit, you can talk to this sort of bias towards a leaning of fiscal austerity in germany, as well as that region continues to slow down and yet, it would seem whether it is the president here or other leaders around the world or even wall street and investors right now, everybody is sort of turning to the fed and central banks as the entities that could actually keep a recession or keep a globe economic growth on track is that fair to put that weight on central banks >> i mean, he's the only adult

in the room right now, the central banks are in general so it's not ideal to put all of that weight on them. germany should be doing a fiscal expansion, the uk should be having a more orderly policy, italy should have more certainty. but we can't have all of that, so we need our central banks right now. i think we shouldn't lose the big picture. the unemployment rate is under 4% inflation is close to the 2% target wages are growing. i think, you know, the u.s. central bank and a number of other central banks around the world have done a really good job navigating turbulent times i just wish the times were a bit less turbulent >> speaking of turbulence, dow now down 300 points. s&p down about 36. gold, jason, is up $25 and you can see the defensive trade reaccelerating this morning. i asked you about market responses to things like the president's tweets i wonder, 20too, whether or not this does anything to further

crimp business investment, business confidence, whether it means that we're going to get pmis sub-50 not just on market, but on ism in just about a week. >> yeah, i'm very worried about. you know, we're in a manufacturing recession. we saw business investment contract in the last quarter consumers are keeping the u.s. economy going. as long as the unemployment rate stays low and wages are rising, consumers can keep doing that. but that won't happen if businesses aren't investing. we won't get our potential growth rate up, which is really important, that businesses aren't investing and business investment is much more sensitive to this type of noise and uncertainty than the consumer side. so i think that's a big area of concern right now. >> i was just going to say, so, jason, lastly, i guess, when you look at the fact that there is so much uncertainty, when you look out over, you know, the coming months, the coming year plus, how do you expect -- i guess, how do you expect things

are going to go? both here in the u.s. and globally >> i have no idea. in part, the economy is always really hard to predict, so you need to be ready for contingencies. but a lot of the global economy hinges now on the decisions of a few people one of them being president donald trump and i certainly lay no claim to expertise in predicting what his next set of actions are going to be on trade and elsewhere. >> jason, we had john ostensibly to talk about drop ed, but thanks for reacting to the news of the day jason furman from jackson hole >> thank you well, when we return, shares of intuit are higher on a revenue beat they're up about 5% right now. the ceo joins us exclusively on the other side of this break meantime, the dow is down almost 400 points right now as isth sell-off steepens. we're going to have more on

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well, just getting a read on markets right now, which we've seen sell off -- the sell-off accelerate, i should say, in the last couple of moments on the heels of those recent tweets from president trump the dow is now down about 346 points, about 1.4% the nasdaq, the worst performer, down 1.6%.

tech stocks, energy stocks, industrials, all of those more trade-tariff sensitive names, more risk on sectors are leading the losses, but every sector in the s&p is lower right now gold continuing to move higher, back at 1536, as the sentiment here really is this move again towards safe havens, given all of the focus that we have had on the trade and tariffs this morning. we have mike santoli on set here this morning as well to break down this action and the fact that we are seeing this increased sell-off right now >> and i think it was an across the board, let's step back from this market, because this is not a process that we can now handicap and game out. we don't know what this means when the president sort of says, all companies have to look for alternatives to building in china. so that's, to me, the reflex reaction is a quick risk off twitch in stocks and bonds you have ten-year treasury

yields back below 155. the lows -- the recent lows have been right in that zone for this week and i think that's something that basically says that the market is trying to call in the bats and say, we just don't know now, that all being said, the s&p has been kind of knocking around in a jumpy way within this range for weeks now so 2822 or 2820 for the s&p has been the recent lows the highs have been 4% or so up from here. so it's obviously an anxious situation, but much more about, you really don't know what to make of this than it is trying to price in some specific feared outcome. >> we've talked for a year or more what it would take to get the vix sustained above 2. and the president thinks he can order american companies to change their corporate behavior. and we got to 19 >> got to 19 it's a summer friday we've got to price in a weekend of nothing heading -- coming up. but also, i do think it's important to recognize that the market has been in this ullbac

correction kind of mode for a month. and so we did during this period see the vix go up to 25. we did during this period of the last several days, even, see a lot of demand for downside protection in puts so all of that is to say that traders have been busy hedging, even before we got this news today. so maybe that's why the vix itself is not responding also, we're in this range. when you're staying in the range and haven't broken below or above it, the vix isn't going to get too excited. >> and it's a slirlighter month. august tends to be one of those times. looking at all of this, i just can't help but to go back to -- and i know i've made this point on our air before. i can't help but go back to the fact that this president and this administration really seems to see this trade standoff with china as essentially a win-win, right? at least based on some of these tweets and some of the comments we've gotten

either we get to some major structural long-lasting trade deal with china or you find ways to, through tariffs and through the pain of the situation, push more companies to move their supply chains, move their manufacturing outside of china i guess preferably to the u.s. now, whether all of this happens, that is the big question mark, especially as we are seeing this weakness in manufacturing here and slowing growth globally, as well >> right, i think there's no doubt that wall street professionals have been overconfident in suggesting that this is obviously leading to some kind of at least superficial agreement. they've been doing that for more than a year. to morgan's point, the administration has viewed this clearly as something bigger, longer term, more dramatic and more core to what they're up to. and that maybe is one of the things the market is having to come to terms with in days like today, as well >> well, i mean, i think the initial messaging was this would be, quote, easy to win, as we well know. wilbur ross came on our air and

said, who's going to be bothered by the minimal pain that tariffs would add, right and that message has evolved over time, to the point where we need to save christmas, and now p to the point where we need to issue false mandates on american behavior >> and we want the fed somehow to kind of grease the skids for the trade policy to be less difficult on the economy than it otherwise would. so obviously, you don't reverse, you know, 30 years of global rotation and outsourcing and all the rest of it in, you know, in a hurry. and i think the market just doesn't know how to assimilate that at this point i always thought, though, in the market's sort of mercenary purposes, if all that it cares about is global growth, is it going to collapse, a hard landing in china, is it going to flare up financial stress in major way? that's the most immediate thing. not so much, oh, frictionally, do we each pay more for certain things and exports go up or down it's not as much about that. and we don't know the answer to

that and the bond market saying, we think the odds of something worse than just a moderate slowdown is rising >> mike, stay close. obviously, the market trying to find a new level here with gold up almost 27 bucks let's get to dom chu for some internals on this midday sell-off dom? >> carl, first of all, to the conversation you were just having, it would seem to me that the market would be a lot further down if they took this more seriously we're down about 24 some points here and that's not insignificant. we had an 800 down point day just a couple of weeks ago at this stage here, maybe the algorithms and the high frequency traders and everybody with the hedge funds maybe getting a little bit more savvy with regard to just what these headlines mean but as you can see, that sharp drop-off is what we saw in the immediate reaction let's take a look at some of the other places we're seeing it play out where the rubber meets the road internally within some of these indices if you take a look overall at some of the other stocks that are involved, we are going to take a close look at those semiconductors

we've been saying it for months at this point. they are some of the biggest and most sensitive stocks, queue china/u.s. trade headlines, those stocks down about 2.5% another sharp leg lower for semiconductor stocks watching that semiconductor etf very closely another place to watch is some of the dow components that have more china-centric business activities they get their revenues from there. check out intel on the chip side of things. down 2.5%. apple stocks down almost 3% at this stage caterpillar on the construction equipment side down almost 3%. and nike 2.5%, as well these four stocks among those dragging a lot of those points off the dow today. apple, caterpillar, and nike some of the more heavily weighted ones there. maybe not as much for intel. however, you pointed out some of the macro things we're watching as well. gold prices and oil prices you mentioned that big surge with gold prices at almost 2% we saw a trade earlier and that

big move higher near almost 2% for gold right now, 1536. it will end on the large drop we saw in crude oil this is the second time we saw a dip in crude intraday. so crude oil, 53.80. about 3% to the downside, watching the macro and the micro, guys, back over to you. >> dom chu, thank you for breaking that down for us. meantime, a revenue beat and a smaller than expected loss are powering shares of intuit. those are bucking this trend right now and are trading up higher this morning. joining us now in a cnbc exclusive is intuit's ceo, sasan goodar goodarzi i've got to start with the fact that there's in angst that's playing with the uncertainty around u.s. and china and how this is affecting global economic growth and how it could affect growth here what is your take on the macro environment? and as the ceo of a company right now, is it affecting the

decisions you're making? >> well, withank you for having me good morning we're very proud of our results. and i will tell you, we see strength in our data we also look at the number of employees our small businesses are hiring, which shows up in our payroll experiences. and both show strength and, you know, as all of these talks are going on in the macro economic environment, we are entirely focused on delivering for our customers. and we like what we see in the strength of the company. >> and just to dig into that a little bit more, how would you assess the business and the different offerings you have here in the u.s. versus some of your international markets >> well, you know, we're in about six countries currently and the strength is pretty consistent across all the countries that we're in and the reason is that small businesses really rely on us to be able to grow their business in this

digital world. and with our strategy of an ai-driven platform, it's fueling their success both for small businesses and for consumers that are looking to have ways to make ends meet what they see is a thriving business for our customers >> and what is your sense of small business activity here in the u.s. i know you have a lot of more tech-centric offerings out there that are helping fuel growth right now. is this a secular shift you're seeing amongst small businesses and self-employed? or do you think it speaks to the ongoing strength that you're seeing in the u.s. economy >> you know, it's both there is a significant secular shift. when you look at small businesses, most are using xl, google sheets, and lots of paper and pens to run their business, along with many apps and what that means is that they can't see all of their income and growth in their business, their profitability per customer in one place and so there's a real shift to use platforms that help them run their business that actually do the work for their business, to

help them understand when they need capital to help them get paid faster to be able to hold on to their money the longest and invest it in inventory to be able to delivery for their customer. so there is a secular shift. and with what we're doing with our platform in the cloud, it's really helping small businesses thrive and fuel their success. >> yeah. and investors are certainly reacting very positively to it, as well. sasan, thanks for joining us today. intuit stock is up 5%. >> great still a ton to get to this hour salesforce and hp going opposite ways today obviously after their earnings last night. we'll dive into both of those. later, vmware ceo pat gelsinger with two new acquisitions each 'lrth under $5 billion wel ask him about that and these big macro issues we're facing on this friday with the dow down 340 points. ♪ higher expectations. ♪ the light beer you've been waiting for

has arrived.

european markets set to close in just a couple of

minutes. seema mody with a breakdown of today's action overseas and what they must be thinking over there. seema? >> carl, a sharp intraday reversal for european equities we're at session lows right now and a nearly 1% move to the downside for germany france is down about 1%, and the italy, the underperformer, down about 1.3% take a look at an intraday chart of the european stock 600. that really tells the story, moving lower once china imposed or announced those new tariffs and then moved even lower on those latest tweets from president trump. and then we had fed chair jerome powell referencing a number of risks in european in his speech saying, quote, we have seen further evidence of a global slowdown, notably in germany and china. geopolitical events have been much in the news including the possibility of a hard brexit, rising tensions in hong kong, and the disillusion of the italian government take a look at the automotive names. most notably bmw and daimler, that manufactures some of their

cars in the u.s. both of those names are trading down on the china tariff headline let's take a step back, though, to put all of these moves into perspective. european stocks now are down about 5% from their respective high germany is down about 7% from its 52-week high but that doesn't necessarily mean that stocks are cheap in fact, the valuation picture shows that european markets are for the most part trading either above or in line with their ten-year price-to-earnings ratio. however, if you compare europe to the u.s., the european stock 600, it's trading at 13 times earnings, while the s&p 500 even with today's move is trading at 17 times compared to the u.s., european is trading at a discount, but it just depends on what you're looking at, what the relative comparison is. morgan, back to you. >> thank you let's get over to sue herrera for a news update. >> here's what's happening at this hour. germany is now backing french president emmanuel macron's call to discuss the amazon rain forest fires at the upcoming

summit this weekend. world leaders are urging bolsonaro to defend the rain forest brazil says it is calling on its army to battle the fires walmart's fight against tesla is on pause. a court has sealed the big box retailer's suit against that company over rooftop solar panel fires. walmart sued the company on tuesday claiming, quote, growth negligence, unquote. the ntsb is investigating an emergency landing by a hawaiian airlines flight in honolulu. cell phone video showing smoke filling the plane. it happened 20 minutes before the plane was scheduled to land yesterday. luckily, no reports of serious injuries and another vaping warning a new report suggests that e cigarettes are no safer than traditional cigarettes when it comes to emphysema researchers from the university of north carolina find vaping exposes smokers to an enzyme known to cause emphysema you are up to date that's the news update this

hour guys, back to you. morgan >> sue, thank you. the markets are selling off right now. the dow is down 345 points right now, but still poised to end the week fractionally higher it's a different story for the s&p and the nasdaq both of those averages are down 1.4% or greater, on pace to close the week lower every sector in the s&p is in the red. coming up, the imf chief economist is going to joins after the break. don't go anywhere.

a live shot of jackson hole. this is one of the traditions of this symposium that the kansas ci city fed holds there is the fed chair what a morning he's had, what a month, what yeaa year, what a t, really, as we digest the text from his speech earlier today and talk about what it means for the fed's optics, the way they're going to process data, the way they're going to handle the president and critics of all kinds. steve liesman joins us from there. mike santoli is here on set as we try to put into context everything we've learned, steve, in really, what, just the past four hours or so >> yeah, well, i mean, if you try to divine a little bit message of him walking with outgoing governor of england, mark carney. i suppose the u.s. and the uk on the monetary policy front are as

good as friends as exist in the world today. i wouldn't say mario draghi is any less of a friend, but certainly, carney he was instrumental in working with foreign central banks and the united states when it came to the financial crisis he heads the financial stability board. and always, you know, a good friend of america, i guess, is a good way to say it and over in england, steering england through difficult times of brexit, hard brexit, and we are, of course, going to be talking to him later today at 5:30 p.m an exclusive interview with mark carney as for powell, i thought he hit a note of good enough in terms of how dovish he was, but all of those remarks were eclipsed by the remarks of the president the president, of course, saying that the fed did nothing apparently mistaking this for a policy meeting, which it's not also, asking the question of, who is a worse enemy powell or president xi in really

unbelievable, unprecedented remarks, essentially calling the federal reserve chairman an enemy. and we'll see what kind of political blowback, if any, there is from comments like that but the chairman making the mildest pushback on the fed, on the president's trade policies, carl saying that there is no playbook for the fed to follow when it comes to trade policy. but the president hitting back hard, calling chairman powell an enemy. saying, who's a worst enemy, chairman powell or president xi, carl >> steve, to your point, art hogan telling our news desk today, the root of the problem is that he didn't understand what jackson hole is quote, someone didn't tell the president that fed policy is not made at jackson hole steve, as you just say, i think jay powell did exactly what he should do, he left the door open so do we think this was a matter of him being poorly briefed on what this symposium is supposed

to be? >> i think the president is often poorly briefed when it comes to the federal reserve there's another example recently where he accused the federal reserve of quantitative tightening, when it had long ago or long past or several weeks ago already stopped quantitative tightening so, yeah, i don't know that the president is briefed at all on some of these issues he goes out and tweets and if you see "the washington post" story about the making of economic policy inside the white house, what you find is that the president's aides often don't know what the president is proposing. they don't know what his plans are going to be, and they don't know when he's changed plans and that "washington post" story chronicles the idea of putting on a payroll tax cut and then the withdrawal of the payroll tax cut, along with the capital gains indexing for inflation so there's a bit of chaos in the white house and what seems clear is that the president is making

policy through the tweets and not necessarily through any policy process, carl >> steve -- >> and there's powell moments ago walking with mark carney >> yeah. mike, i mean, you had the fed chair come out and say there's no rule book for the trade war and how that's factoring into how the central bank is trying to think about and shape policy and watch the data right now you can make the same argument for the markets, too especially with the dow now down about 400 points again, right? >> yeah, there's no doubt about it right now, the reflex is to just step back from risk. i'm noticing the ten-year yield is down to the week's low, 153 this has been the rule the stock market has really had a hard time resisting the gravitational yield lower when they start making new lows that's really the kind of tactical story that's going on right here and also just not knowing how to sort out exactly what the

broader implications are of, you know, the fed, as steve said, seeming to do enough to kind of go along with the market's expectations, but then the ante gets raised, because if you re-escalate further the trade war, the fed gets behind again that's been this push/pull that we've been in for a while now in the asset markets. >> so you think what's implicit in the president's tweets are a message to the fed saying, you weren't -- separate from the fact that it's not a policy meeting, you weren't dovish enough and i'm going to go full tilt until you are >> i think if you want to put a fine point on it, perhaps. i think in more general terms, i think the president is saying, this is the policy of this administration and we're going to prosecute it this way and i didn't get what i wanted out of the rhetoric to say that you're going to actually do this the easy way versus the hard way. something like that. or it's just, you know, fed is a valuable foil, if, in fact wufb

their negati you have their negative implications of policy coming out of the fed branch, having the fed there to basically say, if not for them, we'd be better off. that could be as simple as that. i don't think it's about him thinking it was a policy meeting, him thinking rates were going to be cut today. hard to read the minds, but, yeah >> well, steve is sitting down with imf chief economist >> i'm here with the chief economist of the imf and really a huge part of the story here, which is the global economic weakness and we really have nobody better to give us the landscape around the world than gita gita, thanks for joining us. how concerned are you about global economic weakness is a global recession a possibility here >> global growth is subdued and we describe it as fragile. there are many downside risks. and one of the risks we keep flagging is risks on the trade front, the uncertainty surrounding. it and the development we're seeing as recently as today.

you know, gives us grave concern about what's going to happen to growth going forward >> there's just an objective statistic here, which is that world trade has declined and world trade is something that has declined before other recessions is the signal there similar to other downturns? >> the trade is, indeed, showing a lot of backness. we're seeing a lot of weakness industrial production and manufacturing. but on the other hand, if you look at services, services are still holding up though not as brightly as it was at the start of this year. so i think it's a mixed ball of signals. on the one hand, you're seeing a huge amount of safe assets, which is what you typically see before a recession equity markets, they're still high so it's mixed around the world services sectors are still doing fairly well, especially in places like the u.s. >> how much of the global economic weakness is related to trade policy >> some part of it is, but not all of it is

so it's not just the tariffs that are in place, but the tremendous uncertainty about where this policy is headed. and will there be closure anytime soon and that's weighingon business confidence and we're seeing it in investment. but an important part is also what's coming from emerging markets. and emerging markets, we've see pretty strong weakness in emerging markets this is brazil, mexico, argentina, turkey, and that's weighing on growth and that's coming from economic facto factors in their own countries >> what should the world be doing to offset this weakness? there are a lot of central bankers that have certain tools. there are even some finance minutes. should they be talking together? should there be global cooperation on the issue of addressing the issue >> monetary policy is accommodative. that's an appropriate stance it is going to be data driven and it's going to depend upon, chairman powell said, the u.s. is going to depend on what's happening on the global front, but it's also going to depend on

what's happening with inflation in the u.s there is more to be done on the fiscal front ping it would be a good idea for governments to plan for the possibility that they will need to use their fiscal tools more aggressively than being used right now. especially countries that have a physical space that said, i think the number one issue out there is with respect to trade and trade policy and that has to be addressed >> let's do a jim cramer lightning round on the world i'll ask you and give me your quick answer u.s. is u.s. monetary policy too tight? >> u.s. monetary policy is being accommodative and data driven. so it's going to depend upon how the facts come in. if you look at the economy and the unemployment rate and consumer spending, they are quite healthy and so it would not be right to say it's too tight at this point. >> europe. would more negative interest rates help europe -- the european economies grow? >> the kmoourn economy certainly

needs stimulus, including on a monetary front the traditional, conventional space is limited they will require going into more unconventional tools. i would also flag the fact that they could be more done by companies like germany on the fiscal front >> you're doing great, by the way, for not knowing this game was coming does japan tell us that lo negative interest rates are not the cureall? and even strong government spending, don't they have a deficit-to-gdp ratio of more than 200%? or debt-to-gdp more like 3 hurrica00 if i'm no mistaken >> it is high. it's one of the highest in the world. i think the point that has to be acknowledged is that reform is -- structural reforms matter. and many of these advanced economies are grappling with aging demographics, low productivity growth, and those things cannot be addressed by monetary policy or fiscal policy

directly for that matter sf >> can you find for me a bright spot is there some place in the world that's performing better than you expected and makes you optimistic about development in certain areas? >> as the year was progressing, it's getting harder to find those bright spots >> come on >> there was the potential of recovery, and we are still projecting that for many parts of the world, including economies. but i have to admit, it's getting third to see that. >> are there any place -- i mean, chile seems to be holding up, bordering in argentina, right? argentina, though, we didn't talk about south america yet this is a mess, right? >> there are concerns. some of the biggest downgrades we've made to growth have been has been in the latin american region we've had pretty dramatic cuts forecast for brazil, mexico,

argentina. so it is an important issue. and again, the issues there are now directly about the trade tensions and the trade concerns, they have some of their own domestic problems. >> so you sit there at the imf as global chief economist, right? if you could have your way, would you have the federal reserve cutting interest rates to help emerging markets >> i mean, the federal reserve has to follow its mandate. >> i know that and i understand what you're saying and i understand the political place you're in. but let me ask you another way would it help emerging markets if the federal reserve eased policy >> well, what would absolutely help is with the federal reserve keeping interest rates low, with many other central banks keeping rates low, financial conditions are easing which means that emerging markets are getting kpa ting cal flows. so they are benefiting from a fairly easy financial condition. but again, i have to keep coming back to the point that they're getting hit on the other front

from trade uncertainty, the impact of that global demand on commodity pricing. so it has to be a two-way street here >> let me ask about sort of longer term concerns here. president trump posits interest rate of different countries as part of a competition. that the u.s. should be lower because european rates are low and they're fighting to win. are they part of a competition that ends up being part of a currency war that ends up being a race to the bottom >> central banks around the world are focused on what's happening globally, but also what's happening in their individual economies and it is in the case that all countries in the world are growing at the same rate so you should expect to see some divergence in interest rate policies we just put out a blog on this about whether feds and central banks in general should be engaging in some kind of a currency war, and it's just a bad idea for multiple reasons

one, because, you know, even the impact of having the currency war and how beneficial it is for your own country exists, but it's small so it's not of the magnitude you want to engage in. so it is not a good idea to go in that particular direction >> thank you for joining us. if you find a bright spot, would you give me a call or send me an email and let me know that it's there. >> i will. >> thank you very much >> we're back in a little bit. we have an interview with rich clarida and later, mark carney, the governor of the bank of england. >> steve, you've done jackson hole a number of years this one is one for the record books. great work our steve liesman in jackson hole today let's get back to washington eamon javers with some news out of the white house, which we're all attuned to >> a source confirms what we believed, which is that the president is in the white house right now meeting with his trade team just a few moments ago, i saw peter navarro and robert lighthizer waiting outside the oval office. this source confirming that

meeting is ongoing as we speak white house officials not offering any explanation as to why the president believes that he can, quote, hereby order american companies to move their supply chains out of china remember, this tweet from earlier today, the president saying, our great american companies are hereby ordered to immediately start looking for an alternative to china, including bringing your companies home and making your products in the usa. officials not explaining what legal or moral authority the president has to make that order to american companies. we expect that they might clarify that later some time today. also, officials not aware or able to provide any context for this statement from the president's tweeting saying that he's going to respond to china's tariffs this afternoon officials don't have any information on any kind of planned announcement or event or anything here at the white house today. so we're waiting to see what this sort of substance is that backs up the president's tweet here, saying he's going to

respond to china's tariffs this afternoon. we simply at this point don't know what he means by that and neither do some of the officials here in the white house. >> eamon, you're our eyes and ears at the white house and have been for a long time given the extremes out of the t? >> one of the questions i have is we know that the president's meeting with his trade team right now, but who exactly is in that room? if you talk about the mix of china hawks and china doves, is there a balanced mix of hawks and doves in the room with the president as he's tweeting these things out or is this china hawks meeting with the president in the oval as the president is tweeting that would give you context on sort of what advice and input the president is getting as he has his fingers on the keyboard for china. we don't know whose is in the room, although i told you who was in the waiting room. we'll wait and find out and see what this response is. clearly, this is the president, as always, leading the show here

and aides now scrambling to keep up with him, and scrambling to figure out exactly what the rest of the afternoon is going to look like here >> yeah. we'll await more of those details i know you're going to bring us of course, also what the reaction from the legislative brach, from lawmakers could be to some of these tweet "the halftime report" is at the top of the hour. melissa lee joins us with a look at what's coming up. >> we have a lot to trade. we witnessed a ramp-up in the trade war within the past hour we're trading all the angles, particularly the stocks hit the hardest here also, president trump says he will respond in hours. we're going to track that and trade all angles plus, did fed chair powell do the right thing. they give you the best idea for your portfolio we'll cover that and much more at the top of the hour

>> vmware shares are -- company announcing acquisitions of software companies, pivotal software and carbon black. shares of vmware are down 8.5% joining us now is vmware ceo pat gelsinger. thank you for being with us. >> always good to be with you. >> given the fact we are seeing a market selloff, the market down about 420 points. we have seen this ramp up between the u.s. and china in terms of the trade war and what all this means from a macro standpoint as investors digest that as the ceo of a major company right now, how are you thinking about the macro and all of the uncertainty and how is that affecting your strategy right now as you plan for the longer term >> well, clearly, everybody watches it with interest and what's going on, but i think as

this trade debate has been going on for a while, everybody is adjusting to realize these issues with china are very fundamental and significant, and they're going to go on for a while. everybody, and we are, adjusting our strategy to really be in a two trading block world and how we manage effectively our business and saw good results from our china business last quarter. not to the level we would have hoped but still saw growth there as well. i think everybody has sort of realized this dispute will go on for a while and we're working through how best to manage our businesses in light of that and clearly, we posted very good q2 results, very solid, and looking forward with our two big acquisitions and our big vmware conference next week we're leaning into the future. >> talking about those two acquisitions, the fact you are focused on integration, how will these deals enable vmware to be a one-stop shop for the companies and customers looking to move more of their operations to the cloud

>> we have broadened the vmware vision we have been run for our customers but we're helping them build their generations with pivotal and helping them to protect. on the build side, the world is seeing this major new technology transition happen with cuber netties and maybe since java and cloud and virchalization, the biggest change with pivotal, we have the opportunity to help our consistmers build and run and manage those environments. on the security side, there's a fundamental issue that the security side has failed our customers. they're spending more and losing more we need a different approach this industry is fragmented and ineffective and we believe we can build the security platform, giving a strong end to end position of vmware through the apps, through the net w, and now to the devices no other company can provide. we're thrilled to add carbon

black to our portfolio as well >> this is an unfair question. i apologize. you're the first ceo we have had on since the president's tweets this morning when the president hereby orders american companies to bring the companies home, do you feel compelled to obey? >> i think everybody, every company and ours included is adjusting to this long-term challenge of a two-trading block world, as i would call it. i believe in many cases customers are saying how do i continue to do business with and within china even as there's an increasing challenge i think most companies are already figuring out how to live in that kind of world already. and clearly, we expect that our strategy needs to accommodate it we're making adjustments to it even as we're long-term committed to china, we also expect there will be increasing long-term barriers between the two markets. and we have to adjust, and i believe every other business will do likewise

>> and just to go back to your comments about security and given the fact you are acquiring carbon black, how does the advent of 5g factor into the decision to make that acquisition? >> yeah, and we're thrilled about 5g, and we see 5g as this major new, naeb the largest infrastructure and capital investment cycle for the rest of our careers. and inside of that, we see that the opportunity for us to bring world class software technology to the buildout of 5g is an exciting opportunity in fact, one of the things that excites me most is there's been lots rin about the u.s. isn't well positioned in 5g. when we turn 5g into a software architecture, that's when the u.s. and companies like vmware get to participate on a global platform so we're just thrilled that the market opportunity that it presents and clearly, 5g networks will demand better security because more and more use cases for edge, for smart cities and streets are going to emerge on

5g networks and we must do a better job delivering security as the world puts more and more of their lives, their social networks, their health networks, their financial data on our network, we have to do a better job. >> yeah, and certainly a topic we have been discussing and i'm sure we'll discuss more. pat, thanks for joining us today. >> thank you so much >> we still have mike santoli here at post 9 with us mike, as we finish out the hour here, it looks like the dow is at, what, fresh session lows down about 458 points here how would you -- >> keeps sagging lower not getting any clearance from the bond market to have too much of a bounce just yet it still seems very kind of incremental and measures and kind of a heavy action right now. obviously, we have given up the gains for the week they're slightly negative on the week, about 2% up from the august lows in the s&p 500 right now. i think that's the frame we want to look at this in is this going to be another excuse just to go back and test us to whether the range lows are

going to hold, and if in fact we can sort of latch on to some of the decent data that we got this week from the domestic economy, and if that's going to hold out for a while right now. >> a good point. we did get some bright spots during the course of the week. lei, new cycle high. obviously claims remain incredibly robust, suggesting at least the high freak weens data about the labor market continues to hold in that said, debt buyers at the open really got hurt, as we thought we were seeing a bit of recovery out of powell and then the president's tweets come along. the day is far from done because we have no visibility about what may be coming this afternoon eamon is reporting he's meeting with his trade team. >> i think that's the question, is it a situation where you can have some elaboration of this in policy terms and maybe some walkback of exactly this idea that it's a radical move to try to kind of muscle companies around in the way the tweets would suggest. you see with transports, morgan, look pretty weak, because if

you're focusing innen on the air freight companies, logistic companies, it seems a burden on business, if anything at all comes of it. >> not to mention oil below $54. something to watch that's close to session lows copper, fresh two-year low today. going back to i think june of 20 2017 again, all these proxies for global growth not rebounding by the way, ten-year, 1.52 >> that's a new low for the week, and pretty close to historic lows. >> you know what else is weakening? the dollar >> absolutely. dollar down. obviously, part of that is some fed dovishness and part is an idea that, you know, weak dollar is part of the policy wish list, i think, that the administration has. and you know, it's been a bit of a -- and by the way, the yen is rallying that's a real risk off move against the dollar >> right obviously going to keep our eyes on all of this dow down 463 we always say you can't turn us

off, but on a day like today, that's exponentially true. >> yeah, and you know, i'll be here at 3:00 >> see how this closes up, if not before >> pay close attention to the session as we get into the afternoon. europe, of course, now being close. let's get to melissa lee and the half >> thank you, carl we have lots to trade. welcome to "the halftime report." i'm melissa lee in for scott wapner china slaps new tariffs. president trump says he will respond today, and investors are running cover with the s&p 500 close to session lows. it is 12:00 noon, and this is "the halftime report." >> the trade war heating up. china retaliating with new tariffs. president trump says he'll respond today. the stocks that will get hit the hardest. meanwhile, fed chair powell says the fed will act to keep the economy going. is it a green light for more rate cuts ahead? plus, why nike may be the best way to play the trade troubles it's our call of the day the investment committee is ready to go.