>> i think most of the juice is out of the orange here >> omega health care pays a 6.92% yield. great for long-term demographics >> cvs has nothing to do with china. >> disney since i have the last word i buy >> "the exchange" begins right now. . >> thanks, melissa and welcome to "the exchange," everybody. fed chair powell tried to bring calm to the markets by say s the fed would act as appropriate but president trump not happy with those remarks the president railing that the fed, quote, as usual, did nothing. and then upped the ante by ordering american companies out of china this after china earlier today said it's imposing more tariffs on the u.s. the president also teased that there would be more of a u.s. response to come perhaps as soon as this afternoon. here's the reaction in the market stocks are down sharply. we are very much near session lows, in fact hitting them right now on the dow which is down 499

points that's 1.9%. we briefly fell 500 points for the first time in the session today. 2% declines for the dow and s&p. the nasdaq down 2.3% you name it in terms of the sectors and it's all being hit today. we are just three hours from the close. let's get down to seema mody at the new york stock exchange. >> kelly, as you just pointed out, session lows for the major averages, it's worth noting that we were actually higher in premarket trade on those comments from fed officials. china unveiling new tariffs just before 8:00 a.m., $75 billion on u.s. goods markets turned lower, and then powell's speech at 10:00 a.m. eastern, it calmed markets a bit, but there are still questions as to whether the fed will cut in september. then a series of tweets from president trump taking aim at powell and urging u.s. companies to move production out of china. stocks lowered sharply, down down about 500 points. some of the movers, well, it's

those china-sensitive names, caterpillar and 3m are down today, but they're down over 10% just this month. also worth noting the sharp decline we are seeing in oil prices the latest list from china includes a tariff increase of 5% on crude oil that starts on september 1st we know oil and energy has been already a weak pocket for u.s. markets. kelly. >> and, seema, we are just getting word from the u.s. chamber of commerce which is rejecting the president's call for firms to find alternatives to china they're talking about the business community calling out the lack of progress and addressing china's unfair trade practices. but saying while we share the president's frustration, continued engagement is the right way forward. we don't want to see a further deterioration. >> certainly interesting comments coming there from the u.s. chamber of commerce a number of multinationals are already moving pction out of china. but they're not bringing that production for the most part back to the u.s. it's finding

those other low-cost manufacturing hubs, philippines, taiwan, vietnam. so we'll see if the further pressure from president trump and the administration to move production out of china at some point will come back to the u.s. that'll be key >> seema mody at the nyse. let's get the very latest in the u.s./china trade war with both sides calling for drastic new measures today eamon javers is at the white house. >> reporter: there's a bit of an urgent tone here to the statement. they are saying time satisfy the essence. we do not want to see a further deterioration of u.s./china relations. we urge the administration and the government of china to return to the negotiating table to complete an agreement that addresses concerns over intellectual property, and then globally damaging impact of chinese domestic subsidies the u.s. chamber of commerce saying in effect we want these tensions racheted down and quickly by saying time is of the

essence. the president, meanwhile, has been tweeting through the day. those tweets are what's caught the market's attention tweeting out that he is hereby ordering american companies to explore ways to withdraw from china. look for an alternative china including bringing factories back to the united states. the president also tweeting that he is going to respond to the chinese tariff increase of this morning later this afternoon as i stand here right now, kelly, we have no information on what the president plans to do, no information on what format the announcement will take of whatever the president's response is, and no explanation from the white house on exactly why the president believes he can order american companies to begin withdrawing from china so we've been pressing for those answers throughout the past hour or so. nothing yet. no indication on whether we'll see the president behind a lectern, whether we will get a tweet. but the president says we will

get something this afternoon >> eamon, is there any legal force behind his orders this morning, or could there be as future executive orders? >> no. i mean, the president can't dictate to american companies that they have to withdraw i mean, there may be some national security tools the president could use, but those would be dramatic. i just -- under the normal rule of law, without congress passing a law or something, the president just can't order that. it's just not possible for the president to do. so we'll wait for an explanation of why he is ordering it, if that's just sort of rhetoric, if he wants to set a tone or if he actually believes that he can do this >> right and then we'll see how the business community does respond. eamon, thank you very much eamon javers at the white house. the president tweeting about those tariffs today after once again going after the federal reserve and chair jay powell, the president saying after powell's jackson hole speech this morning, quote, as usual,

the fed did nothing. he continued it's incredible speaking without knowing or asking what i am doing we have a very strong dollar and a very weak fed. i will work brilliantly, the president said who is our bigger enemy, jay powell or xi let's head out to steve liesman who is at the federal summit at jackson hole the initial reaction of powell's speech was some thought it was hawkish, dovish, but now a dramatic turn of events just in the last couple of hours >> reporter: yeah. let me, um, go through that a little bit here, kelly first of all, we did ask a fed spokesperson for a comment on the issue of the president's tweet there calling federal reserve jay powell, jerome jay powell an enemy, the spokesperson refused to comment. we haven't had any chance to have a reaction from anybody inside the room.

they are in conference talking about the economic papers that are there. and another piece of sort of reporting business is we have asked the white house for a comment about whether the president mistakenly believed that the meeting in jackson hole is a policy meeting. if you'll note that, tweet is as usual the fed did nothing. the fed was not expected to do anything today so we've asked whether or not the president was confused to actually think this was a policy meeting. now on to the issues that actually happened here fed chairman powell did say since the last meeting, the fed chairman normally gives a keynote speech here on friday morning of the conference. he said since the last meeting's been further evidence of a global slowdown, trade policy is playing a role in that global slowdown, and the fed is watching those developments. those developments include germany and china slowing down, the fall of the government in italy as well as the global growth outlook he said was

deteriorating. now, powell pushing back as much as we've seen him do so on the issue of the trade he said trade policy plays a role in the global slowdown including weak manufacturing and lower capital spending he went on to say that, you know what, monetary policy, quote, cannot provide a settled rule book for international trade, though it can adjust policy for trade policy developments. we'll just end it there, kelly i will tell you that the chairman did say the economic outlook continues to be favorable. i'd call it a hint, maybe dovish enough for the market. market seems to be taking it okay but once again, it's kind of interesting the way history, recent history has repeated itself you'll remember the fed cut rates, the market fell, came back the next day, and then the president imposed those chinese tariffs. and then what happened today, powell gave a somewhat dovish speech then all of a sudden the president came out with, you know, sort of new possibilities of retaliation on china. we'll get a chance to get more in depth on the chairman's thinking and the fed's thinking.

we're going to talk to vice chairman richard clarida at 4:10 and mark after that as well. >> really looking forward to hearing from clarida in a couple of hours steve liesman is out at jackson hole which kicked off all the action today dow hitting market lows right now, down about 521 points so let's talk about what all of this means for the market and for investors. joining me now are jamie cox, john augusteen andrew, did you think the speech this morning was hawkish or dovish >> i think it was marginally dovish powell really went through a laundry list of all of the down risks that the economy is facing and then he said what i think is the appropriate thing to say when there's a lot of uncertainty. the fed is there as a shock absorber to kind of provide some cushion for some of these risks that might emerge. some of them seem to haved

emerged quickly. >> are you with those makes it more likely that the fed will have to cut rates to support the economy because it raises recession risks? >> kelly, we have reached the ugliest phase of this phase. i don't like what the president did comparing jay powell to a communist dictator it's a terrible, terrible thing for the president to do. >> it was unexpected it's a terrible thing. but what it means to markets what, it means to the global economy, the president is really in danger of engineering a global manufacturing recessi and if he's not -- if he keeps up with these particular policies, we're going to be there, and it's going to spill over to the u.s. consumer, and then we're going to have a really bad situation here to clean up and it will lead the fed unfortunately to have to cut rates. they really don't want to. in fact, i think jay powell did a good job today of trying to say, you know, the market's predicting 150 basis points of rate decreases over the next year we don't think that's really

needed but, you know, that's what the market thinks and therefore that makes bad things happen like the yield curve decline, things invert so i think we are at a point where the president holds all the keys to this and if he doesn't get off of this bad trade policy, it's going to be bad for the entire world, not just the rest of the world china specifically >> so you, jamie, definitely think a recession is possible triggered by this trade war. john, are you of the same opinion of the risk that this carries? >> well, it does increase the risk we would say. we would also say, kelly, that fed chair powell actually broadened the discussion today we thought in a very constructive way by steve liesman saying bringing in the global economic uncertainty, bringing in the trade uncertainty, bringing in the muted inflation. we thought he actually opened the door for the fed to be more accommodated if needed so we thought it was a very constructive speech. and by constructive, you mean dovish so in other words you listened to that and from it took away

that one more rate cut, two more rate cuts. what would the practical implications of that speech be, do you think >> well, we think one more rate cut we thought one more rate cut in september now we're starting to think the 2-year yield is telling us today that obviously the odds of a 50 basis point rate cut in september going up now we will see if we get some inflation numbers next week. we will see what the ecb does before the fed in september. but we are thinking potentially and the bond market's thinking obviously the risks went up to the economy today. so likely that takes us from a potential 25 to 50 in september. we still have time there in between. >> okay. andrew, do you guys think a half-point cut now is likely and if so, how is that messaged? >> so, i think 25 basis points is still more likely than 50 basis points now it depends on how things

unfold between now and the september meeting. i think that they're being careful right now to preserve all options. and i think that's why we didn't have a strong signal that it would be a rate cut in september. now everyone think it's will be. >> and going into the speech, remember the commentary yesterday harker especially was very much this reluctance to cut rates. i felt like i had to, but i didn't want to but there seems to be a divide here i think there is a reluctance and an acknowledgment of cutting rates. so you have to be thinking about that as kind of trading off against the cushion you are providing to the economy so you'd prefer to not to have to cut rates but they appear to be emerging, then that pushes you closer to th rate cut. still a lot of differences some people looking more at the domestic economy which actually continues to be facial strong.

and so that's what kind of pushes us to think it's probably a 25-basis point cut and not the 50-basis point cut >> final word, jamie, what should they do >> well, right now it's really hard to know what to do because every 30 seconds you've got to deal with some type of tweet so what investors need to do is stay -- what we're trying to tell everybody to do is to stick with things that they know like buy stocks that have dividends >> what about fixed income >> i think it's really difficult to convince somebody to buy treasuries here because the upside risk is very low and the downside risk could be high if things were to reverse i think stocks are the better play at this particular moment than bonds >> john, last word >> last word, we're balanced and diversified. we are fortunate for our customers we moved that way in mid-july one thing investors and savers should be really for though is cash yields are likely to go back below the inflation rate again. so just be aware of that

some dividend stocks may be in order here, especially on days where the dow is down this much. >> thank you all appreciate it. we're watching the dow closely. it's down less than 500 points right now. but coming up, if these sales have been touted as a recession in the past, you won't want to hear what they are telling us about the economy this time around we will talk to the ceo of thor industries next. a look at the big industries and companies that will feel the biggest impact from china's new tariffs on the u.s. and why one former treasury official say trade war uncertainty is no longer a variable, it's a constant "the exchange" is back in two. >> this is "the exchange" on cnbc

welcome back if you're worried about the economy, this next stat won't help rv shipments to dealers slipping 20% or so this year, and the wall street journal saying the stock is down nearly 17% and now the president today escalating the trade war with china. joining me now is bob martin he is the ceo of thor industries bob, it's great to have you here and why are your sales slowing >> thanks for having me on today, kelly for us it's been probably a lot

of different scenarios that have come into play a little bit of the tariff, a little bit more of the tariff talk we've had some weather issues. starting two years ago our dealers simply had too much stock. so a lot of different things combined have really slowed business a little bit. but not as much as people really have thought really we've had a correction this year. >> yeah. >> it's correcting of the inventory. so my bigger dealers are actually feeling pretty good and feeling pretty healthy as they have drawn down their inventory as look at the long-term future. >> sales have been really strong for a couple of years coming into this. so let me ask you what the impact has been. a couple hundred dollars worth i think of parts in these rvs come from china you have the president ordering literally ordering companies out of that country. what do you do >> well with, edon't directly buy anything from china. so i know vendors are looking at alternatives right now

so for us, a lot of our raw materials don't come out of there. so the effect isn't as large so i know as our vendors are definitely looking into alternatives, we'll work with them, you know, over time. but many people thought that the effect would be thousands to an rv but it really has turned out to be a smaller amount. and getting the parts we've been able to do that as well. so we're in an industry that we react very quickly and that we are not single-sourced on any product. and we can look at other areas of the world, and we will find options. >> what are your options you know, we saw back a couple of months ago just after the president had really put up the tariff pressure on china, he threatened tariffs on mexico a lot of manufacturers were whipsawed because they said, wait a minute, that's our alternative. now we don't know if we should move there as much vietnam may or may not be an

alternative. where else can you go? >> for us we are learning more we had a large acquisition this year of the ermanheimer group based out of germany for them they've got alternative sourcing as well different areas throughout the world. we're currently working and with and looking for different vendors. i head to germany next week to the largest show in europe i will meet many of the vendors that supply many of the products we get here. our vendors in the u.s., they are weighing these out, you know, as much as anybody >> sure. and, bob, when do we have to see rv sales start to get some traction again in order to be assured that they're not heading into a prolonged slump and that this is not telling us that the economy's in decline >> for us, we look at the last couple years it's been really a right-sizing of the inventory we had a ten-year run and dealers really ordered probably a little bit too much inventory. they will all tell you that. and we had to work through that

inventory last year. this year our inventories are in line one thing we really look at is the age of our inventory that's very much in line and one of our -- we call our canaries in the coal mine, the iconic riveted trailer that costs, you know, upwards of $100,000 that's usually one of our first products that slow down. if there was a macro recession coming and we did see that early many months before anything else, and we're frankly seeing the opposite we are building a new factory for air stream right now dealers want to take products to market where's we simply can't provide enough air streams at this time. so that's one of our biggest indicators so it gives us, you know, some peace of mind that the higher-end products really haven't slowed up. shipments have slowed, but it's really an inventory correction issue. >> i love that i am adding that to the list, air stream indicator where are you building the factory, bob >> right next to the original

factory in jackson center, ohio. most of our production is in northern indiana, but air stream is very much a craft-built product that you have to have the know-how it's the largest factory we've ever built that's our confidence in the long-term of the industry. we wouldn't have done it if we saw things slowing in the future air stream for us, we always feel is a great indicator of the overall health of the industry >> really appreciate it today. >> thank you very much >> bob martin is the ceo of thor industries as we head to break, just want to mention the yield curve, speaking of economic indicators, it's inverted again. there is crude oil down 3.5% there is the spread you see on the left-hand side of your screen there that dotted line shows you the zero level we have just now slipped again below that zero level for the 10-year and the 2-year we are watching closely with the

session lows down 530 points this afternoon and we'll talk a little bit more about why oil is falling it's not all bad news for some energy players in fact a couple could benefit and we'll tell you which one's ahead. also, an impact on the housing market with mortgage rates hitting their lowest level in three years we will lookt etr awhhea housing boom could be on the way.

welcome back to "the exchange." let's get you caught up on these markets. there is a lot of catching up to do today the dow down 525 points after jay powell's speech at jackson hole and the president's escalation of the trade war with china. you could call it their escalation with us as well all 11 s&p sectors are in the red right now led by tech, energy, and consumer discretionary. we are seeing declines of 2.5 to nearly 3% now for those sectors. the transport sector taking a hit as well, down 2% and on pace for its fourth straight week of losses airlines leading the declines in that sector. and how about the chip stocks the semiconductors as you might imagine, they are getting hit hard today as well and they are actually on pace for their third negative week onsemi and invidia among the worst performers invidia is now down about 5% copper is also dropping today. it's the metal with the patti domm in economics. it's seen declines of 2017 let's get over to susan herera

for a cnbc news update now hi, sue. >> hello, kelly. hello, everyone. here's what's happening at this hour israel is mourning a 17-year-old girl killed today in the west bank by an explosion police say it was caused by a palestinian bomb in a popular hiking area. the teenager's brother and father were also injured brazilian president says that he is preparing to send his army into the amazon rainforest to battle the record number of fires there. german chancellor angela merkel is calling the fires an merge. illinois health officials report a person who recently vaped died after spending time in the hospital for severe respiratory illness. the report comes within a day of the cdc and the university of north carolina researchers issuing separate reports on e-cigarettes and respiratory dangers. and the woman accused of being the mastermind of the capital one hack attack is staying in jail a judge has ruled that page

thompson, a former amazon software engineer, is a flight risk prosecutors say thompson hacked into capital one and at least 30 other organizations. you are up to date that's the news update this hour is kelly, i will send it back to you. coming up, the president ordering american companies to start looking for an alternative to china and calling out fedex, amazon, and ups are down more than 3% right now. and apple is also tanking on that news. tim cook is the president's right now. what does it mean for apple? the shares are down 4.5% today and autos are dropping as china threatens to resume tariffs on that sector. we'll talk about all of it next. and tesla down nearly 4% "the exchange" is back in two. do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere.

prevagen. healthier brain. better life.

welcome back with the dow down 507 points, let's catch you up on a couple stories that should be on your radar today. it is time for "rapid fire." here to break down the headlines, john from miller value partners joins us along with cnbc's morgan brennan, bill griffeth and kate rogers

it's great to have everyone here it does look a little like a game show setup. that's for another day, definitely not today >> we are not playing games today. >> no, we are not. markets have been whipsawed all morning and afternoon by this ongoing trade war with china it really began after the president tweeted just after 11:00 this morning that he would be responding to the latest retaliatory tariffs from china but the president tweeting in part our great american companies are hereby ordered to immediately start looking to an alternative to china including bringing your companies home he called out fedex, amazon and ups by name to refuse deliveries of fentanyl from china which i'm curious, morgan, there must be some kind of checking at the border, right, for stuff that's coming into the u.s. >> oh, yeah. there are very specific regulations that are in place. any of the carriers that are moving stuff cross border.

to that point, fedex and ups have come out with statements and talking about how they work closely with the regulatory authorities to monitor prohibited substances. there have been quite a number of investigations over the years including one just this morning from "the washington post" looking at how things like substances like fentanyl are get across the border and fentanyl seems to be the biggest culprit. >> and it's interesting this morning on "squawk box" we were talking to former fda director scott with vaping. a lot of the products appear to be involved with some chinese imports, stuff that's kind of being -- it's not legitimate products so to speak and he said if he were still at the fda, he would order customs and border patrol to do more on this so clearly if you really want to do something about this problem, you should be able to. the i guess that's the smarter salvo. >> that wouldn't be the headline necessarily. you know, i thought steve liesman brought up an interesting point that i hadn't

thought about that there might be some confusion on the part of the president that the meeting in jackson hole was a policy meeting, which of course it is not. maybe he was expecting a rate cut today and didn't get it. and that would add to his furry when you get these new tariffs from china and expect the fed to respond in some kind and he didn't get that. >> so he criticized powell six or seven minutes before announcing these actions or these orders against china it clearly seems like a cause and effect >> absolutely. and to use the word "enemy," not only against our own fed chair but now against the man that you're negotiating with on the trade war, that's -- i know sometimes talk can be cheap, and, you know, in the heat of the moment you say something you might not intend we all know here words matter. >> when you're talking at this level, you have to be careful what you say >> i will just note on that though that we have already

essentially labeled china an enemy. all you have to do is look at the defense strategy and we see china essentially as a near pure threat so to speak >> i don't think powell's on that list. [ laughter ] >> no, not at all. but i'm just saying i think the national security piece of it. >> i know. it's no laughing matter. all right. let's drill down on a couple of other companies that will feel the pain from these tariffs. chinas on autos saying it will impose a 25% tariff on u.s. cars and 5% on parts. they have paused these tariffs back in april. tesla and ford could be among the hardest hit companies. tesla shares are down nearly 4% today. ford down nearly 3%. how much of a risk is this these china tariffs, the total dollar amount is only $75 billion on the u.s., but the market reaction it tells you there is a much more at stake here >> yeah. i think that once again the u.s. economy is a super tanker, right? it takes a lot to make us go off course so right now we're kind of going

strong we look to unemployment and a couple of other indicators but this whole fight has the potential to have a negative feedback loop the longer it goes on, sla are to 1930s and what happened back then so you have a tit for tat situation. then you have headlines. you have the stock market very volatile i think that even though the u.s. economy is a service-oriented economy, those are some of the things that we're watching very closely now in that if we start to see layoffs, you know, not at gm but, you know, cruise lines, bookings go down >> ford especially is vulnerable in that case and i didn't realize and i read this this morning. u.s. car exports to china are down 50% in the last year. so already we've seen a huge impact as a result of the previous tariffs that were put into place now we're going to get more. >> and their marketplace is slowing in china >> this escalation today after hearing that earlier in the week the president was reportedly

concerned about a potential recession in the next year this policy, these announcements today, we are calling it policy. who knows what he'll announce this afternoon but they were talking about a payroll tax cut earlier in the week where ishis going? >> and we know that his advisers, many or most of them have said you are contributing to this -- you know, whether he believes it or not, cares or not or just thinks that the greater good is the point. it's an undeniable cause and effect in the market >> and obviously volatility is not good for anybody and i think the super tanker only has so much before it starts listing if you start to have problems now, once you get within a year of the election which is, you know, two more months, you can't change that. and he's not going to be a second-term president because of that so actually bill said this morning on our call that we should have, you know, he should put a moratorium on tariffs until after the election and then say, you know what, we'll negotiate now to the

election if nothing happens, then it's kind of like -- >> very interesting. because here's another area. tech, shares of apple falling more than 4% after the president threatened the retaliation just after days after the ceo tim cook said it would hurt that company. especially after the president saying to u.s. companies that do business there, bring it home. >> yes so that's exactly right, kelly apple in the red here as president trump says he is now ordering american companies to look for alternatives to china now remember apple does all its design work here in the u.s. that would include cities like cupertino and austin and recently reminded us that it's responsible for creating and supporting 2.4 million u.s. jobs but much of its assembly work is in china where you have millions of chinese putting together different parts of iphones and ipads. tim cook told me that he had made no significant changes to his supply chain and perhaps helping apple here as it

navigates these tensions though, trump's relationship with cook just this week the president praising him as a great executive, kelly >> josh, appreciate it we have that moving. we also have the chips semiconductor stocks, micron invidia all down we had talked about there's a lot of time until september 1 to resolve the situation. now it is going the other way. >> yeah. and i think that -- well, in terms of apple i think that i don't think tim cook is going to have trouble finding a place for his supply chain anywhere else in the world >> but it's a huge supply chain. >> you can't do that overnight but the fact is that, you know, then apple would be down again last time we spoke it was down to 194 you said would you buy it? i said yes if it went up 10% apple is apple >> would you hang onto it here >> you still buy dips because you have apple buying back a tremendous amount of stock and you have warren buffet buying a

tremendous amount of stock >> how seriously are investors supposed to take -- >> first of all we have 5g rolling out. they have to ship their supply chain for 5g tremendously. and that's going to be a huge up a grade cycle that's going to affect chips, apple, everybody emphasis you're not going to get a free upgrade to the 5g on your phone and you're going to have to go out and buy a new thousand dollars. the price point is probably going to be 1,200, 1,500 >> the fact that we are seeing this slide in semis again, yes, it's the tariffs and the china trade war. it's also what this means longer term for the dynamics with huawei but also semis are exposed to every asof the economy in some form or reflection and it's increasing where we're at in terms of economic growth >> want to break in with some news from the national retail federation this is again the national retail federation responding to trump's orders this morning for companies to move operations to the u.s. for years retailers

have been diversifying their supply chains but finding alternatives is a costly and lengthy process that can take years. it is unrealistic for american retailers to move out of the world's second largest econo as 95% of the worlds live outside our borders. our presence allows us to grow and expand opportunities for american workers, businesses and consumers. >> reality check >> yes >> wow >> that's with the negative feedback loop. you just read that now i'm sure that'll be on the pages of the paper tomorrow. and you have people waking up this weekend saying not to mention what trump is going to say is going to say is his tweet going to be before the market closes? so that's another reason why we have the volatility go into the close >> but as they said, costly and lengthy process. it's that companies aren't considering it >> of course they have been considering it >> of course they are looking elsewhere. it's not possible to do overnight. this is something that's going

to take a long time to build out for huge companies like apple, also smaller companies it takes a long time to find a place to do business. >> if you move production to the u.s., it's not just production for the u.s., it's everywhere else we can sell for a lot higher prices than most other countries so they are forcing that up. >> one of the alternatives often discussed is vietnam we have been doing a series of stories on nightly business report about how vietnam is maxed out to a great degree. they can't handle the capacity that china would be able to handle they don't have the skilled labor involved and they don't have the infrastructure in place. soo say, well, let's go from china to vietnam is much easier said than done at this point >> there's another piece to all of this, especially when you look at very globalized companies and the fact that they have multiple supply chains or production lines throughout different parts of the world part of the reason they did that was maybe cheaper labor, cheaper costs of doing business. but the other piece of that is because many of those markets had tariffs in place themselves.

and so you set up shop to be able to manufacture for that country or that region to bypass the tariffs. the u.s. has not necessarily had those tariffs in place so now the implementation of them it'll be interesting to see what this does to production coming back to the u.s. specifically for the u.s >> all of this is just another reminder today that trade policy is complex >> and china is complex because 60% of the people do not believe china is a friend. so that was the latest pew research report which is up from 47% last year. so that's probably why trump is tweeting the way he is because 60% of the people don't believe china in an unfavorable light, well, that's an election issue for him. >> that's a feedback loop anyway why do they believe that >> so much feedback. the dow is down 503 points you didn't get it up i'm sorry. we'll try better next time

>> john, morgan brennan, bill griffeth and kate rogers coming up. >> the stock markets you are talking about. fed chair powell left the door open for some more rate cuts we will check on what that means for housing next speaking of rates, we briefly inverted again between the 2-year and the 10-year yield you can see on the very right-hand side side of your screen there, the fact that it's in the red means that awere inverted fwhachl measure we will have more when we come right back ly road i've ever known ♪ ♪ like a drifter i was-- ♪ born to walk alone! ...barb! you left me hangin' on the high harmony there. if you ride, you get it. geico motorcycle. 15 minutes could save you 15% or more.

welcome back let's check on the yield on the 10-year note as markets sell off this afternoon, we're just above 1.5% 1.5%, and we were at 3.25% last fall yields today began to slip after fed chair powell said the central bank will continue to act appropriately to sustain the economic expansion but yields really tumbled after the president's tweets against china this morning so what do these levels mean for the housing market let me bring in doug dunkin' who

is chief economist at fannie mae. i asked you a couple of months ago how low the 10-year would need to drop to really spur mortgage demand and you said it might need to go to 1.5% or below example we all said, well, that seems far-fetched and here we are. >> here we are and at that rate with mortgage rates related to that 10-year treasury, there is about a trillion and a half dollars of mortgages outstanding where the owners of those mortgages would benefit from refinancing and we've certainly seen a pick-up in applications for refinancing of existing mortgages. and what happens then? so we get another refinancing boom, it helps people out with their monthly payments a little bit. but what is the larger significance of that >> well, there is a difference between refinancing your existing mortgage where you can improve your cash flow, have

more money available either for savings or consumption and the consumer is very strong right at the moment. and the difference in buying a house. so in buying a house it becomes an issue of affordability. we've seen house prices slow down now with interest rates coming down, there's been a little bit of a pick-up in existing home sales. the new numbers that came out today were actually down from last month but it creates an affordability in the housing space that kind of holds it up after it had dropped off a little bit from 2017 >> yeah. i'm glad you brought that up that's exactly what i was going to ask you we saw sales and things generally trend upwards till about 2017 in this housing market and now we are kind of going sideways and we have as low mortgage rates as you could possibly ask for. do you think people are maybe thinking they could go even lower and that's why there is not a ton of urgency yet >> no. i mean, i think there is

urgency. for many people, now would be a great time to buy because they see these low mortgage rates, it's very favorable. we've actually just seen for the first time in a long while also a new upstick in the amount of so in other words, good and true influx, not just homes being left over from the month before. so it's going down live in the house for a long period of time and they want access to those low mortgage rates in terms of housing interests. the rub is that you know those interest rates do nothing to help you afford that down payment. and one of the ways that we understand you know, you said it's going sideways. in many ways, i think it's doing something pretty darn appropriate, which is hold values outpace incomes demand hasn't pulled back and for a lot of people, they're

still not able to return to the housing market they don't have that down payment. they might have the credit they might want the mortgage, but just the access to it is a real challenge and that's what causing these markets to stop it sometimes i think that's great in a sense of markets are acting appropriately right when prices went too high too fast demand pulls back. a stop it's one of the beauties of this kind of system however in a climate now, there's a lot of uncertainty people are really hoping the the housing market picks up because one of the main ways we can stimulate the economy is people's interest in housing so you know, douglas mentioned when you get that refinance, it could be cash out to actually spark con sengs again. the hope it would keep it going. i think housing slowing down doesn't have to be bad part of the picture. it's an important reset. and the spurring and refinance

and the cash out could help the economy as well. >> that would be a nice benefit from this right now. thank you xwis, appreciate it. skyler olsen b coming up, transports taking a leg lower after president trump called them out with tweets against china. what the escalating trade war and president's attention mean for the sector next. take a look at the gold etf. a six-year high just moments ago. back in two. we all feel, we all love, we all cry. it's part of being human. sonoma county declared a homeless emergency in 2018. you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve.

dear tech, dear tech, we need to look after everyone in our community. and we want to help our fellow human beings. ♪ ♪

these are ava's shoulders. they square off, hold firm, bear it all. this is her physical therapist, who lends his strength, to hers. these are ava's shoulders, now stronger than ever. this is what medicare

from bluecross blueshield does for ava. and with plans that fit every budget, imagine what we can do for you. this is the benefit of blue. welcome back the market selling sharply on another escalation in the trade war with china first china is threatening to slap tariffs on an additional $75 billion worth of u.s. goods. this came at 10:00 a.m. this morning. no, 8:00 a.m. this morning then president trump ordered u.s. companies to start looking for an alternative to china for doing business this new development as fed meets in jackson hole and right

before the husband heads to france a let me bring in don, machinaging partner at broten capital. tony is a b cnbc contributor and guys, thanks for joining me. donald, we wanted the ask you how realistic it is for the president to clamp down further as he wants fedex, ups and the other package companies to do, on fentanyl coming into this country from china >> well, certainly that's his prerogative. as commander iief. but the bottom line is that what's happening in trade, what's happening in air freight in particular trade, is already damaging the global economy. our economy, the chinese economy, the korean economy, taiwan, japan, singapore, pick one. already having a disastrous effect and this just only makes it worse >> right, but on these specifics of carrying out this crackdown at the border so to speak, it's unusual to see these companies pulled out by this president by name what kinds of reactions do you

expect from them now is this, does this present a challenge for them is it just a pr challenge? or does it, is it a real logistical one >> i think the challenge is really more one of how you want to, how do you want to skin the cat. how do you want to make the change that he's seeking a much more effective way, historically, has been to not let those conducting illegal activity know that you're monitoring them and selectively one by one go persecute them as opposed to say iing this is what we're doing in telling everybody b ahedo of time that that's what you're trying to attempt. i think the record, history is very clear fedex, ups, all have been r very, very cooperative with the authorities as it relates to shipping illegal contraband but they like to do it on the down

low. >> on the dl morgan suggesteded earlier u.s. post office involved with a will the of business so tony, you know, derek and others had said the president should draw more attention to the fentanyl issues as a way of showing that china's a bad actor. this obviously ratchets up him doing so what are the practical implications likely for the public >> unfortunately, it's more uncertainty. because of what he's doing, not because of the aims of it. the seriousness of these issues, but it's the how and you know to have these kind of things happen in the form of tweets that are you know that are tossed out on friday mornings in august without real clear plans, no expectations of what the companies are supposed to do an how they're supposed to work this is only part of the message. having to do with how other companies should source their prugts at this time of year. so it's you know, frequently, he does pick at an issue that is

important and that china needs to deal with, but the how to deal with it hasn't been well eck cuted to say the least >> given that, what do you make of him saying i hereby order u.s. companies out of china. come to the u.s. just sounds so formal and you wonder if he br serious, what further measures could be behind it ch. >> they need to get back to the table and work these things out in an accommodative way and formal way not hereby ordering things on twitter isn't the way you make policy these companies all of the xaeps are trying to deal with this situation with china are trying to follow the lew. and trying to plan out for the next 18 months how they can run their businesses >> and like dom's said, the volumes don't look good. this is b probably going to make it worse just reacting to the latest.

>> the dow down about 500 points at this hour 470. off the lows go join tyler and melissa for "power lunch" which begins right now. >> e see you in a moment "power lunch" starts now with a major market sell off. check out the carnage on wall street as the trade war takes a nasty turn china began today retaliating with new tariffs then president trump ramping up the rhetoric, ordering u.s. companies to leave china and it's the stock market paying the price is dow is down by 500 point. 1.8% s&p 500 down almost two full percentage points and the nasdaq down 2 p.5%. >> spoofed by a major es canlation in the trade war between the united states and china. eamon javers has the latest. seema looking at the stocks getting hi hi, eamon. >> yeah, as of t